Building New Financial Products with BlackRock's Stephen Cohen

Barry speaks with BlackRock’s Chief Product Officer and Head of Global Product Solutions Stephen Cohen. They discuss launching new investment products and the trajectory of ETFs. Stephen also discusses the crossover between public and private markets, cryptocurrency wrappers, and working with portfolio managers to develop new strategies and ideas. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  At Brookfield, we invest in the thing behind the thing behind the next big thing. Our focus across infrastructure, energy, real estate, private equity and credit is helping to build the backbone of the global economy. We combine deep operational expertise with disciplined long-term investing, uncovering value and partnering alongside clients to shape tomorrow's economy today. Learn how you can own what's next at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital.

• 0:34Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 1:16Speaker 01

  and hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

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• 2:39Speaker 01

  This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

• 2:47Barry Ritholtz?

  This week on the podcast, another banger. Steve Cohen is BlackRock's Chief Product Officer and Head of Product Solutions. BlackRock runs $3.5 trillion. They're the world's largest asset manager. Their iShares ETF division is over $5 trillion. There are few people in the world better situated to identify what is happening in the world of asset and wealth management than Steve Cohen. Not just fixed income, active index, Bitcoin, digital assets, they're also moving into privates and alternatives. Whether that's an ETF or just part of that platform is something else entirely. I thought this conversation was

• 3:30Barry Ritholtz?

  fascinating, and I think you will also. With no further ado, BlackRock's Chief Product Officer and Head of Product Solutions, Stephen Cohen. It's great to be here. We're going to talk a lot about what you do at BlackRock and how the company has been growing, but I want to start with your background. Degree in economics from Southampton College. Was the plan always to go into investment strategy, or what were you thinking back then?

• 3:58Speaker 04

  I'm not sure I had a plan. I I studied economics at school and then at university. And I I was always I was always very interested in this kind of concept of the markets. I didn't have any background, no family background in in markets or investing. But I always found reading up about markets interesting. And and what kind of got me in, it was a slight fluke. We were talking about flukes before the show. One of my neighbors was a telecoms engineer. And he used to go around to all the banks installing the dealer boards. And he one day, and I was talking to him, and he one day.

• 4:36Barry Ritholtz?

  Like various ATMs, automatic teller machines, we call them here?

• 4:39Speaker 04

  Yeah, dealer board, the the phone, phone systems that you use on the trading floors, you know, the with all the with all the hoot and holler and all that kind of stuff.

• 4:46Barry Ritholtz?

  Diebold's and I was missing.

• 4:48Speaker 04

  Oh, right. Maybe he installed those as well. I don't know.

• 4:50Barry Ritholtz?

  Those were the big ATM manufacturers way back when.

• 4:53Speaker 04

  And and he said, so I got talking about it and I'd mentioned this interest and he said, well, why don't you do a day's work experience with me? We'll go to a bank. So we went to one of the banks. I can't remember which one it was. And I walked onto this trading floor and, you know, for someone who had no experience or never experienced this before, it was amazing. There was people shouting, there was screens and flashing numbers and stuff like that. And I thought, you know what? This this looks pretty cool. This buzz was was so the kind of combination of an opportunity to work in something that that took economics and markets and the world. And then this kind of feeling of a buzzy environment, that was the thing. And so I applied to a number of banks and at a university, got an opportunity to go to UBS.

• 5:38Barry Ritholtz?

  So that was your first gig right out of school. You're working with convertibles and fixed income. And something similar at ING Barings?

• 5:46Speaker 04

  Yeah.

• 5:46Barry Ritholtz?

  Tell us about your your work at UBS and ING. What what sort of job was it?

• 5:52Speaker 04

  So I worked, I originally started in fixed income and then went into convertible bonds and a lot of what I spent my time doing was kind of more market strategist type of roles. So talking to clients about what was going on in the markets, what was going on in the bond markets, trade, developing trade ideas for clients. And that's also how I got involved in spending quite a lot of time on the Japanese markets, which I found incredibly interesting and really got to understand the Japanese culture and the way the country operated and

• 6:30Barry Ritholtz?

  Is that what led you to Nomura? Or did Nomura come first and then the Japanese exposure?

• 6:36Speaker 04

  That kind of led, yeah, it did. So getting involved in Japan kind of led me to doing convertible bonds originally at ING and then with a group of us at Nomura. And that's where I spent a lot more time on the Japanese markets. And I think it's all part of how you, you know, I think back to those days, you know, Japan was very different to what it is kind of now, the market, definitely. The market at the time was about nine, the Nikkei was about nine thousand, nine, ten thousand, given where

• 7:05Barry Ritholtz?

  Down from thirty nine thousand?

• 7:07Speaker 04

  From thirty nine thousand. Now we're back at forty six thousand. So there's like a proper V shape of that market.

• 7:12Barry Ritholtz?

  Right. Only took three and a half decades.

• 7:13Speaker 04

  Only took three and a half decades. And I managed to do the middle bit, which was not necessarily the most exciting bit, I've got to be honest. But I think, you know, again, it was, what was interesting about it is you learn about kind of an economy and therefore a stock market that is in such a different place as it was then to, you know, looking at the US market or the European markets at the time.

• 7:33Barry Ritholtz?

  So that raises a really interesting question. How do you think, how do you think about the 1990s, even the 2000s? You were at Nomura till 2011. How do you think about those decades versus today? That world doesn't seem like it's that long ago, but it really feels like it was so different.

• 7:52Speaker 04

  It feels incredibly different. I think for Japan, it's completely different. And, you know, if you go back to As you say, the late 90s, early 2000s, you know, the banking crisis that was part of the bubble and the collapse had still not been solved. And it was only really in the early, early to mid 2000s that they finally kind of got their arms around the banking system. And one thing you read about history, and unless you can get the banking system operating properly and lending, you really struggle to get an economy going. The second thing that's really interesting, I think, is so different, is back then, you would every six months, every year, there would be a government-led fiscal impulse, right?

• 8:33Speaker 04

  And, you know, they used to call it the building the roads to nowhere, right? You know, paving the entire country, just got to kind of spend and spend and spend. And the reaction of the market to that was, this is going to have no impact. The reaction now to fiscal spending is actually, this is, you know, great. This is kind of part of the economy, the country kind of being back on its feet. You're now talking about inflation being potentially an issue in Japan, whereas there it was all about deflation. So it's quite amazing how it has turned around. And you're seeing that in the bond market and just the yields.

• 9:06Barry Ritholtz?

  One of the things I'm kind of fascinated about following the Japan bubble popping in 89 and how long it took to recover from that is the concept, and apologies in advance for my mispronunciation, of Kiritsu, which is the Japanese concept of these vertically integrated companies, manufacturing, retail, banking, like just every sector. If there's a banking problem, the entire economy seems to run into trouble because that whole vertical, sometimes it's Mitsubishi, sometimes it's whatever, each of these entities are giant. And if the bank has a problem, wow, you're really doing some damage.

• 9:50Speaker 04

  Yeah, because I think if you look back to the history, and again, this is, this is changing and different to the way we'd think about kind of Western markets and companies. But Japan historically. Uh. It was a bank lending market. You you got financing through bank lending, all the stock market. Um. And so banks were just so central to the way the economy operated. And you see parallels to that in Europe, a little bit less. Here in the US, it's very different now. You know, there's the there's the banking sector, which is obviously very critical to the way companies and financing. But you have this huge kind of private sector, you have private lending, direct lending, things like that. Um. So again, it's good. I think one of the things I've learned over my career and have the opportunity to work in different markets is you start to see these, the way these economies operate is different.

• 10:34Speaker 04

  And therefore, the the impact on the markets and therefore investors is very, very different.

• 10:38Barry Ritholtz?

  So you stay at Nomura till 2011. How did you, what brought you from Nomura to BlackRock?

• 10:45Speaker 04

  So I had an opportunity, uh, you know, having had a lot of great experiences. Um, in 2011, uh, BlackRock was probably 18 months uh, into the integration of the iShares business or the the indexing business. And really focused on how do we expand this business, particularly how do we expand iShares? This, you know, this ETF business. And back in 2011, Europe, European ETFs was still a very nascent industry. Uh, you know, now it's like a two and a half trillion dollar industry. I European iShares is over a trillion dollars. Um, back then, it was very much still the very early days and you could see what is what was happening in the States.

• 11:28Speaker 04

  And so when I was speaking to BlackRock, uh, you could see this really interesting opportunity to to kind of take all of what I'd done before in terms of the market's kind of background and the breadth of experience. And then apply it to this thing that was still pretty new. And the the kind of mission was how do you educate people about what an ETF is? How do you help people start to think about how to use an ETF in a portfolio? And by the way, also, what are the ETFs that don't exist yet that could exist? And again, you always have to, it's quite hard. You always have to cast, you know, Barry, you always have to cast your mind back to what it was then versus your perspective of where you are today. It was still fairly, you know, plain vanilla in terms of what.

• 12:13Barry Ritholtz?

  Go back to the 1990s. I'm pretty sure the queues were around then and Spy might have been around. But this is before really iShares was still part of Barclays.

• 12:25Barry Ritholtz?

  But no one really thought that ETFs were a giant market waiting to take place, or I should say, very few people thought that. The ones who did ended up being at the head of a giant wave. What made you realize 15 years ago that, hey, this iShares thing is going to be big one day?

• 12:45Speaker 04

  Honestly, it was talking to the people in iShares. It was having kind of been introduced to them and having been approached to go and talk to them. It was, I learnt a lot from just sitting down and understanding this. I'd sat in banks, we traded ETFs. They were, to be honest, a very, very small component of what we did. It was only really when I spoke to the people at iShares and at BlackRock and understood the history of how iShares had grown and where it was then, and that sense of mission, that sense of kind of the purpose of giving more access to investing to people, you know, and creating more transparency, that they had lived as they'd grown the US business

• 13:29Speaker 04

  and they were growing the European business. And that kind of just captured you. And I think frankly, in the last 15 years, I've seen that and been fortunately been part of kind of driving that. But it was very clear that there was a big opportunity to do something different in an industry, an asset management industry that hadn't really been shaken up. And I think one thing that ETFs have done, and iShares has led this, is really shaken up the industry on behalf of end investors.

• 13:58Barry Ritholtz?

  In a couple of ways. At the very least, they're very low cost and it's raised questions about are, do most, not all, but do most active managers actually justify their fees relative to their performance? And then second, helping to move a lot of mom and pop investors, at least having a core as passive indexing as opposed to an allocation that's nothing but active managers. I mean, iShares has been the biggest driver of that. When you started at BlackRock, what was the first job?

• 14:33Speaker 04

  So I started in the iShares business and I actually set up an investment strategy team. Um. And what we did was go out and talk to clients about what was going on in markets. You know, we were part of BlackRock now. My shares was part of BlackRock and so there's a huge pedigree of investing. And how do you take that externally to to our clients and educate them about how ETFs could be used to implement these ideas, build portfolios. Um. I have to say in the early days, a lot of it was just educating people on what what is an ETF. Like, how does it actually work? How, what is a creation? What is a redemption? Um. And what do I need to understand and know?

• 15:16Speaker 04

  Secondly, how do I then think about putting them in a in a portfolio?

• 15:22Speaker 04

  And what's interesting, I remember a couple of years in, probably this, probably eighteen months into my time at BlackRock. Uh. We did a big study on how do you blend active and indexing? Uh. And we were very allergic to the word passive.

• 15:35Barry Ritholtz?

  Right.

• 15:36Speaker 04

  You know, we used to go out and say to people, which we still do, you know, every decision you make is active.

• 15:40Barry Ritholtz?

  That's right. If you. Market cap weighted. I mean, it could have been equal cap.

• 15:44Speaker 04

  Totally. You know, investing in US equities is a decision. It's an active decision. Uh. Then deciding to use an ETF is an active decision. So we would, you know, we would talk to clients about, and what does it mean to use an ETF? How does it fit with uh with active management, which again, go back to, I think it's pretty well accepted now. I think BlackRock has and the ETF industry has played a big, big role in this. But the concept of blending indexing and active managers and alpha in one portfolios. It's, that's kind of very accepted. People are going to get that. It's pretty standard. It wasn't back then, ten, fourteen years ago. And in some respects, it was slightly religious in terms of indexing or like you're either passive or you're active.

• 16:24Barry Ritholtz?

  I recall the phrase that was used in the two thousands, core and satellite.

• 16:30Speaker 04

  Core and satellite.

• 16:31Barry Ritholtz?

  And and you don't hear that all that much anymore. Now it's, um, you have a passive core and you're you're decorating it with active choices around it.

• 16:41Speaker 04

  Yeah, it's kind of how do you get the best out of uh out of everything? How do you say, you know what, actually, here's an area where I think that. We can deliver alpha, which is really what you're, when you say active, what you're really saying is like alpha, you know, something, something beyond the index. And I come back to a point you made earlier, Barry, about how the industry shifted. I think what ETFs did is they shone a light on what is, what is performance, right? And, you know, if you can get the index through an ETF, it's very efficient, then as an active manager, you've got to deliver something more. And many, many active managers at BlackRock do deliver more. But I think that that element of the more became a very important component of the

• 17:24Speaker 04

  industry and component of how for many investors, they could then blend these, these different tools together to create better portfolios. And I think that's the journey to me in the last kind of 12, 12, 14 years has been so exciting.

• 17:38Barry Ritholtz?

  You said when you began, you went out and spoke to a variety of BlackRock clients. Were these mom and pop investors? Were these institutional clients? Were they brokers and RIAs that are investing in ETFs on behalf of their clients? Who were the folks that you first reached out to?

• 17:55Speaker 04

  It was pretty broad, actually. It tended to be wealth managers and it tended to be institutional investors, which would be, you know, primarily pension funds. But what's interesting is how that has, how that's expanded over the last, again, the last kind of decade, you know, if I look at, if I look at the breadth of users now, is anything from central banks through to, you know, and retail investors in 401k plans or the equivalent in Europe. And I think that's been one of the secrets to the, to why ETFs have grown so quickly is that they actually are very much a product or a tool for anybody and everybody.

• 18:41Speaker 04

  So it started very much with, I would say, kind of wealth managers and pension funds, but it grew out and out and out. And frankly, in Europe, we learned a lot from the way the US industry had had grown. We talk all the time about how the European ETF industry is probably about 10 years behind the US. And so there's a bit of a roadmap there. And, you know, I think we're seeing that happen in real time.

• 19:03Barry Ritholtz?

  Coming up, we continue our conversation with Steve Cohen, BlackRock's Chief Product Officer and Head of Global Product Solutions, discussing the idea of private market assets in an ETF wrapper. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 19:29Speaker 00

  At Brookfield, we invest in the thing behind the thing behind the next big thing. Our focus across infrastructure, energy, real estate, private equity, and credit is helping to build the backbone of the global economy. We combine deep operational expertise with disciplined long-term investing, uncovering value, and partnering alongside clients to shape tomorrow's economy today. Learn how you can own what's next at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital.

• 20:04Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume, so writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk, and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs, and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its

• 20:45Speaker 01

  recruiting and hiring practices, but according to recruiters, advisors, and those who've interviewed Jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at ChatGPT.com.

• 21:31Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Steve Cohen. He's BlackRock's Chief Product Officer and Head of Global Product Solutions. He also sits on BlackRock's Global Executive Committee. When I, when I look over at Europe and, and especially the UK, it seems like index adoption has been very slow. People haven't quite bought into the concept of, hey, before you go after Alpha, at least start with Beta. That, that hasn't really found a lot of traction there yet. Or are you seeing that start to change in Europe?

• 22:12Speaker 04

  We've seen that change. It's definitely behind the US. But it is definitely happening. And I think the same forces and drivers that we've seen in the US are very much applicable to Europe and ultimately will be to Asia as well, which I think will go on that kind of same journey. So I think it's just more of a matter of time or timing as to where we are now versus, versus, versus the US. And there are different country dynamics that everywhere in the world play into why different parts of the industry, you know, move quicker or slower. But I think the direction is definitely the same.

• 22:48Barry Ritholtz?

  Different regulatory regimes, different tax treatment. Technology. Is the technology really all that different? You would think that adoption, maybe some countries on a lag, but not 10 years.

• 23:01Speaker 04

  Yeah, I think it's just, so I think the last 10 years in the US. If we are today in somewhere like Europe in the ETF industry where the US was 10 years ago, I think the next 10 years in Europe will be faster than the last 10 years in the US.

• 23:16Barry Ritholtz?

  Makes sense.

• 23:16Speaker 04

  Yeah, it's because I think that partly because there is a roadmap that the US has created. It's different because of regulation, all the things that you mentioned. But I think that everything is happening so much faster now. And you're seeing that in ETFs, you're seeing that in other parts of the industry as well.

• 23:35Barry Ritholtz?

  So let's talk a little bit about what you've been doing at BlackRock for almost the past 15 years. You begin in 2011, the growth must have been explosive. What was that like watching this rocket ship take off?

• 23:51Speaker 04

  It's been fantastic. It's been an amazing experience. You know, the firm has grown so quickly in the last 10, 15 years. And not just grown in terms of assets, which is obviously one way to measure growth, but also just the breadth of what BlackRock does for our clients and the breadth of the number of clients that we talk to. What's, I think, so for someone like me, what's been so great is the ability to be involved in lots of different parts of the firm. And, you know, whether that was, again, growing the European iShares business, whether that was running fixed income iShares, which was a fantastic opportunity and time

• 24:34Speaker 04

  in, or moment in time, I should say, in terms of really not just growing fixed income ETFs, but changing the bond market and the impact we've had there to now, where again, the breadth of the company with private markets and things like that. So it has been a great journey to be on personally, but also to see it from the inside.

• 24:54Barry Ritholtz?

  Can you explain what a chief product officer does at a large asset manager? It's sort of an unusual title in the world of investing.

• 25:03Speaker 04

  Yeah, so there are a number of things that I look at and my team look at. One is how do we continue to make sure that our product range is

• 25:15Speaker 04

  At the forefront of innovation in terms of where the industry is going, how do we make sure that what our clients are looking for, we're delivering in whatever format they're looking at. And I think one of the biggest shifts that we've seen in the industry, we talked before about kind of how you blend active and indexing kind of together, how that's become more commonplace and kind of more, more accepted. I think the other thing that is happening is that the way all of our clients are, you know, consuming investments or accessing markets is also shifting. So this concept that, you know, pretty much for the whole time that we were growing the iShares business, when we talked about growing ETFs, we were really talking about, we were also talking about growing indexing. That was very synonymous, right?

• 25:59Speaker 04

  When you talk about growing ETFs now, you're not just talking about growing indexing, you're talking about lots of different things, active ETFs, digital assets. And so I think this concept of how we ensure that as we look across all of the investment capabilities we have as a firm that we want to bring to our clients, that we're delivering them in a way that works for our clients. That requires us to think a little bit differently to the way we've had to in the past and the way, I think, the way the industry has. And so that's why we've brought all this together into my role and my, my group. And that includes driving the iShares business and the growth of ETFs, making ETFs more central to, to what we do in the firm, but also looking across all of our liquid active business,

• 26:42Speaker 04

  our private markets businesses with our investment teams and those business leads to, to ensure that our product range, you know, works for our clients. And then helping them, helping our clients actually get the best out of what we have.

• 26:58Speaker 04

  I started an investment strategy. We spent a lot of time talking to clients about what's going on in markets, how to build better portfolios, how to get the best out of the tools that they have that we need to build. And then what's next? What's, what's the next trend or theme that's, that's on people's minds?

• 27:14Barry Ritholtz?

  So, so I'm hearing two approaches. One is a top down, hey, what's going on in the world? What's out there that's interesting that perhaps we're not addressing? And a bottoms up, what are clients asking for? What do they think they want? What do we think they need? What's the key driver of new offerings? We could talk a little bit about iBit, which is a unicorn. The Bitcoin ETF approaching $100 billion in assets. I think it could be the fastest ETF to $100 billion. I don't even know what's close. Maybe GLD, but that was a long time ago.

• 27:59Barry Ritholtz?

  How do you think about coming up with new products? How much of it is driven by client demand? And how much of it is driven by just looking from the top down and saying, here's a hole that we really should fill?

• 28:11Speaker 04

  It's a real mixture. It is, you know, we'll have a lot of ideas. We'll have a lot of ideas that are driven by investment views we have as a firm, by our investment teams, by working with other people in the industry. And we will combine that with what we're hearing from clients. And we're clients, you know, we're engaging with clients all the time around, you know, their portfolios and seeing where are there kind of gaps in a portfolio? Or where are there? Sometimes it's, sometimes there are investment opportunities, but there isn't a way to get to it. Again, come back to what ETFs have done.

• 28:54Speaker 04

  Like, how do you give that access to something that was new? If you think about iBit, you know, Bitcoin obviously had grown already to a pretty sizable kind of industry.

• 29:04Barry Ritholtz?

  I think when iBit launched, Bitcoin was a little over $1 trillion, something like that.

• 29:09Speaker 04

  Roughly that, yeah, yeah. And so there was a sizable kind of industry already out there. But for many clients or many potential investors, the ease, the comfort, the knowledge, understanding of an ETF wrapper was a great way of allowing them to buy into crypto, Bitcoin in this case, and make it potentially a bigger part of the portfolio. What's interesting is the number of, you know, in that explosive growth that iBit has had, the number of...

• 29:45Speaker 04

  Buyers, investors of iBit who are already holders of Bitcoin in other forms was quite notable. And so I think it kind of tests to this idea of actually, how do you access different markets, sometimes in quite traditional ways? And how do you bridge between this kind of traditional world and this decentralized world? And you're seeing the same thing with Ether as well, with our Ether Fund.

• 30:08Barry Ritholtz?

  So, you know, the classic Bitcoin issue is, wait, I have to make sure that this drive doesn't get damaged, I have to keep it in a safe. What's my password? Hey, this is a lot of money and it's a bigger pain in the neck to keep track of than the rest of my assets. I can own this in an ETF. Why do I ever want to own Bitcoin directly? Seems to be what a lot of people are saying.

• 30:33Speaker 04

  And that's what we heard over and over again, both again from people who had held or hold Bitcoin in digital wallets and felt that this was a kind of an easier, better way to hold it.

• 30:44Barry Ritholtz?

  Especially when you read the numbers, 25% of all coins ever mined, it might even be 30%, have been lost, either the drives were damaged or the passwords were lost.

• 30:56Speaker 04

  Which is, there's some great stories out there.

• 30:58Barry Ritholtz?

  Crazy, a guy who went out and bought a landfill because he's

• 31:00Speaker 04

  Because he was trying to find the

• 31:01Barry Ritholtz?

  $200 million worth of Bitcoin on a drive that was accidentally thrown away.

• 31:07Speaker 04

  So, you know, putting in an iShare probably would have been a, at least an easier way of owning a landfill.

• 31:15Barry Ritholtz?

  It's kind of amazing, but it raises a question that I've been thinking about for a while. Alternatives and privates, whether it's private equity, private debt, private infrastructure and real assets are probably the fastest growing segment of the market. Are we ever going to see something like that in an ETF wrapper, an illiquid alt in an ETF?

• 31:44Speaker 04

  Possibly. Look, it's definitely something that a lot of people are looking at, including ourselves. But there are a lot of ways to, I think the biggest story, I think people jump towards the kind of private markets and ETFs. And the real story is, how do you open up access appropriately for more people to access private markets as part of the portfolio? So if we think about a world which we believe in, which you're kind of moving from, call it sixty forty, you know, the traditional portfolio to more of a fifty thirty twenty, where twenty is private markets. And that's applicable to somebody who owns a defined benefit scheme. In fact, they've got that already, probably more, through the way the scheme's managed. But actually, if you then apply that to, say, to other pension types, like a defined contribution scheme, or a wealth investor, that kind of

• 32:29Speaker 04

  journey towards incorporating more private markets into a portfolio, for all of the diversification reasons that, you know, we've talked about a lot, that, how that happens is, is the real work. And that may end up requiring an ETF, but I think there are lots of other ways that, you know, that can open up the door to private markets being a bigger part, either a completely new part, or a bigger part of a portfolio for, you know, an individual retiree or an individual investor. Again, it comes back to what we were saying earlier on about, rather than thinking about different product types, an ETF or a mutual

• 33:10Speaker 04

  fund being associated with one type of strategy, it's actually saying, what are the strategies that we believe would help a client, an investor, have a better portfolio for whatever their goals are? And then how do you best put that together?

• 33:25Barry Ritholtz?

  So it's less, less about the product, more about the solution to the...

• 33:29Speaker 04

  To me, it's about the portfolio. Yeah. What's the solution exactly? What are you trying to achieve? And, you know, and if it's a long-term retirement or retirement income, whatever it is. And then what does the portfolio need to look like, or should look like, and how does it evolve over time? And then how do you do it? Right? And what are the kind of mixture of tools that are most, most appropriate to get you there? That's the shift in thinking.

• 33:51Barry Ritholtz?

  So let's dive into that a little bit. You know, the advantage of stocks, bonds, convertibles. They all come with a CUSIP number. It's pretty standard in terms of the custodian ship, where it's held, what sort of public information is available, the due diligence you can do about it, how to get liquid when you want to get liquid, all those stocks, bonds, and put convertibles as sort of a hybrid. Everybody knows how to operate around that. It seems like when we look at privates, they're all one-offs. The custodian ships are all a single thing. Doing the due diligence is time consuming and expensive. The hope

• 34:34Barry Ritholtz?

  is they're not correlated, and you're giving up liquidity in exchange for the illiquidity premium. Can that ever be standardized enough that, as a wealth manager, I could say, hey, Stephen, I want to move 10%, 20% of these clients' assets to a diversified set of equity, debt, and real assets, and I want some liquidity. Like, is this a pipe dream? Oh, and I don't want any K1s because they're a disaster to deal with. Like, if that were something that was turnkey and available, I would think that every wealth manager in America would

• 35:16Barry Ritholtz?

  rush in that direction. How long might it be before privates look something like public markets, or at least the pain points are reduced to something tolerable?

• 35:31Speaker 04

  I think we're on a journey. And I think that is about, first of all, developing investment strategies and therefore, and being able to put them in products that work for a wealth manager. Secondly, there's a big, you know, the operational lift, right? The technology development that is happening, and we're working with a number of firms around how can we make sure that, for example, model portfolios can incorporate private markets in a more efficient, kind of easier to use way.

• 36:02Speaker 04

  It's going to be different to public markets. It should be different to public markets because I think the role of a infrastructure, for example, in a in a in a portfolio is different to the role of owning stocks or owning bonds. And I think that part of, you know, part of the way we've always thought about the role of stocks and bonds has been different as well. You know, bonds is a ballast to a portfolio, stocks as a growth driver, for example.

• 36:24Barry Ritholtz?

  I'm old enough to remember when bonds actually generated attractive yields.

• 36:30Speaker 04

  Maybe that'll come back, you know, we might need a bit of inflation, but uh, yeah, one day, one day, Barry. Will we be back on the podcast to

• 36:38Barry Ritholtz?

  Absolutely.

• 36:38Speaker 04

  to cover that off. But I think that different role is very important, but there's a lot of development to that is happening.

• 36:45Speaker 04

  To be able to make that more efficient than it has been historically. And I think that's, I think we will see a lot of change in the next couple of years.

• 36:54Barry Ritholtz?

  You you mentioned technology. Let's dive a little deeper into that. BlackRock acquired PreQuinn and acquired Efront. And I'm read about some integration into your Aladdin platform. How significant are those tools when it comes to offering private market investments to the public?

• 37:16Speaker 04

  Incredibly important. I think that, you know, for anybody who is, for a wealth manager who is running a portfolio for a for a client.

• 37:26Speaker 04

  The, it's not just, as you know, it's not just about buying the different products or doing the asset allocation. It's also about the risk management of what does that portfolio look like? And that's really what Aladdin is about. And as more and more investors, whether that is a retail investor or a wealth investor, or whether that's a big pension fund, incorporate private markets into portfolios and blend private and public. And I think, again, if you go back over that 10, 15 year journey, we started with Indexing on one side of the floor and, you know, active on the other side. And we gradually brought those together and that became commonplace to blend. And I think we're now in that world of starting to blend public markets and private markets,

• 38:09Speaker 04

  which historically were completely distinct and we're starting to kind of blend, blend those because, because the industries are crossing over. More companies are staying private for longer, et cetera, et cetera. So as we bring those together, the need to be able to, you know, risk manage and understand those portfolios in different scenarios is incredibly important. That's what Aladdin is about. With pre queen, what is so exciting is that I think over time, the private markets will become more transparent. There will be more data available and around and very similar to what, what Aladdin and BlackRock did with public markets will happen in the private markets as well. And that I think will help more and more investors access private markets in the way

• 38:53Speaker 04

  and understand what it is that, that they have, partly of which is again, understanding the different liquidity and, and being comfortable that they're different for a reason. And you're not trying to create a one size fits, fits all. You're trying to create a portfolio that delivers the right, the right outcomes. Aladdin, I think is going to be critical for that.

• 39:11Barry Ritholtz?

  So let's talk a little bit about product development. Just in the ETF space this year, over a thousand new ETFs have come out, or at least we're on pace to do that by the end of this year. This sort of hyper development of ETFs, everything we've talked about seems to be very thoughtful and very measured with a really specific approach. Kind of feels like the rest of the industry is just throwing stuff up against the wall to see what sticks. How, how do you look at this?

• 39:44Speaker 04

  We can only focus on what we do, so.

• 39:47Barry Ritholtz?

  But you have to be aware of.

• 39:49Speaker 04

  But you are aware of what's going on, a hundred percent.

• 39:51Barry Ritholtz?

  Three X inverse Bitcoin, like what, why, why do I want that? Or why does anyone want that?

• 39:57Speaker 04

  Yeah, you'll have to ask them.

• 39:59Barry Ritholtz?

  I mean, I guess it's, um, they want to give people an opportunity to make any type of trade and every type of trade. I'm assuming that's not your approach.

• 40:09Speaker 04

  I think there is a lot out there of throwing things out that sticks. Our approach is very much where do we believe that?

• 40:18Speaker 04

  We can develop products, strategies, exposures that are going to help create better portfolios. And if you look at the evolution of the ETF industry and what's happened is it started, go back 30, 30 plus years ago, it started very much with how do you give access to kind of broad indices? And then it was how do you in equities? Then how do you give access to more granular exposure like sectors or different countries? Then it was how do you move into different asset classes like fixed income, for example? And then more recently, it's been something like digital assets with, with IBIT. And that's really been the journey of iShares, right? And I think that's been therefore the journey of the industry as we've, as we've led it.

• 41:02Speaker 04

  That remains very much our view, how we think about continuing to expand the iShares platform. And that includes now using the ETF technology we've built to take things like active funds and wrap them into an ETF, because the ETF is a more efficient way for many investors to actually own those different strategies. But again, it starts with the strategy. And I think that, you know, for us, it's about how do you, what is it that you're developing in terms of an exposure or a strategy? Why? How does it fit with the world that we see today in terms of where we think the world is going from a market standpoint and a macro standpoint? How does it fit in terms of kind of a portfolio construction standpoint? You're going to have waves of innovation right now.

• 41:47Speaker 04

  We're having a huge wave of, of ETF launches and in particular, last two, three years, you know, the ETF is, it's, it's gone from being kind of very much on the side of the industry to being very central. We're excited about that. You know, that's what we were, that's what we've built at BlackRock and iShares. But it's also meant that ETFs are very much kind of being used more broadly. And, you know, that's going to be, I think, part of how the industry evolves and then it kind of matures.

• 42:12Barry Ritholtz?

  Especially on the active side where you get all the benefits of.

• 42:18Barry Ritholtz?

  Mutual ownership without the capital gains penalty that you get in mutual funds. So it makes sense that a lot of active ETFs would develop where they might have been active mutual funds.

• 42:32Speaker 04

  Yeah.

• 42:32Barry Ritholtz?

  What else do you see as changing or in the midst of transforming? Is it by asset class? Is it by, you mentioned geography or sector? What is really in flux these days?

• 42:46Speaker 04

  So I think that, you know, when you look at, I'll give you a couple of good examples. So digital assets, I think is kind of fairly early days. IBIT is incredibly fast growing. It was the fastest to 20, to 30, to 40, to 50, and now hopefully to 100 billion as an ETF. And we, you know, we have an Ethereum ETF. I think there will be more product development in something like that. And again, for us, that's about bridging this kind of DeFi world with the traditional kind of finance world. That's one area. The second area is, take something like fixed income. You know, we've been building out fixed income ETF industry for 20 years. The industry is now two and a half ish trillion dollars.

• 43:31Speaker 04

  We think it's going to be six trillion by kind of 2030. The growth is huge. Less than 2% of bonds in the world are in an ETF.

• 43:40Barry Ritholtz?

  Wow.

• 43:41Speaker 04

  So it feels, and having been, I can tell you, having been on the journey and been out there, you know, kind of pounding the streets on the value of fixed income ETFs over the years, it feels like this has become really, really big, and it has. And yet, when you think it in the context of the 140 trillion dollars of fixed income out there, you know, ETFs are still a pretty tiny part of the market in terms of how people own bonds.

• 44:06Barry Ritholtz?

  It's relatively large compared to what it was, but in absolute terms.

• 44:10Speaker 04

  But in absolute terms, I still, you know, we're still, to use the sports terminology of, given it's the World Series, you know, the first inning, maybe the second inning. And then even if you look at, what's really fascinating is you, if you look at, and we talked about active ETFs, and again, that's Still very early stages.

• 44:28Barry Ritholtz?

  But on fixed income, they actually seem to do very, like the broad, the Bloomberg ag includes everything, good, bad and different. It seems like it's relatively easy to capture a little bit of fixed income alpha with a handful of screens. You're taking out the lowest credit quality or you're taking out the riskiest credit that you're not getting compensated for. Why does fixed income active seem like it's a better bet or a higher probability bet than active equity?

• 45:03Speaker 04

  I think historically fixed income, and I go back to when I started, was very much a world of limited transparency and kind of understanding. Frankly, I think the understanding for most investors of fixed income relative to, I don't mean, I don't mean investors who are doing fixed income all, every day, but for most retail investors in particular, I think people have a much more natural affinity to stocks than they do for bonds in terms of kind of the understanding. Bonds feel complicated at times. It feels like it's a world we don't quite understand, whereas equities, you kind of, you know, you know, Google or whatever it is. And so I think there's always been a sense of kind of outsourcing those decisions kind of more so.

• 45:47Speaker 04

  The other thing is that the, the index, the indexing market in fixed income has been slower to evolve. So you mentioned the ag and people tend to, when they think about fixed income indexing, they automatically go to the ag.

• 46:01Barry Ritholtz?

  Sure.

• 46:01Speaker 04

  The ag is one index and it's a very specific index in terms of what it is. It doesn't have a huge amount of credit in it, for example. But there are other indices with Bloomberg for which we have products like Universal that actually are much more representative of fixed income. So part of it also is, is, you know, what are you benchmarking yourself against? And I think we went through that experience with equities and we are going to go through that or we're going through that experience with, with fixed income. And the other thing we're seeing with fixed income is that we're developing and building the more granular. Strategies in fixed income. So we're carving up the market in fixed income the way we did in equities through ETFs. So if you want to own zero to three year government

• 46:44Speaker 04

  bonds, own escrow, if you want to own long term treasuries, own TLT, if you want to own bits of the different types of credit crossover, you can now do that through ETFs. So, you know, it is an amazing tool. And what's fascinating about fixed income ETFs is that some of the fastest growing users are asset managers. So fixed income managers using ETFs as a way to be better at their job. And I think, again, that's that blending of indexing. But even in the equity world, you know, equity indices are evolving. We were saying, if you look back to 2000, you know, the top seven, you know, the whole kind of S and P was worth is the equivalent to what the top seven stocks were worth, you know, six months ago. And so you mentioned earlier in the program, equal weight S and

• 47:28Speaker 04

  P. We're seeing a lot of demand right now for things like equal weight or capped indices. We launched a top 20 fund, top T. We did the same thing with Nasdaq, you know, even the S and P 500, owning the top 20 stocks versus owning the 500 stocks is a very, very, very different game. And so even something like large cap US equities, which you would have thought there was nothing else to innovate in, even that has been the area where we've probably done more in the last six months than than many other areas because the dynamics of of the US equity market have shifted so much in the last couple of years and investors are looking for different things.

• 48:10Barry Ritholtz?

  Coming up, we continue our conversation with Steve Cohen, BlackRock's Chief Product Officer and Head of Global Product Solutions, discussing what goes into product development in finance. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 48:38Speaker 01

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• 50:01Speaker 05

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• 51:04Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Steve Cohen. He's BlackRock's Chief Product Officer and Head of Global Product Solutions. He also sits on BlackRock's Global Executive Committee. Since we've been talking about technology and you mentioned the top seven, I am legally obligated to ask a question about artificial intelligence and AI. What is AI doing to your business of developing new products? How are we thinking about either AI as an asset class or actually deploying AI to help build new products?

• 51:46Speaker 04

  I think we're seeing AI in probably three areas. The first one is obviously AI as an investment theme, which is very well publicized, et cetera. And we're seeing that through things like data centers, obviously stocks, credit, et cetera. The second one is AI in terms of investment strategy. For example, BlackRock, we're very fortunate to have a systematic group, investment group, that has a 40-year track record and history of delivering really great performance. And they would argue they were doing AI well before it was called AI, when it was called machine learning or whatever it was called before that.

• 52:30Barry Ritholtz?

  It's been around. Most people think it's a new thing. You know, what was it?

• 52:33Speaker 04

  It's been around a while.

• 52:34Barry Ritholtz?

  Watson played Jeopardy, and I forgot the one. Or was it Deep Blue played chess?

• 52:39Speaker 04

  And Go.

• 52:40Barry Ritholtz?

  Those were 30 years ago.

• 52:41Speaker 04

  Yeah. So it's gone through its iterations. And so, and they've got some fantastic examples of the way they've used machine learning, stroke now, AI, to really understand. Every single day, they will pass thousands of reports, earnings calls, et cetera, transcripts for sentiment. And the result, the investment results of those, of those signals that they create are really quite fascinating and very lucrative in terms of investment alpha. And so, we're really seeing a huge demand right now for systematic investing.

• 53:26Speaker 04

  And this is something that historically people were nervous about because it was a black box and they didn't understand it. And now people are using things like chat GPT etc, which is a black box, but they're seeing the value they're getting. And so what's interesting is there's a psychological shift and a greater acceptance of saying, actually, systematic investing using AI, that's really interesting and exciting. And so, so I think the second thing is we're seeing it through using AI to be better investors. And then the third one is product development. And so how can we use the data that we are able to collect and effectively deploy big data and the AI that we've developed in-house that sits on

• 54:08Speaker 04

  that to identify what are some of those themes that are coming up? What are some of the things that clients are talking about or being picked up in the news or whatever it is? And be more kind of systematic, I would say, in being able to see what those those are. And also, we are able to use it to test and stress test strategies that are new in different market environments. So it's a really, again, it's a really exciting time for for product development because it's giving us new tools that we didn't have before.

• 54:37Barry Ritholtz?

  So, so BlackRock tends to come out with these very well thought out, very rational products. And the question that that I've been thinking about when I first started doing my homework for this is, what are some of the crazy ideas that you looked at and said, yeah, no, that's just a bridge too far? Like, what hasn't come out because it was just too, either not solving a problem or or just too wild and reckless?

• 55:05Speaker 04

  Oh, there's a whole treasure trove of, yeah, we could do another podcast, I'm sure. But, you know, typically, what's interesting about it is, there are two reasons why you might end up like that. One is, it's, it's a crazy idea, but there's just really no demand for it. And

• 55:23Barry Ritholtz?

  Well, that's an easy business.

• 55:25Speaker 04

  Which is an easy business decision. The second time often is you're just too early. And you know.

• 55:30Barry Ritholtz?

  I mean, there could have been an ETF for ETH and Bitcoin 10 years ago if the SEC would have allowed it.

• 55:38Speaker 04

  If they were allowed, yeah, yeah. So sometimes it's the regulatory, you know, it could be, it could be that the industry, the industry in the broad sense of the word regulators or whatever, aren't quite ready. You're not, you're not able to actually build the thing that you've got an idea for. It could be that the market is not quite ready. Fixed income ETFs is a good example. We looked at things 10 years ago and decided that actually the, the fixed income market wasn't ready. We weren't quite ready to be able to do that in an ETF.

• 56:07Speaker 04

  A decade on, and by the way, we launched a bunch of those as well.

• 56:10Barry Ritholtz?

  Right.

• 56:11Speaker 04

  Knowing that it would take a long time, we didn't expect to launch it and it be a, it would take off straight away. Knowing that it would take time for the, for the kind of market to get there, but we were comfortable we could manage that fund. And so often you end up in a situation where you're kind of waiting for maybe the liquidity of the market to be, to be broad enough that an ETF works. So you know it's going to work in the future. It's just a little bit early now. So there are a couple of different reasons why that may be the case.

• 56:37Barry Ritholtz?

  So, so that raises a question, what's next on the product roadmap? So we've, we've talked about digital and crypto. We've talked about fixed income. And we've also talked about privates. What are you seeing as the next 10 years?

• 56:52Speaker 04

  It's really across the whole waterfront of what you just said. I mean, obviously with, with HPS and GIP, with our new partners, there's a lot of opportunity, we believe, to develop in the private credit and the infrastructure space, and also the crossover of, of those kind of areas.

• 57:10Speaker 04

  I think this crossover of public and private markets and what does that look like in, in portfolios? Whether that's within a fund or in a, in a portfolio, I think is going to be a big and very interesting theme. And, and the third area, I think, is we, you know, we constantly, obviously we're, we're always working with our, our active portfolio managers to, to develop better strategies and new ideas they have. But we are always, always looking back as well, because I think. You can fall into the trap of thinking you've done it. And I mentioned the example of US large cap equities and indexing. And why would you ever look at that as an innovation area? Well, because these markets keep changing. And I think the world we're in right now, and a good example of the last six months,

• 57:54Speaker 04

  the number of clients around the world, particularly outside the US, who are questioning their US dollar exposure is pretty significant. And what does that mean for time? Look at the move in gold. Suddenly that is the thing de jour. And so you have to, I think you have to be willing to question the environment, the macro, the market environment and say, actually, what does that mean for things that we kind of thought we'd done? And I think that creates a lot of opportunity for our clients to re-innovate things.

• 58:26Barry Ritholtz?

  So before I get to my favorite questions, I have one last broad question for you. What do you think investors and clients are not thinking about, talking about, overlooking, but perhaps should be aware of? It could be an asset, a geography, a data point, a policy. What is below the radar that really should be front and center?

• 58:52Speaker 04

  I think there are things that are kind of half on and half off the radar, like the impact of what's happening in demographics and immigration and changes like that. And what does that mean for inflation? For the different types of income streams that people are going to need? It's something that's kind of talked about, but always slightly in the background. I think that's going to come more and more to the fore. It ties into the fiscal policy, which is very much kind of talked about. I think that's one thing. I think the second thing is we're still, we're still living through a lot of the post-COVID impact. And COVID is kind of done and it feels like it was many, many years ago. But there are a lot of industries and luxury is a good example, which is still being impacted by what happened then,

• 59:37Speaker 04

  both in terms of the lockdown and then the immediate kind of boom that happened afterwards. There are still a lot of things that are still trying to work their way through the system, as it were. And that tends to be something I think people have kind of forgotten, but from an investing standpoint, is actually pretty important.

• 59:54Barry Ritholtz?

  I completely agree with you. It's funny, we were just having a conversation the other day about housing.

• 59:59Speaker 04

  Mm-hmm.

• 1:00:00Barry Ritholtz?

  And someone asked why we have such a shortfall of single-family homes in the United States.

• 1:00:06Speaker 04

  Hmm.

• 1:00:06Barry Ritholtz?

  Not even talking about affordability of homes.

• 1:00:08Speaker 04

  Yeah.

• 1:00:09Barry Ritholtz?

  Just sheer number. And the answer was, that's a hangover from the financial crisis fifteen, sixteen years ago. Following that boom and bust, a lot of builders shifted over, pivoted over to multifamily houses and apartment buildings.

• 1:00:25Speaker 04

  Right.

• 1:00:25Barry Ritholtz?

  Not single families. So it's fifteen years ago and we're still, still suffering the effects of it.

• 1:00:31Speaker 04

  Yeah.

• 1:00:31Barry Ritholtz?

  It's amazing how, how long a tail some of these things happen.

• 1:00:34Speaker 04

  It takes a long time.

• 1:00:35Barry Ritholtz?

  All right. I, I don't have you all day. I know you have a flight to catch tomorrow, so I have to get you out here at a decent hour. Let, let's run through some of our favorite questions, starting with, tell us about your mentors. Who helped shape your career?

• 1:00:49Speaker 04

  Um, so I've, I think I've been very lucky. I've, in, in each stage of my career, I've always had, I think, somebody who has been, whether a manager or a mentor, but, but really helped me think through and frankly just supported me in my career. Um, I think two particularly jump out. One is, um, uh, the person who actually took me to, to ING bearings and, um, who I first worked with there, who sadly is no longer with us, but was just an incredible friend and, yeah, in quite a pivotal time in my career, uh, really helped me think through what do I want to do next and, uh, and kind of set me on that next kind of journey.

• 1:01:33Speaker 04

  Uh, and then the other one, I have to say, uh, a shout out to someone who was very early in my career, who I worked with, um, who I kind of looked up to in terms of their success, who became my wife. So, uh, that became a kind of a good man. She continues to mentor me in slightly, you know, different, more direct ways.

• 1:01:49Barry Ritholtz?

  That, that's a, that's a nice, uh, couple of mentors. Let, let's talk about books. What are some of your favorites? What are you reading recently?

• 1:01:56Speaker 04

  Uh, big fan of people like Ian McEwan.

• 1:02:02Barry Ritholtz?

  I know the name.

• 1:02:03Speaker 04

  Martin Amis. They're just great, uh, great authors.

• 1:02:06Barry Ritholtz?

  Give us some titles. Martin Amis and Ian McEwan?

• 1:02:10Speaker 04

  Yeah, there's a great book, Ian McEwan, called Sweet Tooth, which is all about, it's got a great twist, which I won't go into.

• 1:02:16Barry Ritholtz?

  No spoilers.

• 1:02:17Speaker 04

  But it's about 1950s, 1960s kind of spies in, in, in the UK. And there's a book by Martin Amis, which is, um, uh, the first, I can't remember the full title. It's time something, but it's written backwards.

• 1:02:32Barry Ritholtz?

  I kind of remember my wife reading something like that from Martin Amis, and I don't remember the title.

• 1:02:37Speaker 04

  It's fascinating. He writes it backwards. So everything happens backwards. So the day starts with the character going to bed.

• 1:02:46Barry Ritholtz?

  Mm hmm.

• 1:02:46Speaker 04

  And it's the, it's written in the, as the consciousness of the, the man. And, um, so it's brilliant. It's just, uh,

• 1:02:56Barry Ritholtz?

  I'll dig up the title.

• 1:02:57Speaker 04

  Very cleverly written.

• 1:02:58Barry Ritholtz?

  Huh.

• 1:02:59Speaker 04

  And a good story, actually.

• 1:03:00Barry Ritholtz?

  Not quite, um, uh, inception, um.

• 1:03:04Speaker 04

  But it's in that guise of, of trying to think about how time works and, um, yeah, I won't spoil it for you.

• 1:03:13Barry Ritholtz?

  All right, all right.

• 1:03:13Speaker 04

  But it's the kind of book where even the most simple paragraph, you kind of reread it because you're trying to get your head around the fact that it's being written backwards.

• 1:03:20Barry Ritholtz?

  Huh. Let, speaking of inception, um, what, what's keeping you entertained these days? What are you streaming, either watching or listening to?

• 1:03:29Speaker 04

  So we've been on a bit of a marathon recently. We've done Yellowstone, 1883, 1923, and Landman.

• 1:03:35Barry Ritholtz?

  That is all on my, in my queue, and I haven't started. I saw the first Yellowstone on a plane, and I'm like, oh, I gotta drag my wife into this one.

• 1:03:43Speaker 04

  It's good. You need to commit.

• 1:03:45Barry Ritholtz?

  Mm hmm.

• 1:03:47Speaker 04

  But it's well worth it. Um, very, very, uh, yeah, very gripping. All very different as well.

• 1:03:51Barry Ritholtz?

  So you're, you're a Brit giving me an American Western recommendation. Let, let this New Yorker give you an MI5 London recommendation. Have you seen the film Black Bag?

• 1:04:07Speaker 04

  I have.

• 1:04:07Barry Ritholtz?

  You have?

• 1:04:08Speaker 04

  I saw it on a plane. I spent a lot of time on planes.

• 1:04:10Barry Ritholtz?

  Okay.

• 1:04:11Speaker 04

  I actually saw it on a plane. It was very good.

• 1:04:13Barry Ritholtz?

  All upside surprise, wholly unexpected.

• 1:04:15Speaker 04

  Very good. I'd never heard of it.

• 1:04:17Barry Ritholtz?

  And then.

• 1:04:17Speaker 04

  And I assume you watch Slow Horses.

• 1:04:19Barry Ritholtz?

  That's where I was about to go is, so I had my wife watching through the second season and she kind of tapped out. I'm trying to bring her in for the most recent season.

• 1:04:28Speaker 04

  You've got to get in. We're very much the, we won't watch it until it's all out.

• 1:04:33Barry Ritholtz?

  We've made that mistake not doing that with certain things. It's incredibly, like, what is this, watching one show a week? What, are we living in the 90s?

• 1:04:45Speaker 04

  I can't.

• 1:04:45Barry Ritholtz?

  Like I'm a caveman.

• 1:04:46Speaker 04

  It's like when an advert appears.

• 1:04:48Barry Ritholtz?

  Right, it really is. Final two questions. What sort of advice would you give to a recent college grad interested in a career in, fill in the blanks, investing, ETFs, financial product developing, fixed income? What's your advice for that person?

• 1:05:06Speaker 04

  Go for it. I, I think that, I really think this industry is changing so quickly. I think it's changing faster than I've, in my kind of career, in terms of what is happening, which I think creates a lot of opportunity for somebody starting out. My advice I always give to all of our analysts who are starting out, in fact, I give it to pretty much all of our team, is you've got to keep learning. This is constantly changing and, and you've got to just, you've always got to be on that kind of learning curve. And, and that's how you get better. It's also where the opportunities come from a career standpoint.

• 1:05:43Barry Ritholtz?

  Makes a lot of sense. Our final question, what do you know about the world of investing, product development, ETFs today, would have been helpful back in the 1990s when you were first getting started?

• 1:05:56Speaker 04

  Well, if I'd known that Bitcoin was going to be at 120,000, I probably would have

• 1:06:00Barry Ritholtz?

  Well, that's a cheat. You could say that, you know, back up the truck.

• 1:06:03Speaker 04

  About everything.

• 1:06:03Barry Ritholtz?

  Right. Back up the truck on Amazon in 2002, or Apple in 98, or Microsoft from the IPO.

• 1:06:10Speaker 04

  I think one thing it does lend itself to, and it sounds a bit strange for somebody who started out, you know, on a bond trading floor doing bond maths, is you realize over time, only when you look back, the power of compounding. I know everyone writes about compounding, and you learn about it, obviously. But it's only when you have been around for a while, and you look back at what compounding actually means, as both an investor, you know, managing your own kind of future retirement and wealth, and then, or as somebody who works with clients about managing portfolios, what compounding actually does imply. And I was thinking about that the other day, actually.

• 1:06:51Barry Ritholtz?

  It's very counterintuitive. There's nothing in the natural world, in your ordinary experience as a mammal, that would give you any insight into just exactly how exponential it is.

• 1:07:06Speaker 04

  Yes.

• 1:07:07Barry Ritholtz?

  It's really fascinating. Well, thank you, Stephen, for being so generous with your time. We have been speaking with Stephen Cohen. He is BlackRock's Chief Product Officer and Head of Global Solutions. If you enjoy this conversation, check out any of the 586 we've done over the prior dozen years. You can find those at iTunes, Spotify, Bloomberg, YouTube, wherever you find your favorite podcast. Be sure and check out my new book, How Not to Invest: The Ideas, Numbers, and Behavior That Destroys Wealth and How to Avoid Them, at your favorite bookstore now. I would be remiss if I did not thank the crack team that helps put these conversations together each week. Alexis Noriega is my

• 1:07:51Barry Ritholtz?

  video producer. Anna Luke is my podcast producer. Sage Bowman is the Head of Podcasts at Bloomberg. Sean Russo is my researcher. I'm Barry Ritholtz. This has been Masters in Business on Bloomberg Radio.

• 1:08:10Speaker 05

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