finance
Bloomberg Radio host Barry Ritholtz speaks to the people and ideas that shape markets, investing and business.
Rhys Merrick of Ripple discussed the company's evolution from a cross-border payments provider using XRP to launching its own USD-backed stablecoin, RLUSD, and offering custody infrastructure to major financial institutions.
Sean McHugh of the Virtual Assets Regulatory Authority shared that the Dubai-based regulator has expanded its licensed firms from 14 to 57 since he joined, aiming to make the city a major capital for virtual assets.
Podcast host Jacob Greaves noted that Bloomberg Intelligence estimates tokenized assets under management have grown to approximately $50 billion as of 2026, up from $1.5 billion in early 2023.
Rhys Merrick highlighted a collaborative initiative in Dubai where the Dubai Land Department is working with regulators and private companies like Ripple and Control Alt to put real estate title deeds on the blockchain.
Rhys Merrick stated that Ripple's transaction volume and growth specifically between the Middle East and Africa trade corridor is up 40% to 50% year-on-year, driven by demand for instant settlement in emerging markets.
Host Jacob Greaves noted that VARA has recorded approximately $680 billion in regulated transaction volumes, prompting a discussion on the maturity and future growth of the Dubai virtual asset market.
Rhys Merrick announced that Ripple has doubled its office headcount in Dubai after securing a DFSA license to operate as a blockchain-enabled payment service provider in the DIFC.
Rich Steinmeier, CEO of LPL Financial, discusses the firm's growth to $2.6 trillion in client assets and its strategy of supporting independent financial advisors. He shares insights on leadership, the firm's cultural values, and the integration of large-scale acquisitions.
Rich Steinmeier explains how LPL Financial is utilizing artificial intelligence and technological investments to reduce administrative burdens for advisors. He notes that advisors spend about 70% of their time on process work, and new tools aim to shift that ratio.
Steinmeier highlights LPL's low advisor attrition rate of 1.5% compared to the industry average of 5%. He emphasizes that contracts are not restrictive and that the firm focuses entirely on earning advisors' business daily.
Rich Steinmeier discusses the evolution of portfolio construction from a traditional 60-40 model toward a 40-30-30 allocation including alternative investments. He supports expanding access to private credit and equity for everyday investors under proper regulatory diligence.
Robin Wigglesworth argues that the bond market has become the engine of the global economy, growing larger than the entire banking system. He explains that bonds represent capital flows at capitalism's most primal level.
Robin Wigglesworth discusses the origins of fixed income history, tracing it back to Venice in 1171. He explains how the city forced citizens to pay a proportional war tax that was converted into a tradable, interest-bearing loan.
Robin Wigglesworth shares that Dutch water boards utilized bond issuances for flood control infrastructure in the 1600s. He notes that one perpetual bond from that era is still outstanding and currently owned by the New York Stock Exchange.
Robin Wigglesworth examines Alexander Hamilton's financial reports to Congress following the American Revolution. Hamilton restructured defaulted state debts into new federal treasuries, establishing a credible credit foundation for the United States.
Robin Wigglesworth describes Louis Ranieri and Salomon Brothers' pioneering work in creating residential mortgage-backed securities. He calls securitization one of the most important financial innovations of the past half century.
Robin Wigglesworth notes that while he is generally relaxed about market bubbles, the current artificial intelligence boom is increasingly fueled by credit and off-balance-sheet liabilities. He warns that credit-driven bubbles tend to burst in more violent ways.
New research by Owen Zidar and Eric Zwick indicates that for every wealthy CEO, there are over 1,000 private business owners with a net worth of at least $25 million. This group of private owners, totaling over a million individuals, collectively holds significantly more wealth than top public company executives like CEOs and CFOs.
Despite the Forbes 400 list receiving 50% of all news coverage on wealth, its members collectively hold only 3% of total U.S. household wealth. In contrast, Main Street millionaires, a much larger group, are worth 13 times more than the Forbes 400 combined and account for 40% of all household wealth.
Contrary to public perception, there are approximately 65,000 Americans worth more than $100 million. This number, described as the most shocking in the book 'The Everywhere Millionaire,' significantly dwarfs the number of individuals typically featured in wealth-focused media like the Forbes 400.
Half of American households with a net worth of $5 million or more own a private business. This highlights the significant role of business ownership in wealth accumulation, suggesting that understanding where wealth resides in America requires looking at business owners.
Only 0.1% of all U.S. estates pay any estate tax, with approximately $200 billion transferring tax-free each year. This low figure is attributed to a significant increase in the tax threshold, which rose from $1.2 million in the early 2000s to $30 million for married couples, and various avoidance strategies.
The widespread use of non-compete agreements for everyday jobs, not just trade secrets, is estimated to cost the U.S. economy $300 billion annually. Eliminating these agreements, particularly for low-wage workers like fast-food employees, could help address economic inequality by allowing workers more options and better wages.
Individuals worth $100 million or more are 62 times more likely to serve in Congress compared to their representation in the general population, while decamillionaires ($10 million+) are 10 times more likely. This overrepresentation of the wealthy in government is suggested to influence policy decisions, potentially leading to loopholes and contributing to wealth inequality.
Adam Frank, head of wealth planning and advice at J.P. Morgan, believes the 'Great Wealth Transfer' is happening as baby boomers pass away. However, he notes that a significant portion of this wealth may be spent on healthcare and other expenses rather than being passed down entirely.
Adam Frank argues that the wealth management industry's primary focus on investment products and performance against benchmarks overlooks clients' broader goals and purposes for their money. He stresses the importance of understanding what clients want their money to achieve rather than solely focusing on market returns.
J.P. Morgan has formed an athlete council, including prominent figures like Tom Brady and Megan Rapinoe, to help tailor financial advice for student athletes. The initiative aims to educate young athletes on managing NIL earnings and preparing for potential professional careers, recognizing the unique psychological aspects of elite sports.
Adam Frank recounts the chaotic period leading up to J.P. Morgan's acquisition of Bear Stearns in March 2008. He describes the surreal atmosphere as employees continued working despite knowing the firm was likely to fail, highlighting the human element amidst institutional collapse.
Adam Frank emphasizes that in wealth management, personal relationships and trust are paramount, often outweighing short-term investment performance. He also highlights the critical shift from wealth accumulation to wealth preservation, especially during market downturns and for individuals transitioning from active careers.
Adam Frank stresses that tax efficiency is as important as investment performance in wealth management. He explains how strategic tax planning, including strategies like tax-loss harvesting and understanding Qualified Small Business Stock (QSBS), can significantly preserve wealth for clients and their heirs.
Contrary to popular belief, significant wealth in America is not concentrated solely on the coasts or in tech and finance industries. Researchers found that 3 million 'everywhere millionaires' in the US have a net worth of at least $5 million, collectively holding more than ten times the wealth of the Forbes 400.
Many high-net-worth individuals in America have built their fortunes through seemingly unglamorous businesses such as auto dealerships, HVAC companies, medical practices, and restaurants. These private business owners collectively hold more wealth than the individuals on the Forbes 400 list.
Achieving top-tier wealth in the U.S. is predominantly driven by business ownership rather than high labor income. While individuals in the 90th percentile of income largely earn through salaries, the top 0.1% derive most of their income from business ownership.
Changes in the tax code, particularly since the 1986 Tax Reform Act, have significantly encouraged the growth of pass-through businesses. These reforms, along with subsequent tax cuts and deductions, have made it more advantageous for entrepreneurs to structure their businesses as pass-through entities, leading to substantial business formation and economic activity.
Unlike in some European countries where failure can have long-lasting social and professional repercussions, in the U.S., it is often viewed as a learning experience and a step towards future success. Data shows that even failed business founders, on average, earn more than similar individuals who did not pursue entrepreneurship, with many becoming serial entrepreneurs.
Private business owners are disproportionately represented in political office at federal, state, and local levels, often outnumbering CEOs of public companies. Their economic power, community presence, and large employee bases grant them significant influence in policy-making.
Entrepreneurs who achieve long-term wealth often demonstrate a key skill: the ability to pivot and adapt to changing industry and consumer trends. This adaptability, coupled with navigating market changes and sometimes luck, is essential for finding a niche and building a successful, lasting business.
A realistic path for aspiring multimillionaires today involves acquiring businesses from retiring owners who may not have successors. Developing expertise in specific industries and positioning oneself to purchase these established businesses, potentially with seller financing, is a viable strategy for wealth accumulation.
Glen Kacher, founder and CIO of Light Street Capital, discusses NVIDIA's current market share in AI accelerators, noting it's around 85%. He acknowledges the move to inference as an opportunity for competitors but believes NVIDIA's innovation potential is underestimated.
Glen Kacher explains AI compute involves training models using powerful chips like NVIDIA's GPUs, while inference uses these or specialized chips to execute tasks. He sees both as investable themes, with inference potentially becoming a larger market than training.
Glen Kacher highlights that his firm's 'AI5' – a concentration of NVIDIA, AMD, Broadcom, TSMC, and previously Microsoft – significantly outperformed the 'Mag7' in 2024. Microsoft was later removed due to perceived stumbles with OpenAI but has since been re-added.
Glen Kacher likens the current AI build-out to the 15-25 year shift from client-server to internet architecture, predicting a decade-long demand cycle. He explains AI's complexity and compute intensity, creating custom solutions for each query, requires significant, long-term investment.
Glen Kacher asserts that AI demand is currently exceeding supply, making current doomerist predictions misplaced. He notes that major players like Amazon, Microsoft, and Google are struggling to keep up with demand for AI compute and infrastructure, facing bottlenecks in areas like memory and chip manufacturing.
Looking five years ahead to 2031, Glen Kacher predicts that AI agents will define the consumer and business experience. These agents will proactively solve problems, leading to significantly higher token consumption and a more integrated use of AI in daily tasks.
Glen Kacher notes the growing competition from open-source AI models, which are cheaper and customizable, challenging closed models from Anthropic and OpenAI. He highlights the regulatory challenges in controlling open-source AI due to its distributed nature.
Data suggests that companies led by their original founders outperform other companies by approximately 3 times. This outperformance is attributed to founders' unique vision, execution capabilities, charisma, grit, and a long-term, decade-spanning strategic outlook, contrasting with the short-term focus of hired CEOs.
The Founders 100 ETF defines a founder-led company as one where the original founder is still running the company, typically as CEO. While straightforward in many cases like Dell or Facebook, definitions become complex with individuals like Elon Musk. For Tesla, the ETF's analysis confirmed through company definitions and a court case that Musk is considered one of the original founders, despite his initial role as an investor.
The Founders 100 ETF (FFF) narrows down approximately 800 founder-led stocks to the 100 largest by market capitalization. From this group, a valuation model selects the top companies, emphasizing a fundamental value approach rather than simply tracking an index.
The Founders 100 ETF (FFF) distinguishes itself from indices like the NASDAQ 100 by offering significant active share and broader economic exposure. While the NASDAQ 100 is heavily weighted in technology and semiconductors, FFF maintains a more balanced portfolio, with lower exposure to semiconductors and a wider representation across industries including industrials, energy, and financials.
The Founders 100 ETF (FFF) utilizes a modified market cap weighting strategy, capping any single position at 7.5%. This approach allows for diversification, ensuring that smaller holdings can contribute to overall portfolio performance even when larger positions underperform. The portfolio is rebalanced quarterly to reset these weightings.
The primary trigger for selling a stock from the Founders 100 ETF (FFF) is the departure of the founder. The fund prospectus states that a sale will occur within 90 days of a founder announcing their resignation. Additionally, a 'fundamental overlay' designed to identify deteriorating company conditions, described as 'burnt pizza crust,' can also lead to a stock's removal.
Seth Bernstein, CEO of Alliance Bernstein, revealed the firm's decision to relocate its headquarters from New York to Nashville. This strategic move aims to reduce costs and access a wider talent pool, with an estimated annual savings of $85 million.
Seth Bernstein discussed the significant turnaround at Alliance Bernstein since he took over as CEO in 2017. He highlighted a strategic focus on distribution, particularly in private credit and the insurance business, which has helped the firm grow its assets under management significantly.
Seth Bernstein stated that Alliance Bernstein will not launch another mutual fund in the U.S., indicating a strong focus on Exchange Traded Funds (ETFs) and separately managed accounts (SMAs) as the preferred vehicles for clients.
Alliance Bernstein significantly expanded its private credit platform by acquiring CarVal Investors, bringing the combined assets in this area to nearly $100 billion. Seth Bernstein noted his personal background in lending informed this strategic growth area.
Seth Bernstein emphasized the deep fiduciary culture at Alliance Bernstein, stressing the importance of putting clients first in both private wealth and investment teams. He contrasted this with the broader industry, noting the slow adoption of a true fiduciary standard.
Seth Bernstein discussed the growing role of private credit, driven by bank constraints, and its increasing accessibility to individuals through wealth management and retirement accounts. He believes private credit will become a significant part of institutional portfolios over the next decade.
Tyler Gardner, who previously taught economics, transitioned into finance and eventually became a "finfluencer" with over 6 million followers. He realized a significant gap in the market for clear, accurate financial education delivered through social media platforms.
Tyler Gardner found that many clients seeking wealth management services were primarily interested in having their assets managed rather than being educated on financial strategies. This surprised him, as he had envisioned a career focused on educating individuals about finance.
Tyler Gardner was motivated to enter the social media space after observing a viral TikTok video about Roth IRAs that contained significant misinformation. He noticed a pattern of engaging but inaccurate content creators on social media, contrasted with accurate creators who struggled to connect with audiences.
Tyler Gardner describes the initial phase of creating social media content as a "cringe phase" where early efforts are often met with ridicule. He emphasizes that overcoming this period of self-doubt and external mockery is crucial for anyone aspiring to be a content creator.
Tyler Gardner argues that the greatest risk for a professional is not in trying something new and potentially failing, but in remaining in a safe, W-2 job for decades with capped upside. He encourages individuals to pursue their entrepreneurial aspirations, emphasizing that returning to a stable job is often feasible if the new venture doesn't succeed.
Tyler Gardner believes that people do not inherently dislike work but rather dislike being told what to do and working with people they don't respect. He highlights that gaining agency, authorship, and autonomy over one's work dramatically increases motivation and job satisfaction.
A new weekly podcast from Bloomberg, titled 'Bloomberg Money,' has been launched. The show aims to help listeners make sense of markets and the economy and how they impact personal finance, investing, and retirement. It will feature conversations with economists, strategists, and wealth managers.
Former Vanguard CEO Bill McNabb attributed his career trajectory to luck and strong mentors, rather than innate brilliance. He shared that his initial attraction to Vanguard was based on gut feeling and shared values, despite then-CEO Jack Bogle's frank assessment of the firm's limited growth prospects at the time.
Bill McNabb highlighted the importance of 'the power of we versus I' and leading by example, principles he learned from coaching and reinforced at Vanguard under leaders like Jack Brennan. He explained that collective drive for success is crucial in business, just as it is for a rowing team.
Bill McNabb explained that the surge in indexing was driven by both psychological factors, like distrust following market scandals, and undeniable mathematical advantages. He noted that over any rolling 10-year period, index funds mathematically outperform 90% of active equities after taxes, a compelling argument for long-term investors.
During the 2008 financial crisis, Vanguard maintained a no-layoff policy for its employees, a move Bill McNabb believes was crucial for reassuring clients and maintaining service levels. He explained that while competitors were cutting staff due to falling revenues, Vanguard doubled down on service and problem-solving, which ultimately strengthened client relationships.
Following the 2008 financial crisis, Vanguard, under Bill McNabb's leadership, strategically focused on expanding its role in the advisor channel and significantly investing in Exchange Traded Funds (ETFs). This period also saw Vanguard refine its core mission to 'take a stand for investors, treat them fairly, and give them the best chance for investment success,' a principle that guided the development of products like target-date funds.
Bill McNabb outlined a board's core responsibilities as focusing on talent, strategy, and risk, rather than trying to manage day-to-day operations. He emphasized the importance of culture and talent assessment, noting that agility is paramount in today's rapidly changing business landscape, a lesson learned from Vanguard's strategic shifts during the 2008 crisis.
Bill McNabb expressed enthusiasm for his work with fintech startups, viewing it as a 'passion play' to improve the investment landscape. He is involved with firms like Venrock, Altruist, and Vanilla, believing that these companies have the potential to significantly benefit investors through technological innovation and improved services.
Bill McNabb believes the future of financial advice will involve a spectrum, with a significant portion leaning towards human-centric advisors, augmented by technology. He argues that while automation is useful, the 'human touch' is essential for preventing investors from making detrimental decisions, especially during market volatility.
Rob Arnott, founder of Research Affiliates, argues that traditional market cap-weighted indexes like the S&P 500, which have dominated investor inflows since the financial crisis, are becoming increasingly risky due to market concentration in a few large stocks. He criticizes the strategy of buying companies after they have already significantly increased in value and trading at high multiples, only to sell them at a loss when their market cap falls.
Rob Arnott explains that indexing, often perceived as passive, has an 'active side' involving about 5% of trading activity. This active component, driven by index rebalancing, can lead to hidden costs and inefficiencies, such as buying stocks at their peak just before they are added to an index and selling them at a low point when they are removed.
Rob Arnott highlights the costly 'flip-flop' phenomenon in index inclusions and deletions, where stocks added to indexes often underperform after their peak, and stocks deleted and later re-added also show significant underperformance prior to re-entry. This cycle results in substantial losses for index funds that must buy high and sell low.
Rob Arnott proposes fundamentally weighted indexes, which base stock weights on economic footprints like sales, profits, net worth, and dividends, as an alternative to market cap weighting. He argues this approach reduces the overweighting of frothy growth stocks and increases the weighting of unloved value stocks, leading to a stark value tilt.
Rob Arnott states that RAFI (Research Affiliates Fundamental Index) strategies have historically outperformed cap-weighted value indexes by 2-2.5% annually. Despite growth indexes showing higher headline returns, Arnott argues that the underlying fundamentals of value and growth portfolios have grown in parallel, with growth outperformance driven by increasing valuations rather than fundamental growth.
Rob Arnott acknowledges equal weighting as a legitimate portfolio strategy that offers a rebalancing alpha and avoids market cap biases. However, he notes it has a strong small-cap and value tilt and can lead to portfolios with higher multiples if not carefully constructed, unlike fundamental weighting which is directly tied to economic footprint.
Rob Arnott explains that while fundamental index strategies have a value tilt, their rebalancing mechanism helps manage the volatility often associated with value investing. He notes that even during periods where value underperforms significantly, fundamental indexes demonstrate resilience, outperforming cap-weighted value indexes in about three out of every four years.
David Booth, founder of Dimensional Fund Advisors, discusses the origins of his firm, which grew out of academic research on market efficiency and the limitations of active stock picking. He explains how the insights of Eugene Fama and others led to the development of passive investing strategies, initially serving institutional clients before expanding.
David Booth, founder of Dimensional Fund Advisors, emphasizes that uncertainty is not to be feared but embraced, as it creates opportunities in both life and investing. He advises investors to 'stay calm' during market volatility, noting that human ingenuity and the market's ability to price in bad news often lead to recovery faster than anticipated.
David Booth recounts how Dimensional Fund Advisors' initial focus on small-cap stocks was inspired by academic research and market observation. He explains that by identifying that institutional investors were underweight in smaller companies, DFA aimed to provide access to this segment, defining 'small' by the smallest quintile of companies on the New York Stock Exchange.
David Booth criticizes modern financial media for creating distracting noise that hinders investors. He argues that success in investing often comes from 'tuning out more' rather than doing more, as market prices already reflect available information, making attempts to predict or react to news futile for most investors.
David Booth discusses his significant philanthropic contributions, including substantial gifts to the University of Chicago Booth School of Business and the University of Kansas. He also touches upon his role in preserving art, particularly through endowing a conservation lab at the Museum of Modern Art (MoMA).
David Bonson, author of "Profit from the Profit," argues that investing should focus on a company's underlying profits and the tangible reward of dividends, rather than speculating on stock price movements. He likens owning stock to owning a 'lemonade stand' and emphasizes that value is created by businesses meeting human needs, not just by market index fluctuations.
David Bonson differentiates between economic investing, which derives value from a company's performance, and speculation, which relies on predicting price movements or market psychology. He notes that the proliferation of instruments like prediction markets and single-day option ETFs has amplified speculative behavior.
David Bonson explains the distinction between endogenous returns, which stem from a company's internal performance and profit growth, and exogenous returns, which are driven by external factors like market sentiment or other investors' psychology. He advocates for an endogenous approach, focusing on business fundamentals over predicting market trends.
David Bonson highlights that despite the S&P 500's significant gains over the past seven years, dividend growth investing has shown resilience, even outperforming the market in certain periods, such as 2022. He suggests that with the S&P trading at a high multiple, future returns may be constrained, making dividend growth a more probable strategy.
David Bonson contends that Berkshire Hathaway, despite not paying dividends, actually exemplifies his dividend growth philosophy by holding numerous companies that do pay dividends. He argues that while some companies might retain earnings successfully for growth, many more 'set money on fire' through poor capital allocation compared to disciplined dividend payers.
David Bonson suggests that the commitment to paying and increasing dividends imposes a valuable discipline on management, acting as a safeguard against reckless mergers and acquisitions. He cites examples like Exxon and Chevron, which maintained dividends through crises, contrasting them with companies like Viacom that engaged in capital-destructive media deals.
David Bonson explains that dividend growth investors can benefit from market volatility, unlike those who simply endure it. By automatically reinvesting dividends, these investors purchase more shares when prices are low, creating an 'automated compounding machine' that amplifies wealth creation over time.
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