Jay Vivian: We ran over about $100 billion of pension and 401(k) monies. And what we learned through experience is that it’s devilishly hard to beat the markets. It’s devilishly hard to pick the markets, the currencies, the managers that are going to outperform. And it’s also expensive to do it that way, whether you do it “insider” or not.
So you could say we learned the hard way, but I would say we just learned by experience that it was better not to do that. It was better just to index a lot of it. In some areas maybe it might make sense, but in a lot of areas it didn’t. And so we slowly moved over towards indexing and the majority of the assets were run that way. When you run a big pool of assets, it’s an interesting experience, especially if you run a really big pool, like I did, because you basically have access to the best and the brightest in the world.
They return your phone calls, which they won’t do if you have a smaller pool of assets, and certainly not if you’re a small investor. But what’s ironic is sometimes you’ll have two or three meetings, maybe even in the same day or in a couple of days, and you’ll have one guy come in and after an hour you’re convinced this is God’s gift to money management, because he’s just convinced you that Malaysia is the best place to go in Asia.
And then that afternoon you’ll have another guy come in. And at the end of that hour you’ll be convinced that Indonesia is the best place to go in that area. And then the next morning you’ll have another money manager come in and he’ll convince you that Sri Lanka or Bangladesh or India…
And in the end you kind of wonder, you wonder, say, “Now, why … these guys are all smart. They’ve all spent their lives in this. This is their life’s work and they can’t even agree.” So sometimes I get that feeling, I’d say, “Now, if these really smart guys can’t agree, how the heck am I supposed to do it?”