Bloomberg Opinion: 'Masters in Business: Eugene Fama and David Booth' (11/05/2019)

[Music] Eugene fama is widely regarded as the father of modern finance there is no behavioral finance wait say that again there is no behavioral finance there's no it's all just the criticism of official words the Nobel laureate has been at the University of Chicago since the 1960s and has educated thousands of students one standout assistant who worked with Pharma in the early days was dimensional Fund Advisors co-founder David Booth we had a belief in markets belief in and how they work based on what we studied here booth and farmers relationship now extends five decades and led to the beginning of dimensional and nearly six hundred billion dollar institutional fund manager every new paper coming out was a landmark paper the two recently sat down at the University of Chicago Booth School of Business named after David Booth following a transformative donation in 2008 for a wide-ranging conversation with Barry Ritholtz on a very special masters in business during your last year Tufts you worked for Professor Harry Ernst who had a side gig running a stock market forecasting service and you did research for him what sort of work did you do with this stock forecasting research I was devising schemes to beat the market and and how did that work out worked out fine on the data that I fitted to him didn't work I was fine on the whole goat sample never did mm-hm so that was a lesson that data drug-gene can turn up things are that really there and how did that research into forecasting the stock market impact your thinking about whether or not the market could be beat well when I came here to Chicago research on asset prices had began to get going in a really serious way and many people were interested in the question of how well stock prices adjusted to I know information put in context I always say it started because of computers before 1960 really didn't have a serious computer to do data analysis on and what the coming of computers statisticians economists were they had a new toy to to play with in stock stock prices were easily available so that was one of the first things they started to study and immediately the economists said well how do we expect prices to behave if the world was working properly in other words if markets were efficient they weren't using that term but that's what they were after and there were all kinds of theories proposed it had lots of shortcomings to them and a little bit of time we came to efficient market hypothesis and you were in your senior year Tufts you had applied here we could never heard back from the school is this an urban legend or is this true no it's true so so what happened I called I called in the Dean of Students Jeff Metcalfe answered that wouldn't happen today the school is so much bigger the dean of students doesn't even have a telephone way too important so he answered the phone we chatted for a while and he said well I hate to tell you but we don't have any record of your application so what kind of grades you have at Tufts and I said pretty much lays he said well we have a scholarship for someone from Tufts do you want it that's how I ended up so so you come here as a student you're you're finishing your work eventually Merton Miller says to you hey do you want to stick around and keep doing the sort of research you're doing is that how you became a a professor here yeah I was I had offers at some other places but lots of the place has turned me down they said it was through Chicago I don't know what that meant actually but these guys know exactly what that means but but it was very rare to hire somebody from your own PhD program onto the faculty they really do it so David you had a somewhat different experience you grow up in Kansas you get a BA in economics and a master's from the University of Kansas what made you decide to come to Chicago well I did a little bit of reading in finance and my finance professor there got his ph.d here and he said finance is exploding really emerging as a an academic discipline it's really yeah one of the epicenters is clearly Chicago and so I thought well the guy should be fun maybe even be a professor so I applied here started to took genes class my very first class and is was the Dean correct was that literally 50 years ago yeah 50 years ago this fall well I was yeah it was the first year that Chicago had a football team in 34 years and you had written about your experience taking a class with gene you called it life-changing and transformative in what ways was it life-changing well life-changing mm-hmm well it led to a career I mean I can't have much of a bigger change than that but it's um life-changing and then I think all everybody here probably like to think of themselves as having a public purpose yeah at the end of it all when you get to be my age you know you want to look back and think somehow the world was better off for your having been here and so these ideas that were coming out you know the essence of efficient markets was already well developed it already coined the term and you see this is enormous ly useful if you look at the way money was managed 50 years ago people are getting ripped off I mean fees are way to I you know the Commission's were fixed by the government okay about ten times what they are today and well it's free today so it's a lot more than 10x yeah yeah yeah so it's I think there was a spirit of that we can improve people's lives you know a real purpose to all of this no gene more on the research side and I've thought my role in all this would be more on the application of the ideas so you become jeans teaching assistant how did that come about I always I always pick the best student in the class in the previous year to be the teacher yeah who's the best of the class you don't have to laugh at that so that student professor farmers teaching assistant why not a career in academia well first off I realized I could never compete with Jean I mean when you're the top of the mountain but it's really something it caused me to reflect and you know really internally and what what am I about what do I enjoy and I think I just saw this as a great opportunity to go out to apply all these ideas people were developing every new paper coming out was a landmark paper it was it was all brand new stuff and none of it was being applied so we're gonna come back to the application very shortly but you mentioned that all these new groundbreaking groundbreaking papers were coming out professor Farmer your doctoral thesis in 1964 was the behavior of stock market prices and this sentence jumps right off the page quote chart reading though perhaps an interesting pastime is of no real value to the stock market so this gets published in the Journal of business in 1965 what sort of pushback do you get to the general concept that charts are of no use past market walk is of no future predictability to what happens going forward I got a lot of lot of pushback from professionals the academics looked at the data looked at what people were saying what they were showing and adopted it right away I mean there was no pushback among the academics really it's really the beginning of I mean if you had to summarize really the impact of all this is what was going on in Chicago then really changed the way people think about investing and that's really been the theme gene has changed the way people think about investing more than that's that's the pre and post line pre fama and post fama yeah there's a sea change we're not I don't like the post where my business meaning post publication so we not only have your doctoral thesis we have the efficient market paper we have the fama French three-factor paper there are a number of very very influential papers that David if I'm hearing you correctly you're saying that changed the firmaments of Finance forever changed it forever and for the better I mean I get particularly and 2019 there's among students there's this kind of antipathy towards finance and economics you know and they don't realize how much finance has changed for the better people's lives have been improved by these ideas in this research lower fees better risk control and so forth the truth is prices are so volatile markets have always looked really efficient they don't look any more efficient than me they never have with the introduction of our new technology [Music] you [Music] back in the days when active managers were dominant inefficiencies could still be easily found as could 2% fees professionals didn't believe markets were efficient they thought they were kind of sort of eventually efficient I doubt many of them would say that today what do you think has changed to bring so many people over to the efficient market theory well the accumulation of performance evidence so back then there wasn't there was no real evidence on how these people did and one of the first papers was like Jensen's thesis here which studied mutual funds for the previous 25 years and showed that basically they weren't beating the market now we know online site that in fact that has to be true that active management is a zero-sum game before cost because they don't they can't win from the passive managers because the best of people hold cap weight portfolios they don't waste they don't know void and underweight in response to what the active people do so if there's anybody under waiting and over waiting there has to be another act of magic on the other side doing the opposite which means if one wins the other loses you know some of those is zero before costs has a plan spills Europe's yeah the earth would take of active management because of the arithmetic because it is arithmetic it's not a proposition it has to be true for everyone or there's an offsetting loop right so what about technology how does that impact how fast information makes its way into prices well it should make it better but you know the truth is prices are so volatile markets have always looked really efficient they don't look any more efficient than they and they never have with the introduction of our new technology so if information is is spread much more quickly now and it was fifty years ago because you have so many sources and it's so quick but you can't really see in the data that that's had a quantum effect on the adjustment of prices to information so we may not be able to see it explicitly in the data but when we look at things like hedge fund performance they did very well before the financial crisis since then not as well we look at the money flows away from expensive active towards inexpensive passive it sounds like lots of investors are voting with their dollars that hey the market is efficient and we can beat it doesn't it seem like technology is driving some of that because there used to be information asymmetries there used to be inefficiencies that a savvy manager might have been able to find it sounds like it's even harder to find those inefficiencies today than thirty years ago you have better information than I do because hey it's it you're saying it's always look good it's always been that way it's always been zero-sum game you know I've been in the business now almost 50 years and every year people say next year is going to be the stock pickers company the stock pickers market well gene saying is it's so so let's talk a little bit about index funds gene you introduced David when he is finishing his MBA and wants to go out into the world of work - John McGowan over at Wells Fargo where they were developing as an institutional product the first index fund what made you think that that was a good fit for for David oh well Mack McGowan who was in charge of the Wells Fargo unit came to all the seminars we did here for business people we did him twice a year the Center for research and securities prices were in seminars for interested business people and Mac came to all of them and he seemed to very you know into the new stuff and so when it came time that David said I see what you do but I don't want to do it as an academic right so I called Mac and said I have a really good student here if you've got a place from any you do so what was your experience like it Wells Fargo working on that index fine well there was a terrific experience great exposure I learned the importance of client work I mean the investment business is part technology or investment science and it's part client work and as I've told gene you know I studied finance for two years I've been studying client work for the last 48 we got into all this stuff but we haven't even easier argument which was look the other hold stocks and large companies and small and you're upholding small so looking accents too small so that was the really the sales pitch that put us on the map you [Music] host Wells Fargo you decide to open the small micro cap fund out of your second bedroom in an apartment in Brooklyn tell us how you applied professor farmers research to that micro cap fund we decided not to have run that portfolio like an index fund even though at first we call it an index fund because it's very similar to indexing with the final step being that we don't trade market on clothes like many index funds do and what that means is we were we would be trading stocks throughout the day well that created a lot of skepticism particularly among academics because you're going to the marketplace you know you don't have any undiscounted information people on the other side of your trade largely institutions think they know a lot about the stock you know why won't they just rip your eyes out when you're trading that's a legitimate question so what's the answer what all that means I have the answer is there a lot of things you can do to use the energy of markets in the power of markets to your advantage it turns out for example if we want to buy a stock let's say that an institution wants to sell it their anxiety is greater than ours so we can use that their interest in trying to do a quick trade to our advantage in and protect ourselves and there's you know plenty of of information out floating out about the stock that you can use to protect yourself but that wasn't known back then it was just we had a belief in markets belief and and how they work based on what we studied here and said look we think we can go out and trade these stocks and not not get killed that there were two theses done here on small stock returns and most of the academics said well looks good in terms of the crisped historical data but in fact if you try to trade it you're gonna get swamped by trading costs and that was the so-called market micro-star such as stuff and then we figured out with what we found out what dimensional was no he really didn't have have to pay those big bid-ask spreads as you were saying he could go fewers patient trader you could do better with the prices so we could deliver this smells like premium but previous to that people learning through the preview believes the spreads but the academics learned was the market microstructure stuff was garbage basically they didn't really understand no interesting well we learned about clients along the way which was see in 1981 big our initial clients were all large the largest pension funds essentially and insurance companies around the world and they weren't hoping the stocks of small companies so really the pitch we got into all this stuff but we hadn't even easier argument which was look you oughta hold stocks and large companies and small and you're not holding small so looking at access to small so that was the really the sales pitch that put us on the map and so that sales pitch starts to take off and dimensional operating out of your apartment gets bigger there's kind of an urge and urban legend that you called New York telephone to have them add six phone lines and they refused they thought you were running a bookie joint yeah is that remotely true yeah this was back the kind of it the bottom of Brooklyn Heights bottom of its history it's uh so we started on a shoestring and we ran the portfolio I was the first portfolio manager running out of my spare bedroom so I knew we needed more phone lines so I called them told New York telephone which was a telephone company at the time said I need some telephone lines so they know six or eight or whatever and they they thought I was a bookie so they wouldn't give me the light so I had to call it the treasurer of New York tell say you know can you send some people down here and give me some telephone lines and they went around the whole block and found that there are six lines of it available in the whole block that maced their equipment and they said okay even have those six lines and that's how we got started and the punchline is he becomes a client yeah yeah right New York that was our kind of behaving lying down so so from from day one Jean is a board member of dimensional funds from the day it launches well even before I mean this principle yeah the idea to start the firm my first call it was to jeans saying look you know it's been ten years since I was in school we there's been a lot of research I know we we need to we need to have access to you know new research and thinking and would you be on the you know one of the founders and and and be our lit you know our eyes in terms of research and he agreed to do that right away who else did you recruit from GSB well eventually we found out we had to have we wanted to create a mutual fund and a mutual fund has to have an independent board of directors so Rex and I went over the Business School walked into Merton Miller's office um they still teach them a little definitely theaters don't think okay so Merton was there we said you know he added he out a small company fund need a pen director isn't burn said oh sure and walked out the door and down the hall Myron Scholes was coming out of his office cycle Myron see the jeans pointed this business school was a lot smaller than and have you been to the ph.d program II kind of got to know the faculty pretty well so Myron agreed to join and so on and so forth so it in fact until recently all the independent directors of the mutual fund our mutual fund Ben have taught at Chicago so well his his business partner Rick's thing field was in my class as well he was really the first one to put out an index fund wasn't he no no it was first S&P 500 okay but here but Rex actually oh that was when I was his teaching assistant he took jeans class and Rex was always one of these pain in the neck as a teaching assistant students because he was interested in everything you know I'm not so Jean you move pretty easily back and forth between academic theory and real world application of true theories not a lot of people were able to bridge that gap between yeah I hadn't I hadn't been able to bridge it either until dimension okay Lola but here it is it's 40 years later and you seem to continue to be right because he yeah the reason I couldn't is because one it's hard to shut me up I don't take a party line so you do too easily and he didn't ever although he and Rex never said would you please do this what they said was you do what you do and we'll figure out if we can use any other time it's the University of Chicago if they had to look up every time the Nobel Prize went to work right nothing [Music] so let me fast forward a couple of decades to the mid 2000s in 2008 David Booth made the largest donation ever given to a business school which has been called a transformational gift tell us about your thinking what made you decide in the middle of the financial crisis to say I know I want to make a donation to my alma mater well it was I'm kind of ties in on the story I've talked about earlier I mean what it got to be the stage where it was time to pay back and I mean I would have been anywhere without Chicago so I said I want to give a big chunk of what I have and this was a mix of stocks and cash is that correct and it was actually I didn't have a lot of cash at that time it was a because we just recently started to accumulate money big enough to but I had stock in the firm and so I gave them basically ownership of a big chunk of the of the stock that I had and they were willing to take a bet on that and it turned out to be a good bet and that that comes with a dividend which continues to pay its way to to booth were you at all concerned that you were right in the middle of a financial crisis giving ownership of a financial firm a lot of firms did not make it through the financial crisis yeah maybe it ties in with the earlier question about what did I learn from here about markets and how they work and you have to kind of keep in the depth of the financial crisis you kind of have to keep reminding people you know markets are where buyers and sellers come together and in a voluntary transaction both sides of a trade have to feel like they'd have a good they got a good deal or they don't try they don't trade so you know there's a lot of trading volume activity a lot of well-known investor is investing and it's just you know one of those those comfortable those markets were functioning the way they they oughta fine sometimes they go up sometimes they go down gene how did David's gift impact the Graduate School of Business oh it was a big lot of cash flow that was not there before hand so it gave rise to lots of research centers I think it made everybody feel as if the feature was more or less assured and the university also got a pretty good take out of itself is they always do so David you tell a charming story about sitting with the Dean and you it wasn't your intention for this originally to be a naming gift they seem to have brought that up to you could yeah right no I said I wanted to Tom this is for the reasons I outlined I wanted to make a gift a big part of what I have and so this is what I want to do and the Dean Ted Snyder at the time said gosh I you we were looking to have a naming gift from the business school this is a lot better deal than that what we're looking for so well name the school after you okay whatever so since then the school has continued to grow in in both reputation and number of students and the offerings here and then fast-forward five years after that gene gets a phone call from Sweden let's talk a little bit about that what was your experience like did the phone call managed to reach you tell us tell us what that was like well I think I think they call it early morning right you know one o'clock Stockholm time which is really early in the morning here I think it's about five or six o'clock so I know you never expect to get it because a lot of people could qualify to to get it when you get it somehow Pete Lee the people here somehow had a guess or whatever I don't know why because there were newspaper people at my door and 10 minutes later easy after the after the call and they wanted to come in my house I said no way you're on your way to class well they had a class that morning and you don't you know get a special dispensation when your Nobel Prize you skipped class but I had never missed the class and always they've been teaching in 50 years yeah wasn't gonna start now so and I wasn't gonna let anybody in because the kids in the class were paying a lot of money to take that course so no way I wanted people from the other side disturbing it so David you ended up going to Stockholm with gene what was that experience like oh it's uh well of course being Chicago trained I've been the ceremony before or with whom when Myron and Bob Merton got their Nobel so you know it's you're kind of used to they'll save you third time's a charm so thirty third time's the charm is there yeah so the so I said the Jeep give me a night to organize something special so I talked and Abba has a museum in Stockholm they didn't just open up and I talked them into running me out the museum for the evening so gene you know he has four kids and that time about eight grandkids and they're all big music fans and so the havoc museum has a lot of things you can do to have fun and one of them is a big stage with a scrim on it and yeah with a for Abba musician singing and with a microphone right in the middle and so you it looks like you're singing with them and so I look so this went on they were kids the kids went wild I look over a gene I can Sally and I could see that they were they were having fun so I made it special for me so the whole thing some people have described as surreal what was your the day of the day after so they had a big event here of the school really a big event I mean with a news and everything well the circles around the building were all full of students and the next day the Nobel people have a camera committee and they're following me across the hyper center the big atrium in the middle and students are working along the sides and we worked on the middle nobody looks up so we get to the other side and the television guy says nobody looked up when I said this is the University of Chicago if they had to look up every time the Nobel Prize want to walk by and to show you how true that is David Booth and gene and I get an elevator on four to come down here and a student gets in wearing headphones turns around doesn't say a word to either of you and the four of us wrote down in silence he was completely oblivious to who was in the elevator with him so I'm always fascinated by that sort of stuff I'm the most important person in behavioral finance you are I am why is that because most of the behavioral finance are just to criticism in efficient markets without me whatever they get [Music] [Music] value has a tendency to go through these longer periods where growth is beating it and over the past decade it's been if you weren't in big cap US growth you were underperforming everything has been the sp500 when we look in emerging markets we look at small cap we look at value having forbid you're an emerging market small cap value it's been terrible what sort of lessons should investors take from this extended period of growth growth beating value well the question they want to ask is as value did okay let's that so the Ken and I actually writing a paper on this at the moment but the bottom line is there's so much volatility in these premiums that you can't tell if the premium has changed uh I know it may have changed it may not yeah you just can't tell us let's see yeah well within the range of chance the experience that the poor return experience is well within the range of chance over the time that's its occurrence so I think you really can't say anything so so there have been other periods of time where value has done poorly I remember hearing in 9899 this value investor was washed-up this guy named Warren Buffett he doesn't know what he's doing and typically when you hear that it's usually at the end towards the end of that period of underperformance you're suggesting we won't know for some period of time if the value premium is gone or if it's just a regular cyclical underperform see I don't think there are real cycles to it I think it's just kind of randomly and go through good and bad periods and you know you can't recognize them except that from the fact right you can't really predict them we've tried tests we try predictive tests and they have large you know nothing worth even focusing focusing on so basically you're stuck with the volatility of equity returns they don't know how to say very much about what's happening to expected returns going forward and and David what we've seen a huge proliferation of various factor funds not just the three factor of the five factor of the seven factor model they're now hundreds identified what what does this mean for investors has the proliferation of all these new factors been good for investors or is it a non-event well I mean I think on balance has been overstated whatever whatever it is the you know I think you know research has identified you know factors it seemed to explain differences and average returns but it can't be hundreds of factors I mean they got it they're probably at the end of the day they're probably a few factors and gene and ken one of the things they try to do is instead of trying to identify more and more factors is take the researchers out there and chemistry condense it down to simpler you know more factors that matter factors that matter well that's a lots of these things are just different manifestations of the same thing give us an example so value can be very measured in many different ways we can use the book to market ratio I can use cash flow the price I can use lots of different variables to identify what it's basically this the same thing and there are thousands of finance professors out there who all want to get tenure they have to publish to do that so they're all just kind of searching through the data finding stuff that maybe they're only on a chance basis and I won't be there out-of-sample so there's lots of work being done and that remains to be done on we call robustness how does it stand up when I have new data we've always been into robustness in the sense that when we found they in the 92 paper we went back and collected the data back to that data started in 1963 we then went back and collected the data 2:26 to look at a sample then we looked at the international data to look at a sample so pretty much the same thing everywhere now we've had a bad period of this but relative to all of that doesn't look that doesn't look that serious and and I have to ask you a question about behavioral economics we're here in Chicago where we could sort of call it the birthplace of behavioral finance what do you think about that area and what's your involvement with it well my good friend Richard Thaler who is the the king of the behavioral finance Princeton and another Nobel laureate that no one noticed I tease them and Sam I'm the most important person in behavioral finance you are yeah I am why is that because most of the behavioral finance is just the criticism of efficient markets without me whatever they get and and Ewan and dick Thaler our Gulf partners aren't you so do you argue across 18 holes or no the reality is we agree on the facts we disagree on the interpretation okay for example he thinks the value premium is the result of people's misperceptions of what accounting information and other information looks like it's all based on misinterpretation of information now if you believe that then you think it should go away because it's possible to teach people that they have these these these bias these are professional managers should be able to get get past them but they still have emotional reactions that sometimes they can't get by well that day that that's the thing about behavioral economics what what their studies seem to show is people don't learn from experience if you're stupid you've repeatedly stupid well and most people are stupid I mean that's the proposition someone has to be on the wrong side of that trade you said it's a zero-sum right so so you guys agree more than you then you might realize we're on the facts yeah but not the interpretation no but so there is no behavioral finance wait say that again there is no behavioral finance there's no it's all just the criticism of efficient markets really with no evidence it is dick here I think he would disagree with that so it's not so sure because when I when I put the chance to him twenty years ago I wrote a paper that said ok now you've been criticizing us for the last whatever it's time for you to come up with a theory that we can actually test and see if it works or not and what was his response we're still waiting actually you presented that paper or that at UCLA gets at ya and jean walks in and says all the way over I was thinking about breaking my leg or something so I could catch some sympathy here and to be fair when Thaler won the Nobel Prize he admitted his plan was to spend the money as it rationally as possible so we haven't if he even he agrees with you on that I wanted to ask about some of your comments on beta in 1993 you said beta is dead do you still believe beta is dead well the evidence basically says that the relation between average return and beta is too flat to be explained by the capital asset pricing model that's a real shame because that model was so simple if it were true it would be really make life a lot simpler in many ways but it just has never worked very well you can have a good career in financial services at the end of it you can look back on it and take pride in what you've accomplished it's as simple as that you [Music] if the market becomes truly efficient one day what happens to all of the management firms that question assumes that markets aren't truly efficient today how do you respond to that what's the evidence no I mean I don't think it's I think all of it is wrong so it's difficult there will still be a management business you just will have very little active in it so that you have to have some active investors to make price prices efficient the problem is you don't expect them to be professional managers because the logic of being a good investor is that you should get their returns right you don't hand them back to other people you take them back in higher fees you know that's a human capital activity is picking stocks or whatever you investment management so if you have real skills you should be charging it should all go all the return should go to you not to your clients and this is for both of you what sort of opportunity for outperformance do you see in private markets given that information in that space is so much more opaque yeah that in public markets so the problem is there are lots of good people studying that but they hamstrung by the the lack of good data on people who live in people who die the front you know the managers who live in them as you do but self-reported it's not like after so you get you go to hell you get to very but kind of buy a set of data on that but you know it's kind of a dependent put into that business you go to if you're looking at managers who actually run the companies that they buy they may actually be able to add value but its management value let's not start picking but if they you're picking companies that have a good idea but a poorly run probably you can have a lot of value added in that case but again it should go through the guys doing it that's that's that's the downside they're the ones who take all the profits out of it well I mean that's just if the logic of human capital right right and we didn't get to a question before I I have to ask about bubbles and this goes back to be it okay so I don't know how to bleep out the word bubbles but what do you mean by a bubble okay so folks like Feiler and Schiller would describe a bubble as a period of excessive market enthusiasm that leads prices to far outstrip their fundamental valuation what's the testable proposition there though I don't know can you put yeah well the way I interpret it is you must be able to predict the end of it a bubble has it be something with a predictable ending so it has to be measurable by a predefined set of parameters and you should be able to identify the end of it so if we were to say fail the test every time whenever fails the test night I mean you can't people can't identify bubbles that way until after the fact after the fact it's easy but there's a famous story around a boat you know the early origins of market efficiency which Holbrook working went into the faculty lounge at Stanford he was to agricultural wheat prices and he showed them charts of prices and he said these were chats of commodity prices and he wondered there's no see if they could identify bubbles and the prices and they every told me and they all could there were no women to me and they all could the problem was what he was showing them was accumulative random numbers with his own just generated stuff so there the message there is people see bubbles where they're not so here's a here's a really broad question given the societal angst of people attacking the value of a business education what is your belief in the value of this education here at booth and how should we communicate this better to society well I think it's in I think it's incredibly valuable to society because if we are going to make lives better for people part of the answer has to come from better and safer for now products and just that's the reality and that's been the history I mean it's like I say I look back on my career and working with Jane and you know we've been part of a movement towards lower fees and better controls so I could find it irritating when somebody says really the only advance on last 50 years has been the ATM you know it's that was boy Volkers quit yeah like we live based all this work live we've improved lives and there been other people with sharing the ideas we're not the only one but I mean I don't think it gets much better than that and so I I would hate to have people not get into business or particularly financial services you can have a good career in financial services at the end of it you can look back on it and take pride in what you've accomplished it's as simple as that so so that leads to the next question what keeps both of you working neither of you have to work why do both of you still get up and go to the office each day it's fun it's fun challenging it's important I mean it's exciting to see they retired people living better as a result of these ideas or better able to send their kids to college or whatever I mean these are these are not you know ideas that have no importance I mean these are you know that's you can get behind that kind of idea you get a lot of satisfaction out of coming up with stuff people haven't seen before everyone recognized and we have time for one last question and I'm gonna go with something about what do you think the future of Chicago Booth looks like what is next in store for the school and this is for both of you well I can tell you that so I've been on the faculty since 1963 a student since 1960 in the 60s basically there was a pretty good economics group there was a developing Finance Group and that was it I mean every school was junk right that was not unique to us so I remember when I was recruiting as a student in the college nothing not from here the people recruiting said why do you want to go to a business school they don't teach you anything we don't pay anything for what they go for what they do and that was to it at that time I think and what's happened through time is not just finance but every other area has been academically made more said to become more successful so marketing accounting statistics was always pretty good but it was never part of business schools so now we have really front-rank faculty in every single discipline the school is so high a high level competitive on the faculty side on the research side but it's just there's no relation to what it was 50 years ago it's a totally different professional place on the student side I think there is a challenge and I've been complaining about it for a long time students don't work as out as they did in the old days ladies and gentlemen please say thank you to professor Dean Pharma and David [Music]

Channel: Bloomberg Markets and Finance

Views: 7,665

Rating: 4.9210525 out of 5

Keywords: Bloomberg

Id: HRNczGwcTVQ

Length: 48min 11sec (2891 seconds)

Published: Fri Nov 08 2019