- Hi everyone, welcome to the Daily Homeroom livestream.
We have a exciting, I guess we could call it a show today.
Just to get everyone on the same page
of what this thing even is.
If you're showing up for the first time
we're doing these live streams as a way to stay connected
during school closures.
When we started seeing the school closures
and now seems a lifetime ago,
but it was I guess it was four or five weeks ago,
we realized that all of us at Khan Academy
with as a non-for-profit with a mission of providing
a free world-class education for anyone anywhere
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as teachers and students as much as possible.
So we started publishing things like daily schedules
to structure all of the content on Khan Academy,
learning plans, teacher-parent webinars
and also this homeroom
and it's a place to talk about everything.
The closures themselves, the economy, COVID virus.
Many times just ask any questions you have.
We have an awesome guest today, I encourage you,
it's going to be Mellody Hobson.
I'll give a better introduction for her in a few seconds.
But feel free and start asking questions
on the message boards
either for myself or for Mellody especially.
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I do wanna give a special shoutout
to several corporations who stepped up in the last few weeks
to really especially around the COVID response
Bank of America, Fastly, Novartis, Google.org, and AT&T.
As with that, I'm eager to have as much time
with our guests as possible.
I've known our guests Mellody for some time,
Mellody Hobson is the co-CEO
and President of Ariel investments.
And, there's two things I really I'm eager
to talk to you about Mellody.
One is just your journey to becoming co-CEO
of what I think is one of the most important
investment firms in the world.
And your view of the economy,
we brought it, had a couple of folks
on in the investment management world
and it's just interesting times to put it lightly.
So maybe a good place to start Mellody,
tell us there's a lot of young people watching
who are trying to figure out their life,
what should they do with their life?
Tell us a little bit about your journey.
How did you end up becoming the co-CEO of Ariel investments?
- Well, thank you so much for having me on Sal.
And just know that I'm such a big fan of yours,
as you know, all too well, from the first time
I came to see you I told you I was just enamored
by all the things you were doing to teach so many people
all around the world and I applaud your efforts
and just feel so much gratitude
that you have things like this that exist
for people all over the world.
I'm also honored to be asked to be one of the people
that you interview and to tell my story.
My story I think is the story of many people
around the world in so many ways,
just a story of persistence and really, really hard work.
I grew up in Chicago,
and I was the youngest of six children.
My mom was a single mom
and when I was growing up,
we had a really at times challenging existence,
to say the least sometimes we got evicted,
sometimes our phone got disconnected, lights got cut off.
We'd live in some of the abandoned apartments
that my mom used to try to fix up
and rent for people in order to make a living.
And it is during that time that I became clear
that I was desperate to understand money,
not make it, not have a lot, understand it.
I thought if I could understand money,
I could have a better life
and I really committed myself to that.
When I was 19 years old,
I had the opportunity to be an intern at Ariel investments,
which was this fledgling investment firm,
started by this wondercan named John Rogers,
who started the company when he was 24 years old.
Today, we're 37 years old now.
And after I graduated from college,
I went back and worked at the firm in 1991,
after graduating from Princeton,
and I've only had one job since then.
And I started off on the client services and marketing side
learning everything I could learned about investing
in the stock market, and over time rose up
in the organization.
In May of 2000, I became president,
I went from intern to president.
And then last summer in 2019, I became co-CEO.
It's an amazing story in so many ways,
and I have so much gratitude for the opportunity
I've been given, but most of all,
I have the most amount of gratitude
for what I've been able to learn about money
and investing over this near 30-year career
that I've been doing this
and how that is really put in me a fire
to teach what I know to other people
so that they can have a better life.
- And what's your sense?
What do you think made your trajectory so successful?
What do you think were the traits
that made you a successful investor
and allowed other people to recognize it as well?
- Well, I think the first thing that helped me
was that I always believe
that you have to always be learning, always,
that I ever have felt even today
that I know enough and then I can stop.
And so having that open mind,
some people call it a beginner's mind.
That's a Buddhist concept that your mind is always new,
like a child, and you're approaching everything
from the perspective of a beginner,
allows you to really take in a lot of information.
Ray Kroc who started McDonald's had a quote
that I really liked.
Ray says, "As long as you're green, you grow,
"when you're ripe you rot."
And I really liked that concept
of just staying green all the time and being open.
Not being so convinced that you know everything,
I think that made a difference.
Secondly, a commitment to learning.
We call ourselves a learning culture at Ariel.
We always wanna build on what we learned from before.
So right now being in this global pandemic,
we're building on all the knowledge we learned
in the financial crisis of 2008 and nine.
And then during that period, we built on the things
that we learned in 9/11.
And that we built on things we learned in the crash of '87.
So it's like constantly accumulating knowledge
that will make you better, and building on it,
till you have more and more muscle memory.
And the last thing is just I love the idea of learning
about the markets, talking about companies,
really understanding how money works around the world.
It just really fascinates me.
And so I think it's very important,
you become more successful
at something that you really like.
And I just really love the business that I'm in.
And at the end of the day,
I tell our team that we work with,
we get to make people's lives better
because we grow their money in their pension fund
or their kids college education money,
that's on our mutual funds, whatever it might be,
so that they can have a better outcome.
And that's as fulfilling as anything that anyone can do
as fulfilling as you teaching maybe,
as fulfilling as doctors who are doing what they do.
We feel that our work is that important.
- And we're getting a lot of questions often
from YouTube and social media which is great.
For Aditya Gupta.
And this is a good starter question.
A lot of people are kinda vaguely familiar,
okay, they're these things, these investment funds.
But his question is, what does Ariel investments do?
And maybe I'll extend his question,
What is your day like?
And maybe what is it like when you started?
What does an investment manager and analysts do?
- So let's start off with Ariel investments does.
We are a boutique, independent, money management company,
we manage stock portfolios for big institutions,
so think states, cities, foundations,
whole host of organizations, often pension
but it could be endowment money as well.
And then for individuals,
we have publicly traded mutual funds
that anyone can invest with us,
who has as little as $50 a month to put in our mutual funds.
We buy domestic companies,
US companies that are small and medium sized companies
that are out of favor
but who are strong potential for growth.
And over the years, we've owned everything from companies
that you know, they usually dominate the niche
that they're in.
Everything from Smucker's jelly,
which is in the portfolio right now.
In the past, we've owned things
like Tiffany's, The Retailer and Clorox
the diversified consumer products company.
So you name it, those companies that dominated niche.
We say once you get the customer,
they go back again and again,
small and medium-sized companies.
And then we have international and global portfolios.
International means it's only companies based outside
of the United States
and global means it's companies all over the world,
including the United States.
And those portfolios also seek to invest in companies
that are out of favor.
And that's everything from higher companies
to the version of what you would have in America
with some of our internet businesses
that are based in China, like Baidu.
So, we're looking for these brands and franchises.
And we want businesses that will be able to grow over time,
but we wanna buy them when they're out of favor,
when for whatever reason they've been cast aside.
So as you might imagine, right now, during a time
when the stock market has been so volatile,
there have been a lot of buying opportunities
that have come to us.
So these days, we're super busy.
But when you ask about my day,
I am actually not an investment analyst,
although I am someone whose Rolodex
is used on a regular basis to inform the stocks
that we are buying.
So in this current environment,
I've been on the phone on many occasions
with my co-CEO calling friends in the industry,
talking about what they're seeing in the market
because we can learn from everyone,
including we called his old corporate finance teacher,
someone named Burton Malkiel,
who wrote a book called "The Random Walk Down Wall Street."
that is so famous, I think it's in its ninth edition,
to say, what do you think of this environment?
But we'll also call very famous money managers
and ask them that as well.
When we do our own independent work
and our own independent thinking,
but we can learn from anyone.
And then our team would be spending lots of time
on the phone, talking to management teams of companies
that we own, asking them what their prospects
for the business are, what has changed, what is the same,
how are they managing during the period?
And most important of all, do they have the liquidity
to get them to the other side?
And I say the other side because this will end
at some point, it won't be forever.
At some point there will be a vaccine.
At some point we will go back to life as we know it,
we don't know how long that will be.
And so the most important thing is to understand
from those companies, that they have the balance sheet
and the wherewithal to be able to withstand
whatever kind of pain they will feel during this period.
I spend an enormous amount of time on the phone talking
to our clients and shareholders, writing to them,
writing the communications explaining what we're doing,
so that they're as informed as possible
and there are no surprises when it comes to our portfolios
and how we're investing and performing.
- And touching on I think a lot of questions
are which are, where's the economy going?
Before I go into that there's something you said
that is interesting, I think a lot of people
could learn from.
The fact that you're looking at companies
that are out of favor,
that might be counterintuitive for some.
So what's the hypothesis there
and also I'm fascinated by your logo, which is a turtle.
So, and maybe those two things are connected.
- Well, we believe that real money is made over time.
And all of our beliefs come from studying
the investment grades.
The greatest investor of our modern time is Warren Buffett,
the CEO and chairman of Berkshire Hathaway,
who still happens to be alive,
who is one of the greatest track records in investing
of any human being ever.
And so we've thought a lot about what he's written
about and talked about, and he talks about time
is the friend of the wonderful investor,
the enemy of the mediocre.
And so we think about that fact
that we wanna invest in things that over the long term
will demonstrate growth.
And there may be a reason that it's temporary,
out of favor, maybe an entire industry
got taken down at once
and a good company went down with it.
And so we're looking for those opportunities
to be able to buy companies when for whatever reason
something has gone wrong.
So a simple example of that
we've been buying a company recently
that's in the dental industry.
And that's very much of late.
And the reason that it's compelling
is because we say to ourselves, okay,
we get it when you're sheltered in place,
no one can go to the dentist.
So the earnings and revenue on that business
just fall off a cliff.
There's no question about it.
Then our next question is,
can they manage through this period
for a significant period of time not knowing
when it'll be over.
They're best in class at what they do.
And when things get up and running again,
we believe most people will go back to the dentist.
In fact, they'll probably be some pent up demand there.
So that would be an example of out of favor,
but shows potential for long-term growth.
When you think of around the world,
more and more people go to the dentist.
I'll give you another quick example.
Medical related, we own a company called Zimmer
that makes hips and knees.
And they literally, it's a doctor gets trained
on one device, and they use that device all the time.
So it's in our mind a razor, razor blade business.
The doctor is the razor, the customer is the razor blade.
The customer comes through and gets hips and knees
over and over again.
Again, during this pandemic, no elective surgery,
having a bad hip or knee doesn't kill you,
but it might really hurt.
So people can't go to the doctor and get their hip replaced.
But we're looking at the demographics that show
this very basic math that shows baby boomers
are going to need hips and knees.
For every one pound you gain.
it's four pounds on your knees.
So while again, there may not be surgeries right now,
over time, not only will it recover,
but we say that's going to unfortunately
be a growing industry.
So that's what we mean about buying things
when they're out of favor.
- No, it's very compelling.
I don't know my old job, I was an analyst at a hedge fund
and at much more junior level than Mellody.
But, my boss always used to say,
when you're buying there's someone smart selling to you
and when you're selling, there's someone smart buying
so what do you think your edge is?
And Mellody's edge and it sounds like it's very much
aligned with the Warren Buffett's of the world
is that most people think relatively short to medium term
and kinda move with the herd and move with emotion.
And if you can somehow separate yourself from that
and be a little bit contrarian sometimes,
you might be able to, time could be your friend.
- And that speaks for our logo.
And we'd say be a lot contrary and the number of calls
that I've gotten from everything
from working class individuals
who are trying to make ends meet saying,
"My 401K plan or 403B plan is getting crushed."
The billionaires that we work for who say,
"I'm thinking of selling."
You don't sell into the panic.
Buffett has this quote, "Buy the panic."
There's another famous line, "You wanna be greedy
"when others are fearful
"and fearful when others are greedy."
So during the time of fear and panic,
indiscriminate selling which we saw in early March.
We're gonna be thinking, where are the opportunities?
Again, there's that famous line,
I think it's Churchill who said,
"Don't let a crisis go to waste."
And so, you say during that crisis,
just from an investment standpoint,
what are the opportunities
that might just be being rolling away,
where people are just running for cover.
You should never sell into that kind of down market.
That's why we have a turtle as a logo.
And we talk about slow and steady winning the race
like Aesop's fables, and don't get the sense
that we mean slow and being like,
we're not doing anything,
we are urgently patient.
Like we're looking for opportunities at all time.
We take our time, and we're thinking
of what will this company be over the next
three to five years,
not the next three to five quarters.
- I like that phrase, urgently patient.
I think I need to be a little bit more of that myself.
(laughs)
I have the urgency, I need the more of the patience.
- But that's what we really are.
We're urgently patient, we're looking at it with urgency
but we're taking a long-term view about what it'll be.
- That's great.
And we're getting a ton of questions
you could imagine about the economy itself.
And those businesses
that you just talked about make a ton of sense,
at least even with my old investment hat on.
But a lot of people and we had Ray Dalio on last week.
And there's kinda contrasting trends here.
We saw the market go down a lot
and then it's kinda gone back up to a reasonable level.
It seems to me as someone who's not doing
this as my day job anymore,
that the market got reasonably optimistic
maybe once we hit the peak of the crisis
and things like that.
But at the other hand, when you look at the jobless claims,
numbers, you think about well, even if a state does open up,
will people really go to restaurants or dentists
or whatever else?
It could be a while.
Do you think the market has it wrong?
Do you think there's something else at play here?
What's your macro read?
- So we are bottom-up stock pickers
We're looking at companies just one company at a time,
what will it be over the long term
and we like it best when those companies
don't get beaten up and down by what's going on
from a macro perspective
but in this environment that's unavoidable.
What we would say is that we we don't think of the market
as being right or wrong, it just is.
And so from that perspective,
our work is to try to be thoughtful around
what is occurring, and the market what it typically
does, it anticipates the future.
It looks out into the future,
and has some sense of what it thinks will happen.
And then that's obviously as a result of a cluster of people
buying and selling et cetera.
And there's no question with the recover
we've seen in such a short period of time
the market is anticipating
better days ahead for the economy.
Perhaps they're thinking that recovery will be faster
than what everyone thought in early March
when shares were being indiscriminately sold.
And so we would say that is what it is,
it could be wrong, we might have a W,
where we go down again, we may have stayed at home orders
again in the fall, we don't know.
We have thought more that it might look more like a U
that we've had this period through the rest of the year
where you would not expect a lot out of corporate America
especially in terms of profitability or earnings.
And then you'd start to see a recovery in 2021,
which to us is like a nanosecond in investing.
That is the scenario with which we're working against.
But we can be wrong and still be right.
Because remember, we're thinking long term,
and we're not making investments.
We're not trading based upon the next three to six months.
It's nice to have the market recover the way it has.
But we also know that
it has been a very, very volatile period,
and these things can turn on a dime.
I think our biggest concern right now
is if we come out, way too fast, and way too early,
that people, could be in a situation where
they have to lock down again,
that might be very, very upsetting.
So we will just have to play it by year and see here.
And for us, it's really to take advantage
of the opportunities as they come.
- And these businesses like say,
these are associated with the dental industry
or hip replacement that when you are in a stay-in-place
order, maybe even once we're out of the stay-in-place order,
and you're allowed to go, but most people will try not to go
until there's a vaccine or something.
How long, when you're looking at how long
they can be solved with little revenue.
What time horizon are you all looking at?
Is it six months?
18 months longer? - We're looking at, yeah.
We were looking at the next six to 12 months, yes.
And saying if they're really, really compromised
during that period, will these businesses
do they have the balance sheet that they can be okay?
That's the question we're asking ourselves
and that's not a guess, for certain industries.
I mean, we're gonna see bankruptcies
come out of this environment.
We've already started to see that,
and there whole sectors that are really, really taking
it on the chin.
I mean, the airline industry is going to be compromised,
there's no question about it, because that's an industry
where capital expenditures are very, very expensive.
You've got big labor issues,
now they're benefiting lower oil prices
but there are a whole bunch of things that can hit them.
And so that would be an industry that we'd say,
we just don't know what will happen there
that goes into the too hard category for us.
But there'll be a whole bunch of other areas
where you can again, look out and say, literally,
I know like, if my crown breaks, I'm going to the dentist.
It's just it's not going to be a question.
- Yeah, and I know you are bottoms-up.
And actually the fund I used to work for
was very, very similar on a much smaller scale.
But I am I'm sure you do have a view on,
I mean, you just gave a little bit of your the macro.
But what from a policy point of view?
If you were the chairman of the Federal Reserve,
or if you were the Treasury Secretary.
What kind of actions you think need to be taken or not taken
to get us through this?
- Well, I have to say I applaud what they have done so far.
I was in a board meeting with someone and they said,
the Federal Reserve didn't bring a bazooka,
they brought the whole arsenal.
And that is true.
This is a giant contrast to the '08-'09 financial crisis,
when I remember Henry Paulson,
who was been Treasury Secretary,
going and presenting to Congress
and asking for a stimulus bill that was 750 billion dollars
and them initially turning him down.
And he did needed that money to rescue American banks.
And that was one of those daunting moments
the market is literally cratered on that bad news.
This is just the opposite.
Congress has an open cheque book,
which has its own repercussions potentially down the road.
But today, you wanna be in the business
of doing too much versus too little
and they're approaching this in exactly that manner.
Now that said, I want this stimulus text
to get to individuals faster,
because that has been problematic at certain levels.
And I think the small business,
PPP is also a challenge in terms of how fast people
are getting money, and is everyone getting
that equal access to the opportunity to participate.
So those things I think we've got to get on.
The one thing I'll also say they did a really good job
with a furlough situation
that when employees get furloughed,
they're getting their full compensation,
which incense companies not to lay those people off.
And so I think that's really, really good.
And I think the unemployment benefits
given the number of people who had to file claims
at the end of the day,
I think they did the right thing there as well.
And especially with putting on the extra four children
and there was a lot there
that was I think, very, very thoughtful,
and the right thing to do.
I just don't think it's over.
I think we're looking at more stimulus, not less.
- And there's tons of question here
but one follow up question to that.
What do you think are the long-term
implications to your point?
In terms of emergence,
you can think of very fundamental terms.
There is food out there,
we just need to make sure people have currency
to buy the food.
Are there shelter?
We need to make sure they have currency to pay that rent.
But in order to do so, trillions of dollars
potentially of increasing the debt.
What do you think are the long-term implications, if any?
- Inflation is likely a long-term implication.
I mean, when we've talked to a number of experts
out there in academics,
they're pretty united in their point of view.
When Rome is burning, if your house is burning down,
you're not thinking about the rebuild at that point
you're thinking about putting out the fire.
So right now, we're assume the put out the fire mode.
And then we'll have to figure out the environment
afterwards and what we do about that.
But again, I think there is no other action
that could be taken than the actions
that have been taken thus far.
- Yeah.
We have this question from Tamika Rogers on YouTube.
And you've touched on this already, but I'll ask it again,
'cause I'm sure a lot of people are asking this.
Miss Hobson, is this the perfect time
to invest in the stock market?
Well-known companies, I guess she's asking,
would it be well-known companies,
mostly that you expect to thrive in two to five years,
which does sound aligned with y'alls thinking?
- So this is what I would say, first of all,
I do think there are some opportunities out there
not as many as there were a month ago
when things were worse.
But what I would say, Warren Buffett says,
"It's a market of stocks, not a stock market."
So, there are companies always for sale in the stock market
even when the stock market is at highs.
I would caution people to make sure
they have the right perspective.
And I think you have to take a longer term view
and not to expect this to be like a rubber band
that's recoiled and it just bounces back like that.
So just making sure again,
you're looking out and you are patient in your perspective.
I also would encourage you to invest in things you know.
That's a famous line from another great investor,
value investor named Peter Lynch,
who was very famous in the '80s.
And he talked about investing in things
that you have a good sense of,
as opposed to trying to stretch and learn something
that you don't know or understand.
There are certain areas we don't invest in
because we do not understand them and we think we're smart.
But we tend not to buy commodities
because you have to predict them.
There are a whole host of things,
we don't have a lot of exposure to technology,
because we think there's rapid obsolescence,
especially amongst smaller and mid-size technology companies
that you can be put out of business very quickly
by another competitor or disrupted very easily
and then your value could erode.
It's harder for Google now or harder for Facebook,
but some of this on the smaller end that can be challenging.
So we don't tend to do a lot there,
being very realistic about what you know and understand.
I'm not one for stock tips from people, anything like that.
And if you don't have the stomach for this, don't do it.
Get a professional, buy mutual funds,
that you have investment professionals like us in Ariel
that are actually doing the work
and worrying about this on a day-to-day basis.
- Actually, just a curious question,
something I always struggled with
when I was in the same field is,
you have a strong thesis, you've done your homework,
you've made your investment.
And y'all are famously patient about it.
Well my question is, are there some times
that you are unsure about yourself?
How do you draw the line between
doubling down on your bet versus saying
maybe I was just wrong and getting out of it?
And obviously, there's parallels to life there
but you're living it every day in the investment world.
- So first, we have this point that we make
with our investment team and we say,
"We hold our ideas lightly, not dearly."
So we hold them lightly so that we have the ability
with new information to change our minds.
It's very important.
biz investing, you don't need, as again quoting Buffett,
"A perfect batting average to be successful."
And so as a result of that, you're going to make mistakes,
you must accept that.
One of the greatest pieces of advice I got
was from my co-CEO and business partner.
Once I was agonizing over something and he said,
"Mellody, I don't agonize over mistakes,
"because I make them frequently."
And you really have to have a little bit
of a move-on mentality.
You make it, what did you learn from that?
And you move on.
And there are times we have absolutely made mistakes
we went on internalize those lessons.
One of the periods where we made mistakes was in 2008-2009,
where we underperform for the first time in a down market,
and we underperform significantly.
And we went back and completely overhauled
our balance sheet work and how we were doing it
and making sure companies have the wherewithal
for tough periods.
And we think that those learnings allowed us
to survive this period and endure this period
much better than we did before as an example.
And so we make mistakes with stocks all the time.
And the simple question we ask our analysts,
this is the easy way to think about it.
We don't allow our analysts to say, "Hold."
Some companies, you have a buy, a hold or a sell.
We say you're either a buyer or seller, you must pick.
If you don't wanna buy it, you wanna sell it.
And in some ways, that's figurative for us
but it's a way of making people
really put a stake in the ground
either like it or you don't,
you can't live in this no man's land or hold
without showing your hand of what you really believe.
- That's a fascinating point is it?
I've always thought about it but never phrased
the way you just said, 'cause your point is right.
If you're holding something, you're essentially saying,
if you were buying today, you'd be willing to buy it.
- 'Cause right - Correct.
- Definition holding that's a fascinating thing,
the rest of the industry (laughs)
I think a lot of the folks are seeking shelter
in that hold position (laughs)
'cause you can't be two, right?
- And the thing is, we have to affirm that every day.
That's the thing, you can't rationalize that
because you've owned it for this whatever amount of time.
Again, quoting a great investor,
"The stock doesn't know you own it, it doesn't care."
So every day, you're starting off with the idea
that is this better than owning something else.
It doesn't matter how long I owned it before.
- And I really love that idea
of not holding your ideas too tightly.
I think there's a very big meta wisdom to that.
Even in life our egos can get very attached
to our points of views or ideas.
And sometimes even become destructive (laughs)
our lives 'cause we hold so tightly to them
in the face of new information.
So there's something very zen about that.
- Think about that, from the perspective
just politics today and the polarization of ideas
around political parties, et cetera.
And when people become too wedded to an ideology,
it can break down, real progress.
And so we really do have this perspective
of that's one of the reasons we believe diverse points
of view are so important to solving really hard problems.
And bringing people with all of those diverse points of view
that might have a point of view that's very strong.
But again, that I'm willing to yield my perspective
to a more compelling point of view,
as opposed to just being wedded to an ideology.
- Yeah, no, I mean, that's so relevant on so many levels.
There's a question here about finance in general
or learning finance from Aditya Gupta from YouTube.
How to start learning about finance investing
in the economy at a younger age?
How can we start investing at our ages?
- So first and foremost, this is one of the things
that just you know, Sal, I came to see you on this topic
because the thing that frustrates me so much is that
I'm just gonna use America
as the base for the conversation here.
You can go to high school in America today
and take woodshop or auto and not a class on investing,
which always leads me to ask audiences the same thing
who's wiggling in their spare time?
Who's cleaning their own carburetor?
No one, right?
But when it comes to understanding
the basics of the Dow, the S&P, the NASDAQ,
small cap, mid cap, large cap, market capitalization,
growth, value, all of these things
that have some profound potential effect
on your long-term financial security, we don't teach it.
And so that's why opportunities like this are so important.
What I believe very strongly is that investing
should be taught in school in America, at a very young age.
I think it should be like learning a language.
I have a six-year old and she takes Spanish at school,
she already speaks Chinese.
And once you can start early, you become very facile
in the language and I think that's very, very important.
One way if you can't get it in a school
to get them to have it as part of the curriculum
and I say to people,
if you have a stockbroker or financial advisor,
the person in the local bank
that may know something about investments,
maybe they can come in and teach a class
for your nephew or your child or what have you,
so you get a sense of these important concepts.
The children get a sense of these important concepts.
If you can't do that, I think a great idea is to do
what John Rogers, my business partner's father did for him.
His father was a child of The Depression, an orphan.
He moved to Chicago, when he was 11 years old.
He was in the first class of Tuskegee Airmen
and he wanted John to understand money.
And so he gave John stocks
every birthday and every Christmas
starting when he was 12 years old, instead of toys.
That you may not do the instead of toys part,
but certainly having that component,
be a part of his gift-giving really taught John
from the very beginning the fundamentals of investing,
and you can do that with a child by giving him
gifts of stock of things that they know and like.
And that's the gift that keeps giving versus the toy
that becomes obsolete at some point.
And that could be Mattel,
that could be shares of Sony because of PlayStation,
that could be McDonald's or Nike,
things that the children understand fundamentally
or your teen, and ultimately may create some interest
there that they can watch and understand
the benefits of ownership and equity,
as opposed to just consumerism.
- Yeah, that's powerful idea.
And I actually think, it's talking about edges
that I think some younger people
because they think a little bit different
have a different lens, they actually might be able
to have a perspective that professionals
might not even fully have.
There's a question here from Layla Torres.
It's really praise, but I think it leads to a question,
"Mellody, thanks for being a role model
"to all females in finance.
"We don't have many
"and it was great to learn about you."
And the question I'll ask is,
why don't we see more females in finance?
- I think there's a lot of stigma around issues
related to math and girls.
And, I'm not the first person who's ever said this.
And it's disappointing, and it continues to exist.
And it's true.
And that, therefore, affects our ranks
in both the investment business
as well as in engineering and other areas.
And I think it's a perception that's just wrong,
the data shows it.
So we've looked at the investment habits, patterns
and successes of women versus men.
And interestingly, women tend to be better investors.
Part of the reason that we tend to be better ambassadors,
we tend to trade less and be more patient.
And that ultimately works in our benefit.
And they've looked at lots and lots of decisions
that have been made over time to be able to show that
that's just rank and file people
in their personal investment portfolios.
In the industry that I'm in,
only 7% of portfolio managers are women.
We actually have one in my office that's great investor
named Rupal Bhansali,
who manages our international global strategies
and has done a phenomenal job.
But it's really disappointing to see those numbers
haven't moved very much.
Now I think exposure is part of that
they need to see people like Rupal and people like me,
who love what we do, and are in this business
and in it to win it.
And I think to the extent that girls and teens
and college students are aware of the opportunities
in our industry and the fulfillment
that we get from the work that we do,
I think they would be as excited about it as we are.
- And related to that.
Another comment this is from Rushika Tellim Saidi
from YouTube said, "Mellody Hobson, you are so inspiring
"to all girls around the world.
"I'm a girl of color and I'm really inspired by you."
And that kind of going with a question from Layla.
When you went into the industry right out of college,
and you looked around at probably were even fewer women,
even fewer people of color, did you ever feel like,
"Hey, how come there's no one like me, maybe I don't belong"
and how did you overcome any feelings like that?
- So I'm smiling because I had a friend once
that I asked a question about being different
in the industry, et cetera.
And he was like "Mellody, how long have you been black?
"How long have you been a woman?"
It just comes with the territory,
when you're a woman or a person of color,
you'll understand what you're up against.
I've told stories about how when I was a young girl,
my mother told me what I would be up against.
And she explained to me, I have it in my TED Talk,
that people won't always treat me well.
She told me that when I was six years old.
And it was really something that was very important
because it allowed me not to then be defeated
by any form of inequity that I saw.
I saw the opportunity when I entered
the industry in 1991, to be different.
And so I joke with people
when I would go to investment conferences,
I would be the only one, the only woman of color.
And when I go up to people, they'd say, "You're Mellody"
before they had even met me.
And I could have been like Cher or Beyonce
like no last name, I stood out.
And so I used that standing out to my advantage.
I said, "Okay, there's no one else like me.
"That I'm going to be memorable."
As opposed to seeing it as a cross
that I was carrying on my back.
It doesn't mean that it was always easy
by any stretch of the imagination.
The way that I built up my confidence is through knowledge.
The more knowledge I have, the more prepared I am,
the more confident I am.
And I think that's really important.
We all know what it takes for us to walk
into a room and feel confident.
If I was studied in my subject
I could walk in with my head high
and with my ideas ready to go.
And I think that's a very, very important
way of conquering the world.
When you can go on with good ideas
and not be afraid to state what they are
not be discouraged when they're rejected.
I always felt like I could get another job
was the other thing.
I was like, "If it doesn't work out here,
"I'm really confident in myself."
Not because I'm cocky or have a huge ego.
I just know I'll do whatever it takes.
If tomorrow you told me I couldn't go work at Ariel
and I had to go and work at Neiman Marcus
or Macy's or Kohl's or you name the store,
I'd be the number one salesperson without a doubt,
because I would do it with that much as much passion
as I do this proudly.
So I really think it's about your own mindset
and your own mentality.
There are going to be haters.
They exist everywhere, and big and small
and your own race and your own gender.
And they're gonna be people who root for you and help you.
I just I decided to ignore those who weren't there
to help me, try to avoid them as much as possible,
make choices that would lead me to people
who are more positive and more interested
in a better outcome for me.
And that doesn't mean I got it perfectly.
But more often than not by giving people
the benefit of the doubt,
I was more right than wrong.
- Wow that's an incredibly inspiring
and I think everyone has aspects about their being
that they might feel a little bit different than others
or feel imposter or feel insecure about certain things.
But I think the way you framed it right now
is inspiring for everyone.
Mellody, I could keep going for hours
asking you questions and it looks like
YouTube and Facebook could keep going on, as well.
But I wanna be very sensitive to your time.
Thank you so much for for joining this.
And I hope you join again.
Hopefully, you had a good time.
There's a lot of questions from a lot of folks here.
But this was a really inspiring conversation.
Thank you so much.
- Well, thank you for having me.
And I just really wanna end by thanking you
for all the work you do, Sal for so many.
You are one of my heroes, I mean that genuinely in my heart
and I'm just so proud to know you
and to be able to learn from you.
- Well, you're one of my heroes,
and it's only been reinforced from this conversation.
So I'm extra flattered that you even say that
but thank you so much Mellody,
it's a real treat. - Thanks.
- So everyone, thanks for joining what I found
to be a very inspiring conversation with Mellody.
A lot of takeaways that I'm gonna be thinking
about as I have my own.
I think we all have our own things
that we deal with in life.
I just loved Mellody's ability to power through
and be resilient and optimistic
and in the face of sometimes significant adversity.
But anyway thanks for joining, I hope we can have Mellody
on in the future as well.
We're gonna have some other amazing guests
in the next few days and weeks,
and stay safe, stay health and these times of COVID.
And just remind yourself that we're all in this together.
Don't try to focus too much on some of the negatives
that you hear in the news.
There's a lot of positives out there.
And one of the silver linings is we are seeing
a lot of humanity step up and do the right thing.
I'll also just throw out the plug again,
because it's part of my job.
We are not-for-profit.
If you're in a position to do so,
please think about making a donation to Khan Academy.
It's donations like that,
that allow us to continue to do this work,
especially for folks who might not otherwise
be able to have access to learning materials.
So thank you so much, and I will see you tomorrow.