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Haverford Trust and Hank Smith are nationally recognized investment leaders committed to informing and inspiring people to build better financial futures for their families. In his chats with authors, influencers and industry experts, Hank helps bring a sense of clarity and calm to the complexity and stress of personal finance. Topics range from quality investing, retirement resilience, market trends and behavioral psychology.
Podcast Description:
In this episode of Speaking of Quality: Wealth Management Insights with Hank Smith by Haverford Trust, your host Hank Smith puts TV personality and financial journalist, Bob Pisani, in the interview seat. Bob, who has covered Wall Street and the stock market for over 30 years and currently serves as senior market correspondent at CNBC, has reported on many of the most famous financial news in the stock world and recently published a book about his experience called “Shut Up and Keep Talking.”
The episode covers a wide range of topics related to long-term market trends, including Bob's personal investment philosophy, the importance of a long-term investment mindset, and common mistakes that investors should avoid. Bob shares humorous stories about what it’s like to work at CNBC, how he gets the attention of famous guests and what he’s learned about the importance of discovering what motivates people when building compelling stories about finance.
To learn more about The Haverford Trust Company, please visit https://haverfordquality.com/.
Episode Transcript:
Maxine Cuffe: You’re listening to Speaking of Quality: Wealth Management Insights with Hank Smith. A podcast by The Haverford Trust Company.
On Speaking of Quality, Hank chats with authors, influencers and wealth management experts to bring a sense of clarity and calm to the complexity and stress of personal finance.
And now - here’s your host, Hank Smith.
Hank Smith: Hello, and welcome to our next episode of speaking of quality Wealth Management insights. I'm your host Hank Smith, Director and Head of investment strategy at the Haverford Trust Company. On this podcast we'll explore topics ranging from quality investing, retirement resilience, stock market trends, estate planning, behavioral psychology, and more. Joining me today is Bob Pisani. Bob is a well-known financial journalist who has covered Wall Street and the stock market for over 25 years. Bob currently works at CNBC as a senior markets correspondent. He covers the global stock market IPOs ETFs, and a myriad of other financial topics. He's been with CNBC since 1990 and has reported on some of the biggest financial news stories of the past few decades, including the 2008 financial crisis the dotcom, boom and bust, and the ongoing evolution of the ETF industry.
Bob, I had the pleasure of reading your book, Shut Up and Keep Talking on a flight from Philadelphia to Phoenix on the way to speaking at a conference in Scottsdale. I was so impressed with how enjoyable that book was, how informative, how fun, that it was one of the two books I recommended at the end of my talk at the conference. The second book I recommended, you actually referenced in your book, The Psychology of Money by Morgan Housel. So, with that, please tell us how you came up with this oxymoronic title of Shut Up and Keep Talking.
Bob Pisani: Well, thank you, Hank, it's a pleasure to be with you. I've been with CNBC for 33 years, which is an extraordinarily long time, very few people stay at one job for that long. And particularly in the journalism business. I've been the stocks correspondent for 27 years now, going on 27 years. And when I decided to write a book to summarize what I thought I knew about investing, and tell a few funny celebrity stories, and a little bit of, you know, life wisdom kind of things. And I was talking to the publisher a few years ago, and he said, I need a title. And he said, you got any suggestions? And I said, well, I want to call it lessons on life and investing from the floor of the New York Stock Exchange. And he said, Well, that's nice, but that's a subtitle that's not a title. I need a title, something interesting, catchy. And he said, so tell me you when you're going on TV, what do the producers say to you? And I said, well, you know, they could say to me a lot but I wear an IFB, which is one of these things, you put your ear and it cooks wirelessly to the control room and the producer because I Bob, though, you know, you're up. Next, you're talking to David, for example. But usually what they'll say is some variation on the phrase, wrap, which means shut up, or the phrase stretch, which means keep talking. So as if they didn't say anything want, but there's usually some variation on shut up and keep talking. And he said, "That's it”. That is the title shut up and keep talking. So it's really about what the producers say.
Hank Smith: It's certainly a very catchy title. You know, we share something in common. We both worked for the same firm for over 32 years. For me, it's been very simple. I love what I do, and I love the people I've worked with and continue to work with, and I am treated well. And I suspect there's some of that in your reasoning for being with CNBC for this long.
Bob Pisani: CNBC is a wonderful place to work. It's very congenial. The television business can be very cutthroat. There are very famous stories and TV series about competitions and how difficult it is. And that is true. But I found CNBC very congenial. I've also found and been lucky to be at the New York Stock Exchange and to be with another organization, the New York Stock Exchange, I don't work for them. But I'm here. I'm embedded essentially in the NYSE. And it turns out, these are two wonderful organizations. I was here at a time when the NYSE was probably at its absolute height. In the mid-1990s. The floor has become much less influential due to growth of electronic trading. It's a good example of technological disruption. But the bottom line is, I've been treated well. It's I love the job. I asked to stay here at this particular job and CNBC has been gracious enough to allow me to do that. Like I said, a lot. Very few people last in the same job for a long time, but I always say Hank, what would people ask me why I've been here so long? I say, well, what would you give to meet all your heroes? What would you give to meet every Rockstar or politician or at anybody you wanted to meet? I guarantee you; they'd come and rang the bell, I figured out that there were since I got here in the, my 96 or 97. There, there's been 10,000, bell rings. That's an awful lot of people that say hello to.
Hank Smith: From a viewers perspective, having that continuity of personnel, it's like, you're waking up to your family, you know, you put on the first show, Squawk Box, and then the same crew for a long time. And you've been there for a long time. And you talk about some of the people like Sue Herera and Bill Griffeth have been there since the beginning. And that makes a difference. That's why I think you have such a consistent viewership.
Bob Pisani: Yes, the people tend to stay for a long time. And you do get views do get to know you and feel like they get to know you. And every once in a while, if you say something that's kind of out of character for you, you'll get a comment or you'll get a Twitter thing. Like, that was a weird thing to say, you know, Bob said something strange. I wonder why he feels this way. So you do, you're right. People tend to think they get to know you because they listen to you.
Hank Smith: Let me just share an anecdote with you. I was actually part of ringing the closing bell in January 17th of 2007. And I remember at the time, our host was Catherine Kinney, who was the President and CO Chief Operating Officer. And I asked her, Catherine, you've done a lot of these, what is the highlight for you? And she didn't hesitate. She said, when Steven Spielberg after ringing the bell turned to me and said, this is the coolest thing I've ever done in my life. So, it is it is a really great experience. And, and you talk a lot in your book, or you write a lot in your book about some of the impromptu interviews that you were able to get to, and they're not easy. Do you want to share a few of those?
Bob Pisani: In 2005, the head of Warner Music was going public and the head of Warner Music, Edgar Bronfman Jr. Came to ring the bell, and he brought along Jimmy Page from Led Zeppelin, they were on the roster at the time. And what you do is when you go on the balcony, there's a red button depressed and you're supposed to hold it down for 10 seconds, and not longer. And then let go. And instead of ringing the bell, what happened was they had hooked Jimmy Page, he bought a guitar. And they plugged it into the amp system, the amplifying system. And he played the opening to a Whole Lot of Love on that. And there were 300 traders on the floor while holding Warren vinyl copies of Led Zeppelin records, Led Zeppelin one and two they were they knew he was going to come they didn't know he's gonna play this. And he's cards play in this like really, really loud. The bell rings, you could barely hear the thing. People were screaming and I'm screaming and when you ring the bell and you go down the stairs, there's two ways you can go. You can go down this go down a flight of stairs, and you can go right go takes you to a little passage that goes out on Broad Street and you go to your car, or you go left and it takes you down a little path that goes onto the floor of the stock exchange. So I'm standing there they finished ringing the bell. I'm standing there with a microphone and a cameraman is 150 guys behind me wanting to meet Jimmy Page. And Edgar Brockman comes down, it comes out to the floor. I said, Hello, Edgar. Nice to see you. Where's Jimmy and he said Jimmy didn't come he made the right turn and went out. Because Jimmy has given us like getting around crowds that much. We sort of knew that we were a little disappointed. But there's a lot of wonderful ways that you can talk to people on floor, some of them are more reluctant to talk than others. So the key to getting this interesting is finding what motivates people. People ask me all the time, how can I make an impression on someone, it's very simple, find what they really, really want to talk about. And most of the time, it's not what they're there to do. So, for example, Aretha Franklin, one of my great heroes, she came on the floor in 2008 for a Christmas party. She had a Christmas album out. It was a lousy year remember 2008, a terrible year for the Christmas party. And I knew she did not particularly want to talk about the Christmas album, although that's what we did talk about. I knew that there was this movie out about Ray Charles and it was a biopic explaining how Ray Charles helped invent soul music. And I said to her, you know, this movie is really wonderful. People love it. It's so like an educational movie about soul music and you are a part of all that. Are you interested in movie on your life and explaining your contribution and she just lit up and I knew I hit it right there. That's what you wanted to talk about. And her manager came out after the interview was over and said, “I didn't hear this interview because I was away from you. But whatever you did, I haven't seen her that animated in a while. So you hit the topic she cared about”. That biopic about Aretha Franklin finally came out 14 years later. Unfortunately, she passed away before it happened. But it took a long time to get it together.
One other, I will tell you that was interesting. Getting somebody excited. Robert Downey Jr. He came on the floor, and I think it was 2013 or so the Ironman three had come out. And these were huge movies. Now, all of a sudden, the movies were bigger than the stars, like the Marvel Comics run was so big that these were bigger. The movies were bigger than Robert Downey Jr, any star. So, they were restricting access to movie stars. They didn't want them to say anything crazy. His people came over this is down these people, not the NYSE and said, “Robert is going ring the bell.” I said, “I know I'm very excited”. And they said, well, “He's not going to talk to you”. I said, “Well, maybe you'll come by and maybe I'll be standing here” and they said, “No, he's not going to talk to you. He's not going talk to anybody. He's just going to ring the bell, wave and walk away and you're not going to bother him”. Okay, fine, so they said just the day before I went home, I got the first Iron Man comic book. I collected comic books in the 60s. So, I had to Avenger One the First Ironman, Robert Downey rings the bell, and he walks down and he's walking past me. And they had two guards put on either side of me, so that I wouldn't be able to talk to him. This is how like, they are so serious, these people. And I held up the Iron Man comic book and said, “Hey, Robert you know, this comic book?” Yelling over the guards, and he looks at it stops. And he says, “Is that the first Iron Man? And he comes over? I say “Yes, it is come over and say hello to the CNBC viewers”, and I got the interview. So that's what he cared about. He didn't care about you know what, you know, what, how's it feel to be Ironman? He was interested in that, because he understood that that was connected to the franchise. He wanted to be a part of it. By the way afterwards, the PR people came up to me and said, “We told you he wasn't talking to you”. And I said, “You told me, you didn't tell Robert, apparently, he wanted to talk to me”. So that's the point find out what people really want to talk about. And get them to talk about that.
Hank Smith: That's great. Bob, take us through a typical weekday from start to finish. I know you live in Philadelphia, are you commuting every day back and forth?
Bob Pisani: I have an apartment up here. So, I've been going back and forth for a long, long time. But the day usually cuts for years and years, I used to get up and look at the Tokyo Stock Market at 5:15 in the morning. Nowadays, I just glanced at S&P futures, to see what's going on there. But I usually get up and then I come in. And you know, you used to stop and read the paper. Remember the days just stop and read the journal in the New York Times, hey, get this all in a condensed version, and go through it to see what's there. But most of the time, I get about 600 emails a day, in the morning. And most of it consists of trading desk commentary. Like here's what our housing analyst said today. And, frankly, you know, a lot of it is just not worth a lot anymore. A lot of the a lot of the quality of research on Wall Street has gone down in the last 20 years.
So, your gain here is assessing this information, the economic data, other people might have said overnight, and making a story out of and this is what I always say about the game and how you do this. Imagine like you're coming in, and there's 100 stick of notes on the wall, blank, yellow sticky notes. And your job is to fill in each one with the facts. But that's not enough, because facts are not journalism. Your job is to connect these facts of today. These are the facts that matters today, and connect the dots show how these stories, these facts are connected. And that's journalism. Journalism is creating an arching overarching narrative out of a series of facts and individual stories. And that's really the hard part. Actually, it's not that interesting to say, you know, the consumer price index is up 2% today, so what? What does that mean? Is that good, bad, awful? How does that compare to other years? How does it compare to other data, it's creating a narrative that's really difficult. So to do that, you have to have very good research skills, very good writing skills, and very good interview skills. But it's the ability to create narrative that is the overarching skill, and really distinguishes one journalist from another really.
Hank Smith: And you talk a lot in your book about the voluminous amount of reading that you do, and I can't help but not ask this question. Because you also talk about almost on a daily basis during the week of going out and having drinks with traders, in particular art cash in which you share some absolutely fabulous stories about and I'm thinking after reading, the first part of your book is there's so much drinking going on. how can these guys do what they do?
Bob Pisani: It's in that culture of working hard and playing hard. It has been embedded in Wall Street for, you know, since the dawn of Wall Street. And I always I always want jokes in my book is a part in the back called Maxim's, which are sort of pithy summaries of things that I've learned by watching people and one of the Maxim's is maximum 48 or something is, when going out drinking with traders, stay one drink behind and shut up. So that means generally you want to, not try to keep up with them. And listen more than talk more. And that's generally pretty good advice for that I found in general, for going out with a lot of people.
Hank Smith: And I might just add, what a bonus for me that those last two sections on the Maxim's and then your book recommendations or your bibliography, that to me was worth the price of the book. And particularly for young people getting into this business, they could do nothing better than get that list of books and in the different broken out in the different categories. Because I've read most of them they're in they're just great books, and the maximums are a lot of fun. And I noticed your tie is straight. That was that was one of them. Content is more important than whatever, but you still in style, but you still have to have a straight tie.
Bob Pisani: Yeah, there's a whole series of comments on just sort of how to present yourself. Yes, content, always trumps everything else. But make, make sure your tie is straight, which is a pithy way of saying, you know, you can, you can practice all you want on what you're saying is the most important thing. But you know, if you look like you spent the night in a washing machine on the spin cycle, and just got out of bed is still going to leave a subliminal impression on people. So little stuff like that matters a lot. You mentioned books that matter.
One of the things that's really interesting about writing a quasi-memoir, where you look back at 30 years is, how do you know what you know? And you have to think of it it's a real active memory. And you have to sort of realize, well, what do I know? Exactly? So you write down all the isolated this you write down like five pages, this is what I think I kind of know, besides funny celebrity stories, and then you think like, how did I come to know this? Who taught me this? I didn't wasn't born this way. If somebody like learned it somehow, and you think of like, what was the origin of the beliefs that you have, and then you start wandering through it is still all through. So I ended up realizing that there was only a half a dozen books and people that had the most influence. I've read dozens and dozens of books. But if you really think about what matters, it's still on my shelf behind me. Stocks for the Long Run by Jeremy Siegel, which came up 94, which talked about the long-term relationships between stocks and bonds that stocks were the best investment long term, he went back 200 years. That was groundbreaking financial research. So, Stocks for the Long Run by Jeremy Siegel. Winning the Losers Game by Charles Ellis, which has been around since the 1970s. And Charles Ellis showed that professional fund managers do not outperform. In general, he was one of those people that did that, along with Burton Malkiel, who wrote A Random Walk Down Wall Street that helped popularize the concept of indexing. He was one of the people that proposed the average person would be better off owning an index fund like the S&P 500. But there was no way to do that in the 1970s. And eventually, Bogle was able to do that Jack Bogle, the founder of Vanguard, opened the S&P, the Vanguard S&P fund in 75, I believe or 1976 I recall. And so, the fourth book was Common Sense on Mutual Funds by Jack Bogle, which came out in 99, 1999, as I recall, and that was an exhaustive analysis of stocks versus bonds and indexing in general. And those people I realized were the ones that had the biggest influence on me, and their books still sit on my shelf, and I've used them as references, even to this day.
Hank Smith: Did you ever think when you were teaching real estate with your father at the Wharton School that you would be in the business that you've been in now for the past 27 years?
Bob Pisani: No, it was a little bit outside what I thought I was going to end up doing. In the 1960s and 1970s. I grew up in, I was born in the Bronx, but I grew up in Bucks County, Pennsylvania, north of Philadelphia, beautiful bucolic area on the Delaware River. And my father was a developer who built apartment houses very successful. And in Oh, it was 1977 or so. He took me aside and called me into his office and said, “Robert, how'd you like to go into business with me? You know, Robert Pisani, and Sons?” and I had worked for him on his projects, I mean, physically work for him. I mean, I worked with the carpenters and electricians carrying wood. I know how building physically went up, because I hope I carry the trusses and help, you know, carry wood for the carpenters. And he said, “The real money is in the financing and arranging and it's the business dealings. And you don't know much about that. You only know how the physical building goes up. And why don't you consider doing that with me? And, you know, we can be a partner together”. And I said, you know, I turned down I said that I want to be a journalist, I want to be a writer. I want to write books. Norman Mailer was my hero, then Tom Wolfe, Hunter S. Thompson. These guys were big public intellectuals. They wrote famous books. And I'll never forget, my father looked at me and said, “Robert, how much money does a writer or a journalist make”? And I said, “Gee, I don't know that. I have no idea”. And he said, “Robert, let me get this straight. You want to go into a business, and you have no idea about what your economic prospects are? Let me just advise you that in the real estate business, I know exactly how much money you can make. And it's a lot. And you see this nice house. He has a beautiful house, outside of New Hope, Pennsylvania, big house, nice car, we can do this. We're builders, we can build a home for you. And is this not of interest to you? “I said, “Well it is, but I want to be a journalist”. And he thought I was my father thought I was crazy. In the mid 1980s. He started teaching at the Wharton School as an adjunct professor. He knew the head of the real estate center there. And he brought me in to help him teach the course. And we ended up taking the course curriculum and publishing a book on real estate development, called Investing in Land published by John Wiley in 89. And by sheer dumb luck, it was the month CNBC went on the air, April 89. And I knew a friend who was got a job there and other pure dumb luck. And she said, “What are you doing?” I said, “Well, I'm teaching my father. Wharton got a book and she said, “Come on as a guest. We just started this thing called CNBC. We're calling it a Consumer News and Business Channel, CNBC, and it's owned by NBC and we're still figuring out what we want to do”. And I went on, they hired me as the real estate correspondent from 1990 to 96. I was the real estate correspondent.
Then in 1997, I became stocks correspondent, and I became the stocks correspondent, because it was obviously, we were getting some serious ratings. And we were getting ratings because of this shiny new thing called the internet. The Netscape IPO happened in August 95 and that changed everything. All of a sudden, the world just woke up to this thing called the internet. And boy, that was a sensation. And I caught that wave. CNBC between about 1996 to 2000, was the hottest thing on television. And I always say to people, I hope that there's some time in your career, when the wind is at your back, and everything is going right, because that's what it was like between 96 and 2000. It was the greatest four years of my life. All of a sudden, we were nobodies for years. And all of a sudden, we were famous. I mean, people stop you on the street to say hello to you, like you're astonished. And it was a wonderful run, it ultimately ended with the.com bust, which was a problem for only a very small group of people who had over-invested technology stocks. What was worse was 9/11, which was the year after. And that was a disaster for all of us all, number of all of us had friends who died. The World Trade Center's only a quarter mile from here, downtown was a smoking row in a pit for over a year and it was depressing and awful. So, the great times were followed by a horrible couple of years, when everyone was miserable, and we were in a recession and friends were dead, people were just very unhappy. And this is section chapter in the book, which was very painful to write about how I almost left CNBC and left the stock exchange because I just thought it was all over. And I learned to meditate. I actually joined a Buddhist meditation center, and it showed me to calm down and what happened was not my fault. You have to sort of understand about changing with the times, you know, it can't step in the same river twice, and all sorts of things and it calmed me down a lot. So, I still meditate but life changes around and you have to learn to adapt to it.
Hank Smith: We have an expression, pay attention to the things you're in control of. Yeah, you're not in control of the direction of the stock market, the direction of interest rates, inflation, all these things that kind of paralyze you and prevent you from doing things that you are in control of like picking up the phone and talking to your clients. Having a good attitude and staying positive. But I do have very much remember that 1996/1997 period when all of a sudden you went into every single clubhouse and club locker room and CNBC was on, everyone was watching CNBC. It is still the case to this day, you're very open in your book about your investment successes, your investment mistakes, and how you personally invest in you. And you make the correct observation that not many people that write about investing, whether it's a newsletter or a book, actually talk about what they do personally. It made me think that in 32 years, I can count on one hand, Bob, the number of times either an existing client or prospective client that I'm making a presentation to, has said, “Hank, how are you personally invested?” Yeah, it's such an it's such an easy and appropriate question.
Bob Pisani: And why don't people ask it? I say this in the book, it's amazed me in 30 years, it to me, the most people ask me, what did you think of the markets? And they usually mean, what do you think the markets going to have in the markets three to six months? They usually mean some intermediate term question. And to me, you know, if somebody was stopping me, I would think the question would be okay, you're so damn smart, they put your ugly face on TV for 30 years. What are you? Oh, that seems like a rational question to me. And if people never asked this question, and maybe it's because it's considered impolite, or to direct a question to ask a stranger, I guess I get that, but sort of the more... So the one thing that I was determined about in this book, and I told the publisher was, I am going to tell people what I own. But I'm going to do more than that. I'm going to explain the history of what I know. And when I did that, I was confronted with horribly embarrassing situations, where I basically did things that I knew were stupid, and I knew were not right. And I did them because of what we would call behavioral economic biases that I exhibited. And I started with the very first thing I ever did in the early 90s. When I opened my 401k, which is I bought General Electric stock, were restricted, I'm not allowed to trade, you know, the stocks, specifically, or own them, but I'm allowed to own the company stock, which was at the time was General Electric. And it is hard to describe the influence of Jack Welch, who was the CEO had on everybody at that time, he was like a god. And I believed him, I knew him, I gone out with him. And so, here's the classic bias, overconfidence not just in yourself, but in your company and your CEO, they can do no wrong, that is a classic bias. And I exhibited that bias, I bought GE stock so aggressively that by 1999, GE had a huge run in the late 90s. By 1999, half of my 401 K was GE stock. Now, you know, Hank, there is no rule on this, but 50% of your money in your own stock is a stupid idea. It is too risky; you need more diversification. And I knew that it wasn't like I didn't know that I knew it. I thought I was so under the influence of Jack Welch that bias that I had, that I just ignored it. And I made a second stupid mistake. When the stock started going down in 2000. We had, of course, a market top, I held on to it. And here's another class who buys but people tend to hold to sell their winners and hang on to their losers.
There's a thing called loss aversion, which is very well studied, where people fear loss is greater than the expectations of gains. Another bias that I exhibited, and I knew this by 2000, I knew about fundamentals. When I go through a list of all the biases people exhibit on behavioral economics in the book, if you want to read it, go ahead. But the point was, I know this, and I still did this. Why? Because these biases are so powerful in your brain that they're really difficult to overcome. And I described this I described meeting Jack Bogle, the founder of Vanguard in the mid 90s, how it changed my life, how I became an index guy, how it became believed in passive investing. Now I supported exchange traded funds. And I've walked through stuff, here's what I own and close. And nobody should be surprised that my largest holding I have is the S&P 500. I own it in an ETF. And that's a core holding for anybody. And I say to young people, they say, Well, what should I buy? I don't know. Look, let me make it simple for you. If you're 25 years old, you don't need to think too much. Buy the S&P 500. And hold on it don't even worry about a bond fund. If you're 25 years old, believe me just keep buying that for a number of years and call me in 10 years and you can diversify if you want and be creative. And if you think you're a genius and you want to buy you know Apple or Nvidia or something. Bogle always knew this. He said, “We know we can't stop people from trying to beat the market”. So take 10% of your money and go ahead, be a genius. Try to trade but you're going to find out you're probably if you're honest if you know how to value have you weighed yourself wins and loses, you're not going to beat the market over time. And I believe that, but I still encourage people to go ahead and pay attention. And if you want to, you know, go ahead and trade, take a small part of your money and go ahead and trade your heart out. But keep the core in long term, index funds, and don't trade around, get somebody like you, (Hank) who can sit down, make a plan. I know people say what am I doing? I said, look, I'm gonna make it very simple for you. How much? What is your risk tolerance? How much can you afford mentally to lose? How long before you retire? How long do you think you're going to live beyond that?
You need to sit down with advisor make a plan, once you have a plan, you trying to trade in and out of the market, like what happened last year, the academic literature is you will lose doing that that is a bad, bad idea. That's why you pay advisors who will tell you don't be stupid and think you can trade your way out of a down market. You cannot.
Hank Smith: I believe every individual should have a honest, it doesn't have to be long, investment policy statement, as Charles Ellis said in his book, investment policy, that is 85 to 90%. of success. If you have a realistic investment plan as your as you just as you just said.
Bob Pisani: it's amazing how many people don't want to believe this. They don't, this impulse to want to beat the market this, this gambling impulse to want to bet on the Raiders Jets game. But what the same, you know, ferocity you want to bet on Nvidia in the direction of Nvidia in the next week is a real problem. It's a bigger problem now than it was 20 years ago, because or 30 years ago, because 30 years ago, it took a little effort to actually trade on a daily basis. It particularly before the advent of personal computers, in the mid-1990s. It took a while to get confirmation, it took a while to put the order in. Now you're sitting in a bar in Atlantic City with your boyfriend or girlfriend, and you can bet on IBM in a millisecond. Or you can bet on the Jets game and it's the same thing. It's a different app, but it's the same thing. And that is qualitatively a different experience. Which is why I think the need for plans, the need for financial education and literacy and the need to just tell people, you will lose money trying to day trade. The vast majority, the vast will lose money. You just don't know how to evaluate your losses. And a lot of people just lie to themselves. They don't even know how to evaluate their losses. So, this is why people ask me do I need a financial planner, I'll say listen, generally keep costs low. But it's a good idea to sit down with a professional, you want to keep the cost of that professional low, Bogle had this. It's the key, but it's a good idea to talk to a professional.
Hank Smith: One other mistake that you've highlighted that relates to behavioral finance. And oh, I'll preface it by saying one of the neat things about the pandemic in zoom is it allowed viewers to go into people's living rooms or studies. And so when I saw you first out of your study, and all this rock and roll posters, you know, my first impression was, Wow, I didn't know Bob Pisani was a stoner? But then you talk about how it's your hobby you collect 1960s Rock and Roll posters. You mentioned Led Zeppelin and in the story, I think was around Black Sabbath.
Bob Pisani: So, this happened during the pandemic when we all closed the NYSE in March 2020 and went home and I collect blog posts I've done this for almost 40 years. And it's a fun hobby. You know, Jimi Hendrix at the Fillmore has a small group of us to collect them. And I believe these people who did this site it's called psychedelia are like the Talulah tracks of their time, they greatly influenced the visual arts and you can still see this today, psychedelia style posters that will show up. So I have these posters and during the, the pandemic I was broadcasting from home and I had these posters behind me and all of a sudden my Twitter feed blew up my coolness factor on Twitter went through the roof, and on the internet went through the roof. There was this ad this Twitter feed called Room Raider, which raided the rooms of the people who were reporting at home everyone was reporting from home all the journalists and just nasty stuff like oh my god, that one looks like she's in a prison. It's you know, Where is she? What's wrong with that? That point is dead behind that woman. And I got a 10 out of 10 which really made me feel good. And I thought to myself, who knew that there were so many old hippies that has been stoners watch CNBC. But if you think about it, you know, we're older that we're baby boomers. That's the demographic actually, CNBC it makes sense, although it doesn't sound like it makes sense. It does. There's a chapter in my book about behavioral economics, and I use the posters as an example.
So one day this is some years ago, there was an auction going on. There are dealers that will sometimes do auctions with these posters, and there's a Black Sabbath poster from 1975. I don't like Black Sabbath, and never collected the posters, but this is a very famous poster Ozzy Osborne's waving his hands in the air. And I thought it was kind of cool. Alright, so the poster was 250 hours and I did 300. I figured, well, I don't know what it's worth three to 500. So immediately I get a bid back counterfeit 400. So that's interesting. So, I did 500, which I thought was sort of the max, and immediately I get another bid 600. Now, when you do that, when you get an immediate counter bid, that means that someone has bids above where you are, in other words, somebody's layering bids above you. And the question is, do you want to go any further or find out where the bid where the bid stops? And I then bid 600, already now I'm over. And when you're, when you're a collector, you have to have price discipline, whenever you're doing something. Well, it doesn't matter what the cut point stance, rock posters, whatever, you have to have discipline and walk away. Otherwise, you'll go crazy, you'll go broke, you'll do stupid things. And I violated this. So because I was just curious about who would want this poster because they don't have a big base of, you know, it's not like Led Zeppelin, which has a base of collectors or the Velvet Underground, there's certain groups that are the Grateful Dead lifting group. So 600, 650 now, immediately 750. And I'm thinking, man, it's just kind of funny. I put in 900 bid 1000. Right there. I mean, instantaneously, so I won't bore you. But about 10 minutes later, I went $3,500.
And I'm screaming at the because now I'm really messed, I'm screwed. I'm just violated all the basic rules about doing auctions. And I want I cannot understand Who on earth would spend $3,500 for a Black Sabbath post. So let's say I called the dealer who I knew. And this is not really appropriate. You're not supposed to be asking about counterfeiters to dealers, because it's theoretically it's private auctions anonymous. And the dealer said, well, I said, I have to know, am I bidding against Ozzy Osbourne? Who the hell wanted a Black Sabbath poster for 3500 dollars? I got to know who won. And it's a Well, I'll tell you. I'll tell you who the who bought the poster was, it was you, you bought it? You're the idiot, right? And I stopped and said, Oh, right. I am an idiot. That was so annoying. I said, All right. Well, and I later I later found out separately, that the counter bidder was a well-known poster dealer in Los Angeles, who probably wanted it for a client that he had maybe some TV rights or something like that God knows. But to this day, you know, the idea that somebody would spend that much money anyhow, I had to, I was so outraged, I, I framed the poster which cost me another $500. It's now $4,000 in and hung it on my wall and still hangs there on the wall.
Hank Smith: Let's close it on this, Bob, you for 27 years have brought the same level of energy, enthusiasm, expertise, and really experienced that, that there is no price on when we you know, when it's time for Bob Pisani to retire?
Bob Pisani: You know, it's a good question, people leave because either they get too old, and I'm getting up there, or they get bored with the job. And I'm certain I'm bored with that. Or they want to go out and do some other things. And it's quite easy. There are some things I also want to do. I'm really interested in financial literacy; I'd like to do a lot more with that. It's kind of appalling. When I describe my own stupid mistakes, it's amazing the mistakes that other people make. And I'd like to spend a little time doing a little bit more on financial literacy and education. One of the things is just explaining how things work and how the market works. And I'd like to do something a little more educational down the road. One of the things that happens in the book that I have a couple chapters on is why the future is so hard to figure out, You know, one of the things that has baffled me is how bad everyone is at predicting the future. I mean, think about this. It's not just weather forecasting. But economists are bad at figuring out the future, amateur stock pickers are bad at picking stocks, professional stock pickers are bad, too. Economists are terrible at predicting the GDP one year from now. And even Hank, the Federal Reserve itself has a terrible track record predicting a simple thing like the GDP and why it bothered me for so many years, and I have a long series of chapters two chapters on this and there's two problems. So this I'll leave you with this, about how difficult this business is in predicting the future. The first problem is this confidence behavior. This behavioral economics thing, the bias is people exhibit that infect their thinking and froze their ability to predict things off so you have things like overconfidence, you know, you've come to believe that you've had an infallible streak because you have one idea and you're going to be right and everything that's a bias. You have people have herd behavior they blindly follow what others are doing? There's confirmation bias is where you select information that just support your own point of view. And then you ignore everything else. This throws off your ability to accurately predict things. That's one problem, biases. The second is the unknowability of the future. There's a real lack of information because events occur that are unpredictable. So you think like, okay, the Caterpillar analysts, this guy's job is in December, he's supposed to figure out what the price of Caterpillar is going to be one year from now, you think that's pretty easy, it turns out, it's really hard. Because it's, so many variables come into play to affect the street future stream of earnings, the CEO and the management staff could change, something could happen to the CEO, all sorts, there are hundreds and hundreds of variables that actually go into trying to figure out what's going to happen to Caterpillar, when you put it into the macro economy, it gets multiplied. So when you look at this, you become very humble Hank about trying to predict the future. And instead of saying, you know, everybody's a bunch of idiots, and being cynical about it. And it's true, people don't really know much about the future, you'll start to understand why.
I'll leave you with one book, you like books Hank, and so wonderful fellow, Philip Tetlock. And he's written a series of books about how to improve forecasting. And he's got a wonderful project called the good judgment project where he actually tries to teach how to do forecasting better, not just economic forecasting, forecasting in general. And biases is one of the things he talks about. So I would highly recommend looking up Philip Tetlock, he had a big influence on me and taught me not just how bad everybody is on this, but just how you could theoretically learn to be a little bit better about it.
Hank Smith: Bob, I want to thank you for joining us to highlight market trends and providing some insights behind the scenes on CNBC. I have to admit, I find the inner workings of broadcast journalism very interesting. And to our listeners. Thank you for listening to this episode of Speaking of Quality, Wealth Management Insights. Make sure to tune in to CNBC to see Bob in action, and be sure to subscribe to be alerted to our upcoming episode drops. Until the next time, I'm Hank Smith, stay bullish.
Maxine Cuffe: Thank you for listening to this episode of Speaking of Quality, Wealth Management Insights with Hank Smith.
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