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The Bigger Why is a long-form podcast exploring meaning, growth, mindset, purpose and the decisions that shape a life and drive behavior.
Hosted by Sam Weber, the show features unhurried conversations with founders, CEOs, authors, creators, artists, actors, investors and thought leaders about focus, ambition, failure, regret, triumph, philosophy, personal growth and the stories behind success, sacrifices made, lessons gleaned and wisdom embodied along the way.
Untitled - March 1, 2026
00:00:00 Speaker: Find the answer to that, because once somebody has found an answer to that question, everything else starts to become really clear. You know, Tony says, where focus goes, energy flows. It's so true. The mind will find what it's looking for, and you just have to set your mind on what it is that you believe. And again, you can always reroute and reposition. But if you don't aim for anything, you will absolutely hit nothing. Christopher Zook is the founder, chairman and chief investment officer of Kaz Investments, a ten billion plus asset manager. So, you know, we're eleven billion dollars now. We are nowhere close to what we can be. Ultimately, he became an investor in, you know, in one of our funds. And that led to a conversation which led to another conversation, which then in twenty twenty one, he actually became a shareholder of the firm. And then we wrote the book together last year, The Holy Grail of Investing. And people asked me at the time, you know, is this a surreal moment to where, you know, here's somebody that you have literally followed his teachings for so long, and now you're actually on a stage and you're writing books together. Christopher recently co-authored The Holy Grail of Investing with Tony Robbins, which became a number one New York Times bestseller. Hello, everyone, and welcome to the Holy Grail of Investing podcast with Tony Robbins and Christopher Zook. We're thrilled that you've tuned in, because over the next couple of sessions, we're going to talk about some of the most interesting things in all of the world of investing a better business model on the planet than managing a private asset management program. Insane to think that we're only going to allow it to go into a government bond. Some things that will really be valuable to you as you go about your businesses and your investing a trillion dollars of GDP a year, is China and the United States. That's it. One company was worth more than the entire output. Christopher was honored with the Texas Alternative Investments Association's Lifetime Achievement Award in recognition of his contribution and sustained support of the industry in Texas. And the thing about almost all people is they can do a lot more than they think they can, and they just need to be given the opportunity in their own mind and then create the opportunity in their world to go achieve what they're truly capable of. Most people can do anything they want if they set their mind to it. My guest today is a great example of how increased self-awareness, clear, actionable and measurable goals, and unwavering commitment and a strong sense of purpose can take you places beyond your wildest dreams. One small step at a time. Kristopher Zook is the founder of Kass Investments, a firm he built with a long term view of capital, people and partnership. In this conversation, we talk about clarity, about goal setting, about reshaping your mindset, about the future of the alternative asset space, about the tension between the size of your goals and your fears. We talk about football and of course, about Tony Robbins. This conversation is about business, but it's very much also a conversation about life. And I'm grateful to share it with you today. But before we begin, I want to remind you, as you watch or listen to this. Please bear in mind that The Bigger Why is an independent podcast in which I explore topics that are meaningful to me in my own personal capacity. The bigger why is not sponsored by or affiliated with any company or other outside interests. So to be clear, any statements or opinions expressed by me or any guests on the show are made in their personal capacities only at the time in which they made them. Please also bear in mind that this discussion is for informational and entertainment purposes only. It is absolutely not legal, financial or investment advice. We also recommend that you consult with your own advisors to your own independent research, and arrive at your own conclusions on any of the topics we discussed today. After all, helping you formulate your own worldview is kind of what this show's about anyway. Sure. No, I'm happy to do so. Thank you for having me, I appreciate it. Um, you know, grew up here in Houston, Texas, where we're filming this today. And, um, always, you know, really was an athlete as my primary focus. And then when I went to school, I played football, uh, had to stop playing football because of the second knee injury and took up the game of golf, was able to be successful enough to make the golf team there at Texas Tech. And, um, and then started the investment business straight out of school. So from that point, worked in various roles in, uh, in the investment world until I started the firm in two thousand and one. And so next year actually will be our twenty fifth anniversary, uh, which is kind of wild to think about. Uh, it's already been twenty five years, but we're just getting started. When you're having fun, it goes by quick. Yeah. It does. It's exactly right. Um, so what sort of led you to want to start my own firm? I mean, obviously, the investment space can be. Especially if you're starting, you know, two thousand and one. You need a big bite to chew. I was in. The good news is I didn't have to worry about what was happening in the world at that time, because I already had my specific goal and my specific target of what I wanted to achieve. But you have to go back ten years prior to that to know how that was generated. So in nineteen ninety one, literally first year out of school, uh, was was successful early on, but was really driven to do much more, much more than that. And so in December, I can actually visualize where I was at the time I got home late from the office, which is pretty typical. Um, my wife had already gone to bed, and and I was, you know, making myself some dinner real quickly and was watching TV, and I saw this guy on TV that was a huge individual with big hair and very big teeth. Uh, otherwise known as Tony Robbins. And, you know, I liked a lot of what I heard. And so I ordered the tape series back in that day. Yes, a cassette tape, uh, series. They couldn't stream on demand then. Yeah, but this is, you know, a lot of people I tell are younger, and they're like, what the heck is a cassette tape? You know, cassette tapes. You actually put it into a cassette player and you listen to it. And, uh, no video to go with it either. It was all audio. But Lisa and I, it was a thirty day course. And so Lisa, my wife and I, we did that thirty day course. And one of the days you actually set your goals for what you want to achieve that year, you know, and basically design your life and to an extent. Right. Well, one of the specific targets that I said is that within ten years I wanted to start a firm by the name of Kass Investments. And every step along the way for the rest of my career up to that point, for the next nine years and nine months, was to help me start this firm. And so, naturally, it's not an accident that nine years and nine months later, we open the doors of Kass Investments because of the fact that that decision was made and that every action was taken along the path to achieve that particular outcome. How serious were you in your mind when you said that goal? Ten years out? Was it pipedream that as serious as a heart attack is the best way to put it? Wow. So one of the things that Tony teaches, which I'm very thankful for and appreciative of, is, you know, if you don't have a major why and you don't have, you know, a reason of why something is a must as opposed to, you know, and I'll quote him, he says, you got to be really careful not to shit all over yourselves. Right. You can't say, I should do this, I should do that, etc. you know, I will do this and I will do that. And that mindset and that shift of is is not something that's optional. This is something I will do is very, very different than most people when they go through their goal setting workshop in January and they're in late December, and then by the first of February, like, yeah, that's too hard. I'm not going to do that. There was never a question that I was going to do it. The only question was what was the best way to go about doing it? What skills did I need to have? Who did I need to know? What experiences did I need to experience in order to prepare me for what certainly was a daunting and unknown task of what that was going to look like. But at the same time, and I'm very strong in my faith and I try to be at least, um, but as a Christian, I felt like that was what, when I prayed over it, that's what God wanted me to do. And if God is telling me to do that, who am I to second guess that? My job is to be faithful and to do what he's asked me to do, and to give it one hundred percent, and he'll take care of the rest. So in a way, goal setting is kind of the crucial point, because you can shoot yourself too short by putting up a goal that's easy. But then if you go too elongated or too extreme or not delineated, then you may wind up. I mean, I teach. I teach a lot of a lot of material on goal setting, most of which I've learned from Tony and some of which I've adapted to, to, to, to other experiences that I've had and other things that I've read and learned. But, you know, almost every single person who teaches goal setting is going to teach a Smart goal. It must be specific. It must be measurable, it must be achievable, it must be realistic, and it must be time sensitive timely. So, you know, it's not a realistic goal to say, okay, I want to lose one hundred pounds. I mean, I'm one hundred and eighty pounds. The only way I could do that, there is a way. Yeah, I could cut off both legs and I would achieve that. I do not wish to do that. So the only way for me to achieve my goal in a realistic fashion is to set something that is a realistic, and I can map out a way to get from point A to point B by a certain date, and then work backwards as to how to do it. And I knew at that time I needed to have certain knowledge and legal and compliance and regulatory and accounting, which I really didn't want to learn, but I needed to learn. Right. There's some people out there that love accounting, you know, I love that about you. That's not me. I work with it because I have to. Same thing with other aspects of business. You just have to know it if you're going to have your own firm. And it's amazing how many people think I want to do that. They they try it and they're like, okay, I really didn't like ninety percent of what I do every day. I'm going to go back inside of another business and let somebody else do all those other things, and that's totally fine. There's a lot of people that think the magic bullet is to be able to go start your own firm. And that may be true for some people. For most people, it's to be, you know, a real business within the business in which they operate. That was true for me when I worked at the firms I was at before. But then ultimately now running the firm. And obviously I made so many mistakes along the way that, you know, it's just something to where most people don't want to persevere through all those mistakes that I had to persevere through in order to continue to get to twenty five years. So it sounds like the commitment was integral to you. Continue to persevere, because since then the commitment was so firm, regardless of the obstacles, you had to figure out a way. That's exactly right. It's a little corny to say it this way, but it's true. But the bigger the Y, the harder we try. Yeah. You know, we've all heard stories of, you know, little people. You know, a lady who's five foot, one hundred and twenty pounds. But she can lift a car off of her child. Why? She got a huge why she's going to find a way. And it may not be within herself at all in her mind to be able to accomplish that. You know, there are all kinds of stories of people overcoming enormous obstacles because they're motivated so much by the why. You know, there's the, the, the saying, again, barring from Tony a lot here, but you it's hard to push somebody to a target. Okay. It is much easier if that person is pulled to that target. They're so drawn to it. They just want to become that. It's who they are. They just aren't there yet. That is ultimately what allows somebody to achieve what they want to achieve, to get up early, to stay up late, to work harder, to to do things they didn't think were possible because they have such a motivation. And the problem is for so many people is they're like, you know, I don't really know what my why is. And it's hard to find. I mean, it's not like, hey, let me just create my why today. It's got to be something that somebody depending on their faith, they pray over it, they feel led to it or something that they're just impassioned by, that they just really set their mind to achieve it. And by the way, it's totally fine if somebody changes a target along the way, as long as they do it for the right reasons and they have a good why as to why they're doing that, what somebody thinks when they're twenty one years old, like I was, that is my ten year goal. It would have been fine if I moved it right, as long as I didn't do it, because I'm just being I'm giving up on that dream or whatever. But because of the fact that I feel called and pulled in another direction, that's okay. The key is that's what I tell young people all the time. Go away. Go to a hotel room if you have to, or go, you know, hike, bike, um, camp out, whatever it may be. Spend time just in nature. Spend time by yourself and just think about, okay, rocking chair test. If I'm in my rocking chair and I'm one hundred and five years old looking back on my life, what is it that I want to make sure that I actually have achieved and accomplished that I will be proud of? Not that other people are going to be proud of me for doing, but that I'm going to be very proud of, for doing. And sometimes people still come up blank and that's okay. But don't give up on it. Figure out what that looks like and at the same time bloom where you're planted and be excellent at whatever we're doing right now. Because if we're excellent at what we're doing now, wherever that may be, doors will open for us to be able to do other things. If that's something that we want to have happen. Were you born this way or was this with this, uh, demeanor? You know, it's funny. I mean, I had a very kind of challenged upbringing that I've been open about before, but my father was an alcoholic. Um, my folks got divorced when I was thirteen. Um, I do, to be very clear. There's people that are a lot worse backgrounds than me. So I'm. I'm well aware of many of those stories of people that were abused and other things. I was not that, but I had to grow up very early in life, and I became effectively an adult when I was fourteen years old, and I was the man of the house. I started working when I was twelve. I've always worked. I have always been driven to accomplish things that I felt were really, really important. Um, and in many cases we're driven, driven to become something that was overcoming the challenges that I had when I was younger. But at the same time, I do believe that just the good things that my father taught me before he had his challenges and before he left the home was, you know, hard work, discipline will pay off. And there's no question that one of the best lessons that I got from my father was that, you know, there's no room for mediocrity. You either do it right or you don't do it at all. And I may not have appreciated it at the time, the way he explained that to me. But it's a lesson that I'm very grateful for. As challenged as obviously that situation was, because before, um, he had his issues, I was able to learn a lot that was very important to who I became as an as an individual. But I really didn't have this much transparency and visibility to, uh, our focus, if you want to call it that, until such time as I had a big enough why, which was I know what I want to accomplish. I know what I want to achieve for, you know, my wife, you know, we got married when I was twenty years old. She was twenty two. So, you know, I knew what I wanted to achieve for her. I know what I would achieve for my future family and ultimately what I want to be able to do, to be impactful, you know, for for my faith and to be able to be impactful on the world. So all of that combined, along with a pretty intense personality. Um, you know, kind of translates to, you know, uh, real focus on let's see what we can accomplish and not let anybody tell me I can't do something. And then you add on top of that, Tony's, you know, um, you know, material and teachings and things I've learned from Tony over the last, you know, it's hard to believe, but literally thirty five years now, um, to be able to refine that focus and then to achieve things that I never thought possible. Something I'm very grateful for. And I'm very, um. I don't lose it. Yeah. No, it's it's precious. And it is something that is a rare, rare commodity. So do you impart this and integrate it into the firm and the way you guys manage all you guys? We do probably to an extent that some of our team gets tired of hearing about it and listening to it. Um, but for, you know, for those that don't know the story, which is, I'm sure most of the audience, you know, from two thousand and one, excuse me, from nineteen ninety one, when I first was introduced to Tony's work. Um, I never went to a live event, actually, until twenty thirteen. And it was at Business Mastery. Excuse me, date with Destiny in twenty thirteen that I really was able to overcome some of my own personal constraints. And then I went to Business Mastery in February of fourteen, and we really totally redesigned the business. The business was doing fine at the time, but I wasn't satisfied with fine. I wanted to do a lot more, but. So Tony actually became an investor with us in twenty seventeen, and I had nothing to do with it. I didn't know anything about it. He was referred to us by someone, and ultimately he became an investor and, you know, in one of our funds. And that led to a conversation which led to another conversation, which then in twenty twenty one, he actually became a shareholder of the firm. And then we wrote the book together last year, The Holy Grail of Investing. And people asked me at the time, you know, is this a surreal moment to where, you know, here's somebody that you have literally followed his teachings for so long, and now you're actually on a stage and you're writing books together. And I said, yeah, no, it's very much like you can't make this stuff up. I say, you can't make that. And so the back to your question for literally the first, you know, whatever that works out to be, you know, twenty years of the firm before he became a shareholder. I mean, everybody knows that, you know, Tony isms are going to be a reality of Christopher's language. So there's two things that everybody in this firm will tell you is that we talk about Tony and his teachings, and we talk about football. Right? I played football in college. I coached high school football here in Texas for four years. Everything, to me is a football analogy or something that Tony has taught me. And obviously there's some exceptions to that. But, you know, for us it's about our faith and we're very open about our faith. And we have all faiths here at the firm, people that have no faith here in the firm. And I respect their freedom to do that whatever they want to be. That's what we want them to become. But we're very open about our faith. Then from there, we're all about, you know, our families and our families matter a great deal. And what's the challenge? I mean, it's a real challenge, especially for people with young children, just like it was for me to where you're working your tail off. And we have one of our promises, which is, you know, we'll exhibit a higher standard of work ethic. Well, a higher standard of work ethic. And also being a great, you know, wife or husband or father or mother or daughter or sister or whatever it may be, a friend. It's tough, but at the same time it goes back to the why. If we want to be something totally special, you don't get what everybody else wants by doing what everybody else does. You have to be better than that. You have to work harder than that. You have to work smarter than that, etc. and so literally everything that we do and our entire ethos as a firm is about, you know, this is about much more than just ourselves. You know, we are a family here. And to be clear, we families fight and we fight plenty. But we come together as a unified front so that when we go out to the world, you know, we are truly that. All for one, one for all. And we are that team that's going to go out and we're going to take the field and we're going to win. Um, but every single thing that we do, every staff meeting, every quarterly review, every annual review that we do is centered around a lot of these ethos. So using the football analogy, where is the firm and the industry, um, in terms of yard lines around the ten or the train line? It's interesting because at first I started to say that the the firm and the industry would be in two different parts of the field. I'm not sure that's actually true as I think about it. So one of the things that we've been very fortunate to be able to do is to see the opportunity set and alternatives investing, you know, maybe a little bit earlier than some, certainly later than others, but we really embraced it. So in twenty fourteen, we really went to use Tony's quote. We burned the boats. We went all in. Effectively on alternatives. And we believe that's where the future of the markets were going to be for firms like ours. There's still many great firms out there that do traditional asset management like we did in addition to alts, but we also saw fee compression coming. The real hard way, you know, how hard is it to add alpha? You know, in large cap long only you could. We had a really good track record, but you know, you're starting to measure it in, you know, tens of basis points to hundreds of basis points. We want to add a lot of alpha and a lot, a lot of value to people. That is what took us to alternatives. So, you know, we're eleven billion dollars now. We are nowhere close to what we can be. And so I want to say we're on the ten yard line in our own territory, but we're probably on thirty or forty, but certainly we're nowhere close to one hundred billion or two hundred billion or three hundred billion. Nor do we necessarily want to be that if that causes performance to degradate. One of the things that we talk about all the time is that bigger does not make better, better makes better, and we want to be the right size to be able to use our scale to benefit our investors and all of our network, our global network of investors that we have. We have eight thousand two hundred investors in all fifty states in forty two countries. Well, that scale gives us a lot of benefits. But if we had two trillion dollars, okay, that scale is awesome, but you're really just not going to have a lot of ability to add alpha probability to the strategy draft. And you're overreaching on stuff. That's correct. And so we always tell people that if we ever get too big, we'll stop taking money. And I mean, I literally said this to somebody a couple of days ago in one of our strategies, you know, if you don't go in, get in, you're going to you're going to miss this because we're going to close it because a lot of things that really, I think help us in that regard, that are different than some firms is we have six hundred and fifty million of our own money collectively as our shareholders, our team and my family in our own funds. So we're the largest investor in everything we do will because of that, we really don't want to have underperformance because of just excess capital. So we have done it many times over the last twenty five years. We will shut down a strategy and stop taking new money or if the opportunity is gone, we'll shut it down entirely and give everybody their money back, because that is what we refer to as just being freakish about alignment, alignment and making sure that we're all about the performance of our vehicles, not just whatever somebody really wants to do. And particularly for investment advisors, you know, that use us for their clients. They invest their capital of their clients with us. It is something to where we want them to always know with CAS that we are going to give them the very best that we can to deliver the best performance. We're not just going to give you a blue suit because you want a blue suit. If we think a blue suit looks good on you, that's what we're going to put on you. But otherwise we're going to give you what we believe is best for our personal capital and then open it up to the entire network. That is a differentiator for us that I tell you, our investors and advisors, they love working with us because it doesn't mean we're going to be right, okay? Everybody's going to make mistakes and everybody's going to be wrong. But we've been fortunate that over the last twenty five years we have made money or have an unrealized gain on ninety five percent of all the investments we've made in the private markets. So we're really good. From a batting average standpoint. People have made more money than us, but we're really focused on not losing money and being sure that we're aligned with our personal capital with theirs. And you add all that together. You get a lot of consistency and persistency, which is to me, the most important thing in an investor should look for as it relates to what you were saying before about you'd rather have someone be pulled. Salami creates that pull versus totally agree with you. Totally agree with you. And when somebody hears that, you know, we're the largest investor and we're going to make the investment whether you invest with us or not, they're like, well, maybe I want to be involved or maybe I don't. That's up to them to make a decision what's best for their clients or for themselves. But ultimately, you know, they know the only reason we're doing it is because we really believe in it. Yeah. And so maybe, um, with retail ization or more coming into the mainstream, uh, alternatives unquote. Um, maybe if you can sort of give a high level overview of the alternative space, because it's interesting, we in the investment world think of them as alternative to traditional investing. But to many people, stocks and bonds are just as alternative. It's an investment. If you're not familiar with the lingo, it sounds complicated. Maybe it sounds like it's over your head, but I think most of this stuff is pretty common sense. Um, so why don't you just kind of. Sure. Happy to do that. And I'm also going to go back and do what I should have done earlier, which was answer the rest of your question. So I gave you an idea of where the firm is and what your second question is. Ties a lot to the where the industry is. You know, the democratization of alternative investments is a real, real thing. And so I would also say that the industry is on the thirty or forty yard line. We're just now getting to where, you know, there's more mass adoption, and technology is making this easier for this to occur. But to where people are able to invest in things they've never been able to invest in before. With the SEC rule changes that we saw in June. Now every single investor can invest in a registered fund and as private investments in it at literally a two thousand five hundred dollars minimum with no accreditation requirements that didn't exist literally five months ago. So there's an enormous part of the world that now can invest in things that they could never have invested in before with us or with somebody else. But ultimately, that means you're going to see a lot more money flow from high net worth individuals. You know, there's a couple of studies out there, but the average institutional investor has has about twenty percent of their portfolio in alternatives. The average high net worth investor mean large you know qualified purchaser has less than three. So getting is not necessarily to go from three to twenty. But when you talk about the democratization as a whole and then you have four hundred one k plans to the equation, you can just see this enormous wall of potential capital coming to the industry. That's why I'd say it's the thirty to forty yard line. But for everybody who thinks alternatives are complicated, this is the way I try to explain it to them. They can be, but only if somebody makes it to be. Uh, the two analogies that I use, one that almost everybody gets immediately is if you ever have owned a home, you own an alternative investment. It does not list and price every day in the Wall Street Journal. You cannot buy and sell it literally within twenty four hours or in two seconds. In the case of some things you don't know for sure what it's worth. You think you know what it's worth, but you don't know for sure what it's worth until you sell it. That is also true for a buyout fund. It's true for a real estate investment fund. It's true for a venture capital fund. It's true for space. It's true for open AI. ChatGPT the other analogy that people have to fully appreciate is the farmer analogy. And most people never think about the business model of a farmer. What is the business model? It's actually really simple. You buy a piece of dirt or you lease a piece of dirt. You plant stuff, you cultivate that stuff, and then you harvest and then you do it again. Now, obviously it's a lot more complicated than that to actually do that, but that is the business model, right? It's simple, doesn't make it easy. But that is exactly what it is. When you're buying a company that's got twenty million dollars of earnings and you're going to go out and you're going to grow that company by either just getting new customers or actually by buying other companies that are similar and putting it all together. And now all of a sudden you've gone from twenty million of earnings to one hundred million dollars of earnings. Well, obviously, if you go from twenty to one hundred million, you're probably worth more than the twenty million when you bought it. So that's how you make money in the world of private equity. That's growth capital. Or it could be LBO leveraged buyout. Fancy terms that the industry overuses when it's really not that complicated. I'm going to buy a business at twenty. I'm going to grow it to one hundred. I'm going to sell it. That sounds like a farmer, right? Again, it's much harder to do than it sounds, but that is the business model. Don't overcomplicate it. But at the same time, everybody in the audience, if you don't understand it, don't do it. Because that is the problem that most people get into is they invest in what they can, not what they should do. So again, don't shit all over yourself. So if you should, you know, do something that is much more important, but you got to have an idea of I should do this, I should do that. How are you going to actually accomplish that? you have to go through the process of finding a partner who really knows what they're doing, and that you understand why they're doing what they're doing and that they're aligned with you. And then once you accomplish that, then let the opportunities take care of themselves and trust your partner and be a good partner to them. You're going to be able to perform much better than you would if you were in literally just plain vanilla. Here's a fun stat most people would never appreciate this. Thirty five years ago, if you put a million dollars into the global stock market today, roughly you'd have about thirteen million dollars. That's a lot. A million to thirteen. That's really good. It's about an eight and a half percent compounded annual growth rate. But if you put that same million dollars into the global private equity market. So public equity, something you can trade every day. Private equity, there is no listed market for it. It just doesn't trade every day. That same exact million dollars would have grown by fifteen point seven percent. That equates to two hundred and ninety three million dollars from a million. I don't know about you, but I like two hundred and ninety three million. A lot more than like thirteen million. That's the difference of the power of compounding over a long period of time. Now, obviously, you shouldn't put all of your money into private equity, nor should you put all of your money into public equity. You should have a diversified portfolio. But that is where alternatives really comes in. Because, you know, when we own a piece of the Houston Astros like we do, or the Los Angeles Dodgers World Series champions again, you know, their success or failure is not really tied to what happens in the market or what happens in the economy. So we call it Non-correlated. That's correct. And, you know, for all the people in the audience that think that's a complicated term, it really is. Again, we make things more complicated in industry than we need to. But non-correlated just means they don't zig and zag at the same time. You know, if you have a golf shop and all you sell is rain gear, there's going to be some days you're going to sell a lot of rain gear and some days you're going to sell nothing. But instead, if you have rain gear and you have sunscreen and you sell both of those, then sunny days, you're going to sell out of sunscreen. Obviously rain gear you're going to sell only on rainy days. So mostly on rainy days. So the two together are negatively correlated. They make money at different times. Well, the whole point of the Holy Grail of Investing book that we wrote, and Ray Dalio is famous for that term. But for those in the industry, Howard Markowitz made this famous with modern portfolio theory. The key is is to finding less correlated asset classes to where something is zigging and something is zagging at different times, but it's really hard to do in the public markets. It was funny. I had a conversation with somebody about probably two months ago and they literally said to me, Christopher, I'm totally diversified. I own all seven of The Magnificent Seven. Okay, well, let me just kind of clue that person in which I did very gently. Is that okay? That means in a year like twenty twenty two, you're talking about being down fifty percent at one time because they pretty much moved together. They do have some, you know, variation and they're one is going to outperform the other. But all seven are pretty much going down at the same time or up at the same time. You want things that are not all moving in the same direction. And what we refer to is you want to get off of this volatile roller coaster and you want a much smoother ride, but you don't have to give up return. You know, that's why Markowitz won the Nobel Prize, because the fact that he proved that you can actually increase your return and reduce your risk at the same time, which everybody thought was impossible. Yeah. Risk adjusted returns, which is what everyone is really looking to underwrite. That's right. Um, and then when you're thinking about growth in the industry, maybe just so people don't think it's like, oh, sales pitchy. Um, you obviously there's growth, but there's also growing at the rate. It's a stable way. Maybe some of the risks if you saw the risks where, you know, in the public markets there are some protections, disclosures, quarterly reports versus the prior markets where you have a little less insight into what's happening. So it becomes really your diligence, the manager, the manager. But it's a bit difficult to actually diligence, diligence underlying portfolio investors because you don't know what investments are going to make. No, it's very true. And that's why who your partner is is the most important thing. Because the fact that you need to know that they are aligned with you and that they are obviously doing things the right way. You know, we have another promise as a firm do the right thing at the right time, in the right way. Well, that's true also what you should expect from anybody you invest with if they are opaque and not willing to tell you what you own, you know you need to have a real serious conversation with them about getting more transparency if you're not sure how the returns are being generated. You know what it is that protects you as an investor? How you get out of your investment when you can get out of your investment. You know, you may not like the answer, but you got to at least know what it is in order to make a good decision. And at the same time, what investors make a lot of mistakes on is they just assume that they shouldn't do something because of the fact that it's something they're not familiar with. You know, another saying we have as a firm is we don't ever say no to something until we know what we're saying no to. And at the same time, we're going to be the fastest no in the West, because once we know what it is, we're going to make a quick decision. Are we going to be involved or are we not going to be involved? And if we're think we might, we're going to do a lot of work and we're going to be really sure that we've done our our diligence. But if we're no, we're not going to be involved. You know, nobody likes to slow, maybe just turn loose, let them find, you know, other opportunities for themselves. But in this industry, you know, because you're dealing with private markets, you know, you you're not going to necessarily have the same visibility as you would just, you know, buying and selling Apple stock. But you're going to, in some ways have even more transparency as to where the returns are coming from. ET cetera, et cetera. The great thing about Apple stock is you always know every day that I make money or lose money because the stock went up or the stock went down, but that has nothing to do with the business, right? You have to really understand and dive deep into 10-q and 10-K and quarterly quarterly reports to be able to say what caused this business to do better or do worse. Well, the challenge is that in the short run, quote, Mr. Buffett, you know, the, uh, the market is a voting machine in the long run. It's a weighing machine because if they continue to perform really, really well, eventually the stock is going to reflect that. And the private markets, it's much more correlated to use that term. Again, it's much more tied to it. If I've grown that hypothetical business from Million dollars to one hundred million dollars in EBITDA and earnings. Then what that is going to translate to is I'm going to be really confident on a range of what I could sell it for. Just like your house, I can't tell you exactly because I had to go through the negotiation process, but I'm not going to sell it for one hundred million likely, and I'm certainly not going to sell it for two trillion, because there's also certain adopted norms and valuation methodologies used by the market. So you kind of know what other people are going to evaluate based on those that know. That's right. And that's one of the advantages in the private markets, for sure, is that you don't have to worry about this emotional roller coaster that, you know, fear and greed that causes public market investors to completely bail out of something for no good reason or completely to pile into something for no good reason. That volatility can still occur to an extent in the private markets, but it's much more muted because of the fact that it's not traded every day and you don't have hundreds of thousands of shareholders voting every day. What to do and not do? In this particular case, it's a much more refined and less volatile way to invest. There may still be changes going on underneath the surface, and there always are, but your quarterly valuation is not going to dramatically change unless something is really dramatically happened in the business. You know, they got a massive contract and they're going to make a ton more money than they used to. Yeah, it just went up a lot. Or they lost a major contract. And you know, they may not be able to pay their bills. Well it's going to lose a lot. But that was a really pretty rare. And again it depends on the sector. If you're talking about venture it's you know more of a binary outcome. If you're talking about, you know, infrastructure you know is is that particular hydropower plant going to, you know, uh change much. No not really. Or that toll road probably not much. You know, there's lots of things in this world that don't have that kind of business volatility, which means their prices are not going to change that much either, which is why investors need to understand what they're investing in so they see what the benefits are, and they can see how it fits in the overall portfolio. And that's why they're having the right partner is the most important thing. Um, and if you could speak maybe to, um, where the money is going, I don't think most people fully appreciate the actual contribution of private markets to growth in major, major areas infrastructure obviously in wine. But even things like defence, uh, AI, uh, and then private credit as well, if you speak to some of those asset classes. Sure. And I'll use one statistic to set the table for it, because this really helps people understand the size of the private markets relative to the public markets. So in the United States, eighty five percent of the companies that do more than one hundred million in revenue. So these are good sized companies are private. Only fifteen percent of them are public. So everybody knows the Nvidia's and the apples and the Amazons and the Googles, etc. and Microsoft's, they're massive companies and they're fantastic businesses. But at the same time, the vast majority of our economy is in the private markets. So if somebody only invests in the public markets, they're actually missing seven times the opportunities that are in the private markets. So with that, you have this every single sector gets most of its money from the private markets, including even things like AI and data centers and the things that everybody, you know, reads about every single day. Right. And they're very, very capital intensive. Now, the public markets obviously do fund some of the bigger major projects, like an Amazon or Google, but at the same, you know, in the same vein, they're not actually raising most of their money today. They're just generating cash flow that they're reinvesting or they're borrowing it in the debt markets in order to be able to deploy it in the private markets. Almost all of that is coming from investors who are investing in that capital in the in the form of equity ownership, or in the form of loans that would be referred to as private credit. Um, which just means credit that doesn't trade every day. So public credit, private credit. So defense gets most of its money. You know, generally speaking, from what's happening in the private world. You have things in certainly data centers, AI, um, you know, infrastructure, dams and bridges and roads and things of that nature. Um, are mostly funded from the private sector. So it's a critical piece of the overall economy. And there's always going to be a place for public, and there's always going to be a place for private. And over time, what we're seeing in the industry is they're converging a little bit more. And so imagine that, you know, your audience is now able to own a piece of space. The Houston Astros, Los Angeles Dodgers and all of these other, you know, fantastic, really interesting assets, all with quarterly liquidity. And they can invest every single day that didn't exist literally until five months ago. And new vehicles are being created to enable them to be able to do that. You know, whether it be ours or someone else, people have the ability to now invest in a way they've never been able to invest before. And you get a pause by some of the recent headlines, um, with subprime auto leasing, some cockroach clues. So, yes. And actually, I had a conversation with our entire, uh, capital formation team yesterday and our investment team yesterday about, you know, we are very concerned about the economy and we're very concerned about valuations in the public markets. And every single person can go read our quarterly letter. We put it out on our on our on our website. It's available to anybody who wants to go read it. I gotta tell you, it's a little terrifying putting out a quarterly letter that every single person in the world can access, and having twenty five years of them, you know, you can see where we were very right. And we were maybe a little early in some things otherwise known as wrong on some things. Uh, we're more right than wrong. But, you know, you can go read them and we encourage you to do that because you can see the psychology of, like, in the middle of the bear market of two thousand and two or, you know, you know, during the global financial crisis when we put out the buying opportunity of our generation, uh, memo to all investors or what was going on during the tech bubble, uh, during the Spac bubble of twenty twenty one, etc.. So what I'll say is that, you know, there are definitive concerns we have with the economy. And in that letter, we talk about how there's a lot of stress on the on the consumer. Um, there's an entire section that we dedicated to what we call the hollowing out of the, uh, of the American workforce, and it's true worldwide. But specifically, we're saying it first in the United States to where skilled labor, if you will, is not being replaced yet and higher end. Your corporate executive roles are not being replaced yet. But a lot of this middle is beginning to be replaced, and it's going to accelerate and it's going to accelerate at a very fast rate. We see I absolutely. So what we always say is that, um, AI won't replace people, but people who use AI will replace people. And so you look at UPS, you look at Amazon, you look at Paramount, you look at Walmart. You can go name after name after name that have laid off thousands of people in just the last ninety days. And the reason is that there was probably a little too much hiring that happened in twenty twenty one twenty two. Money was easy. It was hard to find good people. And so people were like, if I can find them, I'm going to hire them. And now they're like, I don't really need all these people. And oh, by the way, one person is now doing the equivalent of about one point three or one point four what I had before. And. we just. We don't need all these folks. That's almost all in the middle. It's not really here. Now, at some point, the robots may come for that. And that is a concern that we also have when we look far out in the crystal ball, if you will, the senior executives, you know, generally speaking, still got to make sure everything runs together. But it's this really weird. Like how do you take, you know, if there's no middle, how do you elevate up. Right. And is that going to all get replaced by AI. And I don't think so, but that's nobody's sure. But so when we think about that subprime motor, uh, auto loans, you know, are definitely the worst they've been since twenty ten. Uh, credit card delinquencies are as bad as they've been since twenty ten. There are definitively cockroaches in some of the portfolios. I agree with Mr. Diamond's statement in that regard. At the same time, I think that it's a manageable amount. There are certain firms in the world of private credit that have been too aggressive with their lending and not had good enough covenants in their in their loan documents. Those people are going to get hurt and investors in those situations are going to get hurt. But the vast majority of lenders are not in that camp. So unless you see a real, true global slowdown that takes earnings and shoots them in the foot, right, that obviously could hurt any lender. Whether they had good standards or bad standards is going to affect everybody. What does concern me more than anything else is a lot of the consumer related loans because of those challenges with the consumer. Um, we and one of our letters last year or earlier this year, actually second quarter letter, if I remember correctly, we talked about how buy now pay later has become such a big deal. Well, of the people that have used buy now, pay later in the last twelve months, at the date of that letter, fifty percent of them have bought groceries with buy now, pay later. Folks, if you consume it, you should pay for it then, not later because that's just adding up debt that is going to ultimately really come back to bite you. Yeah. So it almost seems, um, that when you're in an environment where there's a lot of supply and people sort of are starting to chase opportunities, maybe you get a little bit sloppy or you get a little loose on your underwriting standards, and you start underwriting quality control versus underwriting the actual risk. Um, and we saw some of that. There's no question this is true, of course, going back forever. Right? I mean, every economic cycle that we've ever had and I use, you know, a phrase internally, we never say never, never say always. Um, I'm using the term ever here because every economic cycle that we've ever had has some things that are in common. You know, that's the old saying is history doesn't repeat itself, but it often rhymes well in every economic cycle that we've ever had. You have situations to where there's too much, you know, supply chasing, not enough demand causing prices to go up, which causes people to think that they're bulletproof and then ultimately they make bad decisions. And then, to quote Mr. Buffett again, the tide goes out and you realize who's wearing a bathing suit and who's not. Well, that is true with every economic cycle. This one will not be different. Um, anytime somebody ever tells you it'll be different this time, run. Don't walk away. Because it rarely it's always different, but it's never the, uh, like, oh, it doesn't matter anymore. Valuations don't matter. It can always just grow to the sky. That's just, you know, run, don't walk. But when we look at where we are in the cycle today, there are definitively some people that got a little bit lax, that got a little bit careless. But there's not what I would consider to be rampant. You know, this, you know, when we saw the Spac bubble in twenty twenty one, we saw a lot of silliness there. I mean, people were paying absurd amounts of money simply because of the fact that, you know, the stock was going up and then you had the red abort activity and all those other things that just really fed on itself, which created this bubble in nineteen ninety nine, again, in my article in my in our quarterly letter that we just wrote, I compare Nvidia to Cisco Systems. Nvidia is an amazing company, great company, but you can have great companies that are bad stocks, just like Cisco Systems. In nineteen ninety nine March of two thousand, he was trading with a five hundred and fifty billion dollars valuation. The company literally was trading at one hundred times cash flow. And everybody thought it's just going to continue to grow forever because you can't do the internet without Cisco. Well, the company is much bigger now. It has grown tremendously and it's an amazing business, an amazing company. The stock literally still is not higher than it was in March of twenty twenty. So two thousand, March of two thousand. So you know Nvidia had a five trillion dollars valuation. You know literally great company. But it was worth more. And it's gone down quite a bit since that that letter was written, but at that time it was doing its market cap was worth more than the gross domestic product of Germany, the gross domestic product of the United Kingdom of, you know, like lots of stock markets in total. To get an idea on the GDP, the only countries in the world doing more than five trillion dollars of GDP a year is China and the United States. That's it. One company was worth more than the entire output of every country other than China in the United States. That's a little bit extreme. Does it mean it can't go up? No, that doesn't mean it can't go up. The market can be irrational longer than you can stay liquid. So I'm not saying go short. Nvidia, what I am saying is that you have to be realistic about it. There's been several articles here from some of our, uh, fellow, um, folks in Wall Street that talk about how at this valuation that we've been at, that the expected return over the next ten years for the S&P five hundred is literally between zero and three percent. Howard Marks came out and said something. Goldman Sachs came out and said something. And if people think they can just buy the S&P and forget about it, I'll remind them that from nineteen ninety nine to twenty nineteen, you made no money in the S&P five hundred. It went flat for a decade, and you had these massive roller coasters that you had to deal with over that decade. That is something that we want people to avoid. Doesn't mean you don't own the S&P. It just means it has to be sized correctly in your portfolio, and you need to own a lot of other alternatives to that and things that don't correlate with the S&P. So the way some of it's not really tied to fundamentals, as you said, it's more tied to just owning US of the market. I'm I'm just a few more questions and we have very limited time. I'm GP sticks or calling GP sticks or we moved on to um which I think you and Michael uh GP Growth Capital. So I think it should have always been GP Growth capital. Michael agrees with me on that, but it's become pretty well known, uh, to to to call it GP stakes. Uh, and so we'll, we'll stay with that term today. Um, okay. And then if there's any takeaway on that you want on your part and maybe whether it's in relation to someone who is looking to start investing but doesn't really know how or is still trying to kind of find their why, you know, maybe they think that they know what they should be doing, or they've been told that they should be doing maybe their communities, their parents, their friends or what? What guys? So a couple of different parts there. So the the entire concept of what we've talked about with the growth of the private markets, the growth of alternatives. The reason why we like GP stakes so much is because the fact that the people that are going to be managing all of that money are going to obviously do really well, they're going to get good management fee income, and they're also going to get what's called carried interest, which is just a share of the profits that they create for people and their businesses should grow up and value pretty significantly. So we you know, we love GP stakes as an asset class. It's one of the reasons why it's our largest theme currently, and certainly we encourage investors to consider it because of the second part of your question, which is a lot of people don't know where to start. In the world of alternatives, when you buy a GP stake, you actually get the opportunity to own a piece of the firm that manages their funds. Well, obviously that means you're getting a piece of every fund they currently have that exists. Every firm that they're doing right now are putting in place, and every fund they ever do in the future in a classic, true GP stake. Well, that means you're going to participate in everything they do, which means you're going to get diversification across. If you own multiple GP stakes, you get geography diversification, you get capitalization diversification, you get size of, you know, the sponsor of who it is, The small firm managing the money, big firm managing the money to invest in small companies. Do they invest in large companies? Do you also get diversification of vintage? So, you know, if you have everything that's coming out in twenty twenty five, it may be a great vintage. It may be a terrible vintage for anybody that's a wine expert. You know exactly what I'm talking about. Some vintages are better than others. Some years, well, you also get sector diversification because somebody might be a health care specialist. Another firm might be a technology specialist. Another firm may be a consumer specialist. Another firm may only do professional sports well. If you own different firms that do all of those things, you're getting exposure and diversification across all of what they do. But you're getting paid the management fees. And hear me on this one. You're getting paid the management fees. You're not the one paying the management fees like you would if you were just a fund investor. You're getting paid the management fees and you're getting paid the share of the profits and the growth of the enterprise value. So there's just this enormous what we call criss cross cycle diversification and also diversification across really every other manner that somebody can do it, which makes GCP stakes a great place for somebody to start because they get so much of the entire alts universe in one single investment. So obviously they can't become an angel, so to speak. Your estimate is in line with the narrative. That's correct. And your shoulder to shoulder with the people that are the managers. Going back to the point of being freakish about alignment, that's something that we like. And so, you know, obviously we're really well known for what we do in the world of GP stakes. And so anybody that wants to learn more about that, they can obviously go to our website and do that or we got a lot of other stuff, just white papers and educational material on LinkedIn etc.. But so, you know, to the to the other part of your, of your question. So GP stakes is a great place to start. But it goes back to, you know, the real main benefit that knowledge Brings. You have to learn what it is you're investing in. Take the time. Study the basics. One of the reasons we wrote the book was to be a resource for people. Okay. And yes, we'd love it if everybody goes out and buys the book. But the the point of writing the book was to be a single place where you can learn about private credit and learn about professional sports, and learn about private equity, and learn about venture capital, and learn about energy and learn about real estate all in one place. And then have interviews with some of the very best people in the entire world that have become really, really good in performing well for investors in that space. So then they understand, you know, their perspective. And also there's a lot of great things about building a business. We talk about their origin stories. Going back to your original questions of, you know, why did they choose to start their firm? What was their background? How did they get their first break? Those kinds of things. And we just think it's you know, obviously the world agreed because it did very well. It's doing very well is that people, you know, people enjoy it. And so I'm really proud of that. But so that's a great way to do it. But don't stop there. There's so many great books out there, some of which we reference actually in our book, um, that people should go read to become more educated, certainly use AI to be able to become more knowledgeable on the subject. Just be careful because, you know, we all know AI is a wonderful tool, but it can be wrong at times. So just be careful and verify. But then from there talk to people that are true experts that are in the trenches every day, that understand what it is to fight the war and to ultimately go through cycles. It's one of the other things that, um, that I tell people is that if somebody has not been through the refiner's fire, then you don't know how they're going to respond when they get, you know, what's the old saying from Mr. Tyson? You know, Mike Tyson says, you know, everybody has a plan until they get punched in the mouth. Okay. Well, that's true for every industry everywhere. So you've got to know that they've been punched in the mouth and they've been able to come back and survive to fight another day. And then from from the last part of your question, which is for somebody that's trying to figure out what their why is, you know, don't do something because somebody has expectations of you. Be yourself. Identify what it is that you love to do. I mean, just love to do. And then go figure out how to get paid to do that. Um, the vast majority of people go through life and they never actually do what they enjoy. They do what they're expected to do or what they're supposed to do. Well, if somebody got an education degree when they must be a teacher, well, that may be the best place for them. But it may not be. Just because they have the degree doesn't mean they can't go back and get a different degree, or they can't be an entrepreneur in education instead of being in the classroom. And maybe the best place for them is in the classroom. And we need a lot more great teachers, so I hope they'll do that. But if somebody goes through and analyzes, what do they really love to do every day? And what we ask everybody that applies here is if money was no object and little, you could do anything you want to do every single day, how would you spend your time and what would your impact be that you would do with that money? And most people don't have an answer for that. Find the answer. But then again, it's understandable because that's like pie in the sky. And I don't know if I'll ever do that, but find the answer to that, because once somebody has found an answer to that question, everything else starts to become really clear. You know, Tony says, where focus goes, energy flows. It's so true. The mind will find what it's looking for, and you just have to set your mind on what it is that you believe. And again, you can always reroute and reposition. But if you don't aim for anything, you will absolutely hit nothing. Yeah. And that is what unfortunately most people do when they go through life. Or they come out of a good school and they go, well, I'm just supposed to go be an analyst, or I'm supposed to be, you know, an associate on a on a banking desk or a private equity firm. All those are great paths, and they're going to learn a ton. But make sure you actually want to do it every day, because if you don't, it's going to suck. So you have to have passion about it and you have to find something that you really enjoy. That's the only way you'll give it energy. That's the only way you'll give it effort. And most of the time, if you have any natural skill and you give it a lot of energy and effort, you're going to be pretty good at it, which means you're going to win. And that ultimately is what the name of the game is, is to go through life. Well, you really shine through. I want to say, uh, you know, in watching your, um, series, one thing I really took from it was, you see, some people have a tendency to think like, oh, these are Superman. You know, these are otherworldly folks. You know, I think you're kind of speaking with these people in their backgrounds. They realize, like, anybody can do this if you just really, you know, put your mind to it and you know, and have that driver, I think it's really for anybody to go after. No. Totally one hundred percent true. And the thing about almost all people They can do a lot more than they think they can, and they just need to be given the opportunity in their own mind and then create the opportunity in their world to go achieve what they're truly capable of. Most people can do anything they want if they set their mind to it. Going back to the thing when I was young, you know, one of the real things that I'm grateful for is I was told early on, if you believe you can do it, you can do it. If you don't believe you can do it, you certainly can't. So decide what you want to do. Decide what you want to go after, and then go. Give it everything you can. And usually it works out pretty well. Christopher, thank you so much for the time. I really have you to thank you for having me. I appreciate it very much. All right. If you enjoyed this conversation, please stay in touch by visiting our website, the bigger Y Withsome. Com. Thank you.