Larry Bernstein

Welcome to What Happens Next. My name is Larry Bernstein. 

What Happens Next is a podcast which covers economics, finance, history, science and politics. Today’s session will be Designing the Perfect Portfolio.

Today’s podcast was recorded previously at Stanford at an event to honor my old boss and close friend Myron Scholes who won the Nobel Prize in Economics.  

Our first speaker will be Andy Lo who is a Finance Professor at MIT, and he will discuss his book In Pursuit of the Perfect Portfolio. Andy interviewed a dozen leaders in academic finance and top practitioners about how to design a portfolio balancing risk and reward by maximizing diversification.

Our second speaker will be Jonathan Levin who is the Dean of Stanford’s Graduate Business School.  Jon will explain how Myron Scholes’ ideas have shaped academic research in finance and how his models have been applied by investment professionals.

Our third speaker is Victor Haghani. Vic and I worked together at Salomon Brothers before he left to be one of the founding partners at Long-Term Capital Management.  Vic will answer the question, how much should you gamble when you have an excellent investment. Vic’s ideas are very important, because most of us focus on what to invest in and spend little time wondering how big to bet? And whether to increase or decrease the wager when uncertainty and volatility increases or decreases over time.

Our fourth speaker is my good friend Bruce Tuckman who teaches at NYU’s Stern Business School and is the former Chief Economist of the CFTC.  Bruce will discuss the benefits that derivatives like interest rate swaps and commodity futures provide hedgers and investors.

Our final speaker today will be Myron Scholes who will discuss the best ways to adjust your portfolio if you are concerned about ESG.  Some market participants who are concerned about carbon emissions are selling shares in their polluters, but Myron thinks that investment managers should first optimize the portfolio and then buy carbon credits to maximize returns while minimizing carbon in the environment.

Buckle up.

I make this podcast to learn, and I offer this program free of charge to anyone that is interested.  Please tell your friends about it and have them sign-up to receive our weekly emails about upcoming shows.  If you enjoy today’s podcast, please subscribe so that you can continue to enjoy this content.

Ok, let’s start today’s session with Andy Lo.

Andy Lo

Topic: In pursuit of the perfect portfolioBio: Professor of finance at MITReading: Behave: In Pursuit of the Perfect Portfolio is here

Opening Remarks:

It's an incredible honor for me to be part of Myron's 80th birthday celebration. 

The topic that I'm going to focus on is this book in Pursuit of the Perfect Portfolio. Larry, thank you for assigning so many chapters. I felt quite bad because you guys had a lot of homework, but I'm going to treat you like I treat my MBA students and I'm going to assume that only 10% of you have done the readings for the class. 

The book began as a very thinly veiled hero worship. My co-author, Steve Forster and I, both taught investments over the years. Luminaries that have inspired us in our research, and so we decided, why not ask them, what a perfect portfolio is. 

We ended up collecting these wonderful interviews. Everybody that’s featuring in the book, we’ve interviewed on video. There are YouTube videos that you can see. And we were thrilled that we got such diversity of opinions about what the perfect portfolio is. 

There isn’t a single perfect portfolio. This is meant to capture a summary of the different perspectives and bring it down to the level of a non-MBA, non-finance, individual to be able to make use of these ideas.

Jonathan Levin

Topic: Myron Scholes’s influenceBio: Dean of Stanford’s Graduate Business School

Opening Remarks:

First of all, Myron, thank you for the invitation to speak. When Myron asked me

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Erscheinungs­datum: 21.10.2022, 14:00:32