First Trust ROI Podcast
On the ROI podcast, we discuss some of the most important questions facing investment professionals today, ranging from macroeconomic views, to perspectives on the equity and fixed income markets, to insights on practice management. We aim to cut through the noise, examine the data, and provide fresh insights to investment professionals as they help their clients find better ways to invest…seeking to generate attractive returns on their investments.
First Trust ROI Podcast
Ep 43 | Separating the Signal from the Noise in the Bond Market | ROI Podcast
Bill Housey explores how fixed income investors can navigate rising uncertainty—from trade policies to inflation and beyond—in this deep dive into the bond market’s shifting dynamics.
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Hi, welcome to this episode of the First Trust ROI podcast. I'm Ryan Issakainen, etf strategist at First Trust. Today, I'm joined by Bill Housey, managing Director and Portfolio Manager of Fixed Income at First Trust. Bill and I are going to discuss opportunities in the bond market. We'll talk a bit about tariffs, about interest rates and where Bill expects the economy and opportunities to lie ahead as we go through 2025. Thanks for joining us on this episode. So, bill, since election day, the market really rallied on the equity side. I think all risk assets caught a bit and people got really excited. And then there's been some policy uncertainty, especially related to tariffs and some other maybe risks to the economy that have entered into the minds of investors. Where do you come down on how the rest of this year plays out in terms of economic growth, I guess, but also corporate profits? Do you see a sharp pullback in profits? How are you looking at, from a macro standpoint, the economy in companies?
Bill:Sure, well, it's great to be with you again, ryan, and I would say there's probably a lot of different directions. We can take that and to start, I would just simply pull back and just look at the market from a 30,000 foot lens and just say you know, it's really been since the fall of 2023 since we've had any meaningful correction in the market. So the last meaningful equity correction was the fall of 2023. If you look at the equity markets, I know you know things have traded up. We put in a new high 6,100 on the S&P, but the reality is that the market has really been trending sideways for three months and only recently have we got into this sort of I'm going to call it technical churn where we're due. We're just long in the tooth for what I would suggest is a very normal correction Now. It might be a 15% correction. It may be as severe as a bear bear market. I don't think the bottom is in just yet because I don't think there's been enough of a washout, as we've typically seen in these types of corrections. What we've experienced to this point, anyhow, has been um short, aggressive and swift, but typically these things will will last a little bit longer and you know you'll get some rally and it'll pull market participants back in. So I think a lot, a lot of times what we typically see is that starts that behavior, the market begins and then the market tries to fit narratives to it.
Bill:Now, granted, there's a lot of uncertainty, as you pointed out clearly, with respect to policy, and higher uncertainty around policy should absolutely equate to higher volatility. Right, the less certain I am about an outcome, the more volatility that comes back into the market. But I would argue we've had a a real uh lapse of volatility for a prolonged period of time. It's good to bring healthy volatility back to the markets broadly and I think time that will play itself through. So right now, when you have an administration that's saying over here to counterparties, we're willing to tariff, we're willing to look for these reciprocal trade agreements, that's going to create a lot of uncertainty, but eventually it gets resolved, eventually these things quiet back down and we have certainty again.
Bill:So you know, as we play through this period, does it create more uncertainty? Absolutely. Does it introduce more volatility? It should. Could we see a further drawdown in equity markets, which, of course, would then spill over to the bond market and credit markets to some extent? Absolutely Do. I think it's recession-inducing. I think it's way too early to say that today. I don't think we have that in the data.
Ryan:So interest rates have been kind of interesting, and I say interesting no pun intended, I guess.
Bill:Interesting interest rates.
Ryan:They have traded between this range of at the 10 year. What about 5%? Have they been 5% this year yet they're approaching 5% and then they kind of reverse back lower. You know we're recording this on March 20th, it's going to air on April 7th, so we'll give you some grace that you know what could happen in the next couple weeks. But is that your expectation as we go throughout the year and beyond? Is that sort of the range that we're going to continue to see at the 10-year?
Bill:Yeah, I think that the peak for this cycle is in and I think we hit it in the fall of 2023 at roughly 5% on the 10-year. And since that time, what's happened? In May of last year, we ran to 470 on the 10-year and then, by September, we pulled all the way back to 360. Then this year, of course, ran back to 480 on 10s and now we're bouncing around around 420 to 430. So you know, as you think about the drivers of interest rates, in my mind there's a couple of main headlines that have taken place. Number one is obviously inflation and number two is the deficit. So let's just try to unpack the equation a little bit together. First, on inflation, you get these tariff headlines and the narrative is that these tariffs are going to lead. You know, it's almost like, basis point for basis point Higher tariff means higher inflation. As far as the market narrative, that's what you read in the popular press, that's what you hear on the talking heads every day, but the reality is, I think, quite a bit different than that. It's very disruptive. It's profit disrupting. You know great examples in the market recently. You know I just read a story last week Walmart talking about its suppliers from China and saying we will not pass on tariffs to our customers. So who will eat those costs? Well, the manufacturer is going to be forced to eat those costs. That's going to put their profits under pressure, right?
Bill:So there's definitely a decououpling of you, if you will, from the narrative, and what's likely to take place are tariffs, a higher tax? They are. Are they, uh, persistent through time? Well, they tend to be one time in nature, right? What is a tariff? If I tariff you, I put it in once, right, you're? If it's a 20% tariff, you're going to feel that 20% tariff, but I'm not going to go to 30% the next year, 40% the next year and 50% the next year. So, by definition.
Bill:I know the Fed has mutilated the word, but it really is transitory to a large extent because they are one time in nature. So what will matter more with respect to interest rates is what happens to inflation expectations as a result of that. Do inflation expectations really start to climb or does the market look through it as transitory, as a one-time-in-nature type of policy? And again, if it isn't basis point for basis point, and some of this comes out in the form of weaker profits, well, that's growth destructive. So you're not going to see rates moving up on that.
Bill:So there's, I think, the possible scenarios or the potential paths that we take for the economy. On this corporate earnings, it's a much wider set of outcomes than higher tariff, higher prices, higher inflation. I think that that is a very sort of remedial expectation as opposed to what's more likely to occur, which is a much wider, you know sort of remedial expectation, as opposed to what's more likely to occur, which is a much wider, you know, sort of standard deviation around the set of outcomes, if you will. So I think that that's going to drive these rates you know to be, you know, in this range right now. Maybe we run back towards four and a half percent.
Bill:I don't think we're breaking down in interest rates. I also don't think we're running away in interest rates. Think that there were in a tighter band around that. And you know we have an administration that isn't looking to grow the deficit right now. You know the deficit, it's close to two trillion dollars. We have an administration that's looking for pay force right, if we tariff over here, we could cut taxes here, right. They're looking for revenue sources to offset some of the policy implementations they're looking for. These are not we. We want to grow the deficit into perpetuity. We want trillions more of deficit spending. That's not what we're hearing.
Ryan:So you mentioned that you were talking about the relationship between tariffs and inflation and therefore interest rates, and I think there are a lot of in the minds of a lot of investors and even some analysts, there is a much closer relationship between tariffs and inflation. Do you think that people are maybe overestimating the level of inflation that could be impacted by tariffs?
Bill:Yeah well, so I'll give you an example. So if you looked at the market back around the time when the Fed started cutting interest rates in September so before the new administration the bond market if I looked at the TIPS market, at that point the bond market inflation break-evens were pricing around 2% inflation, pretty close to it, for the next 10 years. That's what the bond market's expectations were. And around that inflation expectation we saw the 10-year come all the way down to 3.6% Hit fast forward. You get a new administration, you get this tariff uncertainty, policy uncertainty, this narrative around higher inflation as a result of these tariffs. And what happens? The market starts to price in much higher inflation expectations. So we ran all the way to 2.5% inflation expectations for the next 10 years, not for 12 months but for 10 years. That's what was recently being priced in when the 10-year ran to 480. 10 years that's what was recently being priced in when the 10-year ran to 480. Now, with a little bit of growth uncertainty being injected into the picture because of some of this policy uncertainty, some of that's coming down. We're down to about 2.3 percent inflation expectations for the next 10 years.
Bill:So it isn't to say that a tariff doesn't put a little upward pressure on prices. But remember, inflation is rate of change and so I need rate of change to continuously be going higher from that tariff. So what I'm saying is that if it's a one-time price change, well that's one time in the inflation data, right? So if oil goes from 65 to 75, well, that 10 points will come through inflation, right. So if oil goes from, you know, 65 to 75, well, that 10 points will come through inflation, right. But if it stayed at 75, well, it's not inflationary. If it goes to 85, well, that would be inflationary. So we need these tariff policies to go up, go up again, go up again, to really be more persistent.
Bill:You can have upward price pressure, but temporarily, of course. That seems natural Because it'll be puts and takes, right. If you have a product that you can't substitute anywhere else and it has a tariff on it, well, more likely than not, there's some pricing power there, right, they're going to try to. Whoever the manufacturers of that product is going to try to take price. But there are a lot of products with a lot of substitutes that can be manufactured elsewhere or are manufactured elsewhere, where they're going to have a much more challenging time pushing that price through. So it really is a competitive market dynamic. And that is what I think is often lost when you think about a tariff as being basis point for basis point into inflation. It suggests there's no competitive market dynamic. It suggests there are no companies like Walmart who say we will not pass that through to our customers. It's a much wider range of outcomes than I think gets assumed or presumed in the analysis.
Ryan:Well, I think the other thing that's maybe missed in that is, if I pay, in your example, $10, whatever, the equation is between the cost of a barrel of oil and what gets passed through to gasoline prices, If I'm paying more for gas as a consumer, I have less to spend on something else. That's right. So when we're talking about generalized price movements of the overall basket of goods and CPI or whatever it is, I think there's some complexity there as well, because you know, our chief economist, Brian Westbury, is always talking about the money supply and its impact on inflation. Unless you're increasing the money supply, I have less money that I can spend on. You know this other good over here. If I'm spending more on something that's a higher cost, because of tariffs or whatever the cost, that's right, Whatever the reason, Okay. So what do you think?
Ryan:Speaking about tariffs and I'll ask you a question that you can punt on, you don't have to answer this necessarily when you think about what's the likely outcome of some of these policies, do you think that these are intended to be something that's more permanent, like we're talking about putting it on and then it stays on for a long time or do you think that these are just sort of. The goal is to bring down tariffs across and ultimately have freer trade. You know, the theory is reciprocal tariffs. If you tariff me 20 percent, I tariff you 20 percent, and you say, well, we're just going to drop them all. What's your opinion there?
Bill:Well, I think you know, looking at it just as a market participant, right? Not certainly a tariff expert by any means, but understanding that we have an administration and a president who's a negotiator, right, written books about the art of the deal, an absolute negotiator. He's looking to cut, in my opinion, the best deal he can cut for the country and, like I mentioned, he has a policy agenda that he wants funded and he's looking for ways to fund that agenda. And he also doesn't want to see, in my opinion, american companies that are set at a different standard, if you will, in the global markets than our competitors. So if we import goods and we don't tariff those goods, but they're tariffing our goods as we export those goods, he sees that as incredibly unfair and is looking to level that playing field. And there's a whole host of reasons why trade with China is very different than trade with Europe or trade with Canada, for example, who's a very close ally and a close neighbor Europe, or trade with Canada, for example, who's a very close ally and a close neighbor, right. So I do think that some of this is really just important negotiating that's going to take place, but it just takes place in the open market, right. So it seems very chaotic. If you look at it, it's point for point. Well, if you do this, we'll do this, if we do this, you'll do that, right. That creates a lot of chaos and a lot of uncertainty and at the end of the day, it's just a very public negotiation, right? I?
Bill:I remember, you know, taking a class in my mba at northwestern and they talked about it was a negotiating class and the idea in any negotiation is to try to spread the bid and offer as wide as you can from one another, right? So what happens with most negotiations? People go in and negotiate I want in and negotiate, I want to buy that car, I want to buy that house and they say, oh, I don't want to go in too low, I don't want to offend them, I don't want to, right? And the reality is you're sort of negotiating against yourself in that situation. Right, we trade bonds for all day long, every day. We're always trying to negotiate a better level of execution.
Bill:The idea is very simple. The wider the idea is very simple, the wider the bid-ask spread. Well, think about where most deals finish. They tend to finish in the middle. So if I have a narrow bid and offer, if I come in close. Well, where's my middle point going to be? Well, it's going to be really tight to the what they're asking. But if I spread it out, I've shifted that midpoint lower.
Bill:So a lot of what we see right now is a wide bid ask in negotiation, looking for for a better midpoint. It just seems very chaotic when you're trying to track it from 30,000 feet and watching this volley take place. We'll do this if you do that, and vice versa, and it just goes on and on and on. But in the end, I do think in most of these situations or instances there will be a negotiated outcome that our current president is going to feel really good about because he's negotiating, and that's really going to be, I think, ultimately where this shakes out, which I think, at least from what we understand, some of this should be really good for growth over time. Might be disruptive in the short term, but good for growth over time.
Ryan:So policy uncertainty, leading to maybe some risk selling off, you think, ultimately spells maybe a longer-term opportunity. Is that a good summary?
Bill:I think that, as we play this through, what we're likely to see in the markets is a normal correction to a bear market, which you'll see, the narrative, the cacophony of voices that around that as being a, you know, recession vibe or narrative that'll fill. Oh risk could be slowing. The recession risk is going up right as prices fall. It's automatic that the narrative will shift to recession. Risk is higher. But again, we typically do see a good, healthy correction every couple of years. So it's a very normal outcome in the markets. Doesn't mean it's the big one. It doesn't mean it necessarily has to be.
Bill:So I do think that you know there will be consequences and implications from some of the policy changes. Right, if you have government workers that are now being laid off, that now have to find work elsewhere, that's going to be a transition in the economy that will take time for those employees to to find new work. Ultimately, I think the economy is better for it. I think companies are better for it. It increases the labor supply, better talent pool for companies to be able to hire from. So I think, for a whole host of reasons, it's better over the long term. Could it be disruptive in the short term? Sure could it be. Could it result in slower growth in the economy? Absolutely in the short term? Sure, could it result in slower growth in the economy? Absolutely in the short term. And I think we've heard from the administration willing to take some short-term pain for long-term gain to get to the right place.
Bill:But ultimately I don't view this where corporations have over-risked. I don't view this scenario as the typical business cycle where companies are massively over-risked, they've taken on too much debt, or that's not this cycle. That's not where we're at right now. In fact, balance sheets look really healthy generally. There's not a lot of those same excesses. What we're seeing is that squeeze on the government side of the economy and that's where some of that weakness could play through, and that's that's probably going to present some good opportunities.
Ryan:Do you think we focus too much on some of these macro issues? I mean, our conversation has all been about government policy, things that are uncertain. You are a portfolio manager, so you actually have to make decisions, and it's nice for me to sit in a podcast and ask you theoretical questions, but I guess my question for you now is like how do you sort through all that noise? How do you identify the signal, what's really important and is going to impact the performance of your funds?
Bill:Yeah, I think every day there's going to be something, there's a headline, there's noise, there's news, and trying to dissect that information to try to realize or recognize what will be the driver of fundamental performance is a very difficult game to play. So where we focus is on those companies individually looking at their performance, understanding the drivers of the business and looking to identify companies that are defensible in any environment, especially when you're talking about lending the money. Right, it's one thing if you buy a stock, because when you're talking about lending them money, it's one thing if you buy a stock, because if you buy a stock and the earnings grow and you've taken a lot of risk, well, you're compensated for it. If things go well, it's the way you expect. You're going to be really rewarded for it.
Bill:For us, what's our best-case scenario? We get our coupon and our money back If everything goes great. So our job is to really work hard at dissecting these companies, looking rigorously at the financial statements, understanding the drivers, understanding the inherent volatility around that operating performance, and then the noise around the periphery becomes far less impactful because, while that might change the spread on a given day, the price on a given day, if we've done our fundamental work and we can rely on that heavily, then we're. I can sleep at night because I know what I own and I know what I expect it to do, even in that environment. And if that gets cheaper, that's a great opportunity for us to try to own more so over the last 12 months.
Ryan:I look at ETF flows quite a bit and over the last 12 months actively managed fixed income ETFs have accounted for about 40% of overall fixed income ETF asset flows. They now represent something like 17% of those assets. I would imagine that some of what you just discussed about looking at individual companies and their credits and their creditworthiness and whether or not you want to lend them money has something to do with that. But there's also the other side of it and that is some of the weaknesses associated with passive fixed income investments in particular. Can you talk a bit about what you view as an active manager? How do you identify weakness in the passive benchmark and exploit it?
Bill:Well, the single greatest differentiator, I think, relative to what we do actively in fixed income, and it's really important to separate fixed income from equities because they are different. In fixed income, the single greatest differentiator is risk management. So in equities, I've got to make sure I'm positioned and the companies are growing, the equities are moving and it's a totally different barometer right Market cap weighted index, perhaps big, better capitalized companies way more. In the debt markets, the indices are simply structured by where the debt is issued. The more debt that's issued, the greater the weighting in the index. So even if you come back all the way to something as simple as the ag index, which is, you know, treasuries, corporate securitized debt, think about how treasuries have grown as part of that composition of the ag over the last 20 years, from something like 25% of the exposure to 45% of the exposure in the index.
Bill:Now, why has that occurred? Well, you may have noticed these deficits. They have to be funded somewhere and they get funded by treasury issuance. So the more that our government borrows, the bigger the representation in the index of treasuries. And does that mean that you should own of treasuries? And does that mean that you should own more treasuries because the government needs more right. That's really what happens in these indices. The greater the amount of debt that's borrowed gets a much larger representation in these indices, and it doesn't matter whether it's a safe index like the ag, or in terms of high quality investment credit issuers or high yield or bank loan. Where it comes down to which companies have borrowed the most. The more they borrow, the bigger the weight in the index.
Bill:I would argue that that is a very flawed strategy for lending money looking to the most indebted companies, looking to the most indebted sectors, and saying we should give them more because they need more or because they borrowed more. Instead, you might want to look at things like how well capitalized is that company? What's the likelihood that it pays back? Well, how is the valuation of treasuries against corporates, against securitized? All these different variables? What part of the curve do I want to be positioned on? None of that happens in any of these passive indices. So for me, it really comes down to the simplicity of risk management. If you're looking at and actually doing the real work in fixed income, it's about protecting principal, capturing income and avoiding loss. That's the fundamental driver of what we do and that reduces risk. It's not an opportunity to throttle up risk. It's to protect principal capture income, smooth the ride for investors. I think that's ultimately what most people buy fixed income for, and so that's the real driver of that, I think.
Ryan:That's a really good point, because I think oftentimes people think about active management as the way you add value is by adding risk versus the benchmark, and what you're describing is kind of the opposite of that. So, as you look across the spectrum of potential investment opportunities within fixed income at different sectors of the economy, different types of securities, different sectors of the bond market, where do you think some of the most underappreciated opportunities are today?
Bill:Well, I think a lot of the market narrative tends to shift to spread discussions, right? So you'll hear a lot of talk about where spreads spreads are tight. Spreads are tight across fixed income. It's really important to understand that. Spreads are really helpful in identifying value on a given day. So if I compare come a corporate bond to a piece of securitized debt, you know and I can look across sectors and say, well, look for this level of risk, I'm getting this type of premium or spread in the market for that and I think that's cheap, so that's really helpful.
Bill:But spreads tend to be a very poor predictor of future returns and, in fact, the best example of this. We published a piece on this. If you look back at high yield, going back to may of 2007, when the spread was the tightest in history, just before the financial crisis could you imagine like in your mind, it's probably that's bad timing. That's bad time. Right, you would think it's bad timing. But if you actually looked at high yield, if you had purchased it at that month when the spread was the tightest may of 2007 and you rode it through and you looked at one year, three year, five year, ten year, you know I want to say, roughly speaking, you know, three years in you average about six percent a year by five years in Stocks were still negative. From that point you had a negative return on the S&P 500 over five years. The high-yield market was the number one performer. It had outperformed stocks, outperformed every other fixed income asset class and continued to do so for a decade from that tightest spread in history. So the primary driver, or I should say the most important variable if you're trying to assess future returns, is understanding what yield I'm buying at, more so than what spread I'm buying at. I think yield is a much better forward predictor, a higher R-squared if you will, in terms of looking at forward returns relative to spread.
Bill:So as we look at the bond market today, well you know, if I think about an asset class like high yield, where I can get 7%, buying bonds slightly below par, taking half the risk of the equity market in a market where the quality has been improving over half, the market is double B. Now that's never been the case before, because what's happened through the proliferation of private credit is these funds have grown really large in private credit and they need outlets. They need assets to come and find to fund with all that money they've raised and they're tending to take some of the weaker quality companies out of the public markets. The better quality companies stay in the public markets. They get the best pricing, best execution, liquid. But if you're a weaker quality credit and you need access to capital and there's this big pool of money over here in private credit, it lines up very well. So it's tended to push the quality up within the high-yield market.
Bill:So I think, as we look across fixed income, I like to say there's no always and nevers is the best way to think about it.
Bill:So as we look through, we're trying to I dissect these different parts of the market, looking at everything across the various components of the market and looking for the best values, looking for where we can capture the best level of income with the least amount of risk to drive the best future return with the least amount of volatility. That's really the mathematical equation and that iteration it's happening every day, throughout the course of the day. And then you go through a period like a market correction, like we're recently experiencing, and that will present new opportunities for us to be looking across, maybe taking up some of those parts of the market that we thought were expensive that have now cheapened up. An area, for example, like high yield was really tight, widened out on some of that recent volatility, looked for some opportunities in that Investment grade corporates. The same thing we were hiding in more safe assets before that, using securitized assets, areas like that in the market to get more defensive. But that type of rotation having that ability I think is really important of rotation.
Ryan:Having that ability, I think, is really important. So everyone has kind of over the last couple of years now focused on ai and new technology and I've often wondered as a portfolio manager, as you and your team think about opportunities in the market are, are you leveraging new technology to kind of sift through ideas or identify opportunities?
Bill:it is the most profoundly impactful change that has occurred in my career the evolution of ai and I am my eyes are so open to this today and and it has changed dramatically over a very short period of time. A year ago, of course, we all knew what AI was, weren't really sure how to use it. Help me write this letter of recommendation, help me. And now, as we think about what we're doing, I'll give you some examples. I think that, well, whether it's a credit team, investment team or whatever, I think every team will have data scientists as a part of their team. That's the professional will have data scientists as a part of their team. That's, that's the. You know the professional term data scientists, what? What I believe is that we should empower all of our people to be really powerful as a data scientist on top of their current work, even as an analyst, for example, in the credit space. And you, I'll tell you some examples where I was blown away Recently, I put in a scenario and you know, we have commercial licenses with different products and so we can use the.
Bill:You know AI. And so I said hey, run, build me a valuation table using these five companies. They're all public companies. I want you to look back through previous business cycles and I want you to assess the peak to trough drawdown in top line and margins profitability and really give an assessment of valuation multiples through time. It built this table in two minutes and it was phenomenal.
Bill:I know the output already, I already know what it should tell me and I looked at it and what it did in two minutes would typically take an analyst pulling all the numbers, even with automation, a lot longer. And to be able to do that, or to say how deep can I go to see more about this company, more about their contracts? What's publicly available, what used to be publicly available, was a Google search and if I couldn't find it, I couldn't find it Right. Right Now you can go a mile deep to find you know whether it's government contracts that this company has, maybe it was published somewhere and you know. It's just the data's there. It's so much more powerful. I'm reading a book about this right now. I just it is incredible. I think the efficiency gains are going to be extraordinary and we're just at the literally like the very first edge of this.
Ryan:So it seems to me that something like this at first maybe gives early adopters some level of competitive advantage, but eventually it just becomes what everyone has to do to compete. Is that what you would kind of expect with this?
Bill:Yeah, but I also think that there's an edge as well. I think that the edge will come not just from we can all search the same data, we can all build the same valuation tables, things like that, and do it a lot more efficiently. And I mean like in this book I'm reading right now they're talking about the efficiency gains are from 20 to 80 percent, like the, you know, in the industrial revolution, you know, the steam engine was like 18 percent.
Bill:So like this is incredible as far as the potential for efficiency gains, so I think a lot of people are going to use it. I think it's going to make their work a lot easier. But let's talk about the data we produce. So, as analysts, we build financial models, we build forecasts, we rate companies internally with our own proprietary system. What if I start to take that data and apply AI to that, to then assess through that engine where right, where I might be wrong in my rating, looking across sectors, looking across ratings, identifying outliers, right and I think that that just becomes really robust and that could be more proprietary stuff that we develop, for example. That gives you an edge, for example, is one way where it's something that not everybody has. We're going to use it our way. They might use it their way, sure, and there's just a lot of innovation. I think that could potentially be had there.
Ryan:Yeah, really interesting and exciting things on the horizon with technology. All right, last question for you, bill. Again, the time kind of flies by here. I've got more questions, but we don't necessarily have time to ask them. All right, you're a young Bill Housie. Before you got to be a portfolio manager, you've got college age kids, so this is probably an easy question for you. What advice would you give to a young Bill Housie starting out in the investment industry?
Bill:That's a tough one. It's an easy question, I don't know, I don't know if it's as easy as you think it is I like throwing curveballs.
Ryan:No, it's not.
Bill:It's a tough one. It's funny because, as you pointed out, I mean I do get that question from my own children, right, who are? I have three that are in college right now, all in finance. So we do have this discussion a lot. But I think that some of the things we're talking about, like this AI innovation right, and just immersing yourself in the technology right, we're older, right it's. It's harder for us to you know the old dogs, new tricks, right, it's just harder for us to adapt to these things. So, being young and open-minded to where you can begin to see challenges and problems and see a technological solution to them that we won't see, right, because we're not at the front edge Like it used to just be. Wow, these kids coming out of school really know how to use Excel way better than I do.
Bill:I'm glad I got them to be able to use that Excel Now, right, they're using these tools already. They're just so much more empowered by it and I think that, really, just keeping an open mind, I think it's really hard for any young person in any profession, because there's a lot of pressure on kids today to suggest that they should have all the answers like what do you want to do? What's your? What do you want to work for your first job? Right, there's a lot of pressure and sometimes, honestly, it's just better for you to figure it out, it's better to knock around a little bit. That's why we always like to say we like you on your second job, not your first job, because go figure it out for a little while and figure out what you actually want to do and then, once you really kind of lean in this direction, well, now you've committed to it, now you like it, you. Now you like it, you know you like it.
Bill:So I think in the beginning it's about having a wide horizon, being willing to make mistakes. The stakes are low, right, be willing to make mistakes, be willing to try new things, be willing to learn new things and just immerse yourself at every opportunity to learn, because you never know where that will come back to help you later. That's really the key thing. I look back on the early jobs in my career and I think about the tools that I use today. At the time I had no idea where those things would help me later, and they might've been the most frustrating parts of those early jobs that later came back to be real assets in things I do today. So you just never know where those experiences are going to come back to help you later, and so having an open mind about that, I think, is really the most important thing.
Ryan:Bill, thank you for passing along some wisdom to the next generation and thanks for coming on the podcast once again, and thanks to all of you as well for joining us on this episode of the First Trust ROI Podcast. We'll see you next time, thank you.
