I had the honor and pleasure last week of attending the University of Maryland’s Wall Street Speaker Series event as a member of Beta Gamma Sigma International Honor Society. The event was held at the Harvard Club of New York City with keynote speaker, Robert Kapito (Founder, President, and Director of BlackRock, Inc.), and host, Bruce Richards (Founder, President, and CEO of Marathon Asset Management).
After several introductory remarks, Bruce and Bob sat down for a chat about the economy, elections, and BlackRock. Bob believes that many companies are using their cash to buy back stocks, so the economy may stay stagnant while stocks continue to rise due to lack of supply. He also believes that the high yield sectors and municipals are good areas to be in right now. Bruce then asked for Bob’s thoughts on the central bank’s actions. He thinks that until housing prices stop going down, people will continue to not spend. He also thinks that there are too many factors keeping unemployment rates high and that the central bank’s actions can’t be the only cure to unemployment. For example, healthcare costs went up 20% last year. This increase has made it difficult for companies to hire more people. Many companies also have more people on pensions than they have working. This imbalance is not sustainable. Also, the housing and construction industry is one that employs thousands of people. Until we start building again, unemployment rates will be affected. There are also many regulatory and political issues affecting unemployment along with our deficit problems, and people are scared that the central bank may stop its actions too soon. All of these factors influence unemployment.
The talk then turned to elections. He said that most people seem to think that if Romney wins, then our economy will be better, and if Obama wins, then our social system will be better. In reality, the President of the United States doesn’t make all of the decisions, and there are many factors that affect our economy and our social system. He feels that one problem is that members of Congress do not spend much time in Washington, DC, so there are no debates or discussions. From my public policy class last year in DC, we found that this was a complaint of many people. He also talked about how much business is disliked throughout the country and how all of us need to become vocal about how good business can be. There are a few bad people in business but not a large amount.
Bruce then asked about BlackRock and how it’s managed. Bob said that you have to start with good people who are accountable, responsible, and passionate. As the leader, you have to energize people, manage with your head and your heart, and give employees a mission. He then related the story of JFK’s visit to NASA during moon mission days. JFK asked the janitor what he did, and the janitor responded that he was helping put a man on the moon. Bob used the story as an example of how everyone at NASA during that time knew the mission and felt part of it. BlackRock also tries to stay ahead of trends and listens to what its customers want. Every morning at BlackRock, there is a meeting to discuss markets and opportunities. Anyone in the company can be part of it by attending in person or calling in through their computers. They also have a learning institute that meets six times per year.
BlackRock created an analytical system for the buy side of the market. They modeled every security and kept the data proprietary even though the process had been very expensive. But they were able to use that expertise to then analyze other companies’ funds.
The talk ended with Bob’s recommendation to all of us that we put ourselves in positions to meet people. He talked about going to college and getting involved in everything that he could. He talked about how he had interviewed with Romney at Bain but had decided to go to First Boston instead which propelled him to launch BlackRock.
I really enjoyed the talk and how open and approachable Bruce and Bob were. It was a really great event, and I hope that the University of Maryland will allow me to attending the next Wall Street Speaker Series!
