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    Masters in Business

    Goldman Sachs Ashish Shah on Reading the Market With AI and Technology

    Fri Apr 19 2024
    Asset ManagementInvestingLeadershipFinanceGoldman Sachs

    Description

    This episode features A C-Shah, the co-head and CIO of Public Investing at Goldman Sachs Asset Management. A C-Shah shares insights from their diverse background in technology, innovation, equity, credit, and fixed income. They discuss the challenges of building scalable investment processes and the importance of culture in asset management. The episode also covers experiences at Lehman Brothers during the financial crisis, the transition to Barclays, and leadership lessons learned. Additionally, it explores the role of a CIO in public investing, collaboration in finance, market outlook, fixed income concerns, and career growth.

    Insights

    The guest on the podcast, A C-Shah, is the co-head and CIO of Public Investing at Goldman Sachs Asset Management overseeing $2.3 trillion of assets.

    A C-Shah has a diverse background in technology, innovation, equity, credit, and fixed income.

    Building an investment process that is scalable and aligning team incentives are critical challenges for large asset managers.

    Cultural factors play a significant role in the ability of asset management organizations to pivot and innovate.

    Successful investors stick with what they believe works over time and constantly challenge their core thesis.

    It's important to be humble and understand that core thesis needs to be maintained over time.

    The interviewee shares their experience working at Lehman Brothers in the early to mid-2000s, transitioning from fixed income to equity strategies.

    The interviewee's unique expertise in credit, derivatives, and hedge funds allowed them to excel in a role as a hedge fund strategist at Lehman Brothers.

    After Lehman Brothers filed for bankruptcy, the team faced uncertainty about their salaries and benefits, but they continued to work diligently to serve clients.

    Barclays acquired Lehman US post-bankruptcy without federal backing, leading to a bumpy transition with some redundancies.

    Experiencing crisis situations helps managers learn to manage risk and lead effectively.

    Taking care of people and clients is crucial for success during difficult times in the financial industry.

    Multi-asset portfolios can include hedge funds, mutual funds, or ETFs and are internally managed.

    Being a Co-CIO can be beneficial as it allows for different perspectives and wider coverage of investment markets.

    Culture is foundational for success in a competitive environment like markets, where continuous learning and improvement are crucial.

    Collaboration between public and private investing teams at Goldman Sachs Asset Management is key for sharing insights and benefiting clients.

    Debt sustainability and interest rates are key concerns within the fixed income organization.

    The Federal Reserve focuses on liquidity in treasury markets but may need to adjust rates if debt levels impact growth and employment.

    Genetics and AI have implications on investing systems.

    Reading about markets, learning from others' mistakes, and being process-oriented are key for career growth in investing or asset management.

    Chapters

    1. A C-Shah's Background and Career Journey
    2. Challenges and Importance of Culture in Asset Management
    3. Key Considerations for Successful Investment Strategies
    4. Experiences at Lehman Brothers and Transition to Barclays
    5. Leadership Lessons and Collaboration in Finance
    6. Role of CIO in Public Investing at Goldman Sachs
    7. Culture, Collaboration, and Market Outlook
    8. Fixed Income Concerns and Career Growth
    Summary
    Transcript

    A C-Shah's Background and Career Journey

    00:00 - 07:33

    • A C-Shah is the co-head and CIO of Public Investing at Goldman Sachs Asset Management overseeing $2.3 trillion of assets.
    • A C-Shah has a diverse background in technology, innovation, equity, credit, and fixed income.
    • A C-Shah shares experiences from working at Lehman Brothers during the financial crisis and highlights the leadership that often goes unnoticed.
    • A C-Shah's career journey includes experiences as a trader at a hedge fund funded by Soros and working in startups like Level 3 Communications and founding SageLogix.
    • At Alliance Bernstein, A C-Shah led the credit organization to unify the team and build a scalable investment process.

    Challenges and Importance of Culture in Asset Management

    07:12 - 15:35

    • Building an investment process that is scalable and aligning team incentives are critical challenges for large asset managers.
    • Cultural factors play a significant role in the ability of asset management organizations to pivot and innovate.
    • AB Labs was established to prepare Alliance Bernstein for changes in the market, focusing on topics like robo advisors and blockchain.
    • Having the right culture that prioritizes collaboration, performance delivery, and innovation is crucial for success in investing.
    • Innovation and technology are essential for asset managers to deliver mass customization with institutional quality portfolios.

    Key Considerations for Successful Investment Strategies

    15:06 - 23:02

    • Successful investors stick with what they believe works over time and constantly challenge their core thesis.
    • It's important to be humble and understand that core thesis needs to be maintained over time.
    • Constructing portfolios to handle challenges and tilting out of crowded opportunities can lead to success in investing.
    • Research and developing an investment process are critical for reducing risk before the market questions your thesis.
    • In fixed income, evaluating income, shape of curves, and real rates relative to economic growth are key considerations for a successful investment strategy.

    Experiences at Lehman Brothers and Transition to Barclays

    22:47 - 38:15

    • The interviewee shares their experience working at Lehman Brothers in the early to mid-2000s, transitioning from fixed income to equity strategies.
    • The interviewee's unique expertise in credit, derivatives, and hedge funds allowed them to excel in a role as a hedge fund strategist at Lehman Brothers.
    • The early to mid-2000s at Lehman Brothers was characterized by high energy and rapid growth in fixed income, particularly structured credit and mortgage credit.
    • The interviewee reflects on their experiences during the fall of Lehman in 2008, highlighting it as a challenging yet valuable leadership experience.
    • After Lehman Brothers filed for bankruptcy, the team faced uncertainty about their salaries and benefits, but they continued to work diligently to serve clients.
    • Barclays acquired Lehman US post-bankruptcy without federal backing, leading to a bumpy transition with some redundancies.
    • The experience of transitioning from Lehman Brothers to Barclays was surreal but taught valuable lessons in dealing with crisis and change in the financial industry.

    Leadership Lessons and Collaboration in Finance

    37:48 - 46:15

    • Experiencing crisis situations helps managers learn to manage risk and lead effectively.
    • Taking care of people and clients is crucial for success during difficult times in the financial industry.
    • Working in finance involves a responsibility to contribute positively to the economy and provide valuable insights to policymakers.
    • Collaboration with policymakers like Tim Geithner during crises can influence policy decisions and benefit the economy.
    • Expert communication skills are essential in the workplace, and tools like Grammarly can enhance productivity.

    Role of CIO in Public Investing at Goldman Sachs

    45:45 - 53:31

    • Multi-asset portfolios can include hedge funds, mutual funds, or ETFs and are internally managed.
    • Being a Co-CIO can be beneficial as it allows for different perspectives and wider coverage of investment markets.
    • The CIO of public investing at Goldman Sachs focuses on leveraging data analytics across various strategies to deliver better performance for clients.
    • The daily routine of the CIO involves focusing on market performance, people, process, and platform to ensure long-term success.
    • Investing in data analytics and innovation is crucial for asset managers to keep up with market evolution and deliver strong performance.
    • Clients are increasingly seeking customization in their investments to match their needs and preferences.
    • The CIO finds their role rewarding as they get to interact with smart individuals who are dedicated to delivering performance and solving client problems.

    Culture, Collaboration, and Market Outlook

    53:13 - 1:01:18

    • Culture is foundational for success in a competitive environment like markets, where continuous learning and improvement are crucial.
    • Collaboration between public and private investing teams at Goldman Sachs Asset Management is key for sharing insights and benefiting clients.
    • 2024 was predicted to be the year of bonds due to decreasing inflation rates, but unexpected market movements have led to reevaluation.
    • Equity markets still have runway for growth, especially in diverse sectors like Japan and India, while certain areas like technology may face corrections.
    • Treasury auctions facing challenges due to large deficits require careful management by both the US Treasury and investors for long-term stability.

    Fixed Income Concerns and Career Growth

    1:01:12 - 1:13:43

    • Debt sustainability and interest rates are key concerns within the fixed income organization.
    • The Federal Reserve focuses on liquidity in treasury markets but may need to adjust rates if debt levels impact growth and employment.
    • The guest is involved with Minds Matter, a nonprofit that helps low-income students prepare for college and succeed post-college.
    • Grammarly is highlighted as a tool for improving communication in businesses, saving time and enhancing clarity.
    • The guest mentions mentors who have shaped his career, including Dr. Jeremy Segal and Eddie Raha.
    • Favorite books of the guest include techno thrillers by authors like Brad Taylor and content-focused reads like 'Chip Orr' on genetics.
    • Genetics and AI have implications on investing systems.
    • Reading about markets, learning from others' mistakes, and being process-oriented are key for career growth in investing or asset management.
    • Discipline over smarts, doing what works over time, and considering after-tax returns are crucial lessons in the world of investing and asset management.
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