Sam Potter, Sam Mac, Salam Ramji discussed on Trillions



Belts eunice. Our colleague sam potter recently published a story that the moment it's published. We started talking about it and we wanted to bring it onto this episode. What was the story. And why did it catch your attention. It was really story about the fiftieth anniversary of the index fund. And a lot of people really. When they think of the index they think vanguard and bogle which launch there's i believe in seventy six but the real birth of the fund was Four or five years before that and so the guy behind it was interviewed in sam story and this is a there was a lot that was going on vanguard and i think getting at that and looking at that is really interesting but largely look. It's the fiftieth anniversary index fund. This is an etf show ats would not exist. If it wasn't for the index fund so the index fund is sort of the the route which is sprung. All of this all these other things and it's been obviously taken people have taken it and run with it so to talk to the person who is even pre bogle Is really exciting. And we have. Today is named mac mc wound and he'll be joining us from california for this episode as well as sam potter from london this time on trillions meet the man who started eleven trillion dollar index revolutions. Sam mac woken trillions. Thank you good morning. Hello from cinema wine country. Okay sam can you set the stage. How did you decide that this was going to be the story that you were going to pursue. How did i. How did i find match well About six months ago. So i was actually on co with Salam ramji google ahead. Device sheds of black rob and It was just an introductory cool. We haven't spoken before we were just chatting And i was telling him getting really interested in the science of indexing what was what was kind of underpinning the etf tidal wave. If you like. And and he and i said are getting into the history of how the how will bill. And and i said i'm reading capital ideas by by peter bones in you know the history -able straight and he said oh you must know about mcclellan I said i don't actually know that night. And he said the east to you must know this guy this is. This is the guy this is where it started and i have to deal with. I thought i thought it was whatever he said. No it's mac is still around. He's a wine country. Having you know this great life. I said i haven't seen his name in the book and he said keep breathing and then sure enough. I was reading kepler ideas ahead like one of two weeks later. And i read this. The first wedge into the system was driven by a man with a fine scottish name john andrew. Mcclellan mcquillan has a boyish Of had though now grayish white still tumbles down over his forehead. So okay. I gotta i gotta track down a so. Yeah i i sort of tracking down. He's on the board at under biases which coast just getting into the industry now and they helped me Hold back and he was gracious enough to do an interview and it was. I was fascinating stuff matt. Can you rewind the clock fifty plus years now and tell us how did you get the idea for the index fund. Well it's the story is kind of convoluted as long as all kinds of illusionary transformative processes seemed to be. When when i was doing graduate worker harvard. I was a harvard business school. I was working with a professor from from uh sloan school at mit who had collected a bunch of data from barons on common stock on friday closes. And i was doing programming. I had been involved in programming and i. I was fascinated by the apparent discrepancy between the behavior of share prices over time From a normal probability distribution in a nice bell shaped curb while it doesn't actually look like that and fast forward about four or five years. I'm in new york. And i ended up in a meeting through a more serendipity merrill lynch when agip professor jim laurie and professor laurence fisher representing initial findings on return on common stocks. At merrill lynch had funded. And i wound up to her lori. Afterwards i ask a question about these fat tailed distributions as they were coming to be known and he said whoa what we have a graduate student. Who knows something about that subject. That's his dissertation stamos. Gene pharma and one thing led to another. I went out to visit. My family was to chicago. I ended up spending the monday morning. After thanksgiving of nineteen sixty three. I remember vividly. Having a conversation with jane fonda and he introduced me to merton miller and all of a sudden. I realized that this what i was suspicious of was maybe not entirely ill-founded but it was naive relative to what gene was actually working on. Well one thing led to another. And i ended up being asked by an executive and ibm to give a talk at the ibm executive center of san jose. South of san francisco In january of sixty four and in the audience was ransom. Cook who was the chairman of wells fargo. Well i went back to new york and a few days later week later. I got a phone call from from ransom cook and he says i would like to come back to san francisco and meet some of my colleagues so of course i took a couple days off and went back to san francisco and i met a number of people and i went back into ransoms office. Ayso how much. How much are you making. And you're in your drum new york. And i said Six thousand dollars a year and he said I offered you a job for eighteen. Thousand would you come to work for me starting immediately while you could have knocked me over with a feather by get back to new york and i told my wife about this. And she's not exactly thrilled with the long. The short of it is. I took the job and we moved to san francisco and we began to work on. What ransom nicole. The investment management problem.

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