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- [00:00]
Barry Ritholtz
This is an iHeart podcast.
- [00:05]
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- [02:44]
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Bloomberg Audio Studios Podcasts Radio News this is Masters in Business with Barry Ritholtz on Bloomberg Radio.
- [02:58]
Barry Ritholtz
On the latest Masters in Business podcast, I have another extra special guest. Valena Penova is group Chief Investment Officer for insurance giant Swiss Re. She runs their private internal fund, about $108 billion that she manages primarily in fixed income, private credit, a variety of other assets. Really a fascinating conversation with someone who is uniquely situated in the investment world. Swiss Re is a global very well known insurer and reinsurer. They cover just about everything that's out there. Not only are they the insurance company for insurance companies, but they have a variety of lines of business. She has a fascinating career. She helped develop the private equity group for Bain & Co. In Zurich before heading over to Swiss Re. I thought this conversation was fascinating and I think you will also. With no further ado, my discussion with Swiss Re's Valena Panova. Valena Penova, welcome to Bloomberg.
- [04:08]
Valena Penova
Thank you, Barry. It's a pleasure to be here.
- [04:10]
Barry Ritholtz
Well, it's a pleasure to have you. Let's start out with your background. Bachelor's in economics and a B.S. in computer science from Wellesley in Boston and then an MBA from Harvard Business School. What were the original career plans?
- [04:27]
Valena Penova
So I was one of the first generations of Eastern Europeans after the Wall came down who had the opportunity to come to the U.S. if I had not come to the U.S. my passion was to become a doctor. And in Bulgaria, where I came from, getting a medical degree meant that after high school you go to medical school.
- [04:50]
Barry Ritholtz
For five years, no college, high school.
- [04:53]
Valena Penova
No college, and then after five years you can practice. So I arrived at Wellesley with the plan to do pre med. And when I got there I realized that pre med meant that I study some generic biology and chemistry for four years, then I have to apply to medical school, then I have to go to residency. And during that whole time I have to keep on accumulating debt. And at some point in my late 20s, I may be able to practice.
- [05:24]
Barry Ritholtz
Right. It's like a 12 year process. It's pretty intimidating for or. And yet all the medical schools seem to be filled up.
- [05:33]
Valena Penova
Exactly. But for me this was not an option. And what I decided to do is just experiment and see what else I could do. And I'm pretty mathematically oriented. I took a lot of math classes. I Took a computer science class, which I found super fascinating. I mean, back then in 94, it was the early days of punch cards.
- [05:55]
Barry Ritholtz
Were you, were you still in the punch cards?
- [05:56]
Valena Penova
No, but I was. I started coding in Pascal.
- [05:59]
Barry Ritholtz
Okay.
- [06:00]
Valena Penova
So I think a lot of your listeners probably don't know what that computer language is. So it was Pascal, then C, and then I took an economics class. And that's when the lights went off because it was a very mathematical field in many ways, but also with a link to the real economy. I couldn't give up math and computer science. So I ended up finishing with two majors and a minor. But business and applying economic concepts and actually going into business was what I decided to do after the second year at Wellesley.
- [06:38]
Barry Ritholtz
That's really, that's really interesting. So at some point you spend time within the high speed data division of a company that eventually became part of AT&T. That was in the 1990s. What was that experience like?
- [06:53]
Valena Penova
So when I was a junior in college, I tried to get an internship and I was looking at the typical paths of consulting or banking. It is very difficult to get an internship in junior year. And I had a professor in economics who suggested that I look at this company called Media One in Boston that had recently been acquired by. No, it was, it used to be called Continental Cablevision. It had been acquired by U.S. west, a Denver based company and they had rebranded it as Media One. And there I worked in strategy and the strategy focus was on rolling out high speed data through coax cable.
- [07:36]
Barry Ritholtz
So broadband, before we really knew what broadband was.
- [07:40]
Valena Penova
Absolutely. And the team actually that did all the technology in Media One ended up being the core technology team for Cisco. So it was really cutting edge at that point.
- [07:53]
Barry Ritholtz
Really interesting. So how did you end up as a consultant in Boston at Bain? When did that start?
- [08:01]
Valena Penova
So if the company had stayed In Boston, if MediaOne had stayed in Boston, I probably would have gone back. After I graduated, I had an offer, but they decided to relocate to Denver and I really wanted to stay on the east coast. So given I'd been doing strategy work and the fact that I wanted to learn as much about business as possible, I thought consulting would be the right next step. So it was similar enough to what I'd been doing, but consulting would allow me to broaden the view.
- [08:33]
Barry Ritholtz
And Bain & Co. Is one of the biggest consultancies in the United States. What was it like working in Boston at Bain? What sort of projects were you working on?
- [08:44]
Valena Penova
So Boston is the headquarters biggest office. When I joined and was a Huge variety of projects. So I did a project for Amex looking at their credit card solicitation program, how they can be better competitive with other credit card companies. I worked for Motorola and then I spent quite a bit of time in the emerging private equity practice. So Bain was the pioneer in consulting two private equity companies focusing on strategic due diligence of M and A transactions. And it was very fast paced environment. You do a due diligence in one, two, three weeks. And you need to basically keep pace with the private equity team to make sure that the assumptions they need for the model and the conviction for buying an asset could be backed by the analysis the Bain team was doing.
- [09:45]
Barry Ritholtz
So this is in the 1990s. Private equity was still relatively small back then. This is almost 30 years ago. Did you have any sense as to how rapidly private equity would grow and how big it eventually became?
- [10:03]
Valena Penova
I mean, it was, I would say in its second inning back in the 1980, like 1998. Yes. 90, 97. 98. It was. I mean, it was attracting a lot of talent. So if you look at who was going to private equity, it was the best from the consulting teams, it was the best from the investment banking teams. And I think the value proposition was just very compelling. I mean, the returns at those times were easily in the mid to upper 20s.
- [10:38]
Barry Ritholtz
Really. Wow. That's impressive. At the time, I remember NASDAQ was similarly Putting up high 20%, 20, 25, 30% returns. Very unusual number of years in a row. I had no idea private equity was putting up those sort of numbers back then. You end up as the head of Bain's private equity experience. Was that in the US or overseas?
- [11:03]
Valena Penova
So I spent in total 19 years at Bain. If you add the time I spent in business school and I was first in Boston, I actually spent six months in Australia as well.
- [11:17]
Barry Ritholtz
Wow.
- [11:18]
Valena Penova
And then I moved to San Francisco after business school and was again quite focused on the private equity space. Right before 2009, I felt I was ready to do something else. And that's something else was renewable infrastructure, private equity. So that was an emerging space back then.
- [11:42]
Barry Ritholtz
And my renewable infrastructure. So this is everything from solar and wind to battery to more efficient power lines. Still a burgeoning area. How long did you work in that space?
- [11:55]
Valena Penova
So I didn't.
- [11:56]
Barry Ritholtz
Oh, you did not.
- [11:58]
Valena Penova
The catch was that the fund had to raise money and me going to that fund was contingent on them raising the next. The next round.
- [12:08]
Barry Ritholtz
Yeah. And 09 got in the way.
- [12:09]
Valena Penova
And 09 got in the way. And I had already Told Bain, I had told Bain. Listen, I, you know, I've, I've been here for a long time. It had been, you know, 10 years by then. I need to look at something else, I need to do something else. And they told me, listen, instead of leaving, why don't you do a six month transfer in Europe? Why don't you go to Zurich, for example? It's a small office, there's interesting clients, there's quite a lot of US partners there. Why don't you see how you like another office and then you can come back in six months and we can think about whether you want to still leave or pick up and go down the partner track.
- [12:51]
Barry Ritholtz
So that was six months and that six months turned into how long?
- [12:54]
Valena Penova
That six months turned into a year and that year turned into a permanent relocation.
- [13:02]
Barry Ritholtz
How long did you stay with Bain in Zurich for?
- [13:05]
Valena Penova
So I stayed in until I came to Swiss Re. So I moved to Zurich in 2009 and I left Bain in 2017.
- [13:15]
Barry Ritholtz
So US London, a lot of money centers were kind of imploding during 2009. What was the view like from, from Zurich?
- [13:26]
Valena Penova
I would say not that different really. It was a glo. We call it a global financial crisis. So business was difficult across the globe. Europe was in a difficult situation. I mean, I was in Zurich, but I was serving a lot of the European clients and it was hard. But what was different about Zurich compared to San Francisco is Zurich at that time was a very small office with very few partners on a growth trajectory. So it felt like going from a well established company to a startup. And that's where I could develop also business lines and service areas that were not so established across Bain. So institute supporting institutional investors. Right. We had worked a lot with private equity funds, but we had not done as much work with sovereign wealth funds, pension funds. And the problems that those institutional investors face when investing in private markets are well served by the knowledge that Bain had in the space. So that's where I found the niche and that's where I focused when I moved to Zurich.
- [14:41]
Barry Ritholtz
So. So you have a history and an expertise in private equity consulting, analysis. Just generally the space which was small but rapidly growing. How far were you able to take that for Bain? At what point did you realize, hey, I've gone as far as I can go with this. We can only do so much as a, as a consultant, I really want to deploy capital in the space.
- [15:10]
Valena Penova
So that had been on the back of my mind for a long time. I mean, obviously when you work with investors, you're always quite vested in the decisions being made. You're advising on setting up of a new mandate or executing an investment strategy. And that's super intellectually challenging. But the issue is that at some point you need to hand it over. Here is the plan. Here's how you should go about in this deal or in this new asset class. But then it's up to the client to implement it. And what Swiss Re provided me with was the platform to actually do the investing and to take the strategy that I had helped them develop and implement it.
- [15:57]
Barry Ritholtz
We're going to come back to Swiss RE in a few minutes. I want to just stay with your time at Bain in Zurich. So you're on the investment committee in Zurich. Were you looking at global opportunities? Just Europe, the rest of the world, ex us? What was your playground?
- [16:17]
Valena Penova
So I'll give a bit of background on what this investment committee is. So Bain does a lot of due diligence for private equity clients. And as part of that relationship, we as a partnership were allowed by the private equity fund to co invest in transactions that we had. Diligence.
- [16:40]
Barry Ritholtz
That's a vote of confidence. Oh, we think you should put money into this and we're going to co invest along with you.
- [16:46]
Valena Penova
Absolutely. Well, it helps with kind of the broader relationship and it's an attractive opportunity for, for the employees of Bain who invest in those co invest vehicles because you're able to do that co investment without fee and carry.
- [17:06]
Barry Ritholtz
Wow.
- [17:06]
Valena Penova
And as you know, well, those fee and carries are a pretty big chunk of the cost of the product. So the investment committee was a small group of global partners that had to decide which ideas that came from the teams we would put into the Bain Co investment fund. So we were the diligence on the diligence team.
- [17:32]
Barry Ritholtz
Wow. So you really have to know your stuff if you're doing the due diligence for the due diligence team.
- [17:39]
Valena Penova
I mean, that's when you need to be willing to say no to colleagues and friends who then have to deal with the repercussions of saying to the private equity fund, well, we think it's a good deal, but our investment committee decided to pass.
- [17:52]
Barry Ritholtz
Right. Really? So does that create a problem or is it, hey, we only have so much money to do and this is broader than we usually like, or how do they manage around that?
- [18:05]
Valena Penova
I think that the clients understand that when you're thinking about portfolio construction, you can have only so much allocation to a given geography to a different industry. So I think that nobody took it personally. I Think if you consistently say no to a co investment from a particular client, it may raise questions, but generally the quality of those proposals was very high.
- [18:31]
Barry Ritholtz
Really, really interesting. So the question that's going to lead us to Swiss Re is how did your time at Bain & Co. Influence your approach to investment management strategy, private equity selection? This had to be pretty seminal in your development as a, as an investor.
- [18:52]
Valena Penova
Yeah. So if you think about what you learn as a consultant, first of all, you observe a lot of management teams. Ultimately it's all about the team and the quality of the team and the people. That's both with clients and also within Bain. And I think that's also very true about how you set up an investment organization. You can have the frameworks, you can have the processes, but at the end of the day it's about the quality of the team, the trust between team members and the culture you create. And I think you may be surprised to hear that's the first thing I start with. But I truly believe that quality investment requires just a very strong team behind it.
- [19:39]
Barry Ritholtz
The venture capitalists say we like to bet on the jockey, not the horse. It's very much a people business. You have to be able to evaluate not just folks ability and insight, but their ability to execute and make stuff happen. So is it safe to say the decade you spent in private equity at Bain carried forward to Swiss Re?
- [20:04]
Valena Penova
No, absolutely. And maybe there are two more things that I would say carry over. When we talk about investing, we really focus a lot on macro. Right. But at the end of the day, good investing is a good balance between macro thinking. So what's happening with the global economy, what's happening with interest rates, what is the Fed going to do? And micro, and understanding how different segments of the economy, how different businesses make money, make profit, what, you know, not everything is correlated to GDP growth. And I think that balance, I, I brought that balance from my consulting days because a lot of the colleagues in the investment organization think first macro and then micro. And I think both in private equity and in consulting, it is more of that balance.
- [20:58]
Barry Ritholtz
Really, really interesting.
- [20:59]
Valena Penova
And the third is decision making. Right, so decision making, I'm an analytical person and in consulting you focus on the data, on the model, but also observing behavior and stakeholder management. So understanding how the data and how the analytics drives a decision, but then also how do the biases of different stakeholders drive the decisions.
- [21:29]
Barry Ritholtz
Absolutely fascinating. Coming up, we continue our conversation with Valena Panova, Group Chief Investment Officer for Swiss re, discussing how she found her way to the insurance giant this July.
- [21:41]
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- [23:49]
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- [24:20]
Barry Ritholtz
Swiss Re a little bit. You join in 2017 after you had been a consultant for Bain and Company for 19 years. What motivated the transition to full time asset management?
- [24:34]
Valena Penova
So Barry, as we spoke, consulting is exciting because you get to work on your clients most challenging problems. It is super intellectually stimulating and rewarding. However, you lack ownership in the solution that you bring. So for me that was always the one piece missing in my consulting job. You know, you can come up with the best framework with the best answer, but then you hand it over and how it gets implemented and whether it succeeds, you don't get to follow the whole journey. So the opportunity for me to come to Swiss Re and actually invest and implement a strategy was extremely exciting.
- [25:20]
Barry Ritholtz
I'm curious if consultants run into the same problem that I call it the cocktail party problem. If someone asks you about a particular stock at a cocktail party and you give them an answer, well, if it works out it's because they're a genius, but if it doesn't work out, it's your fault. Do consultants run into that same lack of agency issue?
- [25:45]
Valena Penova
I don't think it's lack of agency, I think it's lack of opportunity to follow through. Right. I mean consultants are expensive, right? So if you're a company and you want to hire consultants, you want to focus them on getting you the answer. That's hard, right? Consultants often ask the question why is the client's problem so hard? And if you can't really answer that question, then it's, you know, why are you then at the client in the first place if the problem is not hard? And that's why companies focus their resources on consulting, on really solving the hardest piece of the problem. But companies run big operations and the implementation is typically something that takes a long time. And even if you were to bring a consultant in to help you with implementation, it's the cost benefit is just not there. So I think if you ask many people who were in consulting, that's always the complaint that they have is yes, I follow through you. You know, you obviously keep in touch with your client. You have multi year clients, but you, you have a huge sense of ownership for the solution you have created. You have a huge sense of responsibility. But then you don't have control. You don't have control over the outcome.
- [27:09]
Barry Ritholtz
So you moved to Swiss Re in 2017 as head of private equity. Did you have ownership and control? What was that transition like?
- [27:20]
Valena Penova
Absolutely. I had a P and L. So the mandate that I had to set up was selecting private equity funds, co investments, secondaries to put into Swiss Re's portfolio and then to make sure that we beat the private equity benchmark or the equity benchmark. With that selection, how do they figure.
- [27:46]
Barry Ritholtz
Out what the targets are for private equity? I know there's a bunch of different benchmarks. There's us, there's Europe, there's global. Did you have the mandate to go anywhere, just find us the best deals, or were they focused, focusing you in particular sectors or geographies?
- [28:06]
Valena Penova
So I was also responsible for deciding that. And ultimately the decision was to focus more on developed markets. So we really emphasize us, Europe, developed Asia.
- [28:19]
Barry Ritholtz
Which is primarily Japan and Korea or Australia?
- [28:24]
Valena Penova
Korea, yes.
- [28:25]
Barry Ritholtz
All right. So how long were you running private equity for Swiss Re before they said, hey, we think we have bigger things in mind for you?
- [28:36]
Valena Penova
So sadly, only two years. It was a exciting.
- [28:38]
Barry Ritholtz
Sadly, you got a giant promotion. Why sadly?
- [28:42]
Valena Penova
Well, because I had just set the mandate up. Right. It was, it was a lot of effort to, you know, get the relationships back with. With private equity funds.
- [28:50]
Barry Ritholtz
Right.
- [28:50]
Valena Penova
To build the team, to build the oper, to build the systems. And just when things were running and were looking like you could cruise for a while, opportunity knocked and I had to jump into a completely new and unknown area to me at the time.
- [29:10]
Barry Ritholtz
So we'll talk a little bit about your role as group chief investment officer for Swiss Re. But I'm curious, as when you're running private equity, are you allocating capital to different private equity funds? Were you investing directly into private equity opportunities as a co investor along with P funds? A little bit of everything. How are you allocating Swiss Ray's internal capital?
- [29:39]
Valena Penova
So it's a little bit of all, but it's mostly investing in private equity funds. So I would say about 70, 80% of the allocation is in funds and then the rest is in co investment alongside the funds that we have invested in.
- [29:55]
Barry Ritholtz
Huh. Really interesting. All right, so two years later, you get a promotion, you're head of Swiss Ray's Group, your chief investment officer for Swiss Ray's Group. That's their internal pool of assets. They.
- [30:10]
Valena Penova
Not yet, not yet, not yet.
- [30:11]
Barry Ritholtz
So what's.
- [30:12]
Valena Penova
I had an intermediate promotion.
- [30:13]
Barry Ritholtz
So what was the 2019 promotion?
- [30:15]
Valena Penova
So the 2019 promotion was head of client co, head of client solutions and analytics. And I was focused more on the ALM side of the business asset liability management. So it was. If you think about insurance asset management, we have, you know, we obviously serve the group, but we have business units and legal entities. And each of these business units and legal entities have their own strategic asset allocations. So my role was to manage those business unit and legal entity asset allocation.
- [30:55]
Barry Ritholtz
So, so how long did you do that for? From 2019 till when?
- [30:59]
Valena Penova
Until I got the CIO job, which was in 23.
- [31:02]
Barry Ritholtz
Okay, so 17, 23. So for the past two years you've been chief investment officer for Swiss Rey's internal fund, which is 100 something billion dollars, is that right?
- [31:16]
Valena Penova
100 and 800 and 108.
- [31:19]
Barry Ritholtz
What's a billion or two between friends? How much of that is allocated to private equity and alternatives? How much of that goes to public assets like stocks and bonds? Is it a different set of strategies, a very different mandate than you had when you were running private equity?
- [31:38]
Valena Penova
So maybe. Before I answer this question for your listeners, I want to give a very quick primer of what insurance asset management is and how it's different from asset management for other institutional investors. Because I think the, you know, the answer will make a lot more sense with that, with that in mind. So if you think about insurance asset management, the optimizing function that we have is in three pillars. First is long term value creation with focus on stable, sustainable returns and cash flows. And our liabilities, if you think about especially the life business, are super long term.
- [32:21]
Barry Ritholtz
But you do have annuity.
- [32:24]
Valena Penova
We don't have annuities, but we have not annuities.
- [32:27]
Barry Ritholtz
I'm using the wrong word, so I'm gonna have to pull that out. You have life expectancy tables, so you have some sense of what you're.
- [32:34]
Valena Penova
Exactly.
- [32:34]
Barry Ritholtz
Life insurers have a sense of, hey, we have this much of a future liability 20, 25, 30 years down the road. We don't know who's going to pass away when. But with a large enough group, we can more or less have a sense of future liabilities.
- [32:49]
Valena Penova
No, no, we have a decent sense of future liabilities, but we also need to make sure we have a portfolio that's resilient across cycles. The second pillar is asset liability management. Right. So because we have a view on our liability profile, we need to make sure we match our assets on a currency duration and liquidity basis. So the strategy is very intricately linked with what's happening on the other side of the balance sheet. And then the third pillar is capital efficiency and diversification. I think that is one of the big differences with other institutional investors. We are regulated and we have a risk based capital regime, which means that the cost that we have for holding certain higher volatility asset classes is very high, such as equities or high yield. And that means that we maximize return on a risk adjusted basis. So it's, you know, maximizing risk adjusted return per unit of capital that makes, that makes sense.
- [34:05]
Barry Ritholtz
When we were talking about private equity, I was thinking about those future liabilities. A lot of people realize private equity has, tends to be illiquid for five or seven years at a time. But I would imagine that you could ladder or stagger that. So there's always some fund coming up when, when a future liability arises. It may be illiquid for five years or seven years, but you're talking about 20, 30, 40 years in the future.
- [34:34]
Valena Penova
On the life side, I mean, we also have a property and casualty business which is much shorter.
- [34:39]
Barry Ritholtz
Random. Yeah.
- [34:41]
Valena Penova
Well, it's annual renewal and it's a function of what happens with natural catastrophes. So whether you have a hurricane or an earthquake, but that business renews every year. So it's a very short tail.
- [34:54]
Barry Ritholtz
On the, on the liability side of that. It feels these days like natural catastrophes are not just more frequent, but so random. I don't know if we're just paying more attention to them or if they're actually happening more frequently. How do you manage around having that sort of future liability when it kind of feels a little random when a hurricane hits or tornado hits, a wildfire happens. All these things just seem to come out of nowhere.
- [35:25]
Valena Penova
Well, so I think that's why the whole element of liquidity and stability is so important. On the asset side, we need to have a sustainable portfolio regardless of cycle and regardless of what happens, which means we need to hold more liquidity than you would think at first glance. And we need to have a portfolio that can cover liabilities. So it cannot be the case that if a hurricane hits and we have claims and people are waiting to get paid to rebuild their roof, we say we're sorry, but there is a market.
- [35:58]
Barry Ritholtz
Crisis, alternatives, we're locked up. We can't.
- [36:01]
Valena Penova
Exactly. So you need to really keep that in mind.
- [36:03]
Barry Ritholtz
You know, in the US I think Swiss Re is known primarily as a giant reinsurer. Same situation. Obviously you never know when some insurance company gets to make a claim on their reinsurance policy. I'm going to assume that having stability Sustainability and liquidity is really important for those future liabilities as well.
- [36:28]
Valena Penova
No, no, absolutely. I mean we are ultimately the insurer of insurance companies. We insure the tail. So every time you open the paper and there's a big event, you should think of Swiss RE and what the impact is. So whether there is a, you know, the Suez Canal is, is blocked or there's a big earthquake or the airplanes have been, cannot be returned to the lessors in Russia, all of these macro big events ultimately hit reinsurance. Or if there's a big pandemic and the, the Tokyo Olympics are delayed, that is a reinsurance level event.
- [37:10]
Barry Ritholtz
So, so it's interesting because you spent so much time in private equity, but it sounds like what Swiss Re does internally is going to be a little less alternative focused, a little more liquidity focused. Is that a fair statement?
- [37:28]
Valena Penova
No, absolutely. And if you look at our portfolio, we are 85% fixed income.
- [37:34]
Barry Ritholtz
Oh, no kidding.
- [37:35]
Valena Penova
Of which half is government bonds. And we use government bonds to match liabilities. That is our risk free way of matching liabilities. And then the rest is corporate credit and private debt. And private debt has been one of the asset classes that we have participated in for a long time but where we're seeing a lot of opportunities. So if you say 85% fixed income, the rest is private equity, listed equity, we have some minority positions and then real estate.
- [38:07]
Barry Ritholtz
Huh. That's, that's really fascinating. I wouldn't have guessed so much were in government bonds. But I guess if you want liquid and you want stable and you want, despite what's the ten year now, 4.5%.
- [38:22]
Valena Penova
That'S not so bad.
- [38:24]
Barry Ritholtz
Well, with inflation, two and a half percent, it's not so good. So what do you, how do you think about the return? It's, it's really more about staying ahead of inflation than it is about generating market beating returns. Is that fair?
- [38:41]
Valena Penova
Well, you want to. So as I mentioned, we do focus on long term value creation. And if you think about again our optimizing function, most institutional investors focus on economic returns. We focus on economic returns and accounting returns and we always need to strike that balance.
- [39:04]
Barry Ritholtz
Define accounting returns versus economic returns.
- [39:07]
Valena Penova
So economic returns is if you have a bond and the market value of that bond moves in a negative direction, even if it pays you a yield net net, you might be losing economic value on holding that position. In ifrs, if you hold a corporate bond, the market movements do not go through P and L. Right.
- [39:31]
Barry Ritholtz
So you'll eventually get par. When it.
- [39:33]
Valena Penova
Because we hold it to Maturity, Right, Exactly. All right, so what features into our IFRS result is only the yield on that bond, not the market movement.
- [39:44]
Barry Ritholtz
So here we are in 2025, we're still debating whether or not the Fed is going to cut. How much attention do you pay as, as Chief Investment Officer to all of the noise around? Will the Fed cut? Will they not cut? Are they staying put? Oh, here comes the dot plot. Like how noisy and or insignificant is everything around central bank activity.
- [40:14]
Valena Penova
We start the year always with highlighting where we think markets will go and what is our baseline and what are our scenarios. So of course what the Fed will do impacts markets, impacts valuations, impacts interest rates. So of course we follow it. We are long term investors, so we try to, while we, I'd say sometimes obsessively follow the market news, we, we try to separate the noise from what we really need to do.
- [40:46]
Barry Ritholtz
You guys were in private credit before it became very popular, as it seems to have done recently. At what point does that become a little bit of a crowded trade or given the size and, and the history of Swiss Re in this space? You have your favorite places to, to play in. You know, the funds you like, the private credit shops you like. Like how are you looking at the change in private credit over the past five years? How is that affecting your investment strategy?
- [41:20]
Valena Penova
Private credit is in the news a lot these days. The reality is that private credit is not one asset class. There are many, many flavors. And you have private credit that is mostly ig, like investment grade, like senior secured loans. You have some pretty speculative asset classes and Swiss Re has been focusing on the former. So we started building and we play in that asset class in a more direct way. So we provide infrastructure loans directly to projects and we underwrite each of those loans. So we have a pretty high bar of what we see as quality and also the private debt premium. So that's the premium above the spread that those loans provide in order to put those in our portfolio.
- [42:19]
Barry Ritholtz
So I mentioned the 10 years, about 4.5% today, go back before 2022 and the yield on government bonds were half or worse. What were you guys doing when we were in an era of 1% inflation and 2.5% yield. Does that get you to where you want to be or is that still, did that raise problems for big insurers like Swiss Re?
- [42:50]
Valena Penova
I think this was a problem for the whole industry, especially for the insurance industry, given how much reliance we have on fixed income. And that was the driver in a way for us to start looking at areas like private debt, because there you have bespoke transactions and you can definitely earn a premium versus what you get even in the corporate bond space. But I mean, I'm not going to lie, you're looking to, you're reaching for yield in those moments.
- [43:20]
Barry Ritholtz
Well, there's reaching for yield like people did during the financial crisis. And then there's senior secured privately due diligence debt that didn't carry the same leverage and risk characteristics like we saw with securitized junk mortgages. That was a very different world. But I guess the insight that I'm picking up from you is, hey, two decades of 0% interest rate from the US central bank and other central banks really is the key driver of what's expanded private debt, private credit, private equity and a whole slew of alternatives that substituted for sovereign Treasuries and other issuances. Fair insight?
- [44:09]
Valena Penova
No, it's a fair insight. And I think if there's one concern that we have is if you look at when this space really exploded, it was after the financial crisis and there hasn't been a test of the market. So since 2010 there hasn't been a real credit crisis to really test the quality of these products. And I think they have new products have kept coming to the market, some with a very short history and we still don't know how private credit will actually react in a more prolonged crisis.
- [44:53]
Barry Ritholtz
Well, 2022 was pretty much down 15% year for treasuries and down 20 plus for equities. That's kind of unusual. I think you have to go back to 1981 to have them both down double digits in the same year.
- [45:08]
Valena Penova
But we had no defaults, so our portfolio had no default.
- [45:12]
Barry Ritholtz
So the fact that and the accounting hold till maturity means we don't care what the noisy day to day stuff is. We're in it until this matures so.
- [45:21]
Valena Penova
Well, we care about quality because what hurts us is defaults and RE ratings. Right.
- [45:27]
Barry Ritholtz
So you had no defaults, any RE ratings?
- [45:30]
Valena Penova
We've had some RE ratings but I mean we were. We also have middle market lending. So we have been expecting to see some wobble, but not so much. And not so much. Yeah. And I think, and you know, you always attribute good outcomes to skill when maybe some of it is attributable to luck. But so far our very conservative underwriting has paid off.
- [45:57]
Barry Ritholtz
Huh. Really, really very interesting. Coming up, we continue our conversation with Alina Penova, Group Chief Investment Officer for Swiss re, discussing the state of markets and fixed income today.
- [46:11]
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- [48:40]
Barry Ritholtz
So it's 2025. The year is just about halfway done. Kind of been a wacky year. What surprised you most about the global economy in 2025?
- [48:54]
Valena Penova
So I have to say, coming into the year, sentiment was very bullish. I was in divorce in January, and there's always the joke of whatever you hear in divorce, the reverse will happen.
- [49:06]
Barry Ritholtz
Whatever you hear where?
- [49:07]
Valena Penova
In Davos, at the World Economic Forum.
- [49:09]
Barry Ritholtz
Oh, Davos. Okay. Yeah, yeah. So, yeah, that's. It's. Davos has a tendency to pick tops and bottoms accidentally.
- [49:17]
Valena Penova
Exactly. But back in January, the sentiment was super bullish. It was all about U. S. Exceptionalism. It was all about AI and how AI Will drive returns to the moon. And the sentiment has vastly shifted. So just the speed with which we saw sentiment reverse and the narrative reversed this year a few times now has been to some degree surprising.
- [49:50]
Barry Ritholtz
To be fair, as much as the US President has been talking about tariffs his whole adult life, it's his favorite word. Call me tariff man. You know, I believe that everybody saw his first term. All right, we'll get some 10% tariffs. We can live with that. It feels like a collective failure of imagination as to what took place on April 2nd. I'm loathe to call it liberation day because the only thing that was liberated were a bunch of people were liberated from their money. But other than that, everybody seemed to be surprised by that. And should we have been? Should we have expected that or just collectively knowing. Why would you mess with this? This is going so well. Seems to be the Wall street consensus. Hey, you've inherited a great economy and the stock market's trending higher. Just leave it alone. Like, how does that perceived from Europe?
- [50:55]
Valena Penova
So I wish I said that we were super surprised. I mean, we. We do always tend to be a little bit glass half empty because, you know, we are a risk company. We're a risk knowledge company.
- [51:06]
Barry Ritholtz
Bond investors are always about return of capital, not return on capital. So you're the glass half empty. The equity side is the glass half full. But even given that, still feels like this was really a surprising year.
- [51:21]
Valena Penova
I think the extent of the announcement on April 2nd was a shock. I don't think that. I mean, if you remember that day, people couldn't understand the magnitude of some of the numbers that were shown on that chart. Right. And what the formula was and what it really meant, but I think the direction of travel was, you know, if you had listened to, to also what the President said before the election, you know, we expected some level of increase in tariffs. I think it was just the way it was communicated.
- [51:57]
Barry Ritholtz
Right.
- [51:58]
Valena Penova
And, and the execution of it, that, that caught many, including us, off guard.
- [52:03]
Barry Ritholtz
It seemed to be a little ham fisted, especially when we see how the pains the Federal Reserve takes to not surprise the market. Hey, there's a rate increase coming, couple of months, get ready. Hey, we're two months away. Look at cpi, look at, look at pce. And then all the Fed governors go out and they all speak at the various clubs like the Fed really takes pains to not surprise the market. It kind of felt like this was a purposeful surprise to the markets. How big of an impact did that have?
- [52:39]
Valena Penova
I think the good news for us was that we don't hold a lot of listed equities. It was more an opportunity to think about our playbook of when do we add exposure in the market versus stressing. If we look back at that period of about a month where you had extreme volatility, we didn't make a lot of sharp turns. It was about are we still comfortable with the portfolio we are holding? We had come into the year with a cautious optimism. Right. But I think the emphasis is on cautious and we felt comfortable holding the risk that we had in the book. At the same time we were surprised by the resilience of the market. Right. I mean this was a very sharp reaction, but the recovery was also lightning fast.
- [53:34]
Barry Ritholtz
So I'm glad you used the word resilience because that's the word that keeps coming up. Resilience in the economy, resilience in consumer spending, even if their consumer sentiment is kind of weak. And resilience in, in both equity and bond markets. It seems that you can throw anything at this economy in this market and at least so far it brushes itself up often and just keeps going. How surprising has that been?
- [54:03]
Valena Penova
I mean if you look at the valuations, if you look at the fundamentals, it's surprising, right, because you would expect, I mean you're seeing the consumer slowing down, you still have high interest rates. Valuations especially in the US are in their top deciles and outlook is, is not looking as promising as a few months back. So I think from a pure fundamentals perspective, it's surprising. But markets are not, you know better than me. Markets are not driven purely by fundamentals. There are a lot of technicals that have maintained the resilience of the market. First of all, there's just a lot.
- [54:47]
Barry Ritholtz
Of money out there, endless, endless amounts of capital sloshing around.
- [54:50]
Valena Penova
And there's not that many assets to invest in. So if you look at the size of the US Stock market versus the amount of money that needs to be invested, you have a bit of a supply demand imbalance, which basically is keeping valuations higher than historically.
- [55:10]
Barry Ritholtz
And isn't the same true in sovereign Treasuries, not just the US but there really isn't a lot of sovereign paper, at least a rated paper around. It's almost as if there's a shortfall of sovereign treasury paper.
- [55:25]
Valena Penova
Well, and if you think about also IG credit, investment grade credit, you could almost argue the other surprise has been how tight spreads have become in high quality credit.
- [55:40]
Barry Ritholtz
Right. Why go risky if you're not getting paid to take that risk?
- [55:44]
Valena Penova
But if you think about what companies are issuing that credit, these are. Maybe this will sound controversial. Some of these companies are more credit worthy than some governments. So in a way you could imagine a situation where some investment grade credit even goes tighter. Yeah, Microsoft could have negative spread.
- [56:10]
Barry Ritholtz
Right. Microsoft is more credit worthy than a lot of large nations out there.
- [56:15]
Valena Penova
Exactly. And that is what I think has been keeping both equities higher and spreads as tight as they are.
- [56:23]
Barry Ritholtz
So you mentioned we're in the top decile evaluation in the US but for almost a year now, Europe has been outperforming very quietly, at least for the first, for the tail end of 2024, but a little more visibly in 2025, Europe has been significantly outperforming the U.S. you know, people have been waiting for this mean reversion to take place, this leadership swap for a decade. It's finally seems to be happening. First, why do you think that is? Is it strictly a function of valuation or are some of these things being driven by policy, by the US Dollar, by a return of capital away from the United States? What is leading to this outperformance elsewhere in the world?
- [57:15]
Valena Penova
So I want to start by saying that Europe still has a lot of catching up to do for sure. So if you look at multiples in Europe, they're in kind of the mid teens now. Multiples in the US are mid 20s, low mid 20s. So there's still a pretty big valuation gap. And some of that is just the constitution of the market. You know, you have more high tech, more high growth, but some of it is kind of a European penalty, just given all the, you know, regulation and slow growth and challenges that Europe has been facing. So yes, we have done better in Europe in, in the equity space than in the last year than, you know, than in the last 10. But I think the gap is still pretty meaningful. And I think there's some level of optimism that Europe will need to really speed up investments, whether it's military or infrastructure. I think that Europe has woken up to the fact that in order to quote, unquote, survive in this new geopolitical environment, they need to get their act together and they need to start focusing on investing and reducing a bit the regulatory burden that, that we've had on companies on the continent.
- [58:33]
Barry Ritholtz
It's much greater on the continent. But the flip side of that is I vividly recall in 2000, right in the middle of the dot com implosion, going to London, going to Brussels and New York was very stressed out. Hey, I lose my job, I lose my health care. What, what happens if my kid needs a surgery? In Europe, people were still having cappuccino and cigarettes in the cafes. There was, it just felt a lot looser and a lot less stressful. Is that simply a quality of life trade off that, hey, the Europeans know how to live? Yeah, the Americans can make fast growth tech companies, but we have a better lifestyle. How do you respond to that sort of position?
- [59:24]
Valena Penova
I mean, I think the European expectation for what a good life is is probably quite a bit different from the American definition. I think that there's some people see certain elements of government service as basic, right. So be healthcare.
- [59:44]
Barry Ritholtz
Right.
- [59:45]
Valena Penova
Education, right. I can, I can send my kids to a Swiss university for, I don't know, 1,000 francs.
- [59:50]
Barry Ritholtz
Wow.
- [59:51]
Valena Penova
A year. And you know, you can get an MIT type education for, you know, a small fraction of what you pay in the U.S. right. And, and that's considered a social good.
- [60:00]
Barry Ritholtz
Right. So I think the taxes are much higher. So you're paying for.
- [60:04]
Valena Penova
Taxes are higher, taxes are higher. But there is this social web that you know, that people value. Right. You also, you know, you go to most European cities, you don't see homeless people on the street to the degree you don't have, you don't have some of these, you know, extreme situations that you, you have in the US And I mean the question is how far is, you know, what's the right balance? So I'm not saying that it's all good, right, because you also have a generation in Europe that expects this, but doesn't understand the cost that it comes at. And expects a lifestyle and expects work life balance, but at the same time doesn't have the work ethic required to keep the economy successful.
- [61:01]
Barry Ritholtz
So we're recording this. The Russian Ukraine war is still ongoing. The Israel Hamas war has now become an Israel Iran war. There are all these geopolitical tensions and shifts taking place. How do you think about what's going on in the broader geopolitical area? When you're thinking about making investments for 10, 20 years down the road, is it significant or is it something that, hey, there's a war every year. It's just something we have to deal with.
- [61:37]
Valena Penova
So if you look at history and what impact wars have on markets, the conclusion is that yes, there's a short term shock, but in the long term, even within a few months, that dissipates. So making near term investment decisions driven by geopolitics is probably not the best investment strategy.
- [62:03]
Barry Ritholtz
No, to say the least.
- [62:04]
Valena Penova
I think what matters is what is the symptom behind these events. So these wars are a symptom of the fact that we have de globalization. We are moving in different spheres of influence. And Swiss Re is a truly global company. So the value we bring is that we can, we can ensure tail risks because we can diversify a lot of tail risks at a global level. We reinsure earthquakes in California and in Japan and hurricanes in Florida and pandemics. And those risks are uncorrelated at a global level. And in order to provide that extra cover, you need to have a global mindset. And in an environment where globalization is no longer what it was 10 years ago, one needs to think about how does that impact truly global businesses. So we think about it as long term trend and impact on where we think the portfolio needs to go versus making tactical decisions influenced by short term events.
- [63:25]
Barry Ritholtz
So given that, that you're a long term thinker, you're not playing the tactical game. You still end up with these disruptions and risks and opportunities. How do you assess the state of the market today? Where do you see opportunities? Where do you see risks?
- [63:46]
Valena Penova
So I would say that, and maybe that's my private markets background, I continue to see opportunities in private markets in part because you have imperfect information. You can actually add value to your portfolio if you really have the channels and expertise. I think areas like infrastructure debt are ones that will only grow in the next few years because the world needs a lot more new infrastructure. And companies that provide loans, but also equity in the infrastructure space will both find a lot of deals but also have a lot of opportunities. So you need to think of it from a macro perspective of what you know, where is the need for capital and can do we have the expertise as a team to provide a solution that is uniquely fitted to that?
- [64:47]
Barry Ritholtz
So you mentioned private equity and private credit. European Central bank has cut rates recently a number of times. Does that work as a tailwind for private credit? How does that impact what you see out there?
- [65:02]
Valena Penova
It's definitely a tailwind for private equity, right? So what we see is European funding cost has actually fallen 20 basis points since Liberation Day versus in the U.S. funding cost has gone up the other way, 20 points. And if you think about what makes private equity successful, it is, you know, it's a leveraged buyout, right? That's ultimately part of the value of those transactions is in the leverage part. And lower interest rates clearly are beneficial for the private equity space.
- [65:36]
Barry Ritholtz
So the phrase we hear, and quite honestly hear way too much in the US Is so much uncertainty, so much economic uncertainty. How do you see this lack of clarity, at least around policy decisions in the US affecting your outlook for the markets, for the economy? How does this sort of new regime in Washington D.C. affect the global economy?
- [66:05]
Valena Penova
So if you think about how we plan on an annual or three year basis for many years, we, we would have a baseline, right? We would say we think there's a 70% chance that this will happen and we'll set up our portfolio and our decisions based on this core scenario. And then there's some tail scenarios which we will assess and we'll look at, you know, what are, you know, how could we assess whether we are moving into those scenarios Today our baseline, quote unquote, is 40% odds. So I don't want to even call it a baseline. And we have moved from thinking in baseline and other scenarios to what is the range of outcomes that we should expect and what do we need to be tracking on the macro side on kind of the high frequency data side to understand are we moving from the scenario we think we're in right now to something else. But if you have that path, you have fewer surprises, right? So that's one thing that we have done. And we dynamically assess the probabilities of those scenarios on a monthly basis. We have an investment committee and we do a survey of 15 investment committee members to say, what do you think the odds are? It's kind of the wisdom of the crowd's idea. And we discuss in which scenario are we moving? So that's one thing we have done and I think that provides a lot more flexibility in thinking. And the second is we think ahead of risk events. So markets are much more volatile Today, and typically at the depth of a correction, you're scared, you don't know how to interpret the information you're getting, and you're paralyzed in making decisions. So what we do is we have playbooks to say if the market moves up or down at certain levels, these are the levels at which we'll add risk. This amount of risk as the market goes down, we'll continue to add risk, and then we have playbooks to think about, okay, at what levels, if the market recovers, has it gone too far? And we lighten up on risk. And those playbooks have taken the emotion and the bias out of the decisions, and it makes it much, you know, much less stressful in a way to execute on strategy, because you have a.
- [68:42]
Barry Ritholtz
Plan that you created when you were calm and relaxed as opposed to responding when you're stressful. I'm kind of fascinated by the 70% baseline in normal circumstances, but this year it's more of a 40% baseline. It sounds like you're saying that tail risk is rising. Is that a fair assessment?
- [69:06]
Valena Penova
Yeah, and statistics, you call it fatter tails. So we see the, you know, more uncertainty means that it's less clear what will turn out to be. So there are more scenarios that are.
- [69:20]
Barry Ritholtz
More likely, including the possibility of something really extreme on either end of the tail.
- [69:27]
Valena Penova
Exactly. And we do. I mean, again, we're in the business of tail risk. So we also do think about what could be a really, really tail scenario and what that means for our business. But we do it not just at the asset management level, more broadly, at the group level.
- [69:43]
Barry Ritholtz
We do it across the entire insurance company, I would imagine. All right, I only have you for a few more minutes, so let's jump to our favorite section, our favorite questions we ask all of our guests, starting with, what are you watching or listening to these days? What's keeping you entertained?
- [70:02]
Valena Penova
So I have two kids, and I try to show them some more, you know, intellectual programming. And the latest show we've been watching is called the Real Bugs Life on Disney, which is if, you know, the Bug's life. It was a Disney movie, Right. This is real. So it's amazing technology that's being used to. To record this, but it follows different insects in their natural environment at a very. With amazing cameras. Right. So they have. You basically get a macro view of, you know, how a dragonfly flies and how a dragonfly, you know, runs away from. From its. From frogs or other animals. So it's a. It's a fascinating show. So that's on the on the TV side on podcasts. In good company. I guess this might be a competitive podcast to yours. It's Nikolai Tangen that.
- [71:07]
Barry Ritholtz
Who hosts that. That sounds.
- [71:08]
Valena Penova
It's Nikolai Tangen. He's the CEO of the Norges Bank. So that's the largest sovereign wealth fund in. In Norway and they're a large equity investor and they.
- [71:21]
Barry Ritholtz
I'm gonna look into that. That sounds interesting.
- [71:23]
Valena Penova
They hold 1 or 2% share in some of the largest companies.
- [71:26]
Barry Ritholtz
Right.
- [71:27]
Valena Penova
So he gets to interview CEOs of these companies and it's a. It's a always pretty fascinating discussion.
- [71:33]
Barry Ritholtz
I'll definitely check that out. That sounds good. Tell us about your mentors who helped to shape your career early on.
- [71:41]
Valena Penova
It was definitely my grandmother. She was a professor of agronomy back in the day.
- [71:50]
Barry Ritholtz
Agronomy.
- [71:51]
Valena Penova
Agronomy is the science of agriculture. And she took a keen interest in my education and really pushing me to push myself to do better, to have the right moral compass. So some of the lessons that were instilled in me are. Are still from her time. And then during the bay nears a partner called Dan Haas who was one of the founders of our private equity practice back in Boston and whom I met in Zurich and who I blame for staying in Zurich permanently after I came in 2009. But he really has played a fundamental role in kind of coaching me, you know, on both my career moves, on how I approach problems, just listening at times and really being an invaluable friend and coach.
- [72:48]
Barry Ritholtz
Let's talk about books. What are some of your favorites? What are you reading right now?
- [72:54]
Valena Penova
I'd say my all time favorite is the Three Body Problem. It's a trilogy by now mispronounce the name Luo Sushin right. And it's sci fi mixed with history, philosophy, game theory, you name it. I don't know if you are familiar with.
- [73:15]
Barry Ritholtz
Oh, I'm very familiar with the book and I actually watched the Apple TV.
- [73:20]
Valena Penova
Series which is not as good.
- [73:22]
Barry Ritholtz
Well, it's seems like it just pulls a handful of things out of it. Although to be honest, I started reading the first book and the Three Body Problem for those people who aren't physics nerds are. We can predict two bodies, but once you introduce a third body, the range of outcomes are practically infinite. And you really have no idea where these three gravitational bodies are going to. Are going to take us. But it was. I believe the author is Chinese. It was originally written in Chinese and then translated. The US translation is a little challenging.
- [73:59]
Valena Penova
To fight your way, especially the second Book, I'd say. Yeah.
- [74:02]
Barry Ritholtz
So I, I found the first book difficult. Like it's a little like you could see that whoever did the translation English wasn't necessarily their, their native language, but.
- [74:12]
Valena Penova
The concepts were pretty fascinating. Yeah. To think about. I mean, I mean it was a lot about game theory. Right. And the fact that humanity lacks the ability of reacting to, you know, exit existential long term threats. Right. And what is the psychology behind it? Even when faced with something that, you know, guarantees destruction of humanity, we still squabble around more earthly actually problems, tribal.
- [74:43]
Barry Ritholtz
Arguments as opposed to, hey, we're all going to die, we better do something.
- [74:46]
Valena Penova
The aliens are coming.
- [74:47]
Barry Ritholtz
Right? That's right. And we know you get 50 years to prepare.
- [74:50]
Valena Penova
It was 500 in the book. 500, yeah. And even with that, I mean on the positive side, it also awoke amazing innovation. Right. So it shows you also the best of humanity that you know, when, when people put their mind to it, they can solve really impossible problems. But I think that the outcome is a mixed bag for humanity.
- [75:13]
Barry Ritholtz
What else are you reading? What else are you enjoying?
- [75:15]
Valena Penova
So today I'm reading a book called Humankind. It's by a Dutch writer called Rutger Bregman. And the premise of the book is that humans are innately kind. And meanwhile, so our human nature is not savage, but it's actually good. Right, and he goes through cooperative social primates. Right, Exactly. But a lot of history has been telling us that, you know, we have this veneer of civility and underneath we, we're untrustworthy and evil beings. And I think he goes through a lot of that. And this proves a lot of historical beliefs. And it, you know, in this day and age you need some optimism. And I would say this, this book gives you belief and trust in humanity.
- [76:08]
Barry Ritholtz
So, so humankind kind of the opposite of sapiens. Exactly like that. That book was fascinating, but like a little bit, gee, we really suck as a species, don't we?
- [76:21]
Valena Penova
Yeah. Or the selfish gene. Right. So Richard Dawkins book that also, I mean he, this author disproves some of the thesis, Right. Because Richard Dawkins basically says, well, hygienes basically make us, you know, the species we are. And there's a lot of not so good features. This version says, well, there's a lot of misrepresentation there. And ultimately he shows examples of, you know, why people, I mean, he gives them the example of when soldiers in the first World War, you know, what percent of deaths was caused by people directly shooting at the enemy. And that was a Tiny percent because soldiers had a very difficult time to look the enemy in the eye and kill them. So most of the deaths were done by, you know, grenade or kind of indirect means because ultimately, you know, humans don't want to hurt other humans.
- [77:16]
Barry Ritholtz
That's, that's really fascinating. Our final two questions. What sort of advice would you give a recent college grad interested in a career in either investing or private equity or finance?
- [77:29]
Valena Penova
I would say don't narrow down your options too early. As, as I've experienced in my career, I've. I've done a lot of different things and I learned in each experience, even though they might not look related, I've learned things that have made me a better investor, a better leader. And I think a lot of young people today come in to the workforce and say, I, I know what I want to do. And I think that they actually don't.
- [78:00]
Barry Ritholtz
Right. And your experience going from consulting to private equity to being cio, did you have any idea that would be your path when you first started?
- [78:10]
Valena Penova
Well, I thought I wanted to be a doctor. Here we go.
- [78:13]
Barry Ritholtz
Well, so not just one pivot, but multiple pivots.
- [78:17]
Valena Penova
Exactly. So I think that young people really need to be open minded and explore and take opportunities for what they are. Right. So if you're given the chance to, if you're loving what you do, but you're given the chance to experiment with something else, instead of immediately saying, no, think twice and think, you know, what could I learn? How could this be good for me? Because I think that richness of experience at the end makes you, makes you a better, better business person.
- [78:44]
Barry Ritholtz
And our final question. What do you know about the world of investing today that would have been helpful back in the 90s when you were first getting started?
- [78:52]
Valena Penova
Well, so when you study in academia, you do a lot of analysis, right? So we talked about markets are overvalued, multiples are high. I think when I was starting out, I had a lot more belief in, you know, rigorous analysis and numbers. Give you the right answer. I think investing is much more messy. Right. So putting in the rigor of the analysis with understanding behavior and human biases, technicals, flows, that is the way you get a fuller picture of the investment space. And I think we talk. I mean, there's a lot of very smart people that are very good with numbers. But I think understanding behavior and people is just as important.
- [79:39]
Barry Ritholtz
Huh. Really, really, really fascinating. We have been speaking with Valena Panova, group chief investment officer for Swiss re. If you enjoy this conversation. Well, be sure and check any of the 500 we've done over the past 11 years. You can find those at iTunes, Spotify, YouTube, Bloomberg. Wherever we you find your favorite podcasts, be sure and check out my new book, how not to Invest. The Ideas, numbers and behaviors that Destroy wealth and how to Avoid them. How not to Invest Wherever you find your favorite books, I would be remiss if I did not thank the crack staff that helps put these conversations together each week. Peter Nicolina is my audio engineer. Anna Luke is my producer. Sean Russo is my reader researcher. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.
- [80:46]
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- [81:46]
Barry Ritholtz
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- [82:16]
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- [82:18]
Barry Ritholtz
Megan Megan Megan, Megan Megan.
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Barry Ritholtz
Megan yes, it's me.
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- [82:40]
Valena Penova
Megan.
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- [82:45]
Barry Ritholtz
This is an iHeart podcast.