Podcast Summary: The Investor with Joel Palathinkal

Episode: David Miller: CIO, Catalyst Funds
Date: November 25, 2025
Host: Dr. Joel Palathinkal
Guest: David Miller, Chief Investment Officer, Catalyst Funds

Episode Overview

Joel Palathinkal sits down with David Miller, the Chief Investment Officer of Catalyst Funds—a $13 billion asset management firm. They discuss Miller's unique journey into asset management, lessons from building Catalyst, insights into risk management and diversification, the practical side of starting an investment firm, and the evolving role of AI in finance. Throughout the episode, Miller shares both technical and philosophical guidance for new and experienced investors.

Early Inspirations and Career Foundations

Childhood Curiosity and Early Influences

• Interest in Stocks from a Young Age:
  • David recounts how his curiosity in stocks began as early as second grade, inspired by a book his mom bought him.
  • “By the time second grade had come around, I was interested in what a stock was and I asked my mom and she ... bought me a book on it. And ever since then, I was hooked.” (02:09)
• Family Connections:
  • Key inspiration from his grandmother’s cousin, George Weiss, a hedge fund pioneer who let him place his first trade at age 10 (a bank stock, WEC).
  • “He picked us up in his limo one day, took us to his office ... and had me place my first trade ... After that I was just totally hooked.” (03:50)
• Early Investing Lessons:
  • For his 10th birthday, David asked for Disney stock and Toys R Us stock as gifts, illustrating early exposure to the concept of equity ownership.
  • “Instead of birthday presents, when I was 10, I asked for some Disney stock ... I also wanted some Toys R Us back then; that didn’t turn out quite as well.” (05:44)

Education and Exposure at Top Institutions

Wharton and Michigan: Building Knowledge and Networks

• Childhood Plans Fulfilled:
  • As a third grader, David wrote he’d study at Michigan and Wharton, then work in stocks. He ended up doing just that, albeit swapping the order of schools. (02:09)
• Access to Thought Leaders:
  • Unique exposure at Wharton to figures like Elon Musk (then launching X.com), Jeff Bezos, Warren Buffett, and George Soros.
  • “We had Jeff Bezos come and speak to our group ... and Warren Buffett ... and George Soros too. To have that type of direct access ... I think was the biggest thing.” (06:37)
  • Memorable story: Dinner with Elon Musk before he became famous, talking about X.com and crashing his McLaren. (06:37)

Skill Development and Early Career Choices

Analyst Toolkit for Aspiring Professionals

• Technical and Soft Skills:
  • Miller emphasizes understanding financial statements (10-K, earnings reports, calls), but also strategic thinking—identifying a business’s unique edge.
  • “I was very good historically at strategy. Figuring out what levers to pull that make the most impact in a business ... what enables it to do far better than its peer group.” (09:54)

Career Detours: Entrepreneurship and Digital Marketing

• Early Internet Marketing:
  • During the nascent days of Google AdWords and Facebook, he capitalized on cheap advertising—sometimes earning 10x his finance salary.
  • “It was just really easy to make money back then ... the keywords on places like Google AdWords were so incredibly inexpensive.” (11:49)
• Juggling Two Worlds:
  • Ultimately, the dual demands of finance at UBS and his marketing business proved unsustainable.
  • “Trying to do both made it clear that that wasn’t really possible ... because I wasn’t able to do that analyst work in the way that the guys I was competing against could.” (11:49)
  • Early concept similar to Bitcoin: “I actually started this business in 2000 called bitcoins.com ... you could pay your friends with these coins, play blackjack ... nothing crypto about it, but the idea was ... if you created your own virtual currency ...” (13:48)

Founding Catalyst Funds

The Start-Up Mentality & Early Hurdles

• Translating Lessons from Business to Finance:
  • David and partner Jerry Slaji founded Catalyst Funds in 2006 after a failed attempt to launch a fund with Integrity Mutual.
• Initial Struggles:
  • Launched the first mutual fund with $500K, no ticker symbol, and no track record—leading to “catch-22 issues” in distribution.
  • “You realize you get some catch 22 issues in the very beginning ... show me your track record ... we don’t have a track record.” (18:09)
• Breakthrough During 2008 Crisis:
  • Strategic pivot: Invest heavily in preferred stocks with little bankruptcy risk, outperforming during financial crisis.
  • Dovetailed into a major windfall by acquiring a defunct Reserve fund, gaining $11 million in assets, a ticker symbol, and immediate credibility.
  • “Not only did we end up being down the least in ’08, but we ended up being up the most in our category in ’09 ... then we were kind of off to the races.” (21:59)

Risk Management & Strategic Diversification

Evolving Understanding of Diversification

• Beyond Conventional Diversification:
  • Explains the “real” lesson behind diversification—pairing strategies that perform in opposite markets for true risk mitigation.
  • “When you own 500 stocks, you have 500 bets on one outcome ... You don’t have any diversification as to something that can ... make you money when stocks go the other way ...” (24:12)
• Learning the Markowitz Model in Practice:
  • Partners with Milburn Ridgefield to combine equities (offensive) and managed futures (defensive) in order to hedge using two positive-return strategies, improving risk-adjusted returns.
  • “They had both beaten the S&P 500 since ‘97. But they were up in 2001, 2002, ’08, and 2022, all the worst calendar years for equities ... no double digit negative year in their strategy.” (28:07)
• Analogy:
  • “You never see a football coach or basketball coach ... tell their team, just play offense, you guys suck at defense ... Most investors think, oh well, I should invest in equities ... but you should really pair them with a defensive strategy.” (28:47)

Building Teams and Organizational Structure

Building a Business Around Great Managers

• Catalyst’s Approach:
  • Instead of building a team of in-house managers, Catalyst finds “exceptional managers” and provides them with distribution support, marketing, and infrastructure.
  • “What we found is if we could focus on finding a great manager ... and then pair them with a team of wholesalers ... you could really build a pretty great business without having to figure out how to assemble a whole team ...” (33:13)
• Commission-Driven Distribution:
  • Describes creating a national distribution footprint without the need to raise huge amounts of capital up front, aligning incentives with sales territory reps.
  • “If they do a good job, you pay them a lot of commission, but you’re making a lot of money because they raised a lot of money. If they fail, they kind of fire themselves.” (33:44)

Artificial Intelligence and the Future of Asset Management

Current and Future Role of AI in Investing

• Augmenting, Not Replacing:
  • While LLMs (Large Language Models) like ChatGPT are powerful, human judgment is crucial for orchestration and context—especially in relationship-driven and high-stakes environments, such as private markets.
  • “Asset management is still very much in-person, it’s sometimes thinking quickly on your feet and that’s not there yet ... someone still needs to know who they’re wiring the $50 million to.” (35:24)
• Effective Prompting:
  • Miller explains how to leverage LLMs for creative pattern matching and due diligence, e.g., getting lists of companies with high-growth potential characteristics.
  • “If I go directly and ask ChatGPT what’s the best stock to buy, it’s not going to give me an answer ... but if I start from pattern matching and say, ’What are the characteristics of ... 100-baggers?’” (36:41)
• Getting Better Results with AI:
  • “If you force ChatGPT ... say ‘my child’s life depends on this, check as many resources as possible ... double check your work,’ you’ll get a dramatically better answer ...” (39:51)

Notable Quotes and Memorable Moments

• On Starting Early:
  “I wrote down that I was going to go to the University of Michigan, study business ... then MBA at Wharton ... and then work in stocks. And … I have been working in stocks my whole career.” (02:09)
• On Diversification:
  “There’s this one free lunch in investing, and it’s called diversification. But ... it certainly doesn’t mean owning 500 stocks.” (24:12)
• On Resilience and Serendipity:
  “It was to my benefit that I didn’t fully understand the difficulty of what I was getting into.” (18:09)
• On the Human Side of AI:
  “There still needs to be a conductor like an orchestrator that kind of gives direction ... I don’t think we’re there yet to ... actually have someone be an agent that could give that kind of level of direction.” (39:08)
• Warren Buffett’s Advice:
  “If you buy a company that’s growing 20% a year and you’re paying five times earnings, it’s a lot easier to see how you can make a 50% return than if you’re trying to pick ... Nvidia or an Apple.” (41:14)

Timestamps for Key Segments

• David’s Childhood & Influences: 02:09-05:44
• Wharton/Michigan Experiences: 06:22-08:47
• First-Year Analyst Skills & Career Detours: 09:54-14:49
• Founding Catalyst Funds: 16:38-21:59
• Risk Management & True Diversification: 23:51-29:30
• Team Building & Distribution Strategy: 31:37-34:45
• AI and Its Impact on Asset Management: 34:45-40:47
• Buffett’s Wisdom and Final Advice: 41:14-43:01

Closing Takeaways

David Miller’s journey reinforces that a blend of early curiosity, creative problem-solving, strategic risk management, and openness to partnerships are critical in building a successful investment firm. He advocates for embracing new tools like AI to augment, not replace, human judgment and stresses the enduring importance of personal relationships and rigorous analysis in asset management.

This summary omits all non-content elements such as advertised promos, intros, and outros, focusing solely on the substantive insights from the discussion.