E19: The Evolution of Investing with Ira Gluskin

This is the unlimited podcast by Ginsler Wealth. Please note that the views expressed and comments made by podcast guests are theirs alone and do not necessarily reflect those of Gensler wealth or its employees.

Hello, everybody. My name is Ira Gluskin. I'm being interviewed by Brian Gensler. Brian was a key guy. Luxkin Jeff, in the old days, has been very successful since he left us. I'm a great fan of the type of firm that Brian is in, and he's going to ask me a lot of questions and some of the answers I give will be right off the top of my head. So don't take me to court if some of the stocks I mentioned go down the drain.

The Globe and Mail, the Financial Post, and Canadian Business have all described our guest today as an investing legend. We are very lucky to have Ira Gluskin on the program. We talk about the history of Ira's career and how he built it, founding Gluskin Chef, and of course, investing in investment management, and end with his very important career advice. This one is great. Let's go. All right, welcome everybody to the Gensler wealth the Unlimited podcast here today. I'm very, very pleased to have Ira Gluskin one of my former employers and mentors. Ira is the chief investment officer of Irajar and Associates, a family office overseeing strategy and investments. He's the co founder of Gluskin Chef. Aside from Gensler Wells, one of Canada's preeminent wealth management firms, he served as the firm's president and Chief investment officer from its founding in 1984 until 2009 and as a director and the firm's Vice chairman until the end of 2013. Prior to CO founding Gleskin Chef, Ira had worked in the investment industry for 20 years, primarily focusing on real estate. He serves on the board of directors of three publicly traded real estate firms, which we'll talk about, and is a member of the advisory board of Vision Capital and the University of Toronto's Real Estate Advisory Committee, among many other activities. He's deeply involved at the board or executive committee level with a large number of philanthropic organizations. And as usual, his full bio will be available in the podcast notes. But that's just a quick overview of Ira's long and illustrious career. So, Ira, thank you so much from Palm Springs, I guess taking the time to chat with us.

Palm Beach.

Palm beach, okay.

Big difference.

I can't keep track of where you are. So, okay. Palm Beach, a little bit warmer than where we are here in the. In the snow, out my window. So, Ira, I think today what we want to cover a number of different topics. A little bit about. Sorry, let me actually step back. My idea for this is, this is investing, Business and life lessons with Ira Gluskin. So we're looking for good words of wisdom. But I want to talk a little bit about your history, building your career, founding Gluskin Chef, obviously investing, that's, that's core to your expertise and a whole, I guess a whole host of other things. But if we could, and I know you, you're going to guide me a little bit here, you're not going to talk about what you don't want to talk about and you'll talk about what you do. But can we go back to, you know, early days of Ira Gluskin and your history? How did you get to your career in the financial space? And any thoughts for young folks as they're building up their career?

Well, it's funny, my son and daughter in law and four grandchildren, two of whom were in college and one girlfriend were just down here for a week. Yeah, and I did a little bit of this life lessons but I'm not sure of the impact. But the biggest thing I can point out is that the financial world was a backwater in the old days. So that let's say today nine out of every eight people want to be in the financial rack unless they want to be in technology. But it wasn't like that in the old days. So I was just a middle class suburban kid and in the old days everybody went to the University of Toronto. They graduated and my dad had been in commerce and finance. So I went into commerce with finance and sort of pooped around for four years. Interesting tidbit. This is the most amazing thing because our class has reunions every five years and so we were pretty faithful. And last year the University of Toronto gave me an honorary degree. And I'm sure the rest of the class say, will say how the hell did that happen? Anyway, I didn't have a clue what I was going to do when I grew up. But late in fourth year turned out that the investment departments of some big Canadian life insurance companies were looking to hire people. So I interviewed a few and eventually joined the investment department, the Canada Life Insurance Co. 1964. And I didn't really know anything going in but literally the first day I was in love and I've been faithful ever since. Canada Life was super, super conservative but it gave you a chance to look at bonds and mortgages and stocks and real estate was a great learning experience. But they didn't pay very much. So and I got married and had a kid. So I joined a very aggressive mutual fund in the late 60s right at the top of a speculative market. And then somebody bought them about three years later. And a group of people were going into the brokerage business to do independent high quality research. So I joined and they said to me, well what area you want to do? And I said real estate. Because a whole pile of real estate companies had gone public in this speculative boom. I mentioned I did that for about 12 years and rose through the ranks to become president of this mini firm. And then I was minding my own business. I had a friend named Gerald Sheff who was a big time executive with Cadillac Fairview, one of the, maybe the biggest public company that I follow, the biggest one in Canada. And Chef, he had been a brokerage client of mine and he had sold off a huge pile of real estate and obtained a big bonus. But he really had no job anymore. And me, I was working 258 and spending everything that I earned. So he said if I could raise some money for you, would you manage it? He claims he was just horsing around. Anyways, I went back to him the next day and said I just resigned, I'm ready to go.

That's the way to kick start a career.

But again the big message is because I met a thousand people like Dunn is having the appetite to take the risk, which is exactly what you've done, which I commend you maybe how I had, I don't know, eight months working capital. Anyways, we came up with a game plan and, and as I said before, it was like a different era. People did not invest in public stocks, wasn't popular. There was no way of investing in, you know, private real estate. It was like a thousand years ago. And Chef, he came up with the idea of an incentive fee. Again, hedge funds were in an infancy. Private equity hadn't been invented. And so we had a high fee and an incentive fee and we had this plan of raising a million dollars from people we knew. We knew a lot of rich people, most of whom were in real estate. So we told them that the fund would sort of have a real estate bias, but didn't turn out to be the case. After we got the money, I sold all the real estate stocks. And so somehow we came up with 26 investors and started with 26 million. But then a miracle happened. The first year was pretty good, so we got a incentive fee. And then gradually, like we still didn't have any business game plan. But some of the clients started to say, hey, if we give you some more money, will you manage it? And by then we had hired Kiki Delaney. She joined us. She was a very experienced investor and it was amazing. We did tremendously well for roughly nine years. And we attracted a pile of pension funds. It was all very aggressive and if you can believe it, Kiki was more conservative. And I had hired a bunch of really smart people. But I personally really didn't know how to spell volatility then.

Did you not spell it or didn't mind it or care about it?

I didn't care.

Right, right.

And so what happened? We had a very bad year in 1994 and we were only mediocre for the next five years. And the message is, when you charge very high fees, people have very high expectations. Then we continued to. We were a little precarious, but somehow we did well, actually really well from about 2001 to 2008. And this allowed us to go public. That was a modern day miracle. We were one of the first public companies to go public with an incentive fee. And the reason we went public, because the money management firm doesn't really need capital was because the underwriters were willing to value us on including the incentive fee. And then 2008 was a complete disaster. I've been doing a whole pile of other things as well. So I want to resign. And so I did the end of 08 and chef followed maybe six months later. And then we had a big disagreement with the management about everything, so we sold most of our shares. And then, then we had a fight with them and then we left around 2013 to form the family office. So it's been modestly successful. And here we are.

Okay, well, that's an early days to today. That's a good summary. Couple questions on maybe the. Well, actually, yeah, a couple questions on the Gleskin Chef side. So you're a real estate analyst. Deep real estate. Jerry convinces you, or whatever the right phrase is, to launch a fund with him. Two questions. You said pretty much right away you sold all the real estate. How comfortable you were you with looking at all the different other industries and other stocks and all the other sectors that maybe you hadn't focused on because, you know, now you've, now you're taking on people's money. You have a, you know, same feeling I feel every day. You have a, I don't know about you losing sleep to make sure that everything goes okay for clients. And now you're, you know, investing in a Whole bunch of other stuff. So how do you, how did you build up your expertise to be able to do that with confidence

that it's a million dooll question. Well, chutzpah,

right?

But no, no, I hear what you said. And the key thing was that one Kiki joined us and she had been at Guardian Capital and she'd actually been at this major fund. I was out. She was a real experienced investor. So that was number one. And then shortly after, we hired Ann McLean, same thing. She had good institutional experience. And we hired Martin Bruin. He was very strong analyst. And we always, because we had these high fees because we were so profitable. I always believed in being surrounded by a lot of people. In the very, very early days, I had a limited repertoire, but I believed in concentration. So I didn't need that many stocks. Maybe we had a 1015 stock portfolio that was number one two. You know, I wasn't entirely stupid. I was motivated to read the paper and I read a lot of research. And I would say an early strength was that I was able to establish very good relationship with some strong analysts and somehow it worked out amazing.

So I want to talk about concentration. I want to talk about your approach to investing. We'll do that shortly. Just for one more minute. Talk about the fee structure because 1984 you found the firm. There's an incentive fee on a long only equity fund, essentially. And you had to explain that to investors. I like the alignment. You do well when your clients do well. But today all you hear about, all you read about, all you, all everyone focuses on is, you know, fees gotta be lower, lower, lower, lower. What was it like introducing that back then? And what are your thoughts today about investment management fees?

So just for the record, the initial fee was 150 basis points plus 25% of everything over 15% net.

That's a huge hurdle.

So it was quite a hurdle. And partly it was because interest rates were closer to 10%. So my partner chef, he was upset about that 25:15 and he wanted to change it forever. But I felt I was very superstitious. Gradually, as more and more outsiders took over the management, we introduced a variety of hedge funds with very low hurdles, but it was all about performance. To me, it's like again, if you talk to Jerry, he'd say no, nobody ever complained about price. And if you ask, is he sharp of Four Seasons? Is he? Does anybody worry about price? Oh, no, people are happy. But there's only a tiny percent of the population will even think about Four Seasons. So we Lost a huge percent of the audience. But the great thing about the investment business is it's very fragment. But now I'll tell you the most amazing thing is that now we're a family office. So I have a colleague, Jamie Grundman, who's a really smart guy, does mostly everything. Jamie principally looks after Jerry who has everything in public. So we have some stocks, we manage ourselves and then we use a lot of third parties. Jerry is Mr. Fee Conscious now that he's paying them. He gets so upset about high fees. And you gotta remember the fees have been coming down and I don't know, for 40 years because a guy invented index products that have low fees and have a definite role. I'm prepared to pay high fees. But like I mentioned earlier, you hold high fees to much higher standards. And lately investment managers have not done so well because stocks and bonds both went down. So it's way easier to determine who deserves these high fees. So I'm generally if I know the manager, I personally, I give them the benefit of the doubt because I remember how my feelings were hurt when my so called friends returned redeemed. So I give them all a second chance. But Jerry's much more ruthless.

Okay, so we're, and we're going to talk a little bit about portfolios, not just stocks and bonds and where, where it may be more palatable to pay a higher fee in areas that you're not doing or can't do yourself or can't get for a very low cost like an etf. But we'll get to that in a minute. I just want to finish off on Gluskin Chef, maybe for the time being. We'll probably circle back to it. I recall I was there, I played a role in some of this. But long before I showed up Gluskin Chef was sponsoring big events and creating brands around big events. I think that it was the Barnes exhibit at the ago. Is that right? And then you know, some cheeky ads, you know, one liners that were very, I thought very well done actually. Let me give you a quick Brian Gensler story. So I don't remember when the Barnes exhibit was. It must have been early ish 90s, early to mid 90s.

90. 94.

94. So I was 18 years old and I was a valet car parker as a part time job. And I got a call from my boss at Mark Mooney and Associates which was the valet parking thing. They say we need you at the agony. There's going to be a big art exhibit, a big event by this firm, Gluskin Chef and we need you to park the cars. So I might've parked your car ira, back in 1994 and then lo and behold, I guess 10, 15 years later I was working for you at Gluskin Chef so I parked your car, then I worked for the firm. It was my first intro. But not a lot of investment firms even today in my mind are taking a different, more cheeky, more humorous approach. Everyone's very serious. Not, not us. I don't think against the wealth but how did you guys come up with this idea that you were going to be in my mind a little bit different than everybody else?

So well, one Chef had never been in money management and I'd been in the brokerage industry and never been involved in raising money. So it was partly necessity. So right from day one, you know, I wrote something every quarter and two, I gradually I when I was a broker channel I was real estate analyst. I was very highly quoted.

Yeah.

So I wrote a column for the Financial Times Canada over Shalom for two and a half years. But it was a very well read column and let's say it was a bit irreverent these things. Then subsequently for the Post and then later for the Globe these things produce business. Usually it's not the type of business we would run. In other words it's people who want to invest quarter million. But it did produce some very big clients. But the background, we hadn't done anything like the burns. But the background was very simple. We had a June year end in June 93 we had a incentive performance fee of $50 million. This was 5 050. It was like a huge number in Canada and this led to hubris at the highest level. So what happened was somehow in mid 93, just after we received it, Glenn Lowry, who now runs the MoMA but who was running the agony came to see us and he said the Barnes was coming to Toronto. The Barnes was a collection of impressionist paintings that no one had ever seen because the sponsor Barnes was an eccentric. But it was going to travel around, it was going to go to somewhere in Texas and maybe LA and come to Toronto because the late Joe Rodman who was the volunteer head of the ago was a strong minded guy. So they were trying to raise a million dollars. Sounds small today. So they came to see us and said they were trying to get a group of financial institutions to put up this million dollars. They're hoping to get some banks to be involved. So we said if we go along with this, put up 200,000. We'll be the most obscure person. Well, we just collected 50, so we said we'll do the whole thing. That was not really a big risk then. Remember I said we had this tremendous hubris. We decided to hold a gigantic party. Right. That's where you were parking those cars. That's where I was parking the cars, yeah. So what? This party cost $2 million. And what we did was obviously we're going to invite our clients. So that was pretty easy. Yeah. Then we said we're going to invite every big shot in the country, regardless of whether we know them. And all sorts of these big shots elected to come. And the theory was our clients wouldn't know the difference between big shots and non shots. Right. Anyways, the party was very successful. There was a pile of goodwill. 94 came, finished. Our results were terrible and we had redemptions for five years now. So maybe somebody might say, well, if we hadn't had the party, maybe we would have had more redemptions. Who, who can say? And in Canada, investment management companies, they are involved in a lot more philanthropy, but they're very prudent in the US where there are big hedge funds who make enormous principles of big hedge funds can make in the billions. So people are, they donate a lot more aggressively. Canada's still a very conservative place.

Yeah. Well, in addition to the, to the events though, you know, you, as you say, you were, you were very well quoted, you were writing your columns. You did the one in the Globe as well. For a while the firm had a, as I say, a cheeky different approach. It was differentiation by far. I think the firm stood out dramatically. For me, the lesson was you gotta be different. If you're in a field of a whole host of people doing something similar, you have to figure out a way to stand out. And I think that's what Glesk and Chip did. Right.

Unless now, again, the easiest answer is to have great results. Theoretically, if you have great results, you will do well. There's not that many examples of people with great results who fail to find money. The other day, Jamie just came to me with somebody with big time results and big success. $10 million minimum. I'd never heard of them, but it didn't matter. The problem is investment management is very popular. It attracts the best and the brightest. And there are very modest barriers to entry. There are more barriers than there were before, but essentially it's not like building a steel mill. You don't really need a lot of capital to open up. So as a result, it's just a proliferation of investment management firms. And it's very, very difficult for regular humans to know who's really good and who's really bad. So firms like yours are, in my opinion, the great answer. I know I'm involved in whole variety of investment committees.

Yeah.

And they all range. You know, they have. Some have consultants, some have staff, some have elected to go what they call the outsourced family office. And that's what you're doing a version of. And that is the way to go. And interestingly enough, all sorts of people who have been around investments agree with the concept, but they worry about an extra layer of fees. And I think that is the most ridiculous thing in the world because the whole point of the outsourced family office is to give a whole pile of expertise. I would do that in any field. That's what people do in technology. They pay huge fees. If there was somebody around who could give me medical advice and I pay fees to them. So this is like a. A huge, huge trend. People in, like, the basic thing is firm like Glusk and Chef, you know, we would have by. They would have by now 10 products, right. And they would tell their clients that they're, you know, should give. Clients should give them a big chunk of money because they had all these products. But the Gluskin Chef marketing people try to be objective. But when you go to a General Motors car dealership, the salesman recommends General Motors product, they don't sit around and say, hey, Tesla is pretty good. And you should get this from for your kid. You should go to Toyota. They're hugely biased. Burgundy is hugely biased. JP Morgan is hugely biased. Every firm that has its own products, even these big index firms, they like their product. So somebody who is agnostic, who only says, look it, I just want to come up with the best price through value. That's a huge value. Now, some individuals and some institutions are perfectly capable of doing that, and that's what consultants claim they do. But somebody who does it as a business has got a huge future.

Yeah, thanks. I mean, that is our model in a nutshell. We don't sell any product. We don't manufacture anything, if you want to use that phrase. We're just trying to find the best of what's out there in the world for clients. And if something's doing well, great. If something's not doing well, we get. Not to be blunt about it, but we get rid of it and we'll move to the next. Which actually, you see all these commercials a little bit of a question about fees and the model. You see commercials all day, every day now for Questrade. You can retire richer. Just move your money from wherever you are. You'll pay lower fees. You must see all this stuff as well. What do you, what do you think when you, when you look at that?

Yeah, I think the facts are there's more index funds than there are stocks.

Right.

So that's the question. Well, what index fund should I use? And so somebody who claims and does know a whole variety of index funds, I'm perfectly prepared to have some. I would say it's, I was a fundamental investment manager charging high fees for performance. And there are investment managers who do well most of the time, but a huge majority of them don't. That's a matter of record. I mean it is unbelievable how people still fight this trend. It is a legitimate trend. So if you're going to ignore it, you got to have a really good reason. And one of the big reasons is volatility that these indexes tend to go down which in fact happened and you know, in the Last little while, 20 in 22, it's a matter of history. And so those people who, who are skills in low volatility have a tremendous future. It is amazing that you know, there are a lot of people left. Gluskin CHEF over the years because we hired so many people and I actually got an honorary degree from Wilfred Laurier and the reason they gave it to me was because we had hired so many Laurier co ops and they really should have given it to Bill Webb because he, it was all his idea and he did all the work but I think they thought I was richer and maybe would give them a bigger donation. So many of our co ops have gone on to be quite successful but the most successful of them all has been Waratah led by a guy named Brad Dunkley and his compatriot Blair Levinsky. And so They've had about 10 years and their whole business is low volatility. And I personally am quite prepared to have higher volatility for their big time results. But actually the mastermind people don't want this. Like if you said to them, hey, how do you feel about 20% declines? They say they don't feel that well. And, and so those people who are skilled at low volatility, many people who are interested who create low volatility products aren't able to get new results. It's a real skill. So I commend those people.

Yeah, well look, we use ETFs as well, for some portions of client portfolios, I guess my point on it is there's two elements to managing your wealth in my view. It's picking the investment and maybe it's essentially a free index fund. And then it's all the advice and emotion and ups and downs and hand holding and guidance and planning that you probably need someone to help you with. In our view, that's where we spend most of the time. We spend far more time talking to clients about their lives and their finances and their, you know, the emotional side of investing than we do about what are the 12 things we actually invest in for them. You can't really get that with a index fund provider, in my view. And actually just circling back, just so folks know, because we're talking about the outsourced family office model and you're a proponent of it. Folks may not know that as long as I've known you, when you are 100% fully active in the investment world, one of the gurus in Canada, you still had somebody and a group managing your, you know, helping you and managing your other investments and other affairs as an outsourced family office. So you're, you're, you're talking about something that you've experienced and been doing for years.

Yeah, it is, it is unbelievable for people to have the hubris to think they know everything about everything. So I'm quite prepared to for third party managers. And one of the reasons is actually a bit selfish that the type of manager that I like are people who have 10 stocks which they trade every three years. Right. And there are a variety of these people around and I'm able to steal or borrow some of their ideas for the portfolios that I match because I don't have eight co ops and nine portfolio managers. Associate. I was used to that at Gleskin Chef. I like dealing with investment people and I used to deal a lot with brokerage analysts, but I haven't got those resources anymore. So having those fund managers is good for me.

So let's use that as a springboard. Let's talk about investing in General. Forget about ETFs for the moment. Actually, maybe not forget about them. But what would be your thoughts on, I don't know if you want to call it the best approach to investment management or maybe it's just what was your approach and why you talked a little bit about concentration. But maybe describe how you think investing should be done, has been done, maybe should be done in the future.

Yeah, well, fortunately there is no single answer and it's Amazing. See if you are one of your listeners, let's assume they had a day job, but now they were retired and all they elected to do was to watch Bloomberg tv, which is better in the US to watch CNBC and to watch Fox Business. So all day long. All day long. Especially in the US with very legitimate people speak all day. I'm talking about the real McCoy, leading business people now, many of them. It's very difficult to tell whether people are actually the investors or they are marketing people. A firm like J.P. morgan or Morgan Stanley, Goldman Sachs, they have 300 experts, you know, vice chairman, U.S. wealth, vice chairman, Japanese Wealth, Deputy Chairman, North American Bonds. So they have a whole variety of people who speak for the company. But these are reputable, you know, firms and public companies themselves. The lead, the CEO, CFOs. All day. Well, if it didn't give you a headache. The problem is it is confusing because half the people present themselves as macro economists and what that means, if you don't know it, you're looking at the world. You're looking at interest rates and inflation and peace and dividends and what technology and climate control, these huge issues. And then the other half are people who claim they don't know anything about this. It's all a waste of time. The only thing that's relevant is to invest in really good companies or undervalued companies. Don't pay attention to the world at all. Now, I was always in that camp and that's why I had so much volatility. Today I'm a little less in it. I try to pay a little more attention than I used to, but it's actually near impossible. It is possible. See, the basic thing is you, you, you don't have to be, you know, a technology genius, you know, to know what the difference between a good company and a bad company and good management and bad management. There's a lot of agreement. You know, there are issues about what you should pay for such a security, but it's, it's not, it's not rocket science. A reasonable human with a little bit of education can tell the difference between a good company and a bad company and what the market thinks. However, if you think that you know the answer to inflation and interest rates and Ukraine, you are delusional. It is actually impossible for regular people to know such a thing.

Right? So I agree with you. And I like to say here, the only thing I know with certainty is uncertainty. Things are always going to be changing and you just don't know. So how should investors think about managing their wealth. I was at your firm in 2008 when the GFC, the great financial crisis happened. You know, you've managed through decades and decades of these, you know, major ups and downs. And actually in the stock market has 100% of the time. If we're talking about the stock market has always hit new highs 100% of the time. We're not there right now, but over the last number of decades, it always goes up. So what, what, what should people be doing today with all the things you just mentioned, Inflation, Ukraine, et cetera. And what have you learned through your decades managing through these major world calamities?

Well, that's a good question. See, it's hard to know. There's a lot of uncertainty. It's always uncertain. There is a big difference between. We'll call it. I don't know how many of your readers know about Cassie Wood. Cathie Wood became a very famous lady because she manages an active ETF which owns super technology, high growth, unprofitable companies. So that is inherently, inherently risky. But if you. Let's say that I'm a director of three public companies when they own hard assets and you don't have to be an expert to find, we'll call it value stocks.

What does that mean? Value stocks? Yeah.

See, a value stock, let's assume there's a company with. Has 100 million shares and all it has is $100 million in cash. So it's worth a dollar share and it doesn't have any debt and doesn't have any expenses. Now, if it sold for $3 a share, that's a bit high. But if it sold for 50 cents a share and it's run by reasonable people, that's undervalued. Those are my big thugs. Really undervalued. EDL Financial is a gigantic life insurance company with a lot of marketable securities that sells at a huge Disney professionals who will always give me reasons why these things are undervalued. But there are managers who really specialize in this and that's the easiest thing to go. And if you want to pursue high growth, you know, then you got to be somebody who doesn't really care about these big drawdowns. And if you don't care, there are people who are not bad at it, but it's a really lousy way to go. Well, I'm saying that value is way better. There's a whole world of value. And again, if you want, if you say, gee, I like, I like the word crypto. I like the word marijuana. Then you're off here, rocker, and I got nothing to say to you.

Okay, so speaking of other asset classes, you know, as you said back when you started investing, people weren't even buying stocks. Now there's a whole variety of alternative investments out there. We actually focus a lot in that area. How would you say your, I guess, portfolio has evolved over the years. You run your family office there. You know what, what might your portfolio look like 20 years ago? And what does the Ira Gluskin overall asset mix look like today? And why?

So in the old days, I would invest principally in the funds that I managed. So that was a big part of it. And I didn't have the access to private equity, private whatever. Just I wasn't on the radar screen of people who were introducing these products. So the odd one, it was sort of random which ones I would go into. So now I would say roughly half of my assets are private equity of some sort, including real estate private equity, and the other half are public. My partner, chap Jerry, he hates private. So he's like 90% public securities or public, you know, managers who are public. And it's interesting, people have been investing in private companies since the year zero. And if you want to know, gee, what do private companies do? Well, then just look up Brookfield and Blackstone and Carlisle and KKR and Apollo. These French, you know, the big ones have trillion dollars. There's been a huge, huge trend to these private assets for the last 20 years. And there is a terrific controversy because there are a variety of academics and competitors who think these valuations are phony. See, and say, for example, if you invested in public stocks and public managers, in 2022, you were down maybe you were down 5, maybe down 10, 15, 20, 30, 40. The great majority of people who manage private assets were either up a little or only down a little. So you could say, how can that be? And it's a legitimate controversy. Now what I find is that I have some public real estate stocks and they all went down a lot. Then I have these private real estate assets which the manager claims they didn't go down. Now, I know that this is a little bit ridiculous, but I enjoy not going down.

Right, but does it actually catch up to the public this year or next year?

Well, what the proponents would say is that, yeah, yeah, it went down, but we're well funded. We're not putting it up for sale. And when the public real estate stocks come back, well, we'll come back too. So I'm doing you a favor by not marking you down to an irrational level.

Well, and I spoke with your friend and colleague Jeff Olin from Vision Capital, where you're, as I mentioned earlier, you're on their advisory board, and that's their. One of their core thesis. Basically, they invest in public real estate assets which they think are way are generally cheaper than private real estate assets. Maybe maybe for the reason you, you

just articulated right now. They are also a real estate security hedge fund, right? So they sell short those real estate stocks that they think are overvalued. And it's interesting, like a year ago, there was a lot of evidence that public people like Jeff and Vision, who invest in publicly owned real estate stocks did better over time than private real estate managers. However, 2022, the private did way better. And people would say it's a hoax. So you want to pursue it. The most discussion is about Blackstone. Blackstone is the world's biggest money manager for a fee, trillion dollars, and maybe 40% or so is in real estate. So they're one of the world's biggest real estate managers. $400 billion, and it was all for institutions. And in the last number of years, they introduced fund for Humanoids, you know, maybe 150,000 minimum. And that fund was enormously successful, but they claimed it was up in 2022. So individuals decided to redeem. And Blackstone said, well, you can't redeem as much as you want. So there's a whole controversy. Public real estate security managers are down 10, 20%, and Blackstone says they're up 8. And they demand the hedge fund guys, how can this be? And Blackstone says, well, we have better properties. And it's an esoteric controversy, but from the vantage point of today, I'd say public real estate securities are quite attractive.

And so speaking of that, you're on the board of three publicly traded real estate firms. I think most recently you joined Firm Capital, so First Capital. First Capital. Sorry, First Capital. I apologize. I made two mistakes on things just on this podcast so far. You know, you used to spend your career researching these companies and evaluating their leaders and their boards and, you know, valuations in the market, et cetera. Now you're on the inside, so. Or quasi inside, I guess. What's your view from the inside of these publicly traded companies? Looking at the private market and valuations there and whatever they're doing. How does it feel to be on that side of the table? I guess.

Yeah. Well, it's interesting you use the word quasi inside, whereas I think I am inside.

Okay.

So I'll tell you, Brian, it's been a like a Gluskin chef. I interviewed management of every type and we had rules about becoming directors of public companies. And in addition, demand wasn't that high. But when I, when we left, created the family office and left the firm, there were more invitations and I think there would have been more when I was getting older. To me, it's a great, great opportunity. I've watched. Here's what companies say to their investors and now the opportunity to see what they say privately. And you were not incorrect when you say quasi insiders. Because sometimes the management of the public company isn't frank and honest to its directors. And that is true in private equity as well. That is true in charities, that is true in art museums, in Holaspoons, where there's no public shareholders. The management are not always frank with people who are supposed to look after them. So I feel pretty comfortable in saying that the three companies that I'm director of management is quite responsible and that there's a very high consistency between what they say publicly and what they say privately. And really there's very little if you, if you say I'm going to be real diligent analyst, investor, there's very little that secret. And interesting enough just today I was Saturday morning. I read a lot of papers in the morning. So there is a guy I never heard of with a big contract record. He doesn't want to meet management. He's perfectly. Because he feels they're too promotional, though he's perfectly happy reading the detailed reports. And the question is, when a company is super complicated and it's impossible for investors to figure it out, can the board actually figure it out? And the answer is actually unlikely. So the investor message is stay a mile away from very complicated companies, right?

Yeah. From our approach, it's interesting you say that about whoever that manager is not meeting CEOs and executives, I guess, of companies we would never invest in anything for clients if we haven't met directly with the, you know, key people responsible at the company, at the fund, et cetera. It's just, we think, pretty critical. Okay, so let's wrap up the investing side. I want to ask you a little bit more about sort of some work and business stuff. Maybe the last question on investing, which really is actually not really investing. I guess it's the evolution of the world. You've mentioned a couple companies, you've mentioned some, in some cases investment advice. You know, we've talked about vision capital. It's my responsibility now. As a registrant, a regulated registrant, I have to say. Well, you know, know, we're not providing investment advice here. Consult your advisor. We've got disclaimers all over everything. And the world's gotten very much more compliance oriented. In 2009, there was a Globe and Mail article that interviewed you and you said, you know, we don't really need all these rules. The right thing is not that difficult to define. Most of the time, you know where it is. Which I think you're basically saying, if you have ethics and you act appropriately, it's. Some of this stuff is pretty simple. But the world's getting very, very complex with regulation and disclosure and all this. How have you seen that evolve over your career? And any thoughts on the additional burden? I guess there's positives to it, but. And negatives, but additional burden of all this regulatory world that we're in now,

it's. And you know, it's like. Let's say that I heard. First time I heard about esg, let's say it was five years ago. And I didn't have strong opinion, but I knew that it was an overwhelming trend. It is true that more and more time is taken up by these regulatory events, but it is probably more positive than less positive. It's funny, we had a big staff because even in the late 80s we might have had an investment department, eight people. And we didn't really need eight people, but we could afford eight people. And we introduced rules that nobody could invest personally. Well, this did not go over well because it was a completely unregulated world. And by the way, Even today, after 40 years of regulation, members of Congress still trade stocks. There's no rule on U.S. congress men and women in buying and selling stocks. It's preposterous. Anyways, we introduced these rules and there was selected. It was almost aggressive pushback and investment management. They always bought new issues. There was bad behavior in the early days of Busk and Chef when we started opening up individual accounts right things. Our technology was minus zero. I was weak in technology and Chef was zero. Anyways, so. And nobody there wasn't. It wasn't a huge rule that every client had to look the same. And we, you could argue, well, they got different goals and games, game plans. But let's say we had three clients and one was up 10%. One was even, one was down 10%. So let's say we put our hand up and got a hot new issue. What would we. How would we allocate it between our fund and these three clients we allocated to the client, minus 10. Okay. And nobody was on our case. Nobody was reviewing. I don't think Jerry's staying up at night worrying about this. But it wasn't until 15 years later that the OSC came along and said, oh, no, no, you can't do that. You got to allocate it on the basis of the client size. If the fund was half their assets, they should get half of this new issue. And it was a whole scientific process. And so these things were primitive. And you need to know this. Think about it. Think about Fidelity. Nine zillion dollars, nine hundred funds. And there's a giant new issue that everybody wants to buy. Who's going to get it? How do they allocate it? They need 23 governance people to figure these things out. And it is true. It is true that honest people will do the right thing, dishonest people will do the wrong thing. There's a lot of people in the. In the middle. And it's one of the. One of the. I would call it benefits of being a board member. Like I was a board member of Glesk and Chef, but we had voting control and I didn't pay much attention. But now, like a board book like tricon, I get it printed out. It's literally a thousand pages. I was. It could take 12 hours this week. A mammoth part is accounting. And the public investors have no idea. Just back to square one, which amazes me. Public investors, including most institutions, do not care who is on the board of directors. They figure that management runs things and it's a waste of time for them to try to get involved. Secondly, they don't pay any attention to who the accounting firms are or the. They don't really have a clue. So you could take most basic form. One of the most popular companies in Canada is Brookfield. And if you asked investors did they know anything about it, they would say very little except that their big shooters in private equity and tremendous at raising money and that they would raise their assets every year because private equity was growing every year and they had a great sales force and nothing else mattered. And what person is going to be analyzing Brookfield? Who would want to do that? No brokerage analyst. Because Brookfield is the biggest client of every bank in the country. Gee, is Price Waterhouse going to do much of a job? It's their biggest client. They're the biggest client of every bank. So nobody is going to come along and analyze Brookfield in any detail.

Okay. All right. So that's the let's close on that on investing. And that's I guess a little bit of regulation. Just a few minutes because I know you're going to have to jump soon. Let's talk just a little bit about some of your experience or lessons around business, business partnerships, et cetera. You know, you've been partners with Jerry now since 1984. From my experience being in the same room with, with you guys many, many times, you seem to get along wonderfully. You're have your, your family office now together. Any secrets to great business partnerships? What works? Well, what work, what doesn't? How should people think about finding a business partner that they can work with for hopefully decades?

Well, you know, the divorce rate may peak, but I don't know, it's approaching 50%. So it is absolutely one of the toughest things in the world.

And

thing is, I have a lot in common with Jerry and I would say both of us are relatively honest in the world and you know, share a lot of the same values. Like to gossip about people like he's not. He has zero interest in real estate and zero interest in most of what Jamie and I do. But somehow we're Jen along, I shared values. But it is next to impossible for outsiders to understand this. Gee, did Goldman and Sachs get along? See, it's interesting what I observed say the world of investment managers, okay, and there are, but it was beyond investment management partners of investment funds. Well, how do they get along and how are decisions made? And especially like, you know, who's managing this fund, Jones and Smith? How do they make decisions? And nobody knows. Even I, as an insider working beside different teams, didn't know often how they made decisions. In the simplest form in the investment world, they'd say, okay, you got half the assets, you do whatever you want. I got half, I'll do whatever I want. And we'll tell investors we work together, but nobody, people do not really pursue it. I think they may think that I can't figure it out. And again, I was talking about these gigantic private equity firms. They are in fact the biggest forces in capitalism. Because if you say, gee, I'm going to look at the last 50 public transactions, who, what companies bought and sold 98% are private equity firms. And the question is, how does somebody who controls it? It's no different than Canada pension plan teachers or OSK Olmers. You read these firm stuff. They have 50 offices around the world. Well, who's making the decisions? Is it on the ground? How centralized is it? And most people are happy with very Superficial answers, and they don't really have a clue. See, in the investment managing world, consultants claim that they are experts on. They'll tell you why Burgundy is up or down. They'll tell you whether Glusk and Chef is speculating too much. So they purport to know the answers. And ultimately, as we were talking before, that's why I like the outsourced family office, because the consultants are just consultants. The difference between somebody who's casually recommending and who's gotten hundreds of clients and somebody who's making a principal decision is huge. I face a lot.

Yeah. So we started talking about you and Jerry, got into some other details. One of the things that from an outside. You said people from the outside don't know, can't really fully comprehend the partnerships. My outside view of you and Jerry was that your skill sets were unbelievably complementary and did not overlap or step on each other's toes. I always thought if someone said to me, why do you think Jerry and Ira have been together for so long? That's probably what I would say. As you said, Jerry wasn't looking over your shoulder making investment decisions, and you weren't looking over his shoulder making probably business decisions. And seems like it was very complimentary. So I always thought that might have been the secret. Maybe I'm wrong.

Well, there are other things. See, in the brokerage business and many, many firms, there's a huge fight for percentage of profits. Okay. And Jerry's and I came from that environment. And Jerry's attitude was that we were partners and that it didn't matter to him whether or not he did better than me. He's raising money, and I was performing lousy or the reverse. Everything was equal with us. And it didn't work that well as we expanded the partnership, because people, Everybody wants to claim credit. And so he had a. He's got a very consistent mentality, but so I really appreciated that.

Yeah, I think that's key. Okay, I. I see the time's ticking here, and I know you have a lunch date that you have to do, maybe just to finalize. We've talked a lot about a whole bunch of different things. Final thoughts, almost for our listeners. Looking back, you know, looking back on your work, your life, your family, whatever it might be, what do you think were the most important things that you did? Right? And any major mistakes or advice of things that people should try not to do or try to avoid. Life lesson. Final life lessons for the listeners.

I guess I would say I always worked harder so nowadays you read a lot how the younger generation does not want to work that hard. They want to enjoy the sunset. And I think, I don't know how true that is. I'm convinced it is not true among poor people and immigrants. And I think the world is much, much more competitive than it ever was. And I was reached somebody wrote an article about, you know, this topic, how kids didn't want to work. And I thinking back to Canada Life Insurance company that thousands of employees and you know, let's say that I would work from, if they left at 4:30, I would work, take a break for dinner and you know, work till nine. Well, there was nobody else in the building, right? This goes way, way back. If he. I always give this advice, best advice is marry well. So if you can marry well, inherit well, then you don't need any advice. And if you're gifted intellectually, that's a great fact. But the rest of us, if you really want to be successful, it's about hard, hard work. And I think it's, you know, the toughest part, you know, has to do with raising kids. You know, the modern fathers are way, way, way more involved in their kids life. And yeah, I think you got a wife who's a super workaholic. So nobody is sympathetic to you. Like, gee, you got to do things. Nobody cares. Nobody really cares about the details. And that's, see, think about it. Pre pandemic, right? We're sitting around having this discussion and we're saying, well, Brian and Ira, what do you think will happen? Young people would be happy working from home and would companies be productive? And it would be a joke. Nobody could believe that. My partner chef, he used to get really upset because I like to play golf. And I would say coincidentally, all sorts of the people we hired like to play golf. And so many, many times there was all these senior people absent and they would claim that they were playing golf with clients and he would want to tear his hair because he believed you had to be in the office to be productive. And so now there's this compromise on nobody knows exactly, but let's say three days a week. But I think it's three going to two, not three going to four

would

be my two cents.

Three days going to two meaning two days in the week in the office. And your overall thought on this work from home is.

Well, I follow it because I follow office building stuff. Okay.

Yeah.

And so I follow a lot of these trends and you know, I'm on these three boards and about 10 charities and and I like, I personally like some live meetings, but I'm gonna minority and you need some meetings. But you know, you and I have conducted this on zoom. If we had been live, you could argue TIA would have been slightly better or slightly worse, but not actually that different. And it's a shocking. And again, there's so much glory, especially coming from CEOs of office building companies. But as companies diversified around the world, which is like a 60 year trend, how have they been communicating with their people in Tokyo, Hong Kong, Vancouver, etc. So now the technology is even better. So in an international age, these are unstoppable trends. Okay, good.

All right, so last question for you. I have 27 more questions, but you know, we're not going to get them. Last question. You had said at the beginning, when you started your story, right from the beginning, your father was, I think, had a business background. And so you sort of follow that into commerce. At our firm, we use the phrase unlimited. You know, we can help families and we think unlimited ways, unlimited investment options, et cetera, et cetera. So we always ask our guests at the end, assuming the world, your options from day one were unlimited, what would you be doing? Or what would have you been doing, do you think? If you didn't go the commerce route and you could have done anything in the world that you wanted to do, looking back, you know, what might it have been?

Well, as I said, I didn't know anything about investments. I loved the first day, and here I am, we'll call it, 60 years later, still doing the same thing. So let's say that I've been financially independent for, let's say, 30 years. And especially after 2008, because I was guilty. Many people will say that the market went down, what could you do? But the stuff I was matching had too much risk. I was guilty so that I was depressed, and so I wanted to retire. So that's the end of 2008, so it's almost 15 years. So I had the choice. Gee, I could go back to university, I could travel, I could sit on the beach, I could write the great Canadian novel. And here I am doing the exact same thing. So I got, I got nothing to say on the topic. I actually disagree with a lot of people. You hear people say, nobody ever on their deathbed said, I wish I had written one more memo. Right, right. But I don't think that's true. See, I think you'll find again, you and I, we're, we're regular people. We, we consult Mrs. Artificial Intelligence. And get thousand pages of people who have resigned. Right. So how many of them actually resigned and how many were fired or pushed? And my experience is that huge, huge, huge percentage of people did not retire voluntarily. All across the board and that they wish they were working, they were their happiest experience and get pushed out. Think about private family businesses. Very few people ever retire. So why are they not retiring from these private family firms and everywhere else they're getting thrown out. And some of these gigantic firms getting thrown out is in your high 50s. So it's sort of ridiculous. So, so I would turn this, your question around the other way and say, gee, don't be apologetic, but wanting to stay. And again, what becomes tricky? Say you're a dentist. Or like, let's say I'm a golfer, but I'm going downhill. Like, you know, trust me, I'm going downhill. But I don't think I'm going downhill investment wise. So a dentist, they got a big problem. But many other people, they don't have a problem. They should be encouraged to work until you're 120. That's. And so that should be a great, great alternative. And if it's in their control.

Right.

Unless it isn't in the control of a huge variety of people. That's a sad part.

Yeah. Well, I guess it sounds like if you, if you love what you do and you do it well and you can still do it, keep, keep doing it and do the same thing. So listen, thank you so much, Ira. That was a great discussion on a whole variety of topics. Really, really appreciate your time. I'm sure our listeners, I hope our listeners will enjoy this and wish you the best in Palm beach and we'll talk to you soon.

Thanks, Brian.

Thanks. Bye. Bye.

The unlimited podcast is hosted and produced by Brian Gensler and is edited and mixed by myself, David McMillan. This podcast is not to be taken as investment of. If you like what you heard, don't forget to rate the podcast and follow us on social media at ginslerwealth. Thanks for listening and see you next time.

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