All large firms talk to the competitors, and it is good to learn what they are thinking and possibly doing. The large firms such as Goldman Sachs call them at Talks at GS; Google has talks, Bloomberg has talks and you can see and listen to them on You Tube.

On one particular issue, Talks at GS interviewed Marc Rowan who is the CEO of Apollo Global Management. The interviewer was Allison Mass, Chairman of Investment Banking of Goldman who knew Mr. Rowan from working with him and very likely Apollo is a client of Goldman.

Apollo Global Management was $550 billion under assets. The company owns Athene Retirement Services which is the largest provider of annuities in the US and growing in Europe and Asia. Apollo makes its money on the spread of providing safe secure annuities at a lower rate and investing money to achieve a higher rate. Apollo Asset Management has $400 billion in credit investments using alternative securities; $75 billion in hybird and $75 billion in traditional private equity investments. Of the $400 billion, $200 billion is involved with Athene or they invest in themselves.

In 2008, the investment in Athene Retirement was $16 million and in 2023 worth $330 billion.

Mr. Rowan views the investment world through the phrase – excess return per unit of risk.

The largest area where they expect to grow is investment grade of alternative credit. Although Apollo was $400 billion, the market is worth trillions and they are not a major player yet.

Ms. Mass asked Mr. Rowan what he thinks about the future:

a) there is an inherent lack of liquidity in the markets – nothing is liquid when prices fall, they are liquid when prices rise.

b) Index and Correlations – Mr. Rowan believes in the publicly trade fixed income systems there is no longer seeking alpha because of the rise of Index Funds and people in general are buying the funds when they have cash and selling when they need it. They do not really know what they are buying, i.e. doing a fundamental analysis. For stocks, the main index is the S&P 500 and 5 stocks are driving the equity markets. If people are seeking alternatives, Apollo is in the business.

d) Technology is changing all financial services. If you examine all process of the financial services industry – there is fintech competitor. In the next 5 years, everything change, the seamlessness with change.

e) Apollo tries to think beyond the status quo, what could be or should be rather than what is. Their culture is a healthy intellectual subornation which means all people in the firm should be able to question the process before a decision is made.

f) does the company have momentum? If they have it, they will find a way around the obstacles. If they do not have momentum, everything is a barrier.

Linking to dividend paying stocks, as an investor you want the steady dividends and the long term capital gains which come from investing in profitable stocks. The issue is doe the stock stay profitable and why? Looking at momentum in the company and are they optimistic for the correct reasons help you determine an answer.

There are more questions than answers, till the next time – to raising questions.