On the latest episode of ETF Prime, host Nate Geraci and VettaFi vice chairman Tom Lydon spoke to Bob Pisani, Senior Markets Correspondent at CNBC and author of the recently published book Shut Up and Keep Talking. Pisani offered a unique look at his remarkable broadcasting career and lessons learned along the way.
25 Years on the Floor
Pisani’s illustrious career with CNBC has been 32 years in the making, 25 of those years have been spent on the floor of the New York Stock Exchange. “I’ve been covering ETFs since about 1999 or 2000,” Pisani said. He noted he covered the SPDR Gold Trust ETF the day it happened in 2004.
His book captures the history of over 10,000 bell ringings on the exchange floor. “The heart of it is a memoir, a financial memory of what actually happened and what I’ve learned.” Writing the book gave Pisani a chance to examine why he believes in some of the things he believes in, most notably index investing and ETFs. “When did I come to believe these ideas?”
Sharing his influences, Pisani observed the late 90s were the time he met many of the thinkers that would have a profound impact on his worldview. He pointed to Jack Bogle’s 1999 book, “Common Sense on Mutual Funds,” and Jeremy Siegel and Charlie Ellis, who wrote “Winning the Loser’s Game.” The latter book, about why active managers have trouble beating the indexes, helped shape Pisani’s stance on active and passive investing. Pisani also said that Robert Shiller’s “Irrational Exuberance” opened his eyes to the role of irrationality and biases in the stock market. “The things that I saw that changed my life were the rise of electronic stock trading, number two, the rise of indexing and ETFs, and number three, the rise of behavioral economics.”
Asked by Geraci about his motivation for writing the book, Pisani observed that by staying put for 25 years, he has been able to go very deep on a relatively narrow focus. “The New York Stock Exchange affords you a very unusual perch upon which to watch things,” Pisani said. By being at the ringing of the bell for the past quarter century, Pisani has had the opportunity to meet most of his heroes and afforded an unusual type of access to celebrities and industry leaders.
Lydon said, “Bob, you are really a fixture at the New York Stock Exchange. I know it’s a big part of you as well; I was honored to be a part of your book launch party at the New York Stock Exchange recently.” Recounting the launch, Lydon asked Pisani what it meant to him to be able to gather a who’s who of finance and share anecdotes. Having had the opportunity to meet a host of celebrities such as Barry Manilow, Aretha Franklin, Robert Downey Jr., and more, Pisani relished sharing some stories with the wider public.
In one story, he related to connecting with Barry Manilow on the floor and having the opportunity to ask him if he wrote the State Farm jingle (he did), which led to a deeper conversation about doing the thing you love. Manilow expressed to Pisani that even though his star faded after a while, he kept getting to do the thing that fueled him: producing albums. “If you stay with it long enough, someone writes a story about you, calling you a legend, and suddenly you are famous again!” Pisani recalls Manilow saying.
Despite not expecting anything from Barry Manilow, Pisani mused that he had touched on something profound. People tend to succeed early in their careers before hitting a rut and switching careers. Few stick through that challenging mid-career moment to stick around for the rewards that can await.
Find Out What Matters
Pisani also shared the importance of knowing what matters to others. Aretha Franklin came to the floor Christmas in 2008 to promote a new album. He guessed she was thinking more about her legacy than she cared about the album itself, so he brought up the movie Ray, which was getting academy award buzz at the time, launching Franklin into a robust conversation about her plans for a biopic. “Her manager came by afterward,” Pisani shared, “and said, ‘I don’t know what you said to her, but she normally doesn’t stick around and talk to reporters.”
A similar event ensued with Robert Downey Jr., who showed up to ring the bell for an Iron Man promotion, with people telling Pisani that Downey Jr. wouldn’t talk to him. Snagging the first Iron Man comic from his own collection, Pisani used it as an ice-breaker and got Downey Jr. to interview with CNBC. “Find out what really motivates people.”
The Financial Crisis of 2008
Pisani shared that the most intense and vibrant stock memory he has is the 2008-2009 financial crisis. As a Baby Boomer, he pointed to this event as causing tremendous damage to his generation, with countless boomers selling despite the market being down roughly 50%. A rational actor wouldn’t sell; they’d buy.
This helped reinforce the behavioral economics pillar of Pisani’s core financial worldview. Running through a list of misconceptions and lousy decision-making proclivities, Pisani underscored the challenges of stock picking as it related to all sorts of often hidden biases people might have, “It turns out there are dozens of these biases out there,” he said. “Professional stock pickers are terrible at doing this. Economists are terrible at predicting the economy.”
The future is full of incomplete information. There are many variables and events that are nearly impossible to account for. According to Pisani, when you look at the various biases people are prone to and the sheer volume of random events that can impact the movement of the markets, it’s easier to forgive the various ways people come up short in the department of stock-picking.
How Imaginary Friends Can Help You Cover the Market
According to Pisani, “Part of the problem when you’re staring into a black TV camera is ’who’s watching?’” Sometimes active traders will be tuned in, but largely Pisani thinks it’s people watching their money and looking at broader trends.
To alleviate his anxiety about pinning down who he was talking to, he made up a specific person he was talking to. This allowed him to speak to a specific person with a specific level of understanding about investing and the markets. This let him know when he had to explain things and when he could assume baseline knowledge.
Bob Pisani on Sourcing Sources
“Everybody talks their book,” Pisani observed. He sees this as a universal truth not exclusive to Wall Street, which means it is important to develop a “BS detector” and gather sources willing to give their honest feelings about something. The role of the reporter is to communicate what’s going on. “Our job is to make a coherent narrative,” he said.
Discovering a contact list from the 90s, he noted 500 names in that list. Pisani believes he’s become more efficient, partly because he’s been able to more effectively find people he can trust who can be reliable sources. “You’re a good judge of character, Bob,” Lydon noted.
Media Delivers Narrative, or Does it Drive it?
Asked if the media creates or drives the news in some ways, Pisani said, “the act of reporting alerts people to what’s going on, which drags more people into a thing. So, is the media complicit? The word complicit sounds like a criminal indictment, so it’s not in that sense, but of course, it’s complicit in the sense that the act of reporting something that’s moving will drag in other people and may, in fact, cause other people to buy in because they saw the information in the newspaper.”
Pisani also pointed out that during the dot com people, the media fought against some of the prevailing narratives that were playing into the bubble. “There was plenty of skepticism,” he said. Media can be involved in both propagating and bursting bubbles, so Pisani sees it as unfair to blame media for every crisis when there are active media pushes against some of the most harmful narratives.
Stumbling Into a Career
Originally setting his sights on being a physicist, Pisani soon realized he lacked the raw mathematical talent to be truly great in that field, but he lucked into an opportunity with CNBC to cover real estate. He was keenly aware of how lucky he was to be in the right place, observing, “You can make something out of dumb luck.” Thirty-two years following a lucky connection, he’s still doing what he loves.
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