In this episode, Rich Friedman, Merchant Banking Division Chairman, discusses the impact of deflationary trends around the world on the investing landscape, his team’s investing focus on the digital transformation and the transition to renewable energy, and why he thinks conviction is key to investing success.
On trends shaping the investing landscape: “We're going to have low interest rates for a long time. And… I think the signals from the Fed [are] that we're talking about upwards of four to five years, which in the investment world is a full cycle. So, you have to think about, okay, we're in a world that could be, if you will, deflationary or very low interest rates. And I know there's going to be a lot of debate about whether the increase in fiscal policy and all the money supply is going to lead to an inflationary period. But it's hard for me to see that from where we are. Because the other trends that are accelerating are all around the digital transformation that started a long time ago. And all of the digital related trend strategies are, in effect, deflationary., i.e., we all have our cell phones and our cell phones have put cameras out of business. They've put recording devices out of business. They're deflationary in the sense that they're capturing more of our market share and taking away from other things that we do.”
On investing lessons: “I'd say that the biggest lessons do come from, number one, realizing that investing is hard. And that being able to predict the future is really difficult. And that when the trends become overwhelming because so many things are happening and there's all these deals that are happening and you could feel like you're being left behind because others are doing things and you don't understand the valuations, you have to keep your own self conviction and views and not get caught up in frenzies because we've seen cycles of frenzies go on. So, you have to stay true to your investment strategies and to stay with what you're good at and not try to be something that you're not.”