Book Club featuring Robin Wigglesworth

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one WePlay This is George G. And the time is right. Welcome to our monthly book club and welcome our author, the strong and powerful Robin Wigglesworth. Welcome, Robin. Thanks, George. Thanks for having me. I’m excited to have you on. Robin is the global finance correspondent with the Financial Times his newest book is trillions how a handful of Wall Street Renegades reinvented, invented index fund and change finance forever. Robin, I’m excited to have you on tell us a little about your personal life’s more about your work and why you do what you do?

Robin Wigglesworth 0:44
Well, so I’m the Global Finance correspondent at the ft. The Financial Times, it’s just a fancy way of saying I cover basically anything that touches money around the world. So I write both columns and long reports and weaken features.

And I kind of ended up doing that by chance, you know, I dreamed of being a war correspondent, like many journalist students, but the more I kind of spent time looking at it more I realized that to finance economics, it’s kind of the hidden wiring underpins the world that the world makes, say a lot of sense. But it makes maybe a little bit more sense if you understand money and its role in the world. And, you know, I did get to be a war correspondent briefly for the FT I cover the Arab Spring. So I spent some time in Bahrain and Benghazi, during the Civil Wars there. But financial journalism was my first love, in many respects, professional love, and it’s just endlessly fascinating. So that’s what I do. And then on the side, I managed to carve out some time during the pandemic, to write a book about index funds and passive investing. Because I think, frankly, it’s just this mammoth falls, that’s reshaping a lot of things in ways that I think many people aren’t even aware of, because it kind of get, it doesn’t get covered that well. So

george grombacher 2:02
when you said about doing that, what what was? Was it a was it a matter of I want to write a book. And now that I’ve decided I want to do that I look out all the myriad of topics. How did you settle on this one?

Robin Wigglesworth 2:20
No. And I’ve talked to other authors about this. So there are some people who did really want to write a book and think they have a book in them and then look for a suitable subject. At one point I did look at, I want to write a book and I look for a subject can find something I was interested in enough. This one was it was just a great subject that essentially started off as a magazine piece. So at the FT, you have to really focus on what you cover, we can’t cover absolutely everything. So a Wall Street Journal of Bloomberg, they’ve got like 2000, journalists each, we only have a few 100. So we have to be more like special forces, we have to pick our battles, and be strategic. And for me, you know, lots of hedge funds and private equity barons get really well covered, because they’re big personalities. They’re kind of celebrities, they’re the Kim Kardashian of the financial world, index funds are kind of inherently boring, because there is no person there. They just basically buy the entire stock market. But they were so big. So I spending more and more time writing about it for the ft. Because it was this, this kind of it’s like a tie that’s kind of reshaping everything around it. And, you know, then I started writing a magazine piece about the genesis of index funds, like how they’re invented and, and why they’ve grown into this phenomenon, what the potential downsides are. And that magazine piece got some publishers interested. So I wrote up a proposal and sent it in. And luckily, Penguin was kind enough to back the idea. And lo and behold, trillions was born a couple of years later.

george grombacher 3:48
Nice. And when you made the decision, you wrote the magazine piece, you put together, the executive summary, for lack of a better term, Penguin says, Let’s go, then you think, Okay, what am I going to write here? I can’t imagine you wanted to write a boring book.

Robin Wigglesworth 4:07
No. So um, I mean, frankly, yes, the world does not need another boring finance. And so, the authors I really admire and the books I really love, are quite often ones that maybe tell you a story that you vaguely familiar with already through an unusual hero. So for example, there’s a book by a guy called William Bernstein about the history of trade. It’s basically history of the world, but through the prism of trade and how trade has shaped the world. And for somebody who loves history and studied history, I thought it was just it was wonderful way of looking at events that I knew about, but from a different perspective. Same thing with religion, for example, there’s a book in my bookshelf haven’t read that tells the history of salt. And in finances well, there are many books that frankly, tell a broader story about maybe how business or finance and business But through the prism of a group of heroes or antagonists, so think of when genius failed about the fail of the LTCM hedge fund. Or, you know, the classic case is Michael Lewis, Michael Lewis writes best selling books about five minutes, because he writes about people, because fundamentally, they’re always people at the center of these things. And that’s kind of what I wanted to do. So I didn’t want to write another dummies guide to kind of how to manage your investments. You know, frankly, people can pick that up from Wikipedia better than I can give them that information. But I wanted to maybe highlight the individual people who invented the index fund, the massive orders they had to overcome, and how they disrupted the investment industry in a radical way. And these were people that basically invented the electric car and error of the horse. People either laughed at them or hated them for a very long time. But now, the index fund universe is $20 trillion. And that’s the reason why I call the book trillions. $20 trillion is more than the entire hedge fund, private equity and venture capital industries combined. So I just felt that that warranted a book about like how this wild phenomenon kind of came into being really.

george grombacher 6:19
I think about it, right, it’s so where was that money before? Was it in just traditional active mutual funds?

Robin Wigglesworth 6:31
Basically, yes, I mean, so 20 trillion, there wasn’t $20 trillion worth of money in the world. You know, 50 years ago, when the index fund was first born, obviously, the entire world is luckily gotten wealthier. But yes, I mean, through centuries, you can see this through like all the books and pamphlets about the Mississippi company bubble or the South Sea bubble back in the day, or even the Dutch tulip mania, you know, broadly speaking, people either invested money themselves, if they had the means they were wealthy individuals, or they eventually gave it to a professional. So a couple of centuries ago, they were known as trusts. And then over the past century, it’s been a mutual fund. So that’s how the vast majority of Americans save money, either they save in a pension plan, and the pension trustees give that money to a professional fund manager, or they invest directly into a mutual fund. And what people kind of always had discovered to the chattering after every big stock market vomit over the years, you know, whether it’s yeah, the South Sea bubble, or the Great Depression, that actually even the professionals do a pretty bad job. And even the ones that look like geniuses in the Bull Run, end up being turned to the proverbial Emperor’s with no clothes, when the tide recedes. And the thing is, people kind of saw this occasionally, but there was no alternative. Sometimes occasion, people will say, Well, you can’t even buy the market average come by the entire market anyway, so suck it up. And people can actually prove that, you know, active managers did a bad job until really the advent of the computer error of the mean, like, I wrote a book about history, the finance of history, and the history of investing with index funds is kind of my unlikely hero in the middle of it. But really, it’s almost a history of the the computer era and how that reshaped finance as well. Because you can see index funds as the first evidence of what venture capitalist called Software eating the world, kind of what an index fund is, it’s an algorithm that says, Buy all the stocks in the entire stock market. And initially, that actually had to be executed by humans. But the proof or the way it was planned and design was done with the first generation of mainframe computers.

george grombacher 8:53
It’s fascinating. When When, when an ordinary investor today thinks about index funds, they probably think about Vanguard you agree with.

Robin Wigglesworth 9:02
Yeah, I mean, and, and rightly so. Especially in the US. I was lucky to enough to talk to Jack Bogle, the founder of Vanguard several times before he sadly passed away in 2019. And, you know, he’s one of my heroes and rightly, the hero of millions of people. But I think, somewhat controversially, there’s a gap between the legend of st Jack as he was known and the reality of Jack Bogle. Jack Bogle was not always an index fund fan. In fact, he used to be in the active management industry at a fund management company called Wellington that Vanguard eventually sprung out of, and under a pseudonym. He wrote an article basically rubbishing the idea of index funds in 1960, just completely crapping on them. And, you know, even when he did set up Vanguard, he didn’t do index funds because he was a massive believer in passive investing. He only did it because essentially it was the only thing that they could do as part of Vanguards divorce agreement with Wellington where you used to work. So it’s kind of happenstance. And I always love that about people like how do we become who we are, and, and the gap between how we see ourselves and sometimes portray ourselves and the reality speaking to a lot of friends and colleagues of Jack Bogle, who all loved him and admired him enormously, but maybe seeing the slightly more complicated reality was really interesting. And I frankly think he’s an even bigger hero of mine because of it because I like my hair is complicated. I like them being multi dimensional human beings, I want them having flaws. I want them being assholes. Occasionally. Jack Bogle could be an asshole. And but yes, he was I think still, even though he didn’t invent index funds and kind of fell into it by accident. I still think he did more than probably anybody on the planet to popularize them. Bring them into the public sphere.

george grombacher 10:58
Yeah, fascinating. I appreciate that. So as you are trying to come up with with with an outline is is is that how you wrote your book? You said, okay, you’ve got all this information, just kind of walk us through that?

Robin Wigglesworth 11:16
Well, I mean, I’m sure you I mean, talk to many authors that everybody’s got a very different style. And everybody can always get better in their approach and methodology. But I’m a big believer that everybody does have like, this methodology that suits people well, or doesn’t suit it. Well, like, I work best in the evenings. And then at nights, that’s when I write best, and I write the most. When it comes to structure, I don’t really write in very clear structure ahead of time, I actually structured as I write, and then continue to go back and iterate and change and change, and tighten and tweak, and then do occasionally surgery as well. Especially obviously, you know, when you’ve got like world class editors that someone like Penguin, that helps as well, but I’m naturally pretty structured in their writing. And that’s how I think about stuff. So I’d rather write a lot. And then go back and do surgery, ideally, cosmetic, but maybe something’s something major, then plan out something entirely, and then start writing and realize that that plan doesn’t actually work in practice. It’s a bit like I always think of like generals, always saying the plan of battle never survives the first contact with enemy, I feel any songwriting plan that I’ve ever had, doesn’t really survive first contact with actual writing. But I had I wanted to do essentially, and for me, it was I wanted to do chronological history. Frankly, it’s the easiest structure, it’s naturally kind of flows narratively, and for readers and for the writers. So it’s an easy thing. But I didn’t want to dump people in the middle of my site, my book in 19th century France, with the some of the original, the granddaddy, that sort of set the intellectual foundation stones of index funds. And that I feel is a little bit unkind to the reader, you know, starting with the obscure French mathematician called Lewis Kelly. So I started with Jack, Warren Buffett, and think of it in terms of a film, you want to tell a story, like a gripping star that gets people hooked, then you zoom back maybe at the beginning of the story, and then you gradually lay it out over time. And then ideally, you have a few characters come and go. I mean, the advantage that Michael Lewis has or has in his books, sometimes he focused on a specific timeframe. So you have the same characters, you get to know them a lot better. I found that the hardest part that you know, I have over 100 years of history, and there are some characters that crop up again and again. But broadly speaking, you know, half the people in any chapter you won’t hear from again, and that makes it narratively more challenging to requires more than writing, I think, you really need to flesh them out, but not waste readers time, with inconsequential details about inconsequential characters you’re never going to see again.

george grombacher 14:02
Yeah, I appreciate that. I imagine it would be unique, some great, some frustrating to be a professional writer, and to do things the way that you’ve been doing them. And then all of a sudden, you have a stranger who is now your editor.

Robin Wigglesworth 14:22
Well, I think all writers complain about this. And, you know, but all writers like I’ve both been an editor and a writer. And I think that I mean, it’s easier for professional journalists, like idea with editors every day, I think for people not used to it. That can be quite challenging. So non professional writers, whether they’re even academics or whatever. But I think people need to approach it, in the sense that, you know, most things are better done. In coordination with somebody else, and that editor, or sub editor in newspaper, so you have people that literally like check line by line, they’re not there to kind of sabotage you. You can disagree with them, but they’re there to help you. So you fundamentally need to treat it that way. These are people that have kindly given their time to help you become a better writer and write something better. Now, occasionally, you might disagree with them. I mean, luckily, I have them in this book, it was a pure joy. It was it was very light that party in it, because I think, you know, I’m, you know, used to writing and but you know, it’s tricky. But yeah, you just need to keep in the mindset, even when you argue I’m okay with people arguing with with me, I argue with them. I think that’s, that’s kind of important. And it’s better to be direct and honest about disagreements about what copy looks like or structure. The fun of the always keep in mind that they’re not doing it to be mean. They’re doing it to help you. So it’s keeping that front and center I think is really important.

george grombacher 16:07
Everybody’s rowing in the right direction. Nobody’s out to get you, Robin. Yeah.

Robin Wigglesworth 16:12
Well, some people are, but mostly Russian trolls on Twitter.

george grombacher 16:16
Right, right. Right. So when when somebody picks up a copy of trillions, what are you hoping that they get out of it?

Robin Wigglesworth 16:26
That’s a great question, actually. Um, so I mean, this sounds very grandiose. But then, you know, going back to my original point of I like those books that retell your broader story through the prism of this unlikely protagonist, maybe I hope that people actually almost through osmosis of reading this book, you know, learn something about investing in finance it how investing in finance and Mark financial markets have evolved over a century. And you know, the index fund and how it was invented, the people that did it these Renegades because they really were Renegades at the time. This was not, you know, a popular thing to do to disrupt your own industry, and there central characters, but the board broad a tapestry is what I hope people get away from it as well, that, you know, you don’t need to know the minutiae of how an exchange traded fund functions and trades, you don’t really need to understand securities lending and all this financial jargon, to understand maybe, hopefully come away from the book with a finer appreciation of how markets and investing works, that we’ll have, both of all, first of all, just be really interesting, young, a great tale for you to enjoy. And, but also, you’ll be better in your own personal finances, you’ll manage your money better, you know that when that smooth talking stockbroker tries to sell you some hot tip, or that fund manager that looks like he’s got a great track record of fidelity. You just approach that with a slightly more skeptical view that you will be both a smarter person but also a better investor after reading the book I have faced.

george grombacher 18:05
Love it. I love it. Well, Robin, thank you so much for coming on. Thank you for your time. Thank you for writing the book. Where can people learn more about you? How can they engage with you? And where can they get a copy of trillions how a band of Wall Street Renegades invented the index fund and changed finance forever?

Robin Wigglesworth 18:22
The book, luckily, thanks, Penguin support is found in all good and hopefully the bad bookstores around the world. So I always urge people to check out the local bookstore to support them. But if not, then, you know, Amazon and so forth will have it. I’m like many journalists far too active on Twitter. So that’s the best place to send me praise or criticism or say I’ve got a silly last name. I get that quite a lot within like Wigglesworth. And yeah, and but I also don’t say email. There aren’t many people that last names is Robin wigglesworth@ft.com. Send me an email. And because I do kind of think that journalism as well is better when it’s kind of a two way street that it doesn’t have. It isn’t journalists talking at people but talking with people. So I always enjoy that part as well.

george grombacher 19:13
If you enjoyed this much as I did, show Robin your appreciation and share today’s show with a friend who also appreciate good ideas. Pick up a copy of trillions how a handful of Wall Street Renegades invented the index fund and change finance forever at your local bookstore wherever you enjoy consuming buying books and find Robin on Twitter as well and shoot him an email get in touch and read his work on the FDF t as well. Thanks again, Robin. No, thanks,

Robin Wigglesworth 19:42
George. Love being on it.

george grombacher 19:43
And until next time, keep fighting the good fight. We’re all in this together.

Transcribed by https://otter.ai