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Got it. Okay, I'll get my first shot. Okay, double one. Well, that's the best role there is. That is the best roll. Oh, you kind of want to tell me, don't you? I do want to tell cuz I want to get all involved. But that's not the important. That's not the first. The initial goal is to play defense to to stop me.
Oh, okay. That's more important than moving. So, here's what you do. You do this and you do this. And now you own a what's called the three-point block. Okay. Okay. Now, you have to pick them up. I really want to get at the stories. You were at the beginning of the junk bond era. You were there. The City Bank's investment performance was terrible.
And uh Oh, no. That's me. You can't move me. Sorry. Uh I was associated with the unsuccessful Nifty50 and uh so there's a three and a six. The bank had a change of personnel. They brought in a new chief investment officer, Peter Vermilier, who had experience at Alliance and before that uh JP Morgan and uh Peter wanted to have his own crew.
So um I was lucky they didn't fire me. Yeah. And they and they asked me what did I want to do next and I said I'll do anything except spend the rest of my life choosing between Murk and Lily. No, that's me. That's me. You can't move me. Oh, that's you again. All right. Okay. Sorry. All right. So, move the next one.
Three. Move that one. One. One. Two. And see, and you hit me. And then, oh, you're gone. Oh, good. Okay. Right. So, you're in the bond. I'm a better player, but you're doing better. So, Peter Vermilier said to me, "I'd like you to start a convertible bond fund." They had one, a good one at JP Morgan.
City Bank didn't have one. You like the idea, so I said, "I'll do it." And And convertibles were a backwater. Yeah. that very few people were interested in. Companies only issued them as a last resort if they couldn't get money else. And I kind of like the idea of being involved in things that other people weren't on to.
Already a contrarian. Yes. So tell me about the phone call then that changes your life. Is that what you call it? That's what I call it. August of 78, my boss Nolan Bailey, who was head of the fixed income department, called me up and he said, "There's some guy in California named Milin or something." Yeah.
and he deals in something called high yield bonds. You think you can figure out what that means? And I was smart enough to say, "Yes, I'll do that." Yes. So, I studied up and Mike Milin came to see me in November of 78. And Mike explained to me that if you buy AAA or double A bonds, Yeah. they only have one way to go.
Yeah. Things get worse. If you buy single B bonds and they survive, all the surprises will be on the upside if they survive. If they survive. And the key to making money in the investment business is to have the surprises on your side. So you have to be contrarian and right. That's right. Contrarian and wrong isn't much fun.
Yeah. Yeah. So you go out to California. Well, that was January of 1979 now. Okay. And I went to see Mike to meet his colleagues. Yeah. and have them share with me their take on hyo bonds. People call him the inventor of hyo bonds. There have always been high yield bonds, but but they resulted from defaults and downgradings, what we call fallen angels.
Okay. He was key in advancing the idea that you could issue bonds as high yield bonds. They called them junk in those days. They still call them junk. They call them junk. Yeah. if the promised yield was high enough. And that makes perfect sense. Yeah, that's what that's risk transfer. And and the point is the high yield bond investor knowingly accepts credit risk.
Yeah. If he's promised a sufficient return to compensate him. That makes perfect sense. Yeah. There's no such thing as a good investment idea until you've discussed price. Yeah. Yeah. Exactly. Investing well is not a matter of buying good things. It's about buying things. Well, and people have to understand the difference.
And if you don't understand the difference, you're big in big trouble. No. Got it. Got it. Well, now it is your turn. Now I can move up one more. Okay. Okay. Who's winning? You are because of that block.
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