Mellody Hobson on investing in the market during Covid-19 | Homeroom with Sal

Hi everyone! Welcome to the daily homeroom live stream. We have an exciting, I guess we could call it a show today. Just to get everyone on the same page, what this thing even is: if you're showing up for the first time, we're doing these live streams as a way to stay connected during school closures. When we started seeing the school closures—it now seems a lifetime ago—but I guess it was four or five weeks ago, we realized that all of us at Khan Academy, as a not-for-profit with a mission of providing a free, world-class education for anyone, anywhere, had to step up. We had to figure out how to support all of you as parents, as teachers, and students as much as possible.

So we started publishing things like daily schedules to structure all of the content on Khan Academy, learning plans, teacher-parent webinars, and also this homeroom. It's a place to talk about everything: the closures themselves, the economy, COVID virus, and many times just ask any questions you have. We have an awesome guest today—I encourage you; it’s going to be Melody Hobson, and I'll give a better introduction for her in a few seconds.

Feel free to start asking questions on the message boards, either for myself or for Melody. Especially, I want to give everyone a reminder: we are a not-for-profit. We are funded primarily through philanthropic donations, and so, if you are in a position to do so, please think about donating to Khan Academy. We were already running at a deficit before school closures, and now our traffic is almost 3x of what it typically is. You could imagine we're trying to do more in this context. So any support for us to be able to do the work for folks who might not be able to afford anything is appreciated.

I do want to give a special shout-out to several corporations who stepped up in the last few weeks to really specifically assist around the COVID response: Bank of America, Fastly, Novartis, Google.org, and AT&T. So with that, I'm eager to have as much time with our guest as possible. I've known our guest, Melody, for some time.

Melody Hobson is the co-CEO and president of Ariel Investments. There are two things I really am eager to talk to you about, Melody. One is just your journey to becoming co-CEO of what I think is one of the most important investment firms in the world, and your view of the economy. We’ve had a couple of folks on in the investment management world, and it’s just in interesting times to put it lightly.

So maybe a good place to start, Melody, you know, tell us—there are a lot of young people watching who are trying to figure out their life—what should they do with their life? Tell us a little bit about your journey. How did you end up becoming the co-CEO of Ariel Investments?

“Well, thank you so much for having me on, Sal. Just know that I'm such a big fan of yours. As you know, all too well from the first time I came to see you, I told you I was just enamored by all the things you were doing to teach so many people all around the world, and I applaud your efforts. I just feel so much gratitude that you have things like that that exist for people all over the world. I'm also honored to be asked to be one of the people that you interview and to tell my story.

My story, I think, is the story of many people around the world in so many ways—just a story of persistence and really, really hard work. I grew up in Chicago, and I was the youngest of six children. My mom was a single mom, and when I was growing up, we had a really, at times, challenging existence to say the least. Sometimes we got evicted; sometimes our phone got disconnected; lights got cut off. We lived in some of the abandoned apartments that my mom used to try to fix up and rent for people in order to make a living.

It was during that time that I became clear that I was desperate to understand money—not make it, not have a lot, understand it. I thought if I could understand money, I could have a better life, and I really committed myself to that. When I was 19 years old, I had the opportunity to be an intern at Ariel Investments, which was this fledgling investment firm started by this wonderkid named John Rogers, who started the company when he was 24 years old. Today, we’re 37 years old now, and after I graduated from college, I went back and worked at the firm in 1991 after graduating from Princeton. I’ve only had one job since then, and I started off on the client services and marketing side, learning everything I could learn about investing in the stock market. Over time, I rose up in the organization. In May of 2000, I became president. I went from intern to president, and then last summer, in 2019, I became co-CEO.

It's an amazing story in so many ways, and I have so much gratitude for the opportunity I've been given. But most of all, I have the most amount of gratitude for what I've been able to learn about money and investing over this near 30-year career that I’ve been doing this and how that is really putting me on fire to teach what I know to other people so that they can have a better life.”

And what's your sense? What do you think made your trajectory so successful? What do you think were the traits in it that made you a successful investor and allowed other people to recognize it as well?

“Well, I think the first thing that helped me was that I always believed that you have to always be learning. I have never felt, even today, that I know enough and that I can stop. So having that open mind—some people call it a beginner's mind—that's a Buddhist concept that your mind is always new, like a child—and you're approaching everything from the perspective of a beginner—allows you to really take in a lot of information. Ray Kroc, who started McDonald's, had a quote that I really liked where he says, you know, as long as you're green, you grow; when you're ripe, you rot. I really like that concept of just staying green all the time and being open, not being so convinced that you know everything; I think that made a difference.

Secondly, a commitment to learning. We call ourselves a learning culture at Ariel. We always want to build on what we learned from before. So right now, being in this global pandemic, we're building on all the knowledge we learned in the financial crisis of 2008 and 2009. During that period, we built on the things that we learned after 9/11, and that we built on things we learned in the crash of '87. So it's like constantly accumulating knowledge that will make you better and building on it so you have more and more muscle memory.

The last thing is just I love the idea of learning about the markets, talking about companies, really understanding how money works around the world. It just really fascinates me. I think it's very important. You become more successful at something that you really like, and I just really love the business that I'm in. At the end of the day, I tell our team that we work with: we get to make people's lives better because we grow their money in their pension fund or their kids’ college education money that's in our mutual funds, whatever it might be, so that they can have a better outcome. That's as fulfilling as anything that anyone could do—as fulfilling as you teaching, as fulfilling as doctors doing what they do. We feel that our work is that important.”

And we're getting a lot of questions off of YouTube and social media, which is great. For Adithya Gupta, and this is a good starter question, a lot of people are kind of vaguely familiar: okay, there are these things, these investment funds. His question is, what does Ariel Investments do? And maybe I'll extend his question: what is your day like, and maybe what is it like when you started? What does an investment manager or an analyst do?

“So let's start off with Ariel Investments. We are a boutique independent money management company. We manage stock portfolios for big institutions—think states, cities, foundations—a whole host of organizations, often pension, but it could be endowment money as well. For individuals, we have publicly traded mutual funds that anyone can invest with us who has as little as $50 a month to put in our mutual funds. We buy domestic companies—U.S. companies that are small and medium-sized companies that are out of favor but show a strong potential for growth. Over the years, we've owned everything from companies that you know. They usually dominate the niche that they're in, everything from Smucker's jelly, which is in our portfolio right now; in the past, we've owned things like Tiffany's, the retailer, and Clorox, the diversified consumer products company. So you name it, those companies dominate their niche. We say once you get the customer, they go back again and again: small and medium-sized companies.

Then we have international and global portfolios. International means it's only companies based outside of the United States, and global means it's companies all over the world, including the United States. Those portfolios also seek to invest in companies that are out of favor, and that's everything from higher companies to the version of what you would have in America with some of our internet businesses that are based in China, like Baidu. So we’re looking for these brands and franchises, and we want businesses that will be able to grow over time, but we want to buy them when they're out of favor, when for whatever reason they've been cast aside. So as you might imagine, right now during a time when the stock market has been so volatile, there have been a lot of buying opportunities that have come to us.

So these days, we’re super busy. When you ask about my day, I am actually not an investment analyst, although I am someone whose Rolodex is used on a regular basis to inform the stocks that we are buying. In this current environment, I’ve been on the phone on many occasions with my co-CEO, calling friends in the industry, talking about what they're seeing in the market, because we can learn from everyone—this includes individuals we call, his old corporate finance teacher, someone named Bert Malkiel, who wrote a book called 'The Random Walk Down Wall Street' that is so famous—I think it's in its ninth edition—saying, 'What do you think of this environment?' But we will also call very famous money managers and ask them that as well.

But we do our own independent work and our own independent thinking, but we can learn from anyone. Then our team would be spending lots of time on the phone talking to management teams of companies that we own, asking them what their prospects for the business are, what has changed, what is the same, how are they managing through the period, and most importantly of all: do they have the liquidity to get them to the other side? And I say 'the other side' because this will end at some point; it won't be forever. At some point, there will be a vaccine; at some point, we will go back to life as we know it. We don’t know how long that will be, and so the most important thing is to understand from those companies that they have the balance sheet and the wherewithal to be able to withstand whatever kind of pain they will feel during this period.

I spend an enormous amount of time on the phone talking to our clients and shareholders, writing to them, writing the communications, explaining what we’re doing so that they're as informed as possible, and there are no surprises when it comes to our portfolios and how we're investing and performing.”

And you're touching on, I think, where a lot of the questions are, which are: where's the economy going? But before I go into that, there's something you said that's interesting. I think a lot of people could learn from the fact that you're looking at companies that are out of favor. That might be counterintuitive for some. So where is that? What's the hypothesis there? And also, I'm fascinated by your logo, which is a turtle, so maybe those two things are connected.

“Well, we believe that real money is made over time, and all of our beliefs come from studying the investment greats. The greatest investor of our modern time is Warren Buffett, the CEO and chairman of Berkshire Hathaway, who still happens to be alive and who has one of the greatest track records in investing of any human being ever. So we've thought a lot about what he's written about and talked about. He talks about time being the friend of the wonderful investor, the enemy of the mediocre. So we think about the fact that we want to invest in things that, over the long term, will demonstrate growth.

There may be a reason that it's temporarily out of favor; maybe an entire industry got taken down at once and a good company went down with it. We’re looking for those opportunities to be able to buy companies when, for whatever reason, something has gone wrong. So a simple example of that: we've been buying a company recently that's in the dental industry, and that’s very much out of favor lately. The reason that it’s compelling is because we say to ourselves: okay, we get it. When you’re sheltered in place, no one can go to the dentist, so the earnings and revenue on that business just fall off a cliff. There’s no question about it.

Then our next question is: can they manage through this period for a significant period of time, not knowing when it’ll be over? Are they best in class at what they do? When things get up and running again, we believe most people will go back to the dentist. In fact, there'll probably be some pent-up demand there. So that would be an example of an out-of-favor business that shows potential for long-term growth. When you think of around the world, more and more people will go to the dentist.

I'll give you another quick example, something medical related. We own a company called Zimmer that makes hips and knees. Literally, it’s that a doctor gets trained on one device, and they use that device all the time. So in our mind, it's a razor-razor blade business: the doctor is the razor, and the customer is the razor blade. The customer comes through and gets hips and knees over and over again. Again, during this pandemic, no elective surgery; having a bad hip or knee doesn’t kill you, but it might really hurt. So people can’t go to the doctor and get their hip replaced. But we’re looking at the demographics that show this very basic math that shows baby boomers are going to need hips and knees. For every one pound you gain, it’s four pounds on your knees. So while again there may not be surgeries right now, over time, not only will it recover, but we say that's going to, unfortunately, be a growing industry.

So that's what we mean about buying things we’re not with, when they're out of favor.”

No, it's very compelling. For those who don’t know, my old job, I was an analyst at a hedge fund at a much more junior level than Melody. But my boss always used to say, you know, when you're buying, there's someone smart selling to you, and when you're selling, there's someone smart buying. What do you think your edge is? And Melody's edge, it sounds like, is very much aligned with the Warren Buffetts of the world. Most people think relatively short- to medium-term and kind of move with the herd and move with emotion. If you can somehow separate yourself from that and be a little bit contrarian sometimes, you might be able to... time could be your friend.

“And that speaks to our logo, and we'd say be a lot contrarian. The number of calls that I've gotten from everything from working-class individuals who are trying to make ends meet saying, 'My 401(k) plan or my 403(b) plan is getting crushed,' to the billionaires that we work for who say, 'I’m thinking of selling.' You don't sell into the panic. Buffett has this quote: 'Be greedy when others are fearful and fearful when others are greedy.' So during a time of fear and panic, indiscriminate selling—which we saw in early March—we’re going to be thinking, 'Where are the opportunities?' Again, there's that famous line, I think it's Churchill, who said, 'Don’t let a crisis go to waste.'

So during that crisis, just from an investment standpoint, what are the opportunities that might just be being thrown away, where people are just running for cover, which is actually the rope? You should never sell into that kind of down market. That's why we have a turtle as a logo, and we talk about slow and steady winning the race, like Aesop's fable. We don't get the sense that we mean slow and being like we’re not doing anything. We are urgently patient. We're looking for opportunities at all times; we take our time, and we're thinking of what will this company be over the next three to five years, not the next three to five quarters.”

I like that phrase, "urgently patient." I think I need to be a little bit more of that myself. I have the urgency; I need more of the patience. So that's really what we are: we're urgently patient. We're looking at it with urgency, but we're taking a long-term view about what it’ll be.

That's great. And we're getting a ton of questions; you can imagine about the economy itself. Those businesses that you just talked about make a ton of sense, at least even with my old investment hat on. But a lot of people—and we had Ray Dalio on last week. You know, there's kind of contrasting trends here. We saw the market go down a lot, and then it's kind of gone back up to a reasonable level. It seems to me as someone who's not doing this as my day job anymore that the market got reasonably optimistic maybe once we hit the peak of the crisis. But on the other hand, when you look at the jobless claims numbers, you think about, well, even if a state does open up, will people really go to restaurants or dentists or whatever else? It could be a while. How do you think the market has it wrong? Do you think there's something else at play here? What's your macro read?

“So we are bottom-up stock pickers, so we're looking at companies just one company at a time. What will it be over the long term? We like it best when those companies don't get beaten up and down by what's going on from a macro perspective, but in this environment, that's unavoidable. What we would say is that we don’t think of the market as being right or wrong; it just is. From that perspective, our work is to try to be thoughtful around what is occurring, and the market typically does anticipate the future. It looks out into the future and has some sense of what it thinks will happen. And that's obviously a result of a cluster of people buying and selling, etc.

And there's no question with the recovery that we’ve seen in such a short period of time, the market is anticipating better days ahead for the economy. Perhaps they’re thinking the recovery will be faster than what everyone thought in early March when shares were being indiscriminately sold. We would say that is what it is; it could be wrong. We might have a W where we go down again; we may have stay-at-home orders again in the fall. We don’t know. We have thought more that it might look more like a U— that we’d have this period through the rest of the year where you would not expect a lot out of Corporate America, especially in terms of profitability or earnings. Then you’d start to see a recovery in 2021, which to us is like a nanosecond in investing.

That is the scenario with which we're working against, but we can be wrong and still be right because remember, we’re thinking long-term, and we’re not making investments, we're not trading based upon the next three to six months. It's nice to have the market recover the way it has, but we also know that it has been a very, very volatile period, and these things can turn on a dime. I think our biggest concern right now is if we come out way too fast and way too early that people could be in a situation where if they have to lock down again, that might be very, very upsetting. So we will just have to play it by ear and see, and for us, it’s really to take advantage of the opportunities as they come.”

And these businesses, like say these associated with the dental industry or hip replacement, that when you are in a stay-in-place order, or maybe even once we're out of the stay-in-place order, and you're allowed to go, but most people will try not to go until there's a vaccine or something, how long, when you're looking at how long they can be solvent with little revenue, what time horizon are you all looking at? Is it six months, eighteen months?

“We're looking at the next six to twelve months, yes, and saying, ‘If they’re really, really compromised during that period, will these businesses have the balance sheet that they can be okay?’ That's the question we’re asking ourselves, and that’s not a yes for certain industries. I mean, we're going to see bankruptcies come out of this environment; we've already started to see that, and there are whole sectors that are really, really taking it on the chin. I mean, it's you know, the airline industry is going to be compromised, there's no question about it because that's an industry where capital expenditures are very, very expensive. You've got big labor issues. Now they're benefiting from lower oil prices, but there are a whole bunch of things that can hit them. That would be an industry that we’d say we just don’t, we don’t know what will happen there.

That goes into the ‘too hard’ category for us. But there will be a whole bunch of other areas where you can again look out and say, literally, you know, I know, like if my crown breaks, I'm going to the dentist, but you know, it’s just, it’s not going to be a question.”

And I know y’all are bottoms up, and actually, the fund I used to work for was very, very similar at a much smaller scale. But I am sure you do have a view on, I mean, you just gave a little bit of a view on the macro, but what from a policy point of view, if you were the chairman of the Federal Reserve or if you were the Treasury Secretary, what kind of actions do you think need to be taken or not taken to get us through this?

“Well, I have to say I applaud what they've done so far. I was in a board meeting with someone, and they said the Federal Reserve didn’t bring a bazooka; they brought the whole arsenal, and that is true. This is a giant contrast to the 2008-2009 financial crisis when I remember Hank Paulson, who was then Treasury Secretary, going and presenting to Congress and asking for a stimulus bill that was $750 billion, and then initially turning him down. He needed that money to rescue American banks, and that was one of those daunting moments. The market just literally cratered on that bad news. This is just the opposite; Congress has an open checkbook, which has its own repercussions potentially down the road, but today you want to be in the business of doing too much versus too little, and they’re approaching this in exactly that manner.

Now that said, I want those stimulus checks to get to individuals faster, because that has been problematic at certain levels. I think the small business PPP is also challenged in terms of how fast people are getting money and are—is everyone getting that equal access to the opportunity to participate? So those things I think we've got to get on. The one thing I’ll also say: they did a really good job with the furlough situation, that when employees get furloughed, they're getting their full compensation, which incents companies not to lay those people off. I think that's really, really good.

And I think the unemployment benefits, given the number of people who’ve had to file claims at the end of the day, I think they did the right thing there as well, especially with putting on the extra for children. There was a lot there that was, I think, very, very thoughtful and the right thing to do. I just don’t think it’s over; I think we’re looking at more stimulus, not less.”

And there's tons of questions here, but one follow-up question to that: what do you think are the long-term implications? To your point, you know, in times of emergencies, you can think in very fundamental terms: there is food out there; we just need to make sure people have currency to buy the food, their shelter; we need to make sure they have currency to pay that rent. But in order to do so, you know, trillions of dollars potentially—it’s increasing the debt. What do you think are the long-term implications?

“If any, inflation is likely a long-term implication. I mean, when we've talked to a number of experts out there and academics, they're pretty united in their point of view. When Rome is burning, you know, if your house is burning down, you're not thinking about the rebuild at that point; you're thinking about putting out the fire. So right now, we're still in the put-out-the-fire mode, and then we'll have to figure out the environment afterward and what we do about that. But again, I think there's no other action that could be taken than the actions that have been taken thus far.”

Now we have this question from Tamika Rogers on YouTube, and you've touched on this already. But I’ll ask it again because I'm sure a lot of people are asking this: Miss Hobson, is this the perfect time to invest in the stock market?

“Well-known companies, mostly that you, I guess she’s asking, would it be well-known companies mostly that you expect to thrive in two to five years, which does sound aligned with y'all's thinking. So this is what I would say. First of all, I do think there are some opportunities out there— not as many as there were a month ago when things were worse. But what I would say, you know, Warren Buffett says it’s a market of stocks, not a stock market. So there are companies always for sale in the stock market, even when the stock market is at highs.

I would caution people to make sure they have the right perspective, and I think you have to take a longer-term view and not to expect this to be like a rubber band that’s recoiled and just bounces back like that. So just making sure, again, you're looking out and you’re patient in your perspective. I also would encourage you to invest in things you know; that's a famous line from another great investor, value investor, named Peter Lynch, who was very famous in the 80s, and he talked about investing in things that you have a good sense of, as opposed to trying to stretch and learn something that you don't know or understand.

There are certain areas we don’t invest in because we do not understand them, and we think we're smart, but we tend not to buy commodities because you have to predict them. There’s a whole host of things we don’t have a lot of exposure to technology because we think there's rapid obsolescence, especially among smaller and mid-sized technology companies. You know, you can be put out of business very quickly by another competitor or disrupted very easily and then your value could erode. It’s harder for Google now or harder for Facebook, but some of this on the smaller end can be challenging.

So we don't tend to do a lot there—being very realistic about what you know and understand. I’m not one for tips, stock tips from people, anything like that. If you don’t have the stomach for this, don’t do it; get a professional. Buy mutual funds that have investment professionals like us at Ariel that are actually doing the work and worrying about this on a day-to-day basis.”

And actually, just a curious question—something I always struggled with when I was in the same field—is you have a strong thesis, you’ve done your homework, you’ve made your investment, and y'all are famously patient about it. But I'm sure, well, my question is: are there sometimes that you are unsure about yourself? And do you have—how do you draw the line between doubling down on your bet versus saying maybe I was just wrong and getting out of it? Obviously, there's parallels to life there, but you're living it every day in the investment world.

“So first, we have this point that we make with our investment team, and we say we hold our ideas lightly, not dearly. So we hold them lightly so that we have the ability with new information to change our minds. That's very important because investing, you don’t need a—as again quoting Buffett—a perfect batting average to be successful. As a result of that, you're going to make mistakes; you must accept that. One of the greatest pieces of advice I got was from my co-CEO and business partner. Once, I was agonizing over something and he said, ‘You know, Melody, I don’t agonize over mistakes because I make them frequently.’

You really have to have a little bit of a move-on mentality: you make it, what did you learn from it, and you move on? There are times we’ve absolutely made mistakes, and we want to internalize those lessons. One of the periods where we made mistakes was in 2008-2009, where we underperformed for the first time in a down market, and we underperformed significantly. We went back and completely overhauled our balance sheet work and how we were doing it, and we made sure companies had the wherewithal for tough periods. We think that those learnings allowed us to survive this period and endure this period much better than we did before as an example.

So we make mistakes with stocks all the time. The simple question we ask our analysts—this is an easy way to think about it—we don’t allow our analysts to say ‘hold’ on some companies. You have a buy, a hold, or a sell. We say you're either a buyer or a seller. You must pick. If you don’t want to buy it, you want to sell it. And in some ways, that's figurative to us, but it’s a way of making people really put a stake in the ground. You either like it or you don’t; you can’t live in this no-man’s land of hold without, you know, showing your hand of what you really believe.”

That's a fascinating point because I've always thought about it, but it never phrased the way you just said it. Because your point is right: if you’re holding something, you’re essentially saying if you were buying today, you’d be willing to buy it. Because it's a great definition of holding.

“That's a fascinating thing. The rest of the industry, I think a lot of folks are seeking shelter in that hold position because you can’t be too right. The thing is, we have to affirm that every day—that's the thing. You can’t rationalize that because you've owned it for this, you know, whatever amount of time. Again quoting a great investor: the stock doesn't know you own it; it doesn't care. So every day, you're starting off with the idea that is this better than owning something else. It doesn't matter how long I owned it before, and I really love that idea of not holding your ideas too tightly.

I think there's a very big meta wisdom to that. Even in life, our egos can get very attached to our points of view or our ideas and sometimes even become destructive in our lives because we hold so tightly to them in the face of new information. So there's something very Zen about that. Think about that from the perspective just of politics today and the polarization of ideas around political parties, etc. When people become too wedded to an ideology, it can break down real progress.

Bringing people with all of those diverse points of view that might have a point of view that’s very strong, but again, I'm willing to yield my perspective to a more compelling point of view as opposed to just being wedded to an ideology.”

Yeah, no, I mean that's so relevant on so many levels. There’s a question here about finance and gender or learning finance from Aditya Gupta from YouTube. How can we learn to start learning about finance, investing, and the economy at a younger age? How can we start investing at our ages?

“So first and foremost, this is one of the things that just—you know, Sal, I came to see you on this topic because the thing that frustrates me so much is that I'm just going to use America as the base for the conversation here. You can go to high school in America today and take wood shop or auto and not a class on investing, which always leads me to ask audiences the same thing: who’s whittling in their spare time? Who’s cleaning their own carburetor? No one, right? But when it comes to understanding the basics of the Dow, the S&P, the Nasdaq, you know, small cap, large cap, market capitalization, growth value—all of these things that have profound potential effects on your long-term financial security, we don’t teach it.

And so that's why opportunities like this are so important. What I believe very strongly is that investing should be taught in school in America at a very young age. I think it should be like learning a language. I have a six-year-old, and she takes Spanish at school; she already speaks Chinese. Once you can start early, you become very facile in the language, and I think that's very, very important.

One way, if you can’t get it in school, to get them to have it as part of the curriculum—and I say to people: if you have a stockbroker, a financial advisor, the person in the local bank that may know something about investments—maybe they can come in and teach a class for your nephew or your child or what have you. Do you get a sense of these important concepts, that the children get a sense of these important concepts?

If you can't do that, I think a great idea is to do what John Rogers, my business partner, did for him. His father was a child of the depression, an orphan. He moved to Chicago when he was 11 years old. He was in the first class of Tuskegee Airmen, and he wanted John to understand money. So, he gave John stocks every birthday and every Christmas starting when he was 12 years old instead of toys.

Now, you may not do the ‘instead of toys’ part, but certainly having that component be a part of gift-giving really taught John from the very beginning the fundamentals of investing. You can do that with a child by giving them gifts of stock of things that they know and like, and that’s the gift that keeps giving versus the toy that becomes obsolete at some point. That could be Mattel, that could be shares of Sony because of PlayStation, that could be McDonald’s or Nike—things that the children fundamentally understand. Ultimately, that may create some interest there that they can watch and understand the benefits of ownership and equity as opposed to just consumerism.”

Yeah, that's a powerful idea. I actually think it’s talking about edges that I think some younger people because they think a little bit different have a different lens. They actually might be able to have a perspective that professionals might not even fully have.

There’s a question here from Leyla Torres. It’s really praise, but I think it leads to a question. Melody Hobson, you are so inspiring to all females in finance; we don’t have many, and it was great to learn about you. The question I’ll ask is: why don’t we see more females in finance? I think there's a lot of stigma around issues related to math and girls. You know, I'm not the first person who's ever said this, and it's disappointing, and it continues to exist, and it's true. And that therefore affects our ranks in both the investment business as well as in engineering and other areas.

I think it's a perception that's just wrong; the data shows it. So we've looked at the investment habits, patterns, and successes of women versus men, and interestingly, women tend to be better investors. Part of the reason that we tend to be better investors is we tend to trade less and be more patient, and that ultimately works in our benefit.

They’ve looked at lots and lots of decisions that have been made over time to be able to show that. Now, that’s just rank and file people in their personal investment portfolios. In the industry that I'm in, only seven percent of portfolio managers are women. We actually have one in my office that’s a great investor named Rupali Bansali, who manages our international and global strategies and has done a phenomenal job. But it's really disappointing to see those numbers that haven't moved very much.

I think exposure is part of that; they need to see people like Rupali and people like me who love what we do and are in this business and in it to win it. I think to the extent that girls and teens and college students are aware of the opportunities in our industry and the fulfillment that we get from the work that we do, I think they would be as excited about it as we are.”

And related to that, another comment: this is from Rishika Talamsetti from YouTube. Melody Hobson, you are so inspiring to all girls around the world. I’m a girl of color, and I’m really inspired by you. And that kind of goes with the question from Leyla: you know, when you went into the industry right out of college, and you looked around, there probably were even fewer women and even fewer people of color. Did you ever feel like, ‘Hey, how come there’s no one like me? Maybe I don’t belong,’ or how did you overcome any feelings like that?

“So I’m smiling because I had a friend once that I asked a question about, you know, being different in the industry, etc., and he was like, ‘Melody, how long have you been black? How long have you been a woman?’ You know, it just comes with the territory. When you're a woman or a person of color, you understand what you're up against. I've told stories about how when I was a young girl, my mother told me what I would be up against, and she explained to me—I have it in my TED Talk—that people won’t always treat me well. She told me that when I was six years old, and it was really something that was very important because it allowed me not to then be defeated by any form of inequity that I saw.

I saw the opportunity when I entered the industry in 1991 to be different. I joke with people: when I would go to investment conferences, I would be the only one—the only woman of color. When I would go up to people, they would say, ‘You’re Melody,’ before they’d even met me, and I could have been like Cher or Beyoncé—like no last name. I stood out, and so I used that standing out to my advantage. I said, ‘Okay, there’s no one else like me; I’m going to be memorable,’ as opposed to seeing it as a cross that I was carrying on my back.

It doesn’t mean that it was always easy by any stretch of the imagination. The way that I built up my confidence is through knowledge. The more knowledge I have, the more prepared I am, the more confident I am, and I think that's really important. We all know what it takes for us to walk into a room and feel confident. If I was studied in my subject, I could walk in with my head high and with my ideas ready to go. I think that's a very, very important way of conquering the world when you can go in with good ideas and not be afraid to say what they are—not be discouraged when they're rejected.

I always felt like I could get another job; that was the other thing. If it doesn't work out here, I’m fully confident in myself—not because I’m cocky or have a huge ego. I just know I'll do whatever it takes. If tomorrow you told me I couldn’t go work at Ariel and I had to go and work at Neiman Marcus or Macy's or Kohl's or you name the store, I’d be the number one salesperson without a doubt, because I would do it with that much passion as I do this.

So I really think it's about your own mindset and your own mentality. There are going to be haters; they exist everywhere—a big and small—in your own race and your own gender. They’re going to be people who root for you and help you. I’ve decided to ignore those who weren't there to help me, try to avoid them as much as possible, and make choices that would lead me to people who are more positive and more interested in a better outcome for me. And that doesn't mean I got it perfectly, but more often than not, by giving people the benefit of the doubt, I was more right than wrong.”

Wow, that’s incredibly inspiring! I think everyone has aspects about their being that they might feel a little bit different than others or feel imposter syndrome or feel insecure about certain things, but I think the way you framed it right now is inspiring for everyone. Melody, I could keep going for hours asking you questions, and it looks like YouTube and Facebook could keep going for hours as well. But I want to be very sensitive to your time. Thank you so much for joining this, and I hope you join again. Hopefully, you had a good time. There are a lot of questions from a lot of folks here, but this was a really inspiring conversation. Thank you so much!

“Well, thank you for having me! I just really want to end by thanking you for all the work you do, Sal, for so many. You are one of my heroes; I mean that genuinely from my heart. I'm just so proud to know you and to be able to learn from you.”

Well, you’re one of my heroes, and it’s only been reinforced from this conversation, so I’m extra flattered that you even say that. Thank you so much, Melody. It was a real treat!

So everyone, thanks for joining what I found to be a very inspiring conversation with Melody. There are a lot of takeaways that I'm going to be thinking about. I think we all have our own things that we deal with in life, but I just loved Melody's ability to power through and be resilient and optimistic in the face of sometimes significant adversity.

But anyway, thanks for joining. I hope we can have Melody on in the future as well. We’re going to have some other amazing guests in the next few days and weeks. Stay safe, stay healthy in these times, and just remind yourself that we’re all in this together. Don’t try to focus too much on some of the negatives that you hear in the news; there are a lot of positives out there. One of the silver linings is we are seeing a lot of humanity step up and do the right thing.

I'll also just throw out the plug again because it's part of my job: we are not for profit. If you're in a position to do so, please think about making a donation to Khan Academy. Donations like that allow us to continue to do this work, especially for folks who might not otherwise be able to have access to learning materials.

So thank you so much, and I will see you tomorrow!