I’m not supposed to be here

• But not why you think
• I intended to go through med school after Penn undergrad and emerge a Dr
• This is a great source of amusement to my wife …. I faint at the sight of blood…. and have no bedside manner (a good trait for a bond investor!?) !
• While I didn’t arrive with the traditional business course background…I did come equipped with the math and sciences…and no doubt the medical profession is quite relieved at their near miss!

To be here tonight is genuinely an honor

• I’d like to thank FIASI and Mark Howard for their wonderful lack of judgment in letting me slip in this year with two incredibly accomplished and deserving honorees: Steve and Barbara
• And what a treasure to be included in the company of so many true fixed income pioneers I have long admired: Marty Leibowitz whose book, Inside the Yield Curve, was my bible for so many years
• And, of course, JP Morgan’s own Joyce Chang, who taught so many of us how to look at the emerging markets and not to be afraid of their debt

Shortly after Mark Howard had called me with the news, I ran into Joyce

• She told me her induction was deeply personal…I knew immediately what she meant
• At some point in our careers, we realize that investing isn’t a game, a job or a career path…its serious business and a privilege to have input on how someone else’s money is invested
• But it can also be a burden when markets don’t go your way and it is always all-consuming
• Which my long suffering family knows all too well…..
• The sullen mood swings in challenging markets, the eternal checking the markets at dinner/holidays/vacations, the weeks of travel and of course the news that we were moving to London for a great opportunity – which our 9 and 10 yr old sons didn’t view in the same light
• So an enormous thank-you to my wife and our sons
• And a not so small footnote as we are in the company of FIASI, I did meet my wife of 35 yrs, Katherine, in our CFA level 1 study group

I have been fortunate since I started in the business in 1981 to see the development and evolution of so of our many markets….here’s what things looked like back then

• At Bankers Trust in 1981, I started in the Trust Department….that was where the big mandates were…ERISA law had only been created a few years earlier, so institutional plans were relatively small
• One of my first jobs was breaking time deposits
• The bond market was largely US Treasuries, agency securities and municipal bonds……where clipping coupons was still a physical task and wonderful instruments like Flower Bonds existed
• The agency mortgage market was not fully embraced (the Agg was gov’t- corporate) and corporate America still did a lot of borrowing from banks, and the few securities they did issue were callable
• Your tools were an HP 12c, a Monroe bond calculator and soon a cumbersome spreadsheet called Visi-Calc was replaced by Lotus 123

In an historically rapid period….everything changed and I had a front row seat…

• US Treasuries were STRIPed into instruments called CATs, TIGRs
• Corporate bond issuance became more mainstream – and less callable
• Below investment grade borrowers accessed the public markets in size under the nefarious name of junk bonds
• Out of the agency mortgage market sprung CMOs
• Then all forms of payment streams were pooled and sold creating the emergence of the ABS market
• The Euro and Euro bond market were created from nothing
• EMD became a parallel universe of bonds to the developed markets
• Watching the history of the bond market unfold before me was a bit like being Forrest Gump, BUT

I want to be clear…I never pioneered, developed or created any of these markets

• My entire career was in portfolio management, which meant I had to understand the opportunities and risks of each market and instrument before they went into portfolios
• Very early in my career, I learned to appreciate, value and cherish the research community that rolled up their sleeves and educated me on pretty much everything
• So another huge thank you to FIASI for being that enduring institution that gives researchers and analysts their rightful recognition

I have also been very fortunate to have worked at wonderful institutions where I have always learned

• The nine years I spent at BBH, Gene Rainis – the partner in charge of fixed income, used to get a copy of the Beige Book (Tan book back in the day) when it came out and read every line in it…he taught me that every investor should also be a researcher…its also where I started working with Lisa Coleman who has since remained a trusted partner in the bond markets for the next 30+ years
• At First Boston AM, derivatives and leverage were heavily used. Steve Lear taught me their risks and rewards and like Lisa has remained a trusted partner
• The years I spent at BlackRock were a crucible of fixed income learning….the talent and intellectual horsepower were so deep. Among the many, many things I learned there was that the bond market had evolved into a broad and complex set of counterparty risks…and the better understood they were, the better portfolios could be constructed.
• The 10 years I spent at Schroders took me to London and gave me an appreciation that the bond markets were very rapidly becoming global …its also where I met Ash Williams for the first time who has since constantly reminded us that there are real clients/people dependent on the returns we generate
• Since 2008 I have been at JPM, which I consider one of the spiritual homes for fixed income investors……after all, bonds are loans and the bond market is effectively a non-bank lender. Its also where Lisa, Steve, Ash and I now call home. I will always grateful for the resources that George Gatch, Mary Erdoes and Jamie Dimon have given to me and our fixed income business. And for the talent that I have such easy access to: whether its Joyce Chang or my own beloved fixed income team!

Let me close by saying we should appreciate that we work in the finest market on the planet. Debt can be used to finance anything: governments, businesses and households. As a lender – we’re not asking to be an owner… we don’t ask for anything other than to be paid back. As the economy evolves, I am confident we will continue to be the leading edge of financial market innovation. I do believe we are the lubrication which keeps the global economy running smoothly.

Thank you FIASI for this honor and for continuously putting the spotlight on our industry.