Introduction of Speakers:
Tony Ressler, co-founder and executive chairman of Ares Management, a leading alternative asset manager. Larry Fink, chairman, CEO, and co-founder of BlackRock, the world’s largest investment and asset management company.

Ares Management:
Tony Ressler describes Ares as an alternative asset manager with three semi-autonomous pools of capital: credit, private equity, and real estate assets. The company’s goal is to invest successfully over the long term for its investor base. The name “Ares” was chosen as a reference to Greek mythology, representing strength and longevity.

BlackRock:
Larry Fink explains BlackRock’s role as an investment and risk management organization managing large pools of money. The company’s mission is to make people’s financial futures better by producing positive returns and providing insights to its clients. BlackRock’s size and scale allow it to manage asset classes across the whole spectrum and cater to a wide range of clients.

Addressing Concerns about BlackRock’s Size:
Larry Fink acknowledges the concern about BlackRock’s immense size and potential systemic risk. He emphasizes that the company’s growth is accelerating due to its ability to deliver returns and insights to clients. Fink believes BlackRock’s role in managing retirement assets and meeting client expectations outweighs any systemic risk concerns. The company’s scale enables it to provide differentiated services and meet the needs of its diverse client base.

Tony Ressler’s Career Path:
Tony Ressler shares his unexpected career journey, starting with aspirations for the Foreign Service. After realizing the State Department wasn’t a suitable fit, he ventured into the business world. Ressler joined Manufacturers Hanover Trust’s training program despite lacking a background in finance. He later moved to Drexel Burnham Lambert, where he gained experience in high-yield bonds and distressed debt. Ressler eventually co-founded Apollo Management and later Ares Management.

Accidental Career Journey:
The speaker’s career path was largely shaped by chance encounters and opportunities. From working at Manufacturers Hanover Trust to joining Drexel Burnham, the speaker found himself in dynamic and entrepreneurial environments. Drexel Burnham provided valuable lessons in understanding credit fundamentals and the high-yield marketplace.

Launching Apollo:
In 1990, the speaker co-founded Apollo, a successful investment firm focused on high-yield and distressed debt markets. At Apollo, the speaker gained significant experience in investing in companies.

Establishing Aries:
In 1997, the speaker founded Aries, a private equity firm alongside credit and real estate firms. The goal was to create a complementary and collaborative investment ecosystem. Aries grew from $2 billion to $112 billion in assets under management over 20 years.

Performance-Driven Growth:
The speaker emphasized that assets follow performance in the asset management industry. Consistent performance attracts investors and leads to firm growth. The speaker attributed the success of Aries to their commitment to delivering strong returns for investors.

Conclusion:
The speaker’s journey highlights the importance of embracing opportunities, adapting to changing circumstances, and staying focused on delivering performance.

Larry Fink’s Upbringing:
Larry Fink’s father was a single store owner who actively invested and managed his retirement. Larry observed his father’s investment activities and developed an early interest in investing.

Investing at a Young Age:
Larry Fink purchased stock in DuPont at the age of 13, showing his early inclination towards investing. Warren Buffett also bought stocks at a young age, around the age of 11.

Larry Fink’s Early Career:
After graduating from UCLA Business School, Larry Fink joined First Boston on Wall Street. He initially focused on real estate but was later assigned to the new area of mortgage-backed securities. Larry became the second person on the mortgage-backed securities desk, indicating his early involvement in this emerging field.

Larry Fink’s Founding of BlackRock:
Larry Fink, CEO of BlackRock, faced a significant challenge in 1986 when his profitable division at the firm lost $100 million. This experience led him to question the firm’s partnership ethos and inspired him to leave and start his own asset management firm. Fink believed there was a need for a firm focused on risk management and fiduciary responsibility.

BlackRock’s Founding Principles:
BlackRock was founded in 1988 with four guiding principles: Acting as a fiduciary in everything they did. Putting clients first. Having a single technology platform throughout the organization. Fostering a unified culture, referred to as “One Black Rock.”

Risk Management as a Core Principle:
BlackRock’s foundation was built on risk management, which Fink recognized as crucial after experiencing significant losses. This principle remains a core part of BlackRock’s approach today and has contributed to its success.

Tony Ressler on the Current Business Cycle:
Tony Ressler, CEO of Ares Management, believes that trying to time the end of a bull market is not their primary objective. They focus on finding attractive assets in the current market conditions rather than attempting to predict market movements. Ares Management has a broad portfolio of investments, including direct lending, structured credit, energy infrastructure, private equity, and real estate. Ressler emphasizes the importance of carefully selecting investments and focusing on the quality of businesses and assets to navigate market adjustments successfully.

BlackRock’s Approach to the Business Cycle:
BlackRock does not significantly adjust its investment strategy based on the business cycle. They believe their focus on risk management and long-term investing allows them to weather market fluctuations effectively. They prioritize in-depth analysis and careful selection of investments, especially in the current market environment.

Overall Economic Situation:
Larry Fink expresses concern about the focus on short-term market movements and the neglect of long-term investment strategies. He emphasizes the importance of retirement planning and the need for investments that compound over time to achieve financial integrity.

Economic Fuel and Late-Stage Indicators:
Fink highlights the significant tax cuts and increased budget spending, leading to the largest deficit during a time of economic strength. He views these factors as fuel that will likely sustain the US economy for the next year or so.

Concerns about the Tax Bill:
Fink questions the sustainability of the tax bill’s impact on the economy beyond the initial one or two years. He expresses worry about the effects of higher interest rates due to rising deficits.

External Financing and Trade Partner Tensions:
Fink points out the unique situation of the US having a high percentage of its deficits financed externally, which could lead to adverse outcomes. He raises concerns about trade partner agitation due to the US’s actions, potentially resulting in negative consequences.

Global Growth and Economic Slowdown:
Fink notes the impressive synchronized global growth in 2017, with countries like Japan, China, and Europe experiencing strong economic performance. He observes a recent slowdown in Japan and Europe, possibly influenced by factors such as a strong euro and record levels of mergers and acquisitions (M&A).

M&A as a Late-Stage Economic Indicator:
Fink identifies the record amount of M&A activity as a late-stage economic indicator, suggesting that CEOs are preparing for a potential economic slowdown. He acknowledges the potential counterargument that companies may be utilizing their increased free cash flow due to tax cuts to acquire competitors.

Short-Term Economic Outlook:
Fink predicts that the US economy will likely perform well for the next 12 to 18 months due to the effects of the tax cuts. However, he notes that the current market behavior and psychology do not reflect this optimism, indicating a potential late-stage economic scenario.

Corporate Tax Cut and Global Competitiveness:
Fink acknowledges the benefits of the corporate tax cut in stimulating the economy and enhancing global competitiveness. He emphasizes the positive impact of the tax cut on corporate profits and free cash flow.

Corporate Tax Cuts and Global Competitiveness:
Lowering corporate tax rates helps the U.S. compete globally by encouraging companies to reinvest large amounts of cash overseas. While a sudden influx of cash may require careful management, the overall impact is positive for the economy.

Trade Policies and Diplomacy:
The trade war with China, the U.S.’s largest creditor, is a complex situation with potential benefits and risks. There may be a strategy behind the trade war, particularly in the context of other diplomatic discussions, but it remains unclear.

Infrastructure Development and Streamlining:
Infrastructure development is a priority for both Democrats and Republicans, but implementation challenges often arise. Build America Bonds, introduced during the financial crisis, provided a 2% subsidy for municipal financing, raising $185 billion in one year for infrastructure projects. Deregulation and streamlining approval processes are crucial for accelerating infrastructure development and enhancing productivity.

Political Risk Assessment in Investment Strategies:
Political risk is generally less of a concern for investments in North America and Europe due to their stability and strong economies. Emerging markets pose greater political risk, but they constitute a smaller portion of investment portfolios. The U.S. economy’s low country risk makes it an attractive destination for large pools of capital.

Corporate Purpose and Sustainable Profitability:
Companies need a clear purpose to achieve sustainable long-term profitability. Purpose should align with employees, clients, and the communities in which the company operates. The demands on public companies to demonstrate purpose are increasing. Companies that fail to focus on purpose and their role in society risk losing their license to operate.

Macroeconomic Environment and Investment Strategies:
Long-term investors must adapt to the macro circumstances and navigate through economic shifts and policy changes. Despite short-term fluctuations, a long-term investment perspective remains valid unless one believes humanity will face catastrophic failure.

Larry Fink’s Long-Term Outlook:
Fink emphasizes the importance of long-term optimism, viewing short-term calamities as opportunities for long-term growth. He believes in focusing on the long-term and helping investors navigate market fluctuations over 40 years. Fink asserts that humanity will ultimately overcome challenges, enabling long-term opportunities.

Micro Strategies and Long-Term Results:
Fink acknowledges the need to focus on the micro strategies of individual companies to achieve long-term results. He emphasizes that investors should not be overly concerned with short-term market movements or geopolitical events.

Positive Impact of Larry Fink’s Letter to CEOs:
Fink’s letter to CEOs urging them to embrace the concept of business as a force for good has received a positive response. Over 800 CEOs have responded, expressing their support for this concept. Companies are becoming more transparent in their long-term strategies and their role in society.

The Rising Bar of Transparency and Accountability:
Fink’s initiative has raised the bar for transparency and accountability among companies. Companies can no longer hide their practices or intentions, and they are being called out for their actions. This increased transparency is viewed as a positive development.

Philanthropy and Community Engagement:
Both Larry Fink and Tony Ressler are actively involved in community impact and engagement. They serve on nonprofit boards and contribute their time, leadership, and resources to various good causes and institutions. This philanthropic work is driven by a desire to make a positive impact on society and contribute to the well-being of others.

Community Involvement:
Aries’ 1,000 employees are encouraged to participate in community service activities that they are passionate about. The company provides a charitable co-investment to match employee contributions. Speaker 5 believes that a company with employees involved in the community creates a better corporate environment.

Larry Fink’s Personal Experience:
Fink was raised in a family where giving back to the community was a way of life. He learned a great deal from serving on various boards, both good and bad. He believes that giving back should be part of an organization’s ethos.

BlackRock’s Social Responsibility:
BlackRock manages more retiring assets than any other organization in the world, which carries a huge responsibility. Fink wants to instill a consciousness of giving back as part of the organization’s ethos. In many cultures, charity is not a part of the culture, but Fink believes that being part of the community and giving back is important.

BlackRock Foundation:
The company created a foundation to match employee contributions and engage them in philanthropic activities. It focuses on people’s time as well as financial contributions. Involvement starts at the top level with partners giving both money and time to organizations they believe in.

Conclusion:
Speaker 5 and Fink agree that corporate and individual involvement in community service is essential. It creates a better corporate environment, allows employees to pursue their passions, and fulfills an organization’s social responsibility.