Andrew Milgram

I would say I sense a lot of laziness out there.

I think there's a lot of wash, rinse, repeat.

We do it this way because we do it this way or we're investing to model or it's just the only way that I can describe it is lazy.

That, A, I think is intellectually bankrupt, but I also think it's worrisome because when we go into autopilot,

things don't tend to work out.

And I feel like large portions of the investing world are now on autopilot.

Where do you see that most acutely?

In big parts of the credit market.

Say more about that.

So the primary vehicle for credit creation and corporate credit over the past 10, 15 years has been the CLO.

So CLOs are a magical device.

Just describe them for anyone that doesn't know what it

So collateralized loan obligations.

So these are a package of loans that are assembled as a group of assets.

And then against those assets, there is a stack of liabilities that are sold with equity underneath.

So an individual investor will put up the equity and then a number of lenders will provide stacked layers of capital.

So orders of priority, which allow the purchase of that portfolio of assets.

The investing relies primarily on diversification and overcollateralization as its method of risk control.

There is this pretend system that's going on at the moment where there are analysts looking at each individual credit.

And I don't want to disparage the entire CLO industry.