Transcript: Fuller & Thaler’s Raife Giovinazzo



The transcript from this week’s MIB: Raife Giovinazzo of Fuller & Thaler is below.

You can stream/download the full conversation, including the podcast extras on iTunes, Bloomberg, Overcast, and Stitcher. Our earlier podcasts can all be found on iTunesStitcherOvercast, and Bloomberg.


UNIDENTIFIED FEMALE: Masters in Business is sponsored by Harvard Business School Executive Education offering four comprehensive leadership programs that transform rising executives into competent business leaders. To learn more, visit, that’s

UNIDENTIFIED MALE: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast I have an extra special guest. I’m going to bet you haven’t heard of this money manager but you should.

His name is Dr. Raife Giovinazzo. He runs the very interesting behavioral small-cap equity strategy at Fuller & Thaler. For the past five years, the fund has compounded at 17 percent and it has beaten 99 percent of all its peers. So, they are doing something right there.

He has a fascinating background and you’ll hear about both his academic background at Princeton and the University of Chicago, working for two of the giants in the world of behavioral economics, Danny Kahneman and Richard Thaler. How’s that for a pair of advisors.

And he spent his entire career working in that space trying to figure out how to apply the knowledge and the wisdom that those gentlemen and others have created in the field of behavioral finance to the world of investing. I think you will find this to be an absolutely fascinating conversation. I know I enjoyed it a great deal.

So, with no further ado, my conversation with Raife Giovinazzo.

I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio. My special guest today is Dr. Raife Giovinazzo. He is responsible for managing the Fuller & Thaler behavioral small-cap equity strategy at the firm Fuller & Thaler. He has a fascinating background.

Previously, he was researcher and co-portfolio manager with BlackRock’s Scientific Active Equity group. He has a B.A. in Sociology from Princeton and an M.B.A. Ph.D. from the Booth School of Business at University of Chicago.

But his advisors were Danny Kahneman at Princeton and Richard Thaler at Chicago. So, I expect this to be a fascinating conversation. Dr. Raife Giovinazzo, welcome to Bloomberg.


RITHOLTZ: So, let’s start with your advisors. That’s pretty elite group of people you worked with in your career. Kahneman is your undergraduate advisor and Thaler is your M.B.A. and Ph.D. advisor, that’s some serious intellectual firepower.

GIOVINAZZO: They are smart folks. I was lucky. You know, I took a class by Kahneman on decision-making. I loved it, asked him to be my thesis advisor. The funny thing is at that point in time, I didn’t understand that he was a giant in his field. I knew he was very smart obviously.

In the course of doing my research, I realized I’m talking to the number one expert in this subject matter and then he actually connected me ultimately with Thaler. He said — I called them up about five years after I’ve been working as a strategy consultant and said, “I want to go back and want to combine study of business with the study of psychology” and he said. “Well, you need to go study under my best friend Dick Thaler at the University of Chicago.

RITHOLTZ: How crazy is that?

GIOVINAZZO: It worked that well.

RITHOLTZ: So, during the time these folks were advising you, you have an appreciation of how unbelievably fortunate you are.

GIOVINAZZO: I did, you know, and that’s a nice thing. You know, it’s a great thing. Let me talk up my Alma Mater, the University of Chicago. There’s so many Nobel Prize winners there.


GIOVINAZZO: You know, I mean, ironically, I don’t know if you knew this fact, on my dissertation committee were both Thaler and Fama which is the only time that’s ever happened and, you know, to my knowledge that those have been on the same committee.

RITHOLTZ: And they’re golfing buddies as well.

GIOVINAZZO: They’re golfing buddies, yes. They get along much, much better than people think they do.

RITHOLTZ: Well, philosophically, they’re completely the opposite sides of the universe and yet.

GIOVINAZZO: I would disagree actually in that they both strongly believe in paying attention to evidence. Let’s look at the data —


GIOVINAZZO: — and that’s actually a big unifying approach as opposed to we’ll just look — we’ll have a theory about what should work —


GIOVINAZZO: — and we don’t actually care if it actually happens in the real world.

RITHOLTZ: So, they start with a data but they end up in very different places.

GIOVINAZZO: They have different interpretations of the data. That’s certainly true.

RITHOLTZ: To say the least. So, the other question that comes to mind is how did you go from Sociology, which is definitely not a money economic/business-oriented coursework, to right in the mix of finance and asset management? What made you decide Sociology leads to M.B.A.?

GIOVINAZZO: So, it happens that at Princeton the most flexible major was Sociology. I actually only took five Sociology classes as a, quote, “Sociology major.” To be honest, I was never very well trained in the discipline of Sociology, but it allowed me to take all sorts of social science classes and I think at that time, I was really searching for this understanding that it’s more than just economics. There is something that matters about how people think, how people behave, what are norms.

And so, I think it was a very natural transition to where I ultimately ended up even at Princeton to really being focused on this decision-making which is an intersection of Psychology and Economics.

RITHOLTZ: So, you come out of Princeton, you spent five years doing some consulting work, you end up going to Chicago, what was that, four years M.B.A. Ph.D.?

GIOVINAZZO: I wish it was only four.

RITHOLTZ: So, the M.B.A. is two years and then it’s another three or four years on top of that?

GIOVINAZZO: You know, what’s ironic is I told my wife when I joined the Ph.D. program, I think I’ll be able to do it in three years.


GIOVINAZZO: It turns out nobody does it in three years and almost nobody does it in four years. And so, I was the norm, I did it in five years. It’s kind of funny that meets the standard planning biases that —

RITHOLTZ: I was about to bring that up.

GIOVINAZZO: That’s exactly the planning biases —

RITHOLTZ: Kahneman talks about that all the time.


RITHOLTZ: When they started working on an economics textbook, he said. “Well, you know, we’re smarter than most of those other guys.” This will only take us and he said, “We were off by a factor of 10X —

GIOVINAZZO: Yes. Exactly.

RITHOLTZ: which is pretty funny.

GIOVINAZZO: I did the same thing. You know, what he says is people use an internal model to forecast. They think about their own personal situation and they down way the external model of forecasting which would be what happened to everybody else.


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