Do Small Private Investors Share These Incentive Conflicts?

#650: Sarah Williamson is the kind of person who shapes the decisions that move trillions of dollars. She earned her MBA with distinction from Harvard Business School and holds both the CFA and CAIA designations, two of the most demanding credentials in finance.

In this episode, she helps us understand how investing really works, who the major players are, how capital flows through the system, and why the incentives driving investors, activists, and asset managers often collide.

Sarah spent more than twenty years at Wellington Management, where she rose to Partner and Director of Alternative Investments, after working at Goldman Sachs, McKinsey & Company, and the U.S. Department of State. Today she leads FCLTGlobal, an organization dedicated to helping companies and investors focus on long-term value creation. She is also the author of The CEO’s Guide to the Investment Galaxy.

She explains why index funds now dominate corporate ownership, how Reddit and retail traders changed the market’s dynamics, and what it means when activists push companies to “bring earnings forward.” She also introduces a framework for understanding the “five solar systems” of investing, a map that connects everyone from day traders to trillion-dollar sovereign wealth funds.

Whether you are a passive investor or simply curious about what drives the market, this episode gives you the clarity to see how capital really moves and why it matters.

Key Takeaways

• Reddit and the meme-stock movement permanently changed how individual investors move markets
• Index funds now dominate ownership, creating both stability and new corporate challenges
• Activists often prioritize short-term profit over long-term innovation
• Sovereign wealth funds act like national endowments, investing with century-long horizons
• Understanding who owns what (and why) makes you a more informed, confident investor

Resources and Links

• The CEO’s Guide to the Investment Galaxy by Sarah Williamson
• FCLTGlobal, a nonprofit that helps companies and investors focus on long-term value creation

Chapters

Note: Timestamps will vary on individual listening devices based on dynamic advertising segments. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.

(00:00) Meet Sarah Williamson: CEO, CFA, Harvard MBA, global finance leader

(5:41) The five “solar systems” that organize the investing world

(7:55) Reddit and the rise of the retail investor

(16:25) Tesla, brand loyalty, and shareholder activism

(22:57) How sovereign wealth funds invest for generations

(28:57) Inside asset managers and their incentives

(41:56) Activist investors and the tension between short and long term

If you want to understand the real power dynamics behind modern investing, from Reddit traders to trillion-dollar endowments, don’t miss this episode.

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