Good morning,
Today I gladly share a conversation I had with Ayesha Tariq, a tenured corporate banker with over 18 years in the industry, a macro specialist, and author of Banking on the Market. After beginning her career in corporate banking in Bangladesh, Ayesha migrated to the UAE circa 2006 to continue her career in the sector, later adopting the role of head of treasury for a $1B+ family office and also consulting for banks in relation to syndications.
Ayesha is someone I had the pleasure of meeting a few years back and is a highly intelligent, kind and curious person, who views the investment landscape from the eyes of both a lender and a macroeconomist. In today’s discussion, we talk about her history in corporate banking, viewing companies from the eyes of a lender, why macro is so important in one’s process, the current macro environment, and women’s voices in finance. I hope you enjoy it.
Conor: Hello Ayesha, welcome, and thanks for taking the time to answer some of my questions today. Many of the readers may know you as the author of Banking on the Market, a weekly newsletter which covers what is going on in financial markets from macro, to industry fundamentals, to individual companies. To your audience, you describe yourself as a “mother, daughter, and banker” with a passion for coffee, reading and rain. I relate to that last section, apart from the rain part, as we have enough of that in Scotland.
Unbeknownst to some, you started off your career as a corporate banker for Standard Chartered operating as a lender and working with multi-billion dollar entities. From there, you ended up in the UAE where you have worked in regional banks, acted as a head of treasury and investments for a family office with a $1B+ multi-asset portfolio and now are a consultant working with banks in relation to syndications. Phew.
As I take a breath, I was wondering if you could provide the readers with a synopsis of how that long road came to fruition. What sparked the interest in corporate banking, what drew you to the UAE, and so on?
Ayesha: Before I begin, let me take a moment to thank you for this interview. You’re a smart person and a good friend. I’m so excited to do this. Let’s go back to a day I had in college. A professor asked everyone in class what their ideal job would be. A good majority said banking and when my turn came, he rolled his eyes with a sigh and said, and you? My answer was: Anything but banking!
I thought banking and finance were terribly boring. I was all set to have a fabulous career in marketing and advertising. I was the creative sort. I used to paint, design and play a lot of sports, which helped me become an extrovert. But once I graduated, Standard Chartered was one of the few places that were recruiting without the need for nepotism. They had a special program called the International Graduate Program, which was solely based on merit. I got through and was assigned to corporate banking. I wasn’t thrilled, at first. But, I began to realise that the job wasn’t all about boring numbers but rather the relationships you build with entrepreneurs, helping them grow their business and learning about companies in every possible industry. Needless to say, I fell in love.
I fell in love with studying companies - learning how they grow and what they can do better. Guess what? 18 years and thousands of balance sheets later… I’m still in love! Turning to the UAE. Again, it wasn’t a choice I consciously made. I wanted to work outside the country for a while. I come from Dhaka, Bangladesh and I really wanted to gain some international exposure. There was a job opening here and I took it, because of the proximity to my home country. I am an only child and I didn’t want to be far away from my mother. Since then, however, I’ve fixed the problem and she lives with me and my daughter now!
Conor: Love that.
When you come to the UAE, you come with the idea that you’ll work 4-5 years, make some tax-free income and leave. Somehow, the years have just rolled by and I’m still here 15 years later. I love the UAE! I’ve been privileged enough to see the growth the country has experienced and in a small way, be part of that growth story.
Conor: I want to hone in on your experience as a lender for a second. I remember we briefly talked about this when we first met last year, but the lens through which a company’s fundamentals are viewed from the eyes of a lender tends to differ slightly from that of a traditional bottom-up equity analyst. The former tends to lay more emphasis on liquidity, the balance sheet, and solvency. Could you possibly paint us a picture of how those two fundamental approaches may differ, and where the value in assessing a company from a lender’s perspective may be most material? Also, I would love to know if this mindset, or process, has stuck with you throughout the years?
Ayesha: Let me answer your second question first - yes it has stuck with me. I spent the first 14 years of my career only in Corporate Banking so it’s very hard to unsee things from that perspective. I still work debt deals so I still have my corporate banker hat on for the most part of my day. And those skills are definitely transferable when it comes to equity analysis. So let me tell you how the DD is slightly different. As a corporate banker, you are concerned with whether your client can repay your debt, so it’s all about cash flows. We look at the cash flow first, income statement second and balance sheet third. You’re constantly scanning for risks first and then possible mitigants.
This is why I use the tagline - “There’s always a story behind the numbers” - because most bankers see the numbers first and forget the stories. And I’ve always tried to balance both. Most people think that bankers scrutinise companies more than equity analysts. Perhaps that’s true but that should never be the case. Always bear in mind that bankers get paid first and equity holders last. So if anything, equity analysis should be even more thorough because your money is at more risk than any other party.
Conor: I have had the pleasure of listening to you pitch at the Commonstock Market Game a couple of times, one time for Unity, and the other for Disney. There, I got a glimpse into how you think about individual stock selection.
But to add some colour, how would you describe your investment approach on the whole?
Ayesha: In corporate banking, we usually have industry segmentation. I have been fortunate enough to work across almost every industry except technology. So, I guess I approach my investing that way too. I look at industries and find stocks within the industry. Of course, the macro influences industries and that’s how I rotate a portion of my portfolio. I used to be more of a bottom-up investor, choosing individual stocks I came across or read about and I still have many of those in my LT portfolio, like Disney, Nike, Apple, and Berkshire. But, that wasn’t a great screening process. So I have a more top-down approach now, let’s say for the last 4 years or so. When I worked in the family office, we were mostly focused on real estate and hospitality so there was a lot of work to be done in terms of macroeconomic demographics etc. But, macro became even more important as most of our loans and equities were in dollars and the Fed had started to raise interest rates at the time. So, that has sort of always stayed with me.
Conor: In my mind, your tagline is your recurring statement that “there’s always a story behind the numbers”. So often we see analysts taking numbers at face value, perhaps ignoring the qualitative side of the argument, or relying on multiples with no context. How do you divvy up the time you spend between quantitative and qualitative reasoning, which do you oft lay more emphasis on (if at all), and can you think of any specific examples in your career that really highlights the fact that there is always a story behind the numbers?
Ayesha: I love that you ask me that. I already sort of gave you a preview of why I say this. I do think it’s very important to understand the story and the larger picture. Otherwise, numbers on a spreadsheet look all the same and could probably mean nothing. The stories. I’d say I always start with the stories and then the numbers and then perhaps the price chart. I’m kidding. I probably will look at the chart a bit earlier in the process. Although it’s been known to happen that I’ve traded without a chart at all.
I never wanted to be a banker. But I fell in love with corporate banking because of the stories. The way a company operates, how it was built, the nuances of industry practices - they all just appeal to me. One of my first clients as a manager had a balance sheet that most other banks wouldn’t touch. But, because they were one of my first clients, I took a special interest in them and took the time to really understand their business. Turns out the numbers really were telling us the whole story and we ended up structuring a great deal for him. And, although he’s no longer a client, we still remain friends. And that’s one other thing I’d add. Corporate banking taught me the power of relationships. When you have a great relationship with your client, you can learn so much. And I think that’s helped me immensely in my career and in my life.
Conor: Moving on, I have always associated your own output with macro. You discuss it a lot on Twitter, in Spaces, and write a fair bit about the topic in Banking on the Market. As we saw in 2018 during the China trade tension, and in 2020 at the onset of covid, and now once again in 2022, as the impact of inflation and supply chain disruption lingers, there is a strong divergence between the options volumes in ETFs and individual stocks, suggesting a macro-led market.
As someone who actively creates content matter related to macro data and commentary thereof, have you noticed an uptick in demand for your analysis? And then secondly, what are your two cents on the current macro situation across the world?
Ayesha: Yes, I’ve definitely noticed an uptick in demand for macro and to be fair my supply has also pivoted towards that quite a bit. (A bit of economics humour there!)
Conor: There is perpetual demand for good economics humour from me, greatly appreciated.
It is a function of the times we’re living in. With inflation and the Fed and policies, everyone wants to understand what’s going on. I also think this last bull run during the pandemic brought forth a lot of first-time investors to the market and they suddenly realise that investing and trading has become more challenging this year. So they need to learn more. I love that people are more interested in the macroeconomic environment. I think it’s like an umbrella over your investing or trading. The current macro situation is like nothing we’ve ever experienced before. I know people like to draw parallels to various times in history but, I would say it’s a mash-up of those times and then some. We have to remember that government balance sheets have ballooned to unprecedented levels and with zero-bound rates.
This cannot be sustained and we’re seeing the resultant inflation, which has been exacerbated by supply chain issues. I think the Fed will do what it takes to bring down inflation, even if that means an increase in unemployment to a certain extent. I don’t think they are too concerned with the stock market because inflation remains a bigger threat. In fact, I believe the Fed may even want to pop that bubble and that of the housing market. However, the problem is that inflation cannot be tamed with Fed policies alone because we still have supply-side issues. And as long as China remains closed and Europe's geopolitical issue persists, we will continue to see that persist.
I cannot predict what will happen from here. If I could, I would be very rich by now! But, realistically speaking, all signs point towards a longer, protracted bear market for stocks and a global recession.
Conor: I was an economics student for five years. It is what initially got me hooked on the world of business, global trade, corporations, and the psychology behind consumption decisions. Eventually, I discovered that I was more passionate about the stock market, but the two are certainly related.
For those looking to get a stronger grasp of economics, perhaps specifically macro, what advice would you give to them?
Ayesha: Well, it’s the advice that I used myself - read everything you can get your hands on, even if you don’t always understand it at first. Many of these concepts are quite confusing and I found that the only way to properly make some sense of them was through repetition. We’re very fortunate to have information at our fingertips now. It wasn’t always that easy for me growing up and we definitely had to look up books a lot. That’s perhaps the reason I have so many books.
I would definitely say if you can get your hands on Paul Samuelson’s Economics, that would give you a good grasp of the basics. The Fed’s Press Conferences are great to listen to and they’re available on YouTube now. Reuters is free online and they have plenty of macro resources. Following the economic data is also a good way to understand what’s going on. Trading Economics gives you free access and some background on the data.
Finally, I’d say you could also subscribe to my free newsletter and my website where I do write about the macroeconomic environment and try to break down concepts for everyone to understand.
Conor: I jestingly said, the other week, that “on the way up, they are investors. On the way down, they become economists''. Said in jest because although generalists tend to pay more attention to macro when it causes disturbance in the stock market, there is this ever-long debate about whether one should or should not pay attention to macro. Buffett, Lynch, and others have long said that interest rates are impossible to predict. Some argue that it should be ignored entirely. But anything macro eventually affects everything micro, and henceforth, it affects the stock market.
That’s an oversimplification, but I am not here to argue whether it should or should not be ignored. I know your position in the matter. Setting the precedent that I, nor you, nor anybody can accurately predict where the economy is going to be in 5-Years’ time, what do you think is the best way to incorporate macro into one’s investment process? As an added bonus, if you’d like to spice things up, I’d be interested to hear your rebuttal to those who say macro should be ignored outright.
Ayesha: I love Buffett and Lynch and I understand the point that they are making by saying that interest rates cannot be predicted but, having said that they can destroy businesses. Buffet doesn’t really invest in speculative companies and his time horizon is long enough for any mistakes to be forgiven and forgotten. I am a Buffett superfan but I couldn’t necessarily invest the way he does. So even if you don’t want to look at macro-based investing or rotation strategies, I think it’s still important to understand how the macroenvironment might affect your particular company.
Take retail stocks, for example. We see that demand may be coming down and more inventories will build up. This is a cause for concern. Or how a shortage of workers leads to higher costs and if your company is heavily dependent on a large workforce they will be hit much harder. So I really believe that it all fits into the part of learning about your company thoroughly and making sure you account for all the possible risks that could affect the company, and that includes macro. So for anyone who says, that macro doesn’t matter. Take a look around you. It’s the macro that is driving the stock market down. Each company on its own may not be terrible but the rise in interest rates coupled with a reduction in liquidity has forced a great number of stocks to crash.
Conor: I have alluded to it a couple of times now, your newsletter. I believe this is the reason I first reached out to you way back when. You have been writing Banking on the Market for nearly 2 years now. What incentivised you to start sharing publicly, what was the original goal for the newsletter, and what have been some of the highlights from those two years?
Ayesha: I love writing. I’ve always loved writing and literature. I’m an avid reader as anyone who’s seen me on video can tell from my bookshelves in the background :)
I’ve been writing on and off since school. I’ve been published in local newspapers as well. But more importantly, writing gives me comfort. It’s cathartic. However, when you work in banking or finance full time, there’s little time for anything else. So, in 2020 as we spent more time at home during the pandemic, I got back on Twitter and started writing again. At first, I just wrote random articles on Medium about starting a business, and mental health. Just odd pieces here and there. But, then I noticed people on Twitter writing about finance. After all the years I’d spent in finance, I felt that I had something to share.
When I started my newsletter, my goal was to help one person. Just one. I thought to myself that if I could just help one person understand the world of finance a little better and the right way, my mission would be accomplished. My goal has always been and will always be to share my knowledge. The greatest achievement that I would take away from my career would be all the people I’ve taught and trained along the way. It fills my heart with joy to see them successful in their own right, today. To have played even a small part in that success makes it all worth it. That’s what I want with my newsletter as well - to help people. I can completely understand that the world of finance can be daunting and a little boring. So, I try my best to break things down as easily as I can and make them palatable enough for people to consume.
Conor: After two years, I noticed that you are now (rightfully so) launching a paid tier to Banking on the Market, keeping the Weekend Edition that everybody loves free. I would love to hear what the plans are for Banking on the Market looking ahead with a paid tier, and why you decided that now is the time to go ahead with that plan.
Ayesha: I’ve told you why I decided to start my newsletter. It was to share my knowledge, everything I already knew. So the newsletter was more a by-product of everything I was watching or learning for my own use. But, now I would like to do more. I’ve decided to pivot from a simple newsletter subscription service to a full-fledged website, so that I can continue to expand it with more in-depth posts and eventually learning modules, as well. The website is just my full name ayeshatariq.com.
I really would like to build it out to be more useful and share more researched information. I would also like to spend a lot more time bringing that content to people. Finally, I am an opinionated person and I feel more comfortable sharing my views with the exclusive few who would value them. So, I’ve decided to actually build out my own website and start charging a nominal fee of $10 per month or $100 per year. And I plan to add not just macro content but also, more research on stocks and trade ideas. I think with everything going on in the world, people need knowledge more than ever and I would like to help more with that.
Conor: You conducted an interview back in September 2021, and at the beginning of that discussion the conversation centred around women in the industry, and you shared some great insight into the difficulties, that still persists today, for women in finance. So, thanks for sharing that, readers can find it here. You talked about the fact that there are so few women, self-perpetuating that fact because other women see that, and feel that they can do little to change it. For me, as someone who actively works in this space, reaching out to creators in the investment field, it feels like only 5% (maybe less) of people putting content out there, like yourself, are female when I think about the collective. You and folks like Kyla Scanlon do great work there.
I actually see there being more of a niche of personal finance female creators as opposed to investment or macro. Do you think the factors that you alluded to in that interview translate to lower participation rates of women in the creator space, as they do in the workplace?
Ayesha: I smiled when I read this question. It certainly has been an interesting journey, and it isn’t over. It’s as I said on my podcast - women have to fight the good fight every day. As much as we would like to think that we’ve shattered the glass ceiling - we have not. This topic is very close to my heart. I want more women in finance and in fact, I want more people to take an interest in finance and the economy. There are a couple of factors that probably deter women from high finance and consequently being vocal content creators.
The world of investment, macro and even certain spheres of banking involves making big decisions and bold calls. It often requires people to take big risks. It’s not always easy to be responsible and when you’re dealing with money matters, you have to be. I think in many ways women are raised to believe that we are the weaker sex. While perhaps true physically, it certainly isn’t the case mentally. There’s no difference in ability - just attitude. So, I think many women are conditioned to think that they can’t succeed in high-stress jobs. I would translate that into content creation as well. They shy away from being vocal because they are worried about how people will take it.
The other thing I spoke about was finance being a boy’s club. And it still certainly is. Not just in the workplace but even in the home. We’ve grown up thinking that money matters should always be taken care of by the man and therefore, we leave the finance up to men. Without going into stories, let me just say, it still stands true to this day. I still think it’s more of a challenge for people to accept complicated financial explanations coming from a woman. And I’m not saying that the world is not changing but, after 18 years in this world, I have some authority to say that this is still the case. I think women have a great place in finance and as content creators - well any profession for that matter. We bring a certain balance to the workplace and to jobs. And that balance can certainly be translated into content creation. We need to recognize that as our strength, not our weakness.
I will end this answer with something I said on that podcast:
My daughter said to me, “Being a woman has never stopped you from doing what you’ve wanted”, and it just filled my heart with joy. That’s the world I want, where people are just people. Not a gender, a race or a nationality.
Conor: Beautifully said.
Conor: Well I’d like to thank you once more Ayesha, it’s always a pleasure chatting with you, and I think that more people should benefit from reading your work. Before we break off, where can readers find you and your work, and do you have any concluding items you’d like to say?
Ayesha: Yes… I’d like to leave everyone with a few words - always be learning, always be questioning. My curiosity to always find out more, and never take anything at face value has always served me well in life. I would also like to say that being kind can be a superpower. Please be kind!
You can find me on Twitter, LinkedIn, Commonstock, Substack and now, my Website. All the same handle - ayeshatariq.
Conor,
Author of Investment Talk
Ayesha is terrific!
Thank you so much, Conor. I loved doing this interview. Your Q’s were so insightful. 🙏😊