Speaker 1: Hello, and welcome to another episode of the Odd Thoughts Podcast.
Speaker 1: I'm Tracy Allaway and I'm Joe. Joe, what did you
Speaker 1: study at college? Mmm? I'm already nervous about answering this
Speaker 1: question because I don't I actually genuinely don't know where
Speaker 1: you're going with it. Well, I also don't know what
Speaker 1: you studied, so I'm genuinely curious. I studied international relations.
Speaker 1: Actually I went at University of Texas. They called it government,
Speaker 1: which is not really a thing anywhere else, but it
Speaker 1: was kind of like their political science department. But I
Speaker 1: focused on international relations. Okay, I swear this is a
Speaker 1: complete coincidence, but I also studied international relations. Really, it's
Speaker 1: funny that, like, of all this time I've known you,
Speaker 1: this has never come up. No seriously, like for people
Speaker 1: like who think who are listening, I think maybe we're
Speaker 1: faking this or something. It's actually I don't. I genuinely
Speaker 1: did not know that. About now people are thinking that
Speaker 1: we just never talked to each other outside of this podcast.
Speaker 1: We just we just only talk markets, no personal stuff.
Speaker 1: The reason I was bringing it up was because I
Speaker 1: was trying to think of a parallel with what we're
Speaker 1: going to speak about in just a few minutes. Um,
Speaker 1: And I was thinking, you know, in international relations, there
Speaker 1: are these two dominant theories that govern how you think
Speaker 1: about the world. Their realism and liberalism. Do you remember that.
Speaker 1: I'm glad you didn't ask me to name them. I
Speaker 1: would have remembered realism and I would have blanked on
Speaker 1: the other one. But yes, that sounds right. Okay. So
Speaker 1: realism is this theory that states and governments and people
Speaker 1: are essentially self interested and you know, everyone's out to
Speaker 1: get each other, and liberalism is, oh, actually we can
Speaker 1: all get along and there's scope for cooperation to diametrically
Speaker 1: opposed theories that completely govern that particular study. Um. Now,
Speaker 1: the reason I'm bringing it up, it's because we are
Speaker 1: going to talk about a similar parallel in economics. Can
Speaker 1: you guess what it is? Uh? Why don't you just
Speaker 1: tell me? I mean, I think, I think I know
Speaker 1: where it's going. But I really like the way you're
Speaker 1: taking this. So alright, So it's the efficient market hypothesis
Speaker 1: versus behavioral economics. Yes, okay, so most people probably know this,
Speaker 1: but the efficient market hypothesis basically says that you can't
Speaker 1: beat the market, that it's a perfect reflection of the
Speaker 1: information currently out there, in a perfect reflection of the
Speaker 1: price that you should be paying for that information. Meanwhile,
Speaker 1: behavioral economics basically suggests that human beings can be irrational
Speaker 1: and we can get stuff wrong, and that means that
Speaker 1: markets also can be irrational and can get stuff wrong.
Speaker 1: So to pretty much diametrically opposed schools of thought. So
Speaker 1: are we going to find out which one is correct today? No,
Speaker 1: We're actually going to talk to someone who thinks they've
Speaker 1: found a middle path between those two seemingly opposed schools
Speaker 1: of thought. All right, I'm intrigued to who are we
Speaker 1: talking to and what's their theory? Okay, I'm really excited
Speaker 1: to bring on Andrew Low. He's an economist, he's a
Speaker 1: long time m I T. Professor, and he's written well,
Speaker 1: he's written several books, but most recently he has written
Speaker 1: a book on exactly this topic. Andrew, thank you so
Speaker 1: much for joining us. It's a pleasure, thanks for having me. So,
Speaker 1: just going back to the efficient market hypothesis. I gave
Speaker 1: a little snapshot of it, but maybe you could describe
Speaker 1: it a little bit more and also perhaps explain how
Speaker 1: it came to be a fundamental tenet of modern financial
Speaker 1: uh theory, when everyone and seems to beat up on
Speaker 1: it nowadays. Sure, well, you know, it's a really interesting
Speaker 1: idea and it's the brainchild of two economists. Gene Fama
Speaker 1: at the University of Chicago coined the term and came
Speaker 1: up with the basic idea that in an efficient market,
Speaker 1: prices fully reflect all available information. And so that's the case,
Speaker 1: then you really can't beat the markets by using information
Speaker 1: because it's already in the price and M. Paul Samuelson
Speaker 1: was the other economist who contributed to this theory, and
Speaker 1: his paper was titled proof that properly anticipated prices fluctuate randomly,
Speaker 1: which is a very fancy way of saying that once
Speaker 1: you incorporate all available information into prices, you don't know
Speaker 1: where it's going to go, so you can't predict future
Speaker 1: prices based upon where it is today. It seems to
Speaker 1: me the efficient market hypothesis has come under a lot
Speaker 1: of criticism in recent years. We've seen Nobel Prize winners
Speaker 1: who have won for their work and sort of talking
Speaker 1: about this more. The behavioral approach, which is very as
Speaker 1: Tracy explained at the beginning, is sort of this opposite view,
Speaker 1: But it still seems for all the criticism that efficient
Speaker 1: markets has come under, it's still pretty hard to beat
Speaker 1: the market. Like, it still seems like more or less
Speaker 1: it's a pretty difficult task. Well, that was exactly the
Speaker 1: conundrum that I was trying to figure out when trying
Speaker 1: to sort through this particular theory versus all of the
Speaker 1: various different critiques. The efficient market hypothesis actually works pretty well.
Speaker 1: It is really hard to beat the market, and prices
Speaker 1: do actually reflect a lot of information that's out there,
Speaker 1: and so it really it's hard to reconcile the basic
Speaker 1: ideas about efficient markets with all of the psychological and
Speaker 1: behavioral anomalies that people like conoman diversity failure, and UH
Speaker 1: and others have come up with to try to counteract
Speaker 1: these various different ideas of efficiency. So walk us through
Speaker 1: how you tackle that problem then, and the theory that
Speaker 1: you came up with you call it adaptive markets. Right.
Speaker 1: The basic idea is that there are elements of both
Speaker 1: of these schools of thought that work well, but neither
Speaker 1: is the complete picture. You really need both of them.
Speaker 1: They're both important aspects of the same phenomenon, and the
Speaker 1: idea behind adaptive markets is fairly straightforward. It basically says
Speaker 1: that investors are highly competitive and adaptive, and therefore it
Speaker 1: is tough to beat the market because lots of other
Speaker 1: people are trying to do that. But it's not impossible
Speaker 1: because every once in a while, markets aren't driven just
Speaker 1: by logic and analysis, but they're also driven by human emotion. So,
Speaker 1: for example, when the stock market goes down by ten
Speaker 1: or a lot of people are going to start heading
Speaker 1: for the exits. They're going to start unwinding their portfolios,
Speaker 1: and that kind of a herd mentality can actually lead
Speaker 1: two prices that don't fully reflect the information that's available
Speaker 1: at that point in time, So, in other words, it
Speaker 1: reflects emotion as opposed to fundamental valuations. The efficient market
Speaker 1: hypothesis is a great way to explain market dynamics when
Speaker 1: people are acting logically, but every once in a while
Speaker 1: we freak out, and the freakout factor is where the
Speaker 1: behavioral economists have their day. Both of these are important
Speaker 1: aspects of market dynamics, but they don't always operate at
Speaker 1: the same time, and it's really trying to understand which
Speaker 1: part of these different phases are relevant at a given
Speaker 1: point in time that the adaptive markets is focused on.
Speaker 1: So I think that like anyone who looks at markets
Speaker 1: can appreciate that there are times when sort of pure
Speaker 1: emotion and animal spirits really take over, whether it's a panic,
Speaker 1: whether it's in the stage of a bubble. But one
Speaker 1: of the things that we've talked about a lot on
Speaker 1: this podcast, as said, factors that even if you know
Speaker 1: something as a bubble, or even if you know something's
Speaker 1: a panic, it's really hard to know what stage you're
Speaker 1: in and whether you're near a bottom or whether you're
Speaker 1: you're near a top. So my question is, if you
Speaker 1: know you know, you sort of thread this middle ground
Speaker 1: where sometimes behavioral take takes over. Sometimes markets are based
Speaker 1: on pure information. Does your theory help one get any
Speaker 1: closer to actually, you know, maybe beating the market. Well,
Speaker 1: it does, and I argue that those who do beat
Speaker 1: the market today are using some form of this theory.
Speaker 1: For example, hedge fund managers understand instinctively that market dynamics
Speaker 1: change as a function of the flora and fauna of
Speaker 1: the market ecology. In other words, they look at who
Speaker 1: are the participants in any given market at a point
Speaker 1: in time and they feel the the market dynamics as
Speaker 1: a function of those various different participants. It really is
Speaker 1: trying to understand markets from a more of a biological
Speaker 1: perspective than a physical perspective. And uh, I think that
Speaker 1: that kind of approach will requires us to collect very
Speaker 1: different kinds of data from the ones that we're doing
Speaker 1: right now, and if we had that data, we can
Speaker 1: make much better predictions about where the market is going.
Speaker 1: So what sort of data are you talking about? What
Speaker 1: would be helpful just knowing who is and who isn't
Speaker 1: participating in a particular market. Well, let me start by
Speaker 1: giving you a different perspective. Imagine if you're an ecologist
Speaker 1: being asked to study particular ecological niche say, the Amazon rainforest,
Speaker 1: and let's suppose that you would like to save a
Speaker 1: particular species in that ecology. How would you go about it. Well,
Speaker 1: as an ecologist, you'd probably start by taking an inventory
Speaker 1: of all of the different species, how they relate to
Speaker 1: each other, what they eat, who they prey on, what
Speaker 1: the various different food chain relationships are, what the environment
Speaker 1: looks like and how it's changing over time. Once you
Speaker 1: study all of those aspects of the environment and the
Speaker 1: flora and the fauna. You can then start get identifying
Speaker 1: key aspects of that system that require management in order
Speaker 1: to preserve a given species or in order to highlight
Speaker 1: a particular species. If you now take that same analogy
Speaker 1: and apply it to the financial markets, you'd see that
Speaker 1: what you want to start with is not just looking
Speaker 1: at prices, but to understand who the buyers are, who
Speaker 1: the sellers are, and not just that, but the nature
Speaker 1: of the buying and the selling pension funds, broker dealers,
Speaker 1: hedge fund managers, who the investors are, who the ultimate
Speaker 1: buyers and sellers aren't, and what motivates them. Once you
Speaker 1: understand the nature of the flora and fauna of the
Speaker 1: financial markets, you can then start making predictions like, well,
Speaker 1: if it turns out that pension funds are going to
Speaker 1: be indexing and sticking to a particular asset allocation over
Speaker 1: a period of time, then that means that they're going
Speaker 1: to be submitting by orders when the market goes down
Speaker 1: and submitting cell orders when the market goes up in
Speaker 1: order to maintain that strategic asset allocation. You'd understand the
Speaker 1: motivation for the various different species in that marketplace and
Speaker 1: be able to make better predictions about how they would
Speaker 1: react to certain kinds of market events. That that's the
Speaker 1: kind of data that I think we need in order
Speaker 1: to be able to analyze market dynamics. Now your book
Speaker 1: and your theory is called adaptive market. If that data
Speaker 1: were to be made available, presumably all of that would
Speaker 1: then be incorporated back into price because people adapt would
Speaker 1: that then require some sort of further metadata for investors
Speaker 1: wanting to stay ahead of the trend? Absolutely, In other words,
Speaker 1: you really have to take into account the impact of
Speaker 1: behavior on those dynamics. And that's the same thing in
Speaker 1: other kind of biological settings. You know, for example, if
Speaker 1: it turns out that one species begins to grow, that
Speaker 1: growth is going to mean that it's gonna be going
Speaker 1: to be plentiful in terms of its numbers, and therefore
Speaker 1: it's going to require more food. Whatever it preys on
Speaker 1: is going to end up being selected out, and ultimately
Speaker 1: that means it's going to have less food per individual,
Speaker 1: which means that eventually the population is going to decline.
Speaker 1: So in other ways, their feedback loops in the system
Speaker 1: that have to be incorporated in terms of predicting how
Speaker 1: one species will do relative to another. The case of
Speaker 1: human beings interacting with each other's more complicated because we
Speaker 1: can think farther ahead and plan and predict in much
Speaker 1: more sophisticated ways. So once we see these kinds of
Speaker 1: changing dynamics, we're going to alter our behavior, and that
Speaker 1: change in behavior will then have an impact on those dynamics.
Speaker 1: So the system tends to be more complicated, but nonetheless
Speaker 1: it is a system that can be modeled, and with
Speaker 1: the right kinds of mathematics and statistics, we can actually
Speaker 1: do a better job of modeling that system than using
Speaker 1: kind of static physical laws that we're trying to apply
Speaker 1: right now to market dynamics. So this is what I'm
Speaker 1: really curious about, because one of the attractions of the
Speaker 1: efficient market hypothesis is its relative simplicity as a model.
Speaker 1: What you're saying definitely makes sense, but I can only
Speaker 1: imagine that, you know, identifying and figuring out how a
Speaker 1: complete ecosystem of a particular market works. Are you actually
Speaker 1: simplifying anything there? How useful is it as an actual model? Well,
Speaker 1: all I can say is what Albert Einstein said when
Speaker 1: he was accused of developing theories that were so complicated
Speaker 1: and by the way. I'm no Albert Einstein, so I'm
Speaker 1: not comparing myself to the great physicist. But when Einstein
Speaker 1: was criticized for the complexity of his special theory of relativity,
Speaker 1: he responded that a theory should be as simple as
Speaker 1: possible and no simpler. And I think that the financial
Speaker 1: theories that we're using are actually simpler than they should be.
Speaker 1: So there's no doubt that the efficient markets hypothesis cuts
Speaker 1: through a lot of really complicated and unnecessarily involved types
Speaker 1: of theories that really don't make any sense. And so
Speaker 1: that's one of the reasons why Fama, Samuelson and others
Speaker 1: u had such an impact on both academia and industry.
Speaker 1: But what we're seeing over the course of the last
Speaker 1: couple of decades is much more complicated financial dynamics. It's
Speaker 1: not the case anymore that a buy and hold strategy
Speaker 1: of a sixty forty portfolio is good enough for retirement,
Speaker 1: because well, we see markets going up and down in
Speaker 1: some very dramatic ways over short periods of time, and
Speaker 1: if we ignore those dynamics, we could actually get into
Speaker 1: a fair bit of trouble, especially those of us who
Speaker 1: are thinking about retiring within the next ten or twenty
Speaker 1: years versus thirty or forty years. So horizon matters, the
Speaker 1: nature of the buyers and sellers matter, the fact that
Speaker 1: we have an inner, nationally integrated financial system that's different
Speaker 1: than it was thirty or forty years ago. So I
Speaker 1: think that we do need to have more complex theories
Speaker 1: to match the complexity of the financial system as it
Speaker 1: is today. But it doesn't mean that that we can't
Speaker 1: simplify that kind of complexity. In other words, the theory
Speaker 1: of evolution is a great simplification of what happens in nature,
Speaker 1: and it is more complicated than the earlier stories about
Speaker 1: how we evolve and how we change, but I think
Speaker 1: that it does capture a very important set of of
Speaker 1: differences from those earlier theories. So what I'm hoping is
Speaker 1: that the adaptive market hypothesis, while it is somewhat more
Speaker 1: complicated because it contains both human behavior as well as
Speaker 1: efficient markets as uh sub subsets or subcases, it nevertheless
Speaker 1: provides a unifying framework that allows both of those theories
Speaker 1: to live happily under one roof. So I'd love to
Speaker 1: spin it forward and talk about this market today. Because
Speaker 1: there are all sorts of interesting debates going on right now.
Speaker 1: People say, is there a bubble going on? Has the
Speaker 1: Federal Reserve created some sort of unusual stability? What explains
Speaker 1: the lack of market volatility despite seeming you headlines that
Speaker 1: are extraordinary when you look at this current market from
Speaker 1: the sort of ecological standpoint that you describe, what are
Speaker 1: the what are some interesting things that you're seeing or
Speaker 1: that you're just sort of exploring in today's flora and fauna. Well,
Speaker 1: it's interesting that you mentioned those various different aspects of
Speaker 1: what's going on in the financial system, because they're actually
Speaker 1: quite closely related, but in ways that I don't think
Speaker 1: you would have been able to see if you're focusing
Speaker 1: on markets from the efficiency perspective. So take the example
Speaker 1: of the Fed. Well, we know that the FED engaged
Speaker 1: in some very significant quantitative easing in the aftermath of
Speaker 1: the financial crisis. Now why is that important? Well, quantity
Speaker 1: It of easing is a direct way of trying to
Speaker 1: stabilize markets and increase employment by taking on certain kinds
Speaker 1: of assets and managing the liquidity of the Federal reserve system.
Speaker 1: That involved reducing interest rates to a certain level and
Speaker 1: encouraging investors to put money in riskier assets. So that's
Speaker 1: what we've seen. We've seen in a low yield environment,
Speaker 1: investors have flocked to a variety of risky investments, but
Speaker 1: the vast majority of the funds have gone into stable,
Speaker 1: passive index products, and that in turn has actually caused
Speaker 1: equity prices to rise over the course of the last decade.
Speaker 1: And that increase in equity prices, particularly in passive vehicles,
Speaker 1: definitely contributes to the fact that we have lower volatility
Speaker 1: today than we had in probably twenty years. That decrease
Speaker 1: in average volatility, in turn has caused as investors to
Speaker 1: put more money in equities because of risk parity strategies
Speaker 1: and other volatility linked investments. So the action of the
Speaker 1: FED which was in response to this financial crisis, and
Speaker 1: it was an emotional reaction in a way, because one
Speaker 1: could argue that prices go up and down all the time,
Speaker 1: you should just let the chips fall where they may.
Speaker 1: But because we care about people who are out of work,
Speaker 1: we want to make sure that financial stability is a
Speaker 1: high priority among regulators and policymakers. So that kind of
Speaker 1: reaction has repercussions that have an effect on market dynamics.
Speaker 1: And we're working through those effects today. So when people
Speaker 1: hear the word adaptation, or at least when I hear
Speaker 1: the word adaptation, I also, you know, I think a
Speaker 1: little bit about resiliency and you know, again the ability
Speaker 1: to adapt to new situations. So when you look at
Speaker 1: the market nowadays, lots of people are thinking about valuations
Speaker 1: being sky high, the possibility of things may be beginning
Speaker 1: to pop as central banks withdraw their quidity. What's what's
Speaker 1: the fragility that you see in the ecosystem, What's the
Speaker 1: thing that could topple over the dynamic that we've been
Speaker 1: seeing for the past five or six years. Well that's
Speaker 1: a great point, because fragility is something that biologists and
Speaker 1: particularly ecologists study all the time. And one of the
Speaker 1: things that they tell us about fragility is that we
Speaker 1: need to have a certain amount of biodiversity in order
Speaker 1: to create a more robust ecology. The basic idea being
Speaker 1: that certain species can get wiped out because of an
Speaker 1: environmental change, but if we have a variety of different species,
Speaker 1: the likelihood that one or two of them will be
Speaker 1: able to survive will allow the ecology to maintain some
Speaker 1: semblance of its prior existence. Even before that big evolutionary shock,
Speaker 1: we don't have that same kind of resiliency concept in economics.
Speaker 1: I think that certain economists, over the course of the
Speaker 1: last several decades have tried to focus on that by
Speaker 1: looking at things like concentration in the industries and various
Speaker 1: different types of industries that are starting and those that
Speaker 1: are declining. But the idea of measuring resiliency in the
Speaker 1: economy is really pretty far behind what the biologists are doing.
Speaker 1: So from my point of view, I think that resiliency
Speaker 1: is really a key issue, and that's one of the
Speaker 1: reasons why I focus in some of my research on
Speaker 1: hedge funds. The hedge fund industry is actually a source
Speaker 1: of all sorts of new species. If you think about,
Speaker 1: you know, various different kinds of investment vehicles that are
Speaker 1: now widely available. A lot of those investment vehicles first
Speaker 1: began in the hedge fund industry, and so it's important
Speaker 1: if you want to maintain resiliency to have a vibrant
Speaker 1: hedge fund sector where all sorts of new ideas can
Speaker 1: get tried out, and the ones that work well will
Speaker 1: progress and grow, and the ones that don't will basically
Speaker 1: get wiped out. You want to have that kind of
Speaker 1: turnover in ideas and and financial products and services so
Speaker 1: that we don't ever get into a situation where we're
Speaker 1: getting locked into something. The one concern that I have
Speaker 1: about resiliency right now is that we have a huge
Speaker 1: amount of assets flowing into passive index strategies, and obviously
Speaker 1: that's been a very important source of investment return for
Speaker 1: a large majority of investors who don't have the skills
Speaker 1: to manage their portfolio actively. So active versus passive is
Speaker 1: a debate that I think has long been settled. Passive
Speaker 1: is definitely here to stay, and it's an incredibly important
Speaker 1: component of the flora and fauna of the investors that
Speaker 1: are looking for opportunities. The problem is that if we
Speaker 1: now are all investing in these passive vehicles, what happens
Speaker 1: when there's a stock market correction that inevitably there will be,
Speaker 1: and we see these passive investments under performing, Well, we're
Speaker 1: gonna get a massive exit from that particular set of vehicles.
Speaker 1: And like any kind of a situation where you've got
Speaker 1: a crowded trade and a massive unwinding, you can see
Speaker 1: a much bigger drop in these market levels. So crashes
Speaker 1: are now more likely. In fact, we see flash crashes
Speaker 1: happening all the time, which is a technological example of
Speaker 1: these kinds of phenomenon happening in very very short term.
Speaker 1: But I think that this is a concern that I
Speaker 1: have about resiliency. We're creating opportunities for financial panics that
Speaker 1: didn't exist ten years ago or didn't exist to the
Speaker 1: same degree. So we just need to be wary of
Speaker 1: that and be prepared for those kinds of shocks. Very
Speaker 1: bleak answer, but obviously, you know, it's definitely capturing an
Speaker 1: anxiety that I think a lot of people feel right
Speaker 1: now about the markets. We've talked about this a lot,
Speaker 1: that sort of where is this sort of endless boom
Speaker 1: and E T f S and passive actually go. But
Speaker 1: you know, there's debate about how big passive could get.
Speaker 1: There's the study of ecology. Give us any clues into
Speaker 1: when tipping points could happen or anything like that, or
Speaker 1: do we just sort of have do you know it'll
Speaker 1: just happen one day and it will be all over Well,
Speaker 1: I think it does give us a clue. Rather, it
Speaker 1: gives us a way of trying to understand where those
Speaker 1: tipping points might arise, and once again, the way to
Speaker 1: do that is to measure the biomass of the various
Speaker 1: different species and ask what they're driven by and ultimately
Speaker 1: what will cause them to change their direction. I think
Speaker 1: that in the case of passive investing, it's pretty clear
Speaker 1: that it offers tremendous benefits to a large number of investors.
Speaker 1: So we're not going to see any kind of a
Speaker 1: decline unless and until there are some kind of widespread
Speaker 1: market decline. If the stock market goes down by ten
Speaker 1: or that might be enough to cause a retreat into
Speaker 1: fixed income assets or cash for a period of time.
Speaker 1: And so I think that's really the kind of tipping
Speaker 1: point for passive investments because right now, given the low
Speaker 1: yield environment, investors are really continuing to pour money into
Speaker 1: that sector. But eventually nothing lasts forever. We're going to
Speaker 1: see reversals in every kind of asset class. And in
Speaker 1: this case, if we take a look at the nature
Speaker 1: of the investors who are going into the market versus
Speaker 1: those who are willing to take money out of the market,
Speaker 1: will get a better idea of when that kind of
Speaker 1: a tipping point might be and and what kind of
Speaker 1: triggers might cause that tipping point to happen. I'm trying
Speaker 1: to think if passive funds are the eight hundred pound
Speaker 1: guerrillas or the excitable antelopes in the market ecosystem. All right,
Speaker 1: Andrew low, m i T Professor and author of Adaptive Markets,
Speaker 1: Financial Evolution at the Speed of Thought, Thank you so
Speaker 1: much for joining us. Thank you, it's been a pleasure. So, Joe,
Speaker 1: what did you think of the you know, the ecosystem
Speaker 1: analogy was strong in that conversation. Yeah, I really like
Speaker 1: that conversation, and I really like that framework for thinking
Speaker 1: about it. You know, it's funny thinking about what we
Speaker 1: do all day, writing about markets and what people think
Speaker 1: is going to go up or what people think are
Speaker 1: good investments. Are not even a pure emage world. We'd
Speaker 1: kind of have to admit that our jobs are sort
Speaker 1: of stupid in a way, like why even bother writing
Speaker 1: about this? Why bother saying? Why bother? Why bother bringing
Speaker 1: people's opinions if there's no way for anyone to just
Speaker 1: sort of get a pure edge. And what I like
Speaker 1: about Andrew's view is the idea that it's really tough,
Speaker 1: but it's not impossible and that if you explore the
Speaker 1: right facet there is value in sort of in at
Speaker 1: least trying. I agree all the I'm not sure. I
Speaker 1: like the notion that our jobs are meaningless. Well. One
Speaker 1: thing I really liked about his framing, though, is the
Speaker 1: emphasis on market structure, because this is something that you know,
Speaker 1: you and I bang on and on about, but in
Speaker 1: order to understand the market, you really need to understand
Speaker 1: the structure of it and the various players and the
Speaker 1: motivation at play. And I really think that's the point
Speaker 1: he's making about his theory. That said, you know, I
Speaker 1: can imagine that that does get quite complex when you're
Speaker 1: an economist trying to publish a you know, paper for instance.
Speaker 1: That's that's a lot to model totally. But this idea
Speaker 1: that you know, there's sort of two different ways of
Speaker 1: thinking about the market. So one is you might have
Speaker 1: a stock and you might look at its income statement
Speaker 1: and it's balance sheet and sort of what we're talking
Speaker 1: about with Ozwa Dalmadaran recently. But then the other aspect
Speaker 1: is this where it's like you look at the overall
Speaker 1: market and you try to figure out who the gazelles
Speaker 1: are and who the hyenas are, and who the eight
Speaker 1: hundred pound gorillas are and figure out, Okay, what is
Speaker 1: the motivation of each of these And I think that
Speaker 1: also is a very interesting way of thinking about what's
Speaker 1: what in the market. Yeah, agreed, I really want to
Speaker 1: go to the zoo. Now I have this urge to
Speaker 1: go to the zoo. Okay, let's leave it there. That
Speaker 1: was another episode of the Odd Thoughts podcast. I'm Tracy Alloway.
Speaker 1: You can follow me on Twitter at Tracy Alloway. And
Speaker 1: I'm Joel Wisnthal. You can follow me on Twitter at
Speaker 1: the Stalwart. And you can follow Andrew Low on Twitter
Speaker 1: at Andrew w. Low and follow our producer Sarah Patterson
Speaker 1: at Sarah pet With two Teas. Thanks for listening.