WEBVTT - What the Next Generation Wants From Wealth Managers 0:00:02.640 --> 0:00:14.840 Bloomberg Audio Studios, Podcasts, radio news. 0:00:17.880 --> 0:00:20.560 Welcome to Merrindalk's Your Money, the personal finance edition of 0:00:20.600 --> 0:00:23.319 Merindalk's Money. In these bonus podcasts, we talk about the 0:00:23.320 --> 0:00:25.840 best strategies for making the most of your money. I'm 0:00:25.840 --> 0:00:28.640 Maren Zumset, Web Editor at Large for Bloomberg UK Money, 0:00:29.200 --> 0:00:31.159 and across the next two weeks, we aren't going to 0:00:31.160 --> 0:00:33.960 bring you highlights from a special broadcast we recorded at 0:00:33.960 --> 0:00:36.800 the Bloomberg offices in London on the fourteenth of July. 0:00:37.280 --> 0:00:39.080 It was an hour long panel focused on how the 0:00:39.080 --> 0:00:41.600 world of wealth management is changing, about the rise of 0:00:41.720 --> 0:00:46.000 next generation wealth clients and the growing role of alternatives in. 0:00:45.880 --> 0:00:47.400 Modern portfolio construction. 0:00:47.760 --> 0:00:50.600 The banelers were John Steppeck, senior reporter and author of 0:00:50.640 --> 0:00:54.160 the Money Disgital newsletter, Charlie Morris, chief investment officer and 0:00:54.200 --> 0:00:57.320 founder of byte Tree, a leading provider of investment research 0:00:57.480 --> 0:01:01.480 in traditional finance and digital. We also as Jean dam 0:01:01.680 --> 0:01:04.360 and Marie Global head of Investments for Barkley's Private Bank 0:01:04.400 --> 0:01:07.679 and Wealth Management. Here's the first part of our conversation. 0:01:11.720 --> 0:01:14.520 Thank you all for joining me today. Now we are 0:01:14.520 --> 0:01:17.720 going to define our terms. We are talking about the 0:01:17.760 --> 0:01:20.200 next gen of clients. What do we mean when we 0:01:20.240 --> 0:01:21.200 talk about the next gen? 0:01:21.520 --> 0:01:23.839 That's a good question, I think for us, next gen 0:01:24.560 --> 0:01:29.000 are you know, typically children who are really developing a 0:01:29.040 --> 0:01:29.840 sense of wealth. 0:01:29.880 --> 0:01:32.640 They're they're interested in investing. 0:01:32.319 --> 0:01:37.280 They're curious. Often, they're active. They're very active, and they 0:01:37.280 --> 0:01:41.000 want to be in control often and excited. And next 0:01:41.040 --> 0:01:45.080 gen for us is there's a period for our clients 0:01:45.160 --> 0:01:49.640 where it's about engagement and trying to understand them better. 0:01:49.880 --> 0:01:50.600 I think, OK. 0:01:50.600 --> 0:01:55.360 So we're talking about the newly well off young correct, yes, 0:01:55.680 --> 0:01:59.040 and be inherited, the beneficiaries of the great well trend wealth. 0:01:58.840 --> 0:02:01.720 Tund which is the big happening soon as we know. 0:02:01.960 --> 0:02:06.280 And yeah, they're learning, and they're they're they're passionate, often 0:02:06.320 --> 0:02:10.839 with purpose beyond returns. So capital is not the only 0:02:10.880 --> 0:02:13.200 thing that we discuss. There's a lot going on at 0:02:13.400 --> 0:02:20.120 family level, family dynamics, capital capital more than returns. So yeah, 0:02:20.160 --> 0:02:23.200 the discussion often with next gen goes in many directions. 0:02:24.320 --> 0:02:29.119 And what is the same as as the old gen 0:02:30.240 --> 0:02:37.160 is a sense of having some kind of gross end 0:02:37.160 --> 0:02:41.120 preservation at the same time, which is interesting. You see, 0:02:41.600 --> 0:02:44.400 it's a different dynamic than entrepreneurs are creating the wells. 0:02:44.720 --> 0:02:48.120 Often next gen for us are taking the wells and 0:02:48.800 --> 0:02:50.960 try to figure out what's going to be the purpose 0:02:51.000 --> 0:02:53.119 of that as wells for the next generation. 0:02:53.480 --> 0:02:54.320 Okay, excellently. 0:02:54.400 --> 0:02:57.040 We'll definitely talk about that bit more in a minute, 0:02:57.080 --> 0:03:00.680 but I want to continue defining our terms and ask you, John, 0:03:00.680 --> 0:03:03.560 perhaps to explain what we mean when we say alternatives. 0:03:04.080 --> 0:03:07.000 Yeah, all ternators are basically anything that isn't listed equity 0:03:07.200 --> 0:03:11.080 or listed bonds. So you'd be talking about private assets, 0:03:11.520 --> 0:03:15.239 private equity, private credit obviously in the news a lot recently. 0:03:16.320 --> 0:03:18.800 Also in the more kind of financial side of things, 0:03:18.800 --> 0:03:23.880 commodities pretty much every commodity either direct investment commodities are 0:03:23.960 --> 0:03:28.760 other ways into commodities, the derivatives like futures and options. 0:03:29.919 --> 0:03:33.440 And also I suppose in its slightly further away from 0:03:33.440 --> 0:03:38.119 the financial side, kind of like collectibles, so in trophy assets, 0:03:38.160 --> 0:03:44.119 so anything like art or wine or coins, even. 0:03:44.120 --> 0:03:48.160 Gems on gems, vintage jewelry. 0:03:47.960 --> 0:03:51.600 Vintage jewelry, anything that fits into the sort of almost 0:03:51.640 --> 0:03:55.360 like a kind of hobby turned into financial vehicle, classic cars, 0:03:55.400 --> 0:03:56.080 that kind of thing. 0:03:56.400 --> 0:03:57.800 Real estate. Did you mention in real estate? 0:03:58.240 --> 0:04:01.080 I mean real estate, Yeah, that is a form of 0:04:01.360 --> 0:04:04.720 alternative is probably in the cost I think, but yeah, 0:04:04.720 --> 0:04:07.040 commercial property would be the other one I mean. 0:04:07.040 --> 0:04:08.240 And also anything. 0:04:07.880 --> 0:04:11.200 That's somewhat less liquid I think you can almost think 0:04:11.280 --> 0:04:14.440 of like an alternatives is often something that's less liquid, 0:04:14.760 --> 0:04:17.520 although that's not always the case. Obviously, plenty of commodities 0:04:17.600 --> 0:04:22.520 up there for the liquid, and obviously gold is broadly 0:04:22.640 --> 0:04:24.679 an alternatives. 0:04:24.120 --> 0:04:26.040 And commodities we divide up between. 0:04:26.600 --> 0:04:30.039 You list listed miners for commodities, for example, would not 0:04:30.080 --> 0:04:32.200 be an alternative, but holding about a gold in your 0:04:32.200 --> 0:04:36.279 basement or buy proper uti would be an alternative. Yeah, yeah, okay, 0:04:36.279 --> 0:04:40.000 fair enough, right, Sarlie. There's one more alternative right which 0:04:40.000 --> 0:04:43.480 I'm slightly newer. Alternative is that a big one? 0:04:44.480 --> 0:04:49.279 That is that where that question is crypt in general? 0:04:49.320 --> 0:04:52.120 Okay, do pick up on I want to pick. 0:04:52.040 --> 0:04:55.640 Up on the definition of alternatives, and I would say 0:04:55.640 --> 0:04:59.320 that you could also talk about cash flow and non 0:04:59.320 --> 0:05:02.600 cash flow, So if financial and non financial assets. Yeah, 0:05:02.680 --> 0:05:06.119 and so you know, when you look at hedge fund, 0:05:06.160 --> 0:05:08.280 you know, I say, if it's long short equity or something, 0:05:08.440 --> 0:05:11.120 it's a strategy. It's not really an asset class. And 0:05:11.160 --> 0:05:13.880 I would say the same is true for many things 0:05:13.920 --> 0:05:17.000 like private equity. It's just a liquidity thing. 0:05:17.640 --> 0:05:17.760 You know. 0:05:17.800 --> 0:05:20.040 It's obviously long long term money and that sort of thing. 0:05:20.360 --> 0:05:24.000 But the true alternatives don't don't revolve around money. There's 0:05:24.040 --> 0:05:26.720 something else. So you've got the commodity sphere, you've got 0:05:26.720 --> 0:05:29.279 the digital asset sphere or the crypto sphere, and the 0:05:29.279 --> 0:05:31.880 collectibles that John pointed out, and also that you know, 0:05:31.920 --> 0:05:33.960 liquidity is essential to that. So when you look at 0:05:33.960 --> 0:05:36.760 the liquidity, you know, something like gold is the vast 0:05:36.800 --> 0:05:39.000 majority of the community market, and there's also oil, but 0:05:39.040 --> 0:05:41.720 of course there's not an investment, you know, oil, it's 0:05:41.760 --> 0:05:44.480 a future contract, whereas whereas gold can be held. And 0:05:44.520 --> 0:05:47.360 then again when you come to crypto, seventy five percent 0:05:47.800 --> 0:05:50.720 of all crypto is bitcoin, and twenty five percent of 0:05:50.760 --> 0:05:53.040 the other one million coins or however many there are, 0:05:53.360 --> 0:05:55.880 it's not bitcoin. And it's very similar to gold versus 0:05:55.880 --> 0:05:58.679 the above ground supply of gold against the above ground 0:05:58.680 --> 0:06:01.960 supply of of other commodities. So I just think that's 0:06:01.960 --> 0:06:03.440 a very good way to think about it. I think 0:06:03.440 --> 0:06:07.120 the financial service industry has been hoodworking people for years 0:06:07.360 --> 0:06:09.680 trying to call things alternatives. Put the fees up and 0:06:09.720 --> 0:06:10.320 that sort of thing. 0:06:10.520 --> 0:06:12.480 But then not really can I pick you up them. 0:06:13.080 --> 0:06:16.440 Let's stop on private equity, which is constantly called an alternative. 0:06:16.600 --> 0:06:18.359 And John and I talk about this a lot on 0:06:18.360 --> 0:06:20.680 the podcast, and we say, well, private equity is just equity, 0:06:21.000 --> 0:06:22.480 just equity, that's more expensive. 0:06:23.400 --> 0:06:24.120 It's the same thing. 0:06:24.680 --> 0:06:27.240 Yeah, absolutely, I mean private equity, I mean it can 0:06:27.279 --> 0:06:29.039 be very good. But of course the just parity of 0:06:29.040 --> 0:06:32.479 returns in private equity funds is vast, whereas if you 0:06:32.520 --> 0:06:34.599 buy an index fund, everyone gets the same out. So 0:06:34.600 --> 0:06:37.760 there is a very different sort of fundamental thing going 0:06:37.800 --> 0:06:38.200 on there. 0:06:39.040 --> 0:06:42.120 Okay, but go back to crypto as Can I call 0:06:42.160 --> 0:06:43.080 it an asset class? 0:06:43.640 --> 0:06:46.280 Well, I think so they coin an asset class. 0:06:46.360 --> 0:06:49.960 Has it been granted permission from somewhere high up in 0:06:50.040 --> 0:06:51.080 financial circourse? 0:06:51.160 --> 0:06:52.719 I don't know. I don't know what the rules are here. 0:06:52.760 --> 0:06:54.560 Well, there are rules, of course, and that is that 0:06:54.640 --> 0:06:57.240 if it's created by the Federal Reserve, the Bank of 0:06:57.279 --> 0:07:00.960 England or Golden Sacks or someone like that, then of 0:07:01.000 --> 0:07:03.479 course it's a legitimate thing. But because it's because it 0:07:03.520 --> 0:07:05.520 came from chaos, and it came from the cypherpunks and 0:07:05.600 --> 0:07:07.839 that sort of thing, it's never been accepted by the 0:07:07.839 --> 0:07:10.800 financial services industry. So that's it. It's where it came from. 0:07:10.800 --> 0:07:15.160 It came from the wrong the wrong postcode, and that's 0:07:15.200 --> 0:07:18.400 why they don't like it. And you know everything else 0:07:18.400 --> 0:07:20.240 that you know, if it comes out of Gonvi Sex, 0:07:20.280 --> 0:07:22.880 then it's always very good, you must buy it. And 0:07:22.920 --> 0:07:26.640 so there's that. But I think that is an asset class. Absolutely. 0:07:26.960 --> 0:07:29.400 It's something completely different. And you know, you go back 0:07:29.400 --> 0:07:31.680 to the history of asset classes. You know, we probably 0:07:31.720 --> 0:07:35.400 started off with I would think commodities must have come first, 0:07:35.440 --> 0:07:37.760 you know, the first loafe of bread, and then we 0:07:37.800 --> 0:07:40.560 progressed from there with debt and then equity in the 0:07:40.920 --> 0:07:43.400 thirteenth century or something, and then it really kicked off 0:07:43.400 --> 0:07:47.240 in Amsterdam a few hundred years later. And most of 0:07:47.240 --> 0:07:49.880 the other things aren't really asset classes. But crypto has 0:07:49.920 --> 0:07:52.880 come along. It is completely different. It is definitely non 0:07:52.920 --> 0:07:57.680 financial and it is definitely not equity or bond or commodity. 0:07:57.920 --> 0:08:00.880 It's something different. It's digital, it's very but it's real. 0:08:01.080 --> 0:08:02.640 Okay, so we know what it doesn't. It will come 0:08:02.640 --> 0:08:06.480 back to what it is. Yeah, we know what it doesn't. 0:08:06.560 --> 0:08:07.160 What is it? 0:08:07.280 --> 0:08:07.720 What is it? 0:08:07.800 --> 0:08:09.800 What's that We'll come back to use cases and all 0:08:09.800 --> 0:08:11.080 that in the minute we'll have we'll have a nice 0:08:11.120 --> 0:08:12.960 row everybody in about twenty minutes when we become of 0:08:13.040 --> 0:08:13.320 some of. 0:08:13.240 --> 0:08:16.360 The other stuff. Right, let's go back to actual portfolios. 0:08:16.360 --> 0:08:20.280 So maybe your older gen have classic, old fashioned or 0:08:20.320 --> 0:08:22.960 did at least have old fashions sixty forty portfolios, and 0:08:23.160 --> 0:08:25.160 apart from maybe a little bit in their vintage cars 0:08:25.200 --> 0:08:28.280 and jurry collections, they were very clear equity bond. 0:08:28.920 --> 0:08:32.000 But that portfolio construction is no longer the default. 0:08:32.400 --> 0:08:35.840 No, I think to Charlie's point earlier, I think we've 0:08:35.880 --> 0:08:38.920 seen really the adoption of more asset classes. We can 0:08:38.960 --> 0:08:42.439 give it with an assad classes later, but clearly today 0:08:42.520 --> 0:08:45.800 I would say the need for an extry terms and 0:08:45.840 --> 0:08:49.040 dovestication has led to portfolios being more than equities and bonds. 0:08:49.760 --> 0:08:52.960 Not new right, because we've been discussing headshants for a 0:08:53.000 --> 0:08:56.160 very long time. Pract equally in markets in general are 0:08:56.160 --> 0:08:58.520 more popular, so they are becoming really part of any 0:08:58.559 --> 0:09:01.640 asset education you can find on the street today. Being 0:09:01.720 --> 0:09:03.559 the question is the quantum and the question is how 0:09:03.600 --> 0:09:07.040 you access for what kind of returns? But this is 0:09:07.240 --> 0:09:11.280 usually back to either skills alpha or in liquidity premium 0:09:11.520 --> 0:09:14.280 one way or another. So today, yeah, I would say 0:09:14.559 --> 0:09:17.760 so for our own clients, if you come and you're 0:09:17.800 --> 0:09:20.360 not constrained and we can have a very very broad discussion, 0:09:21.040 --> 0:09:23.120 the starting point is going to come from what we 0:09:23.200 --> 0:09:26.400 call a holistic asset. That location discussion will come first 0:09:26.440 --> 0:09:31.960 and foremost with liquid liquid long only long short, and 0:09:32.080 --> 0:09:34.040 it will be a lot more than sixty foury for 0:09:34.080 --> 0:09:39.160 sure that we see increasingly going into I would say 0:09:39.840 --> 0:09:42.720 more mainstream portfolio. I think it's been the norm for 0:09:42.800 --> 0:09:45.280 a long while, right, a lot of families. I've been 0:09:45.320 --> 0:09:48.120 studying us En doughnuts for a very long time and tried, 0:09:48.360 --> 0:09:51.280 you know, to be as good as another topic we 0:09:51.280 --> 0:09:55.160 can discuss. And you see this kind of endoormant spirit 0:09:55.360 --> 0:10:00.800 now tricking down up to or down to very small 0:10:00.840 --> 0:10:05.240 portfolio because it's easier today to actually build a fifty 0:10:05.400 --> 0:10:06.440 fairly something. 0:10:06.880 --> 0:10:09.080 Maybe it's friddling down exactly the point where it's maybe 0:10:09.160 --> 0:10:11.360 not going to work so well anymore. Those in downward 0:10:11.400 --> 0:10:14.240 portfolios have work brilliantly during the great heyday of private equity. 0:10:14.840 --> 0:10:17.800 Yeah, I think it depends on how it is an end. 0:10:18.559 --> 0:10:22.720 I think, yeah, Look for us, really the key part 0:10:22.760 --> 0:10:25.120 of the job is to define a plan like a 0:10:25.200 --> 0:10:27.160 goal and a plan for a plant, and plan that 0:10:27.200 --> 0:10:29.000 plants can survive over time. 0:10:29.040 --> 0:10:31.240 To your point on the way than the likes. 0:10:31.679 --> 0:10:35.280 I do think that if you can have the time 0:10:35.480 --> 0:10:39.640 to compound, which is such a wonder being long, you know, 0:10:39.720 --> 0:10:42.360 and full on equality risk is a good thing usually, 0:10:43.640 --> 0:10:47.959 whereas if your time arison is shorter, clearly should be 0:10:48.000 --> 0:10:49.400 a little bit less like in the US and no 0:10:49.840 --> 0:10:52.520 and at more yield in a portfolio. So I think, look, 0:10:52.840 --> 0:10:57.080 the toolkit is wider. What doesn't change is the need 0:10:57.160 --> 0:10:59.960 to get the right to advice and construct right portfolio 0:11:00.400 --> 0:11:02.280 so you get the right outcome. I think the problem 0:11:02.600 --> 0:11:04.800 you have is maybe there's a bit of fashion going 0:11:04.840 --> 0:11:07.040 on right and it's all about that thing or the 0:11:07.080 --> 0:11:10.920 other thing that may go to the lower and client, 0:11:11.120 --> 0:11:12.760 maybe not always for the right reason. 0:11:12.800 --> 0:11:14.560 And say, what's in fashion that maybe some people are 0:11:14.600 --> 0:11:17.240 having too much of in their portfolios. 0:11:17.320 --> 0:11:22.160 So well, a good question, I think the with the 0:11:22.160 --> 0:11:22.680 next gen. 0:11:23.000 --> 0:11:25.160 To Charlie's point, we've been having a lot of discussions 0:11:25.200 --> 0:11:28.040 on digital assets for sure that they own one way 0:11:28.120 --> 0:11:32.360 or another. I think most things, any interesting topic this 0:11:32.480 --> 0:11:35.800 is really probably something an asset class can debate, but 0:11:36.640 --> 0:11:39.880 it's really something that's all across the spectrum, like from 0:11:40.120 --> 0:11:44.199 very very wealthy families to actually mainstream investors because it's 0:11:44.240 --> 0:11:45.560 easy actually to get to it. 0:11:46.720 --> 0:11:48.960 Again, it depends how you want to get to it it. Yeah, 0:11:49.000 --> 0:11:50.360 for real crypto et cetera. 0:11:51.080 --> 0:11:54.320 So that that piece, for sure, I think the the 0:11:54.400 --> 0:11:59.559 more private market the it's all about the democratization right 0:11:59.600 --> 0:12:03.680 now of inequid stuff, which you know, for me, you 0:12:03.720 --> 0:12:07.480 need to stay true to having quality investment in those 0:12:07.559 --> 0:12:10.240 portfolio so you need to know what you're trying to 0:12:10.320 --> 0:12:11.600 harvest and what you're giving. 0:12:11.520 --> 0:12:13.400 Up for more equity on all the way. 0:12:13.640 --> 0:12:16.440 Okay, well let's let's imagine, all right, say, good argument 0:12:16.520 --> 0:12:21.120 that I'm a thirty year old investor now and I've 0:12:21.120 --> 0:12:23.040 come to you and I haven't really got any sense 0:12:23.040 --> 0:12:24.120 of what I want, but I know I'm a long 0:12:24.160 --> 0:12:26.240 time investor. I don't require much in a way yield 0:12:26.280 --> 0:12:28.160 at the moment. What am I going to get from you? 0:12:28.200 --> 0:12:31.839 Am I going to get budiocent equity, twenty percent bonds 0:12:32.120 --> 0:12:34.479 and forty in alternatives? 0:12:34.520 --> 0:12:37.000 How's it going to work? Is the very default that 0:12:37.080 --> 0:12:37.360 you have. 0:12:37.640 --> 0:12:42.880 So we have we have a framework and clearly a 0:12:42.880 --> 0:12:45.800 thirty year old. You know you've been an accumulation, so 0:12:46.320 --> 0:12:48.440 should be a really equity or his premium. 0:12:48.120 --> 0:12:49.120 One way or another if you are. 0:12:49.440 --> 0:12:54.720 And then question again is like what kind of inequality 0:12:54.760 --> 0:12:57.920 can you fall in bad times? You need to forecast 0:12:57.920 --> 0:13:00.280 for those bad times we've seen right back in the day, 0:13:00.320 --> 0:13:02.160 I used to be a secondary as well. 0:13:03.559 --> 0:13:06.160 It's good not to be shotcast. It's a good idea 0:13:06.559 --> 0:13:09.000 in general. So we built a plan you can survive 0:13:09.040 --> 0:13:10.280 in good time by times. 0:13:10.559 --> 0:13:13.480 So equality will be a big part, and the alternative 0:13:13.480 --> 0:13:16.520 part will probably be around the combination of equity or 0:13:16.720 --> 0:13:20.320 retain seeking portfolio type strategy, some more equality and a 0:13:20.320 --> 0:13:22.840 bit of diversification on the way. 0:13:22.960 --> 0:13:24.600 So but equality will be. 0:13:24.920 --> 0:13:25.600 Will be them. 0:13:26.400 --> 0:13:29.400 Even though we can label somethings alternatives, et cetera, et cetera, 0:13:29.480 --> 0:13:32.440 in the end, it's going to still be a majority equity. 0:13:33.040 --> 0:13:34.640 It's going to be a ninety ten in the end 0:13:34.679 --> 0:13:35.160 sort of thing. 0:13:36.160 --> 0:13:39.360 Yeah, we'll define what the right cushion is for you 0:13:39.440 --> 0:13:40.400 so you can sleep at night. 0:13:41.000 --> 0:13:44.280 But the point we just made earlier around. 0:13:44.120 --> 0:13:49.280 Private equity, it's equity leverage right and equity again. 0:13:50.120 --> 0:13:50.920 And are concerned. 0:13:50.920 --> 0:13:52.240 I'm John and I have been talking about this, say, 0:13:52.400 --> 0:13:55.760 just the democratization of private equity is not not necessarily ideal. 0:13:55.760 --> 0:13:58.520 All right, Well, they's aiming, isn't it, because I suppose 0:13:58.559 --> 0:14:00.680 this is the other thing, isn't it? The like private 0:14:00.679 --> 0:14:04.200 equity benefited from ultra low interest rates for a long time, 0:14:04.440 --> 0:14:07.280 but also from the fact that it was small and 0:14:07.360 --> 0:14:09.439 I was big. And I think one of the things 0:14:09.480 --> 0:14:13.480 you were mentioning kind of made me think, if for 0:14:13.559 --> 0:14:16.400 toalking about ill liquidity, you should be getting rewarded for 0:14:16.480 --> 0:14:19.880 taking illiquidity risk. Obviously, it was at one point in 0:14:19.880 --> 0:14:24.600 this particular cycle that actually tipped and people were saying, actually, 0:14:24.720 --> 0:14:29.600 you were paying an illiquidity premium as a psychological buffer 0:14:29.640 --> 0:14:31.280 to stop you from taking your money out at the 0:14:31.320 --> 0:14:33.800 wrong time. And I just thought it was fascinating how 0:14:33.920 --> 0:14:37.360 it's so smoothly changed that the sale pitch went from 0:14:37.440 --> 0:14:40.600 being you're getting paid more for taking this eliquidity risk, 0:14:40.880 --> 0:14:43.760 so the eliquidity premium vanishing and saying, oh, that's because 0:14:43.800 --> 0:14:47.000 you're paying more for the psychological protection. And I have 0:14:47.040 --> 0:14:50.000 to say it left me a little bit skeptical about 0:14:50.120 --> 0:14:54.160 what the exact purposes of adding private equity to a 0:14:54.280 --> 0:15:01.160 portfolio of publicly listed, equally easily accessed liquid equities, and as. 0:15:01.120 --> 0:15:02.960 John always says, you know, if you if you want 0:15:03.000 --> 0:15:07.000 access to small companies in the UK at least inexpensively, boy, 0:15:07.040 --> 0:15:09.320 have we've got a deal for you a list of market. 0:15:09.720 --> 0:15:12.360 Yeah, but I think the no, you make a very 0:15:12.400 --> 0:15:14.360 good point. I think you know that. As we mentioned before, 0:15:15.680 --> 0:15:16.880 it's about being selective. 0:15:18.360 --> 0:15:20.400 You know, is it a good idea to invest in 0:15:20.520 --> 0:15:22.520 the private equity market overall? 0:15:22.840 --> 0:15:25.720 Can debate. Now we can see. 0:15:25.600 --> 0:15:28.000 People who've been able managers, who being able to actually 0:15:28.040 --> 0:15:32.360 deploy capital and actually make most of the return through 0:15:33.280 --> 0:15:36.800 operational improvement from story shops, less leverage, less multiple expansion. 0:15:37.280 --> 0:15:39.400 If you can repeat that over time, probably you're happy to. 0:15:39.400 --> 0:15:43.920 Pay for alpha over over over over better or equally better. 0:15:44.440 --> 0:15:46.160 Not your point, Yeah, I can see the point. I 0:15:46.560 --> 0:15:49.640 will always remember and point out a few clients towards 0:15:49.640 --> 0:15:52.520 the you know seven vintages, right, seven intagers you make 0:15:52.560 --> 0:15:56.080 money or so many people just time and get got out. 0:15:56.200 --> 0:15:59.920 Right, you made money because you were stuck. But I 0:16:00.040 --> 0:16:03.160 here's a good thing to be start with skills. I 0:16:03.160 --> 0:16:06.120 agree that's important. But yeah, I can see your point. 0:16:06.240 --> 0:16:09.240 I do think the again for the right portfolio with 0:16:09.320 --> 0:16:10.960 the right construction, it makes sense. 0:16:11.800 --> 0:16:15.760 Is it the holy Grail? And you know the magic one? No? 0:16:15.760 --> 0:16:19.560 No, yeah, let's go back to crypto. Let's go back 0:16:19.560 --> 0:16:22.000 to a bitcoin. You know, we talk about gold a lot, right, 0:16:22.080 --> 0:16:23.160 John and I we talk about gold. 0:16:23.200 --> 0:16:24.200 We right aback, gold a lot. 0:16:24.280 --> 0:16:25.960 And when we talk about how much gold did you 0:16:26.000 --> 0:16:27.200 have in your portfolio, even if. 0:16:27.160 --> 0:16:28.680 You're a gold bug, how much should you have? 0:16:28.760 --> 0:16:31.520 And the answers comes down to and this is Amsbatian 0:16:31.520 --> 0:16:33.480 Lion at Troy always puts us very well. He says, 0:16:33.560 --> 0:16:36.120 you want enough for it to make a difference in 0:16:36.160 --> 0:16:36.680 a crisis. 0:16:36.760 --> 0:16:39.040 Right, So one percent isn't enough, Two percent isn't enough? 0:16:39.600 --> 0:16:41.280 Question what is enough? 0:16:41.320 --> 0:16:43.320 So in a crisis, you want your portfolio to have 0:16:43.480 --> 0:16:46.160 enough that you know it saves you two degree of 0:16:46.320 --> 0:16:48.880 it works as the head when it is working, which 0:16:48.880 --> 0:16:51.680 it isn't always. But you don't want so much in 0:16:51.720 --> 0:16:53.840 the good times, remembering that the majority of times are 0:16:53.920 --> 0:16:56.040 good times. You don't want so much that it pulls 0:16:56.040 --> 0:16:58.480 your returns down too much when things are going fine. 0:16:58.520 --> 0:17:01.720 So what is the answer for I think some of 0:17:01.720 --> 0:17:03.320 the trop portfolios it ends up being. 0:17:03.240 --> 0:17:03.920 Nine ten percent. 0:17:03.960 --> 0:17:05.760 And then sometimes it goes down seven and sometimes we've 0:17:05.800 --> 0:17:11.359 got fourteen, so we tend to think maybe minimum five ish. 0:17:11.480 --> 0:17:14.280 Yeah. Well, I think the answer ied point people too 0:17:14.359 --> 0:17:16.920 is the World Gold Council's study which they did about 0:17:16.920 --> 0:17:19.360 ten years ago, which came to it concluded eight five 0:17:19.359 --> 0:17:23.040 to eight percent, which means eight percent and they and 0:17:23.080 --> 0:17:25.680 they were being a bit cautious there. The central banks, 0:17:25.680 --> 0:17:28.240 of course, are now at twenty nine percent of their reserves, 0:17:28.400 --> 0:17:30.960 so they're taking it pretty seriously. And you mentioned the 0:17:31.000 --> 0:17:33.240 good times, Well, we've had most of the times. The 0:17:33.359 --> 0:17:35.040 last twenty five years have been the good times. But 0:17:35.080 --> 0:17:38.480 gold has beaten the S and P including after dividends, 0:17:38.800 --> 0:17:41.000 and so that's into twenty six years, gold is ahead 0:17:41.000 --> 0:17:41.480 of the SMB. 0:17:42.080 --> 0:17:44.960 Still has gold been constantly anticipating the bad times? 0:17:45.000 --> 0:17:48.119 Perhaps, Well, gold doesn't have to. I think it's a 0:17:48.119 --> 0:17:50.119 bit of a bitsnoment that gold necessarily goes up all 0:17:50.119 --> 0:17:53.280 the time because of bad news. I think, you know, 0:17:53.480 --> 0:17:56.119 a very simple way to think about it, particularly in 0:17:56.119 --> 0:17:59.280 the moment, particularly post Ukraine twenty twenty two, is that 0:17:59.359 --> 0:18:03.560 gold's ordn't piece of the central bank reserves, always has been. 0:18:04.600 --> 0:18:07.679 When those reserves are growing very very quickly, the gold 0:18:07.720 --> 0:18:10.680 price is very very strong, and when those reserves have 0:18:10.800 --> 0:18:13.520 been growing more slowly or in decontracting than the goal 0:18:13.640 --> 0:18:16.040 price has been weak. And so you know, people ask 0:18:16.080 --> 0:18:18.560 them out this year, Well, you know, when they have 0:18:18.600 --> 0:18:20.960 got problems in the straight of the Moose, and the 0:18:21.400 --> 0:18:24.000 central banks who are very wealthy in that region, they've 0:18:24.000 --> 0:18:26.440 got problems right now. They need some liquidity, so they're 0:18:26.440 --> 0:18:28.280 selling gold, not all of them, but some of them. 0:18:28.520 --> 0:18:30.879 And so in the margin, there's less gold buying in 0:18:30.880 --> 0:18:33.640 twenty twenty six and there was in twenty twenty five. Yeah, 0:18:33.880 --> 0:18:35.920 and that could be one of the reasons. There's also 0:18:36.000 --> 0:18:38.800 the unwinding of speculation, but that's all another story. But 0:18:38.840 --> 0:18:40.600 I think you know, the bottom line is, you know, 0:18:40.600 --> 0:18:43.560 what's the right weight of gold in the portfolio? My 0:18:43.720 --> 0:18:46.600 view would probably be five percent of you bearish gold 0:18:46.840 --> 0:18:48.440 and twenty percent of your bullish gold. 0:18:48.640 --> 0:18:50.399 Have a view, okay, have of you and take a 0:18:50.400 --> 0:18:52.520 bit no less than five, all right, So with that 0:18:52.720 --> 0:18:55.720 in mind, With that in mind, what about boitcoin. 0:18:56.720 --> 0:19:00.199 Well, there's a question, and I have to have to 0:19:00.200 --> 0:19:04.160 my bold index because I couldn't possibly know the answer intuitively, 0:19:04.200 --> 0:19:06.520 I would have to go and deliver the financial mass, 0:19:06.520 --> 0:19:09.000 and if you do some volatility I mean interested, I 0:19:09.000 --> 0:19:11.720 mean the bark is, do you'd use volatility to do allocation? 0:19:13.200 --> 0:19:15.399 It's part of it, yeah, I mean it's an important 0:19:15.400 --> 0:19:18.399 input for a lot of people who do decide how 0:19:18.480 --> 0:19:23.359 much allocation to have to various things and cross correlations 0:19:23.359 --> 0:19:25.399 and so forth. But you're a bigcoin of gold, have 0:19:25.440 --> 0:19:29.560 low correlation high at the moment, possibly, but generally speaking 0:19:29.560 --> 0:19:31.800 of the last five ten years, that've been very low, 0:19:32.320 --> 0:19:36.440 and the volatility matching the risk rating would would come 0:19:36.440 --> 0:19:39.199 out and say about forty two percent in bitcoin about 0:19:39.240 --> 0:19:41.920 fifty eight gold. Okay, so on that basis, if you're eight, 0:19:42.000 --> 0:19:44.840 if you're eight in gold, then you probably should be 0:19:44.960 --> 0:19:48.000 six or seven in bitcoin. That might seem high to people, 0:19:48.119 --> 0:19:49.199 but the logic stacks up. 0:19:49.240 --> 0:19:49.760 I got it. 0:19:49.960 --> 0:19:53.000 Was you ever put that much into a portfolio? You 0:19:53.040 --> 0:19:54.959 ever give someone a portfolio with a percent bitcoin? 0:19:55.240 --> 0:19:58.520