1 00:00:02,200 --> 00:00:06,399 Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg 2 00:00:06,480 --> 00:00:10,039 Speaker 1: Radio this week on the podcast What Can I Say? 3 00:00:10,200 --> 00:00:15,240 Speaker 1: Jeremy Grantham, he is a legend, Uh, the founder of GMO. 4 00:00:15,400 --> 00:00:18,680 Speaker 1: He is literally the G in GMO. He is the 5 00:00:18,760 --> 00:00:21,840 Speaker 1: chairman of the firm as well as sitting on the 6 00:00:21,880 --> 00:00:26,759 Speaker 1: asset Allocation Committee. Um. He has had a fascinating career. 7 00:00:26,800 --> 00:00:30,400 Speaker 1: I could have spoken him for hours, um, but we 8 00:00:30,520 --> 00:00:33,479 Speaker 1: only had him for a finite amount of time before 9 00:00:33,600 --> 00:00:37,320 Speaker 1: his next actually dinner. We're recording this late on a 10 00:00:37,400 --> 00:00:42,480 Speaker 1: Thursday night. Uh, it's dark out, the Bloomberg studios are empty. 11 00:00:42,520 --> 00:00:47,159 Speaker 1: It's kind of interesting evening recording. But what can I 12 00:00:47,200 --> 00:00:51,680 Speaker 1: tell you? His his track record is astonishing. He's created 13 00:00:51,720 --> 00:00:55,200 Speaker 1: a ton of wealth over the years. His philosophy of 14 00:00:55,280 --> 00:01:00,040 Speaker 1: investing is pretty straightforward. Be a value investor, be a 15 00:01:00,040 --> 00:01:03,160 Speaker 1: air of the data. Understand when things are getting out 16 00:01:03,160 --> 00:01:06,560 Speaker 1: of hands. Um, you may not get the timing perfect, 17 00:01:07,400 --> 00:01:11,840 Speaker 1: but when things become excessively pricey, when the animal spirits 18 00:01:11,959 --> 00:01:16,880 Speaker 1: run amuck, when the bubbles begin to form, you know 19 00:01:16,959 --> 00:01:21,240 Speaker 1: how that ends, and it's never well. The history he's 20 00:01:21,240 --> 00:01:27,680 Speaker 1: put together of warning and positioning himself correctly before the 21 00:01:27,760 --> 00:01:32,080 Speaker 1: nineteen late eighties, Japanese bubble popped, UH, the dot com 22 00:01:32,120 --> 00:01:36,039 Speaker 1: bubble in the late nineties, the Great Financial Crisis. His 23 00:01:36,160 --> 00:01:41,160 Speaker 1: timing has been pretty extraordinary. He's been pretty bearish on 24 00:01:41,440 --> 00:01:46,040 Speaker 1: US stocks um over the past few years and has 25 00:01:46,120 --> 00:01:51,720 Speaker 1: become much more enthusiastic for emerging market value stocks. He 26 00:01:51,800 --> 00:01:54,800 Speaker 1: has warned if you jump into e M, you're gonna 27 00:01:54,840 --> 00:01:59,160 Speaker 1: feel foolish and uncomfortable for a period of time and 28 00:01:59,200 --> 00:02:02,560 Speaker 1: not your first buying opportunity, then it becomes even more 29 00:02:02,600 --> 00:02:05,680 Speaker 1: painful that your second buying opportunity. But if you have 30 00:02:05,720 --> 00:02:09,200 Speaker 1: a ten or a twenty year window, UM, that's where 31 00:02:09,240 --> 00:02:13,560 Speaker 1: you want to be. We discuss philanthropy. He's basically donated 32 00:02:14,560 --> 00:02:18,519 Speaker 1: all of his money to his charitable foundation, and of course, 33 00:02:18,840 --> 00:02:21,120 Speaker 1: since it was Jeremy Grantham, we talked a lot about 34 00:02:21,160 --> 00:02:26,440 Speaker 1: climate change. It's his favorite philanthropic issue, and he's basically 35 00:02:26,560 --> 00:02:29,919 Speaker 1: warns that if we don't do something in soon, uh, 36 00:02:29,960 --> 00:02:31,880 Speaker 1: there ain't gonna be a whole lot of people around 37 00:02:31,960 --> 00:02:36,440 Speaker 1: in fifty years. That we're standing on the precipice of 38 00:02:36,480 --> 00:02:41,640 Speaker 1: a catastrophic um set of of changes. And he says 39 00:02:41,760 --> 00:02:46,680 Speaker 1: he approaches climate change the same way GMO has approached investing. 40 00:02:46,720 --> 00:02:49,320 Speaker 1: He looks at the data, he looks at the overall 41 00:02:49,360 --> 00:02:55,079 Speaker 1: trend and makes what he believes are intelligent, reasonable UH 42 00:02:55,160 --> 00:02:58,280 Speaker 1: decisions based on that data, and those decisions have led 43 00:02:58,360 --> 00:03:02,960 Speaker 1: him to be extremely cautious about what's coming our way 44 00:03:03,040 --> 00:03:08,679 Speaker 1: courtesy of UM rising carbon in the atmosphere caused primarily 45 00:03:08,800 --> 00:03:13,919 Speaker 1: by burning wood coal, UH and oil and gasoline, and 46 00:03:14,000 --> 00:03:16,880 Speaker 1: we need to UH figure out if we want to 47 00:03:16,880 --> 00:03:19,560 Speaker 1: be here a century from now or not. UH. He 48 00:03:19,639 --> 00:03:24,000 Speaker 1: talked about the propaganda industry that's been pushing back against this, 49 00:03:24,080 --> 00:03:26,400 Speaker 1: how the oil industry and the Koch Brothers have funded 50 00:03:26,800 --> 00:03:32,800 Speaker 1: UH disinformation campaign, as he said, brilliantly, quite successfully, and 51 00:03:32,960 --> 00:03:36,680 Speaker 1: lots of people no longer believe in science because it's 52 00:03:36,760 --> 00:03:39,760 Speaker 1: profitable for these companies to have the public not believe 53 00:03:39,800 --> 00:03:42,680 Speaker 1: in science. I could talk about our conversation for hours 54 00:03:42,680 --> 00:03:45,320 Speaker 1: and hours, but rather than listen to me, continue to 55 00:03:45,360 --> 00:03:53,680 Speaker 1: babble with no further ado. My conversation with Jeremy Grantham. 56 00:03:53,720 --> 00:03:57,320 Speaker 1: I have an extra special guest this week. His name 57 00:03:57,800 --> 00:04:00,080 Speaker 1: is Jeremy Grantham and he is one of the co 58 00:04:00,240 --> 00:04:04,480 Speaker 1: founders of GMO, where he is also chief Investment strategist, 59 00:04:04,800 --> 00:04:08,160 Speaker 1: a member of the Asset Allocation Team, and a member 60 00:04:08,200 --> 00:04:12,240 Speaker 1: of GMO's board of directors. Previously, he was co founder 61 00:04:12,280 --> 00:04:16,200 Speaker 1: of Battery March Financial Management. He began his career as 62 00:04:16,240 --> 00:04:20,160 Speaker 1: an economist with Royal Dutch Shell. He did his undergraduate 63 00:04:20,200 --> 00:04:23,800 Speaker 1: work at the University of Sheffield, got his MBA from 64 00:04:23,839 --> 00:04:29,200 Speaker 1: Harvard Business School. Jeremy Grantham, Welcome to Bloomberg. Hello, pleasure 65 00:04:29,240 --> 00:04:33,560 Speaker 1: to be here. So let's let's start with the Battery 66 00:04:33,680 --> 00:04:39,440 Speaker 1: March Financial Management that was nixt nine. GMO was seven. 67 00:04:39,960 --> 00:04:44,680 Speaker 1: I'm curious the seventies were not especially fun period to 68 00:04:44,760 --> 00:04:48,560 Speaker 1: be an equity investor. How much of your investing philosophy 69 00:04:48,600 --> 00:04:53,000 Speaker 1: was shaped by your experience in the nineteen seventies. The 70 00:04:53,080 --> 00:04:59,080 Speaker 1: seventies were hugely kind to us country to what you're suggesting. 71 00:05:00,040 --> 00:05:05,279 Speaker 1: We had a battle plan to invest all our money 72 00:05:05,400 --> 00:05:11,159 Speaker 1: in small cap value before institutionally they had invented small 73 00:05:11,600 --> 00:05:16,920 Speaker 1: or value. Everybody invested with Morgan Guarantee Trust, and they 74 00:05:16,960 --> 00:05:20,640 Speaker 1: bought the nifty fifty, the Great Avon's and ibm s, 75 00:05:21,320 --> 00:05:25,240 Speaker 1: and we bought Great Lakes Dark and Dredge and which 76 00:05:25,279 --> 00:05:30,479 Speaker 1: and no one had heard of. And they went down 77 00:05:30,720 --> 00:05:34,039 Speaker 1: with the rest of the market, but no more badly 78 00:05:34,120 --> 00:05:37,120 Speaker 1: than the Avon's. They all everybody went down in the 79 00:05:37,120 --> 00:05:43,159 Speaker 1: great and then where they rallied for a year, we 80 00:05:43,320 --> 00:05:47,240 Speaker 1: just rallied and rallied, and the small cap inherited the earth. 81 00:05:47,880 --> 00:05:52,000 Speaker 1: And between seventy four and eight two a small cap 82 00:05:52,200 --> 00:05:55,760 Speaker 1: outperformed by well over a percentage points. So did that 83 00:05:55,839 --> 00:05:59,040 Speaker 1: experience affect your philosophy? Did that make you more of 84 00:05:59,080 --> 00:06:02,880 Speaker 1: a small care up in value factor investor? It made 85 00:06:02,920 --> 00:06:07,760 Speaker 1: me much more a devotee of trying to find which 86 00:06:07,800 --> 00:06:13,960 Speaker 1: group might do better in a D two. We basically 87 00:06:14,000 --> 00:06:16,640 Speaker 1: abandoned small cap and went into large cap because they've 88 00:06:16,680 --> 00:06:20,680 Speaker 1: done so well. So we gave up our ten years 89 00:06:20,720 --> 00:06:25,400 Speaker 1: of background together Dick Mayo and me and being the 90 00:06:25,600 --> 00:06:29,320 Speaker 1: m M GMO being the m M GMO and and 91 00:06:29,480 --> 00:06:33,400 Speaker 1: changed because when something has a run and beats the 92 00:06:33,440 --> 00:06:36,359 Speaker 1: market by a hundred points, you better be ready to 93 00:06:36,400 --> 00:06:39,360 Speaker 1: abandon chip, and so we did so before we get 94 00:06:39,440 --> 00:06:42,400 Speaker 1: up to the I want to stay. In the nineteen seventies, 95 00:06:42,839 --> 00:06:46,360 Speaker 1: when you were at Battery March, you worked with Dean 96 00:06:46,440 --> 00:06:50,080 Speaker 1: LeBaron and the two you kind of put together an 97 00:06:50,080 --> 00:06:53,640 Speaker 1: idea that you first floated at a Harvard Business School 98 00:06:53,680 --> 00:06:57,680 Speaker 1: seminar um, and the concept was maybe people should just 99 00:06:57,760 --> 00:07:00,640 Speaker 1: buy a Brouin index of stocks and stead of trying 100 00:07:00,640 --> 00:07:04,160 Speaker 1: to pick individual names'll just tell us how that played out. 101 00:07:04,360 --> 00:07:09,080 Speaker 1: Dean had a a friend, Lee Bowden Hammer, and this 102 00:07:09,240 --> 00:07:13,800 Speaker 1: was a summer course for pension fund officers at HBS, 103 00:07:14,640 --> 00:07:19,240 Speaker 1: and they had written a special case where these pension 104 00:07:19,280 --> 00:07:23,320 Speaker 1: fund guys were going to choose between the establishment Morgan 105 00:07:23,360 --> 00:07:28,840 Speaker 1: Guarantee Trust they JP Morgan basically and and the other 106 00:07:28,880 --> 00:07:32,920 Speaker 1: banks in New York owned the pension fund business back then. 107 00:07:33,960 --> 00:07:37,880 Speaker 1: And the second player was tro Price, which was relatively 108 00:07:37,960 --> 00:07:43,360 Speaker 1: new and represented growth, which was also relatively new, and 109 00:07:44,000 --> 00:07:48,120 Speaker 1: and the third one was a little unheard of new company. 110 00:07:48,200 --> 00:07:52,000 Speaker 1: They actually invented a new name for us. And they 111 00:07:52,000 --> 00:07:55,000 Speaker 1: had to decide between these three. And at the end 112 00:07:55,000 --> 00:07:58,200 Speaker 1: of the class, when they had gone through their proceedings, 113 00:07:59,200 --> 00:08:05,320 Speaker 1: as it's typically the case, they the boss asked the 114 00:08:05,480 --> 00:08:09,640 Speaker 1: visitors sitting on the back bench, had they got any comments. 115 00:08:09,800 --> 00:08:12,080 Speaker 1: You're not allowed to talk during the class, but you 116 00:08:12,320 --> 00:08:17,240 Speaker 1: usually get asked. And I can't remember what Dean said, 117 00:08:17,320 --> 00:08:19,920 Speaker 1: but what I said was when I looked at the case, 118 00:08:20,320 --> 00:08:22,720 Speaker 1: and I looked at the data for the three players 119 00:08:22,880 --> 00:08:25,640 Speaker 1: and the SMP. I was surprised that no one in 120 00:08:25,680 --> 00:08:28,560 Speaker 1: the room had suggested giving their money to the gentleman 121 00:08:28,600 --> 00:08:31,840 Speaker 1: from standard and pause. That was it went over like 122 00:08:31,880 --> 00:08:35,120 Speaker 1: a lead balloon. No one twitched and on the car 123 00:08:35,480 --> 00:08:37,840 Speaker 1: back in the drive, I had said to Dean, why 124 00:08:37,840 --> 00:08:43,360 Speaker 1: don't we take this seriously? Honestly, think about it. GM 125 00:08:43,440 --> 00:08:46,280 Speaker 1: is said to have a hundred different managers. What chance 126 00:08:46,320 --> 00:08:49,640 Speaker 1: did they have of actually beating the SMP. They're drowning 127 00:08:49,760 --> 00:08:54,480 Speaker 1: in turnover and management fees. So if you look at it, 128 00:08:54,600 --> 00:08:58,679 Speaker 1: you know one thing with absolute certainty. The players are 129 00:08:58,720 --> 00:09:01,640 Speaker 1: going to pay percent or two percent a year to 130 00:09:01,679 --> 00:09:04,959 Speaker 1: play the game, and the observers sitting at the bar, 131 00:09:05,080 --> 00:09:07,600 Speaker 1: if you will, watching the poker game, are going to 132 00:09:08,640 --> 00:09:13,080 Speaker 1: have a market return. Therefore, by definition, the guys at 133 00:09:13,080 --> 00:09:15,440 Speaker 1: the bar are going to be the average of the 134 00:09:15,440 --> 00:09:19,160 Speaker 1: poker players, because there will be a zero sum poker players. 135 00:09:19,720 --> 00:09:22,560 Speaker 1: Some of them may do brilliantly well by inflicting their 136 00:09:22,559 --> 00:09:26,400 Speaker 1: transaction costs and their management fees on one of the 137 00:09:26,480 --> 00:09:29,920 Speaker 1: less good poker players. And but at the end of 138 00:09:29,960 --> 00:09:32,320 Speaker 1: the game, all the players will sum to minus one 139 00:09:32,360 --> 00:09:35,040 Speaker 1: and a half, and all the observers will sum to 140 00:09:35,480 --> 00:09:39,960 Speaker 1: zero and and you would win. And why don't we 141 00:09:40,000 --> 00:09:42,920 Speaker 1: suggest to the big players instead of instead of having 142 00:09:43,000 --> 00:09:46,240 Speaker 1: thirty investment managers or a hundred, that they put a 143 00:09:46,240 --> 00:09:50,360 Speaker 1: big chunk of their money into the market. So the 144 00:09:50,600 --> 00:09:54,160 Speaker 1: entire logic was zero sum game, which was a sufficient 145 00:09:54,200 --> 00:09:56,800 Speaker 1: reason to do it then and is a sufficient reason 146 00:09:56,840 --> 00:10:01,120 Speaker 1: to do it today. And no one was interested. We 147 00:10:01,200 --> 00:10:05,680 Speaker 1: offered it. Dean was a brilliant propagandist. No one was interested. 148 00:10:05,720 --> 00:10:08,960 Speaker 1: No one was interested, and he got written up the 149 00:10:09,040 --> 00:10:13,640 Speaker 1: story in the New York Times magazine, supplement and so 150 00:10:13,720 --> 00:10:16,200 Speaker 1: on and so forth, and it got a lot of exposure, 151 00:10:16,280 --> 00:10:19,120 Speaker 1: and at the end of a year, Pension and Investment 152 00:10:19,160 --> 00:10:22,440 Speaker 1: the Trade Rag jokingly gave us an award for the 153 00:10:22,480 --> 00:10:25,840 Speaker 1: most talked about product with no business? How did you 154 00:10:25,880 --> 00:10:30,839 Speaker 1: first get interested in the challenges of climate change? When 155 00:10:30,880 --> 00:10:35,080 Speaker 1: when I'm giving my stump speech to financial people, I 156 00:10:35,160 --> 00:10:38,560 Speaker 1: always hope that someone will ask me this question. And 157 00:10:38,720 --> 00:10:41,440 Speaker 1: what I say is, you've seen the data that I've 158 00:10:41,480 --> 00:10:44,840 Speaker 1: just gone through, and you're asking me this damn stupid question. 159 00:10:45,400 --> 00:10:48,640 Speaker 1: Why why would I be excited if you've seen the data? 160 00:10:49,200 --> 00:10:51,559 Speaker 1: The real question is, what the hell are you doing, 161 00:10:51,600 --> 00:10:54,920 Speaker 1: not being excited. How is it possible that the great 162 00:10:54,960 --> 00:10:57,320 Speaker 1: majority of you sitting in the audience have done nothing 163 00:10:57,600 --> 00:11:01,280 Speaker 1: and no very little about this threat, which is the 164 00:11:01,320 --> 00:11:03,920 Speaker 1: most severe one you will have to deal with for 165 00:11:03,960 --> 00:11:05,559 Speaker 1: the rest of your life. There was a book out 166 00:11:05,640 --> 00:11:08,520 Speaker 1: not too long ago called Windfall, and one of the 167 00:11:08,559 --> 00:11:13,040 Speaker 1: conclusions of the book was the dry areas are gonna 168 00:11:13,040 --> 00:11:15,520 Speaker 1: get drier, the wet areas going to get what wetter. 169 00:11:16,320 --> 00:11:18,320 Speaker 1: Where it's hot, it's going to get hotter. Where it's cold, 170 00:11:18,320 --> 00:11:21,199 Speaker 1: it's going to get colder. And the way this falls 171 00:11:21,240 --> 00:11:26,960 Speaker 1: out across the planet is disproportionately on the poorest people 172 00:11:27,120 --> 00:11:30,520 Speaker 1: in the world. Does does that still ring true? Is 173 00:11:30,520 --> 00:11:33,080 Speaker 1: that what we're looking at going forward? Yeah? I think 174 00:11:33,160 --> 00:11:37,480 Speaker 1: in general the consequences of climate damage here I felt 175 00:11:37,559 --> 00:11:42,040 Speaker 1: in the most sensitive areas, which are occupied mainly by 176 00:11:42,080 --> 00:11:45,040 Speaker 1: the poor, they live in the least desirable parts of 177 00:11:45,040 --> 00:11:49,720 Speaker 1: the world, the semi desert zones of Africa and the 178 00:11:49,720 --> 00:11:53,760 Speaker 1: Far East being classic examples. However, the cold, the cold 179 00:11:53,800 --> 00:11:57,880 Speaker 1: areas are not getting colder. Actually, the further north and 180 00:11:57,960 --> 00:12:01,559 Speaker 1: south you go towards the poles, the faster it's warming up, 181 00:12:01,960 --> 00:12:04,800 Speaker 1: and the closer you get to the equator, the more 182 00:12:04,840 --> 00:12:08,720 Speaker 1: slowly it's warming up, which interestingly has has some profound 183 00:12:08,720 --> 00:12:13,000 Speaker 1: effects because the wind draws its power from the temperature 184 00:12:13,000 --> 00:12:16,200 Speaker 1: differential between the pole and the equator, and if you 185 00:12:16,280 --> 00:12:19,440 Speaker 1: narrow that by having the polls get warmer faster, you 186 00:12:19,520 --> 00:12:22,959 Speaker 1: slow down the winds. So now hurricanes are moving ten 187 00:12:22,960 --> 00:12:26,120 Speaker 1: percent slower, So you're more likely to have a hurricane 188 00:12:26,200 --> 00:12:28,640 Speaker 1: amble its way across your territory and rain a whole 189 00:12:28,679 --> 00:12:31,880 Speaker 1: lot more rain, which is what happened in spades in Houston, 190 00:12:31,960 --> 00:12:35,080 Speaker 1: where it rained thirty inches in three days. You have 191 00:12:35,280 --> 00:12:38,480 Speaker 1: raised the question as to whether or not energy will 192 00:12:38,559 --> 00:12:42,320 Speaker 1: give us a serious and sustained set of problems over 193 00:12:42,360 --> 00:12:45,959 Speaker 1: the next fifty years. What what you're thinking about energy? 194 00:12:46,440 --> 00:12:49,920 Speaker 1: Looks like parts of the world are transitioning to renewables 195 00:12:49,960 --> 00:12:53,440 Speaker 1: somewhat slowly, but it's moving forward. Tell it. Tell us 196 00:12:53,440 --> 00:12:59,080 Speaker 1: about energy? Well, the technology and energy has been unexpectedly great. 197 00:12:59,360 --> 00:13:03,600 Speaker 1: It's moving at great speed, has a thousands of new 198 00:13:03,720 --> 00:13:08,280 Speaker 1: enterprises trying to push it along, and in general it's 199 00:13:08,320 --> 00:13:13,040 Speaker 1: been a very pleasant surprise, meaning the costs have come down, 200 00:13:13,040 --> 00:13:16,160 Speaker 1: the efficiency costs of wind have come down more than 201 00:13:16,200 --> 00:13:21,720 Speaker 1: anyone dreamt possible years ago, costs of solar have come 202 00:13:21,760 --> 00:13:25,760 Speaker 1: down the same um. Solar is now equal or cheaper 203 00:13:25,800 --> 00:13:30,800 Speaker 1: than coal. Is that a fair statement? A modern utility 204 00:13:30,880 --> 00:13:34,480 Speaker 1: plant for solar or wind in any one of half 205 00:13:34,480 --> 00:13:38,760 Speaker 1: a dozen better states is cheaper to construct and run 206 00:13:39,040 --> 00:13:41,800 Speaker 1: than it is merely to run an existing coal plant. 207 00:13:42,360 --> 00:13:46,560 Speaker 1: It's actually fully costed cheaper than the marginal cost of 208 00:13:46,600 --> 00:13:50,400 Speaker 1: the best nuclear and the best coal plants. Do you 209 00:13:50,440 --> 00:13:54,560 Speaker 1: see much of a future from nuclear? My my motto 210 00:13:54,640 --> 00:14:00,559 Speaker 1: is never underestimate science and also, unfortunately, never underestimate Homer 211 00:14:00,640 --> 00:14:05,120 Speaker 1: sapiens ability to screw it up the But in terms 212 00:14:05,120 --> 00:14:09,679 Speaker 1: of nuclear there are endless attempts to come up with 213 00:14:09,720 --> 00:14:14,559 Speaker 1: what you might call third generation fusion, trying to bypass 214 00:14:14,640 --> 00:14:16,520 Speaker 1: some of the problems that have slowed them down for 215 00:14:16,559 --> 00:14:19,440 Speaker 1: twenty thirty years based on the new technologies. They have 216 00:14:19,520 --> 00:14:23,880 Speaker 1: so much invested in in the old approach to fusion 217 00:14:23,920 --> 00:14:26,960 Speaker 1: that they're kind of now they're thirty billion in the hole. 218 00:14:27,000 --> 00:14:29,360 Speaker 1: They feel they have to keep going, and some of 219 00:14:29,400 --> 00:14:33,760 Speaker 1: these new people working on a shoestring may may get lucky, 220 00:14:33,800 --> 00:14:36,480 Speaker 1: may come up with a form of fusion. There was 221 00:14:36,520 --> 00:14:38,680 Speaker 1: there was a buzz A couple of years ago about 222 00:14:38,760 --> 00:14:41,520 Speaker 1: thorium reactors that kind of came in, and and even 223 00:14:41,640 --> 00:14:47,880 Speaker 1: on fishing thorium or new engineering tricks small scale, you 224 00:14:47,960 --> 00:14:50,760 Speaker 1: can't rule them out. If you come back in thirty years, 225 00:14:51,080 --> 00:14:53,400 Speaker 1: I think there's maybe a fifty fifty shot that one 226 00:14:53,520 --> 00:14:56,600 Speaker 1: or the other will have come through with something that 227 00:14:56,760 --> 00:15:01,640 Speaker 1: is helpful. Um of course by their and energy storage, 228 00:15:01,680 --> 00:15:04,040 Speaker 1: which is the key to wind and solar, and may 229 00:15:04,080 --> 00:15:06,680 Speaker 1: have become so cheap that it's that it's not really 230 00:15:06,720 --> 00:15:11,760 Speaker 1: necessary even even if it's technically feasible um solar and wind, 231 00:15:11,880 --> 00:15:14,200 Speaker 1: which are continuing to decline by the way out into 232 00:15:14,200 --> 00:15:16,760 Speaker 1: the distant future as far as one can see. I 233 00:15:16,920 --> 00:15:19,400 Speaker 1: just give you one example of that, and that is 234 00:15:19,480 --> 00:15:22,880 Speaker 1: that the winds over the ocean is faster than the 235 00:15:22,880 --> 00:15:28,840 Speaker 1: winds on land, and the bigger the wind tower, much 236 00:15:28,880 --> 00:15:33,360 Speaker 1: more efficient it becomes. It's the swept area, so that 237 00:15:33,480 --> 00:15:36,360 Speaker 1: a twenty fourth blade doesn't give you twice the energy 238 00:15:36,360 --> 00:15:38,360 Speaker 1: of a ten foot blade, it gives you four times. 239 00:15:39,400 --> 00:15:42,520 Speaker 1: And as you go up the wind speed increases, and 240 00:15:42,560 --> 00:15:44,920 Speaker 1: the power of a windmill is a cube of the 241 00:15:44,920 --> 00:15:47,320 Speaker 1: wind speed. That's why hurricanes of a hundred and forty 242 00:15:47,360 --> 00:15:50,320 Speaker 1: miles are so much more deadly than a hundred and twenty. 243 00:15:50,360 --> 00:15:52,480 Speaker 1: It sounds like it should be seventeen percent, but it's 244 00:15:52,480 --> 00:15:55,760 Speaker 1: fifty or sixty percent. And so if you can build 245 00:15:55,800 --> 00:15:58,880 Speaker 1: a truly giant windmill, and the ones you drive past 246 00:15:58,960 --> 00:16:01,360 Speaker 1: on a cycling trip in under two megawats, and the 247 00:16:01,400 --> 00:16:04,160 Speaker 1: one you can order from ge if it's still around 248 00:16:04,440 --> 00:16:09,440 Speaker 1: but delivery in two is twelve megawats, and that is 249 00:16:09,520 --> 00:16:12,280 Speaker 1: almost as high as the Eiffel Tower, believe it or not. 250 00:16:12,840 --> 00:16:16,040 Speaker 1: And they are massively efficient, and you can only build 251 00:16:16,040 --> 00:16:18,880 Speaker 1: them in in in the oceans where the wind is 252 00:16:18,880 --> 00:16:21,640 Speaker 1: more constant. And if you could find the technology to 253 00:16:21,680 --> 00:16:24,320 Speaker 1: build it in the North Atlantic and have cables that 254 00:16:24,360 --> 00:16:28,880 Speaker 1: could carry it back to civilization. Uh, the wind is 255 00:16:28,920 --> 00:16:31,240 Speaker 1: blowing e t plus percent of the time in the 256 00:16:31,280 --> 00:16:33,720 Speaker 1: winter when you really need it in the northern hemisphere. 257 00:16:34,240 --> 00:16:37,040 Speaker 1: So there is a lot of potential up our sleeve 258 00:16:37,120 --> 00:16:40,000 Speaker 1: for the next few decades. In the end, I think 259 00:16:40,040 --> 00:16:43,480 Speaker 1: we will have a plentiful supply of green energy. We 260 00:16:43,560 --> 00:16:46,080 Speaker 1: will not, as a civilization, be brought to our knees 261 00:16:46,520 --> 00:16:49,000 Speaker 1: for a lack of green energy. The problem will be 262 00:16:50,200 --> 00:16:52,840 Speaker 1: how long has it taken us to get there? So 263 00:16:53,000 --> 00:16:55,440 Speaker 1: we will get plenty of energy in fifty years, will 264 00:16:55,480 --> 00:16:58,160 Speaker 1: be fully decombonized. I should think in a hundred years, 265 00:16:58,200 --> 00:17:01,920 Speaker 1: maybe sooner, but the damage that will have been done 266 00:17:02,560 --> 00:17:06,480 Speaker 1: by then. As the carbon dioxide count rises. We have 267 00:17:06,600 --> 00:17:09,560 Speaker 1: seen and been amazed, including the scientists, by the way, 268 00:17:09,800 --> 00:17:12,680 Speaker 1: at the rate at which the damage in fires and 269 00:17:12,800 --> 00:17:15,919 Speaker 1: floods and the hurricanes, and the speed they build up 270 00:17:15,960 --> 00:17:19,640 Speaker 1: their power drought some floods for agriculture, We've all been 271 00:17:19,680 --> 00:17:23,800 Speaker 1: horrified by how quickly that has escalated. And if you 272 00:17:24,000 --> 00:17:27,520 Speaker 1: extrapolate what is going on today, we have no hope 273 00:17:27,520 --> 00:17:29,560 Speaker 1: of controlling this for one and a half degrees, that 274 00:17:29,760 --> 00:17:33,320 Speaker 1: is merely an intellectual exercise. We have no real hope. 275 00:17:33,320 --> 00:17:35,639 Speaker 1: But two degrees, we're going to have to fight and 276 00:17:35,760 --> 00:17:38,760 Speaker 1: scratch and do much better than we are doing today 277 00:17:38,880 --> 00:17:41,560 Speaker 1: to keep it below three degrees. And at three degrees, 278 00:17:41,680 --> 00:17:45,399 Speaker 1: all manner of bad things are already happening, and some 279 00:17:45,560 --> 00:17:48,879 Speaker 1: of them may actually get out of control, become self 280 00:17:49,440 --> 00:17:54,639 Speaker 1: reinforcing vicious cycles. There's no guarantee that that will not 281 00:17:54,800 --> 00:17:58,880 Speaker 1: happen anytime in the next few decades. So so let's 282 00:17:58,880 --> 00:18:05,160 Speaker 1: talk for a moment about agnetology or culturally constructed ignorance. Um, 283 00:18:05,240 --> 00:18:08,479 Speaker 1: you have a line that I'm intrigued by. You wrote, 284 00:18:09,160 --> 00:18:15,280 Speaker 1: the misinformation machine is brilliant. Please explain. The Koch Brothers 285 00:18:15,320 --> 00:18:18,760 Speaker 1: and and the excellence of the world have been basically 286 00:18:18,800 --> 00:18:26,200 Speaker 1: funding a disinformation for thirty years, maybe longer, and they 287 00:18:26,200 --> 00:18:33,120 Speaker 1: have help set up institutes, UM. Right wing institutes who 288 00:18:33,800 --> 00:18:37,159 Speaker 1: basically defend the idea that climate change is a hoax 289 00:18:38,000 --> 00:18:42,320 Speaker 1: are in that sense anti science. And they've done it well. 290 00:18:42,400 --> 00:18:46,840 Speaker 1: They've been persistent, they've funded it, if you will, generously, 291 00:18:47,680 --> 00:18:52,480 Speaker 1: and they have achieved remarkable results. In comparison, science has 292 00:18:52,520 --> 00:18:57,720 Speaker 1: been diffident and cautious, careful not to overstate anything, and 293 00:18:57,720 --> 00:19:01,640 Speaker 1: and in that care they have garanteed they understate everything. 294 00:19:02,160 --> 00:19:04,600 Speaker 1: And as I like to tease them, it may be 295 00:19:04,720 --> 00:19:07,600 Speaker 1: dangerous to overstate most things in science. But one thing 296 00:19:07,720 --> 00:19:11,760 Speaker 1: is absolutely certain, and that is it's dangerous to understate 297 00:19:12,119 --> 00:19:16,160 Speaker 1: climate change. If by understating it, by being too cash, cautious, 298 00:19:16,200 --> 00:19:22,199 Speaker 1: too careful, you you influence a politician to underreact, you 299 00:19:22,880 --> 00:19:27,160 Speaker 1: influence the general public to underreact, you may be making 300 00:19:27,200 --> 00:19:32,520 Speaker 1: a huge, painful, dangerous mistake. So the tobacco industry managed 301 00:19:32,560 --> 00:19:37,040 Speaker 1: to keep people confused about the impact of tobacco for 302 00:19:37,359 --> 00:19:41,600 Speaker 1: decades and decades before they ultimately how to make a 303 00:19:41,760 --> 00:19:45,480 Speaker 1: multibillion dollar, multi decade settlement. How long will it take 304 00:19:45,520 --> 00:19:50,680 Speaker 1: before the carbon industry, UH, similarly stops pulling the wool 305 00:19:50,720 --> 00:19:53,159 Speaker 1: over so many people's eyes. I think we're changing very 306 00:19:53,280 --> 00:19:57,840 Speaker 1: rapidly this last couple of weeks. That's been a confluence 307 00:19:57,840 --> 00:20:03,679 Speaker 1: of reports and coupled with the terrible forest fires burning 308 00:20:03,680 --> 00:20:09,560 Speaker 1: all the time in California. Regrettably, those natural horrors are 309 00:20:09,920 --> 00:20:14,159 Speaker 1: seemed seemed to be necessary to move public opinion. But 310 00:20:14,240 --> 00:20:19,080 Speaker 1: the confluence of that tragedy with all these major reports 311 00:20:19,119 --> 00:20:24,840 Speaker 1: one from NASA, a government agency, and and major one 312 00:20:24,960 --> 00:20:29,119 Speaker 1: from the U, n H I, p c C talking 313 00:20:29,160 --> 00:20:31,959 Speaker 1: about the chances and costs of holding it at one 314 00:20:32,000 --> 00:20:35,160 Speaker 1: and a half degree centigrade, and and and also three 315 00:20:35,280 --> 00:20:40,520 Speaker 1: or four other articles and peer reviewed seriously important journals, 316 00:20:40,560 --> 00:20:43,040 Speaker 1: what I would call the top three science journals. That 317 00:20:43,200 --> 00:20:47,040 Speaker 1: confluence has created an enormous amount of attention in the press, 318 00:20:47,040 --> 00:20:49,520 Speaker 1: which is so rare, and it's played, and it's played 319 00:20:49,520 --> 00:20:53,480 Speaker 1: in my opinion, and I think Trump has agitated the 320 00:20:53,520 --> 00:20:57,399 Speaker 1: science world into standing up and actually stating now for 321 00:20:57,440 --> 00:21:01,240 Speaker 1: the first time in terms that rep present that honest belief. 322 00:21:01,840 --> 00:21:04,440 Speaker 1: So I think the worms have turned fairly big time. 323 00:21:05,160 --> 00:21:08,199 Speaker 1: I I used to tease them. I hadn't actually a 324 00:21:08,200 --> 00:21:11,919 Speaker 1: commentary in Nature, perhaps the number one journal, and it 325 00:21:12,040 --> 00:21:17,200 Speaker 1: was called be brave, be persuays if be arrested if necessary, 326 00:21:17,480 --> 00:21:20,080 Speaker 1: And there was haranguing these guys for not stepping up. Well, 327 00:21:20,160 --> 00:21:24,159 Speaker 1: now Trump has done what many people couldn't, and he 328 00:21:24,280 --> 00:21:27,840 Speaker 1: stepped up. They have stepped up. I should say, let's 329 00:21:27,880 --> 00:21:31,600 Speaker 1: talk a little bit about philanthropy. I read a fascinating statistic. 330 00:21:32,440 --> 00:21:37,320 Speaker 1: Only two to four of all charitable donations made each 331 00:21:37,400 --> 00:21:43,400 Speaker 1: year go towards environmental causes? Is that possibly right? Sadly, 332 00:21:43,480 --> 00:21:47,120 Speaker 1: it's absolutely right. I mean, it's it's tragic. It reflects 333 00:21:47,160 --> 00:21:51,320 Speaker 1: I think the motivation for a lot of charitable giving, 334 00:21:52,320 --> 00:21:55,280 Speaker 1: which to be uncharitable, is to move in the right 335 00:21:55,359 --> 00:21:58,439 Speaker 1: circles and be recognized for what you do. And you 336 00:21:58,520 --> 00:22:04,320 Speaker 1: move with illuminati, and you go to dances and balls 337 00:22:04,440 --> 00:22:09,760 Speaker 1: and photographed and put in in the tatler, and and 338 00:22:09,840 --> 00:22:14,679 Speaker 1: so it goes on. And in comparison, lowly defense of 339 00:22:14,720 --> 00:22:21,399 Speaker 1: the environment is not very good from promoting your your 340 00:22:21,440 --> 00:22:24,760 Speaker 1: your life in in in smart circles it's it's a 341 00:22:24,840 --> 00:22:28,439 Speaker 1: kind of country cousin and and it gets two percent, 342 00:22:28,560 --> 00:22:33,639 Speaker 1: even though without solving the climate problem. Your college is 343 00:22:34,080 --> 00:22:37,480 Speaker 1: your museums, everything. In the end, it's not going to 344 00:22:37,520 --> 00:22:41,280 Speaker 1: be worth much if we can't maintain a fairly stable 345 00:22:42,600 --> 00:22:47,520 Speaker 1: global civilization, which is seriously at risk. And almost any 346 00:22:47,760 --> 00:22:50,639 Speaker 1: serious scientists would come from that. So let's talk a 347 00:22:50,680 --> 00:22:53,480 Speaker 1: little bit about the Grantham Foundation for the Protection of 348 00:22:53,480 --> 00:22:57,119 Speaker 1: the Environment. What what sort of activities does that fund? 349 00:22:58,400 --> 00:23:02,640 Speaker 1: First of all, let me say it hasn't of my 350 00:23:02,880 --> 00:23:07,840 Speaker 1: accumulated ill gotten gains from the financial world, and that 351 00:23:08,040 --> 00:23:11,120 Speaker 1: is a pretty effective statement of how serious I think 352 00:23:11,160 --> 00:23:13,760 Speaker 1: it is. I don't even see it really as philanthropy. 353 00:23:13,840 --> 00:23:17,480 Speaker 1: I see it as defensive investment, trying to look after 354 00:23:18,119 --> 00:23:24,479 Speaker 1: my children, grandchildren and their progeny indefinitely. And I am 355 00:23:24,520 --> 00:23:29,280 Speaker 1: always amazed that more people don't see it that way. UM, 356 00:23:29,840 --> 00:23:31,960 Speaker 1: I'm not a scientist and you don't. But you don't 357 00:23:32,000 --> 00:23:36,399 Speaker 1: have to be a scientist to understand the science that 358 00:23:36,520 --> 00:23:41,040 Speaker 1: is coming down the road so fast. So let's talk 359 00:23:41,040 --> 00:23:45,000 Speaker 1: a little bit about, um, your long term goals. How 360 00:23:45,000 --> 00:23:49,760 Speaker 1: do you specifically identify different recipients that you fund? You 361 00:23:49,760 --> 00:23:52,320 Speaker 1: you fund a lot of existing groups as well as 362 00:23:52,359 --> 00:23:56,280 Speaker 1: some of your own new projects. To start with the 363 00:23:56,359 --> 00:24:01,879 Speaker 1: exciting stuff of our corpus UM is invested in green 364 00:24:02,359 --> 00:24:08,000 Speaker 1: investing by us directly in in in venture capital. So 365 00:24:08,160 --> 00:24:12,760 Speaker 1: and I have three very industrious sharp helpers and we 366 00:24:12,840 --> 00:24:16,000 Speaker 1: spend I spend as much time as I can, and 367 00:24:16,040 --> 00:24:20,760 Speaker 1: they spend all their all their time really um chasing 368 00:24:20,800 --> 00:24:24,639 Speaker 1: down great opportunities in this field. And one of the 369 00:24:24,720 --> 00:24:28,119 Speaker 1: rules we have is they have to be capable of 370 00:24:28,160 --> 00:24:32,840 Speaker 1: really making it a difference, changing the probabilities of surviving 371 00:24:32,840 --> 00:24:36,119 Speaker 1: all all of these stressful points. And we spend a 372 00:24:36,119 --> 00:24:40,720 Speaker 1: lot of time face to face with scientists and entrepreneurs 373 00:24:40,760 --> 00:24:45,560 Speaker 1: scientists slash entrepreneurs, and it's amazing what they're up to. 374 00:24:45,640 --> 00:24:49,560 Speaker 1: They have done um incredible things. I just give you 375 00:24:49,640 --> 00:24:53,080 Speaker 1: a few examples. We our r n A is the 376 00:24:53,160 --> 00:24:56,679 Speaker 1: kind of engineering part that sends messages to the d 377 00:24:56,800 --> 00:25:00,399 Speaker 1: NA what to do. And the problem with it was 378 00:25:00,640 --> 00:25:04,639 Speaker 1: so so expensive to isolate that a lot of work 379 00:25:04,880 --> 00:25:07,639 Speaker 1: just couldn't be undertaken. It was a thousand dollars a 380 00:25:07,720 --> 00:25:10,800 Speaker 1: Graham and we bumped into a group that with a 381 00:25:10,840 --> 00:25:14,200 Speaker 1: completely different approach, can now make it. At thirty five 382 00:25:14,400 --> 00:25:17,280 Speaker 1: cents a Graham with a target of ten cents next year. 383 00:25:18,080 --> 00:25:22,399 Speaker 1: That's the kind of order of magnitude you need to 384 00:25:23,200 --> 00:25:27,640 Speaker 1: be disruptive. And and having obtained the material, they can 385 00:25:27,680 --> 00:25:32,640 Speaker 1: now design h endless things. But one of them they 386 00:25:32,640 --> 00:25:34,840 Speaker 1: started with a very obvious one was to send the 387 00:25:34,880 --> 00:25:41,679 Speaker 1: instructions to a very expensive beetle, the Colorado potato beetle 388 00:25:42,320 --> 00:25:46,040 Speaker 1: um that can devastate whole fields in in kind of 389 00:25:46,040 --> 00:25:51,320 Speaker 1: one sitting as it were, and the RNA says, are 390 00:25:51,359 --> 00:25:54,840 Speaker 1: you a Colorado beetle? Yes, I am, Please proceed to 391 00:25:54,880 --> 00:25:57,840 Speaker 1: this part of your DNA. Now we will turn off 392 00:25:57,960 --> 00:26:03,280 Speaker 1: this particular switch. And what does is unique to that beetle. 393 00:26:03,720 --> 00:26:08,240 Speaker 1: It will make it impossible to digest cellulosic fiber. So 394 00:26:08,280 --> 00:26:11,159 Speaker 1: the beetle munches away on the potato and dies of 395 00:26:11,200 --> 00:26:14,480 Speaker 1: starvation and drops harmlessly to the ground where it's not 396 00:26:14,520 --> 00:26:16,800 Speaker 1: even poisonous and can be eaten up by the other 397 00:26:16,880 --> 00:26:22,520 Speaker 1: local insects, and all of the literally poisonous insecticides that 398 00:26:22,600 --> 00:26:26,040 Speaker 1: previously we're used can be dispensed with. I mean that 399 00:26:26,200 --> 00:26:28,320 Speaker 1: that is the kind of thing that could really change 400 00:26:28,320 --> 00:26:32,280 Speaker 1: the world. And another one is we we fund a 401 00:26:32,480 --> 00:26:36,440 Speaker 1: lightweight vehicle. The trouble with the Tesla. I just received 402 00:26:36,480 --> 00:26:39,200 Speaker 1: my Model three, and I'm thrilled by it, by the way, 403 00:26:39,440 --> 00:26:46,959 Speaker 1: But it weighs three thousand pounds pounds and it's moving 404 00:26:47,960 --> 00:26:50,080 Speaker 1: a hundred and fifty pounds of me down the road. 405 00:26:51,359 --> 00:26:55,520 Speaker 1: And the vehicle we're funding via m I T work 406 00:26:55,880 --> 00:27:00,440 Speaker 1: is under eight pounds. Is that like a composite material 407 00:27:00,520 --> 00:27:05,400 Speaker 1: that's been it's carbon fiber protection around a three wheeler, 408 00:27:05,680 --> 00:27:09,880 Speaker 1: and you could say it's a glorified comfortable motorbike with 409 00:27:09,920 --> 00:27:12,480 Speaker 1: one or two passengers, in room for some groceries and 410 00:27:12,600 --> 00:27:16,000 Speaker 1: keeps the rain off. But it's also the most streamlined 411 00:27:16,080 --> 00:27:20,880 Speaker 1: vehicle on the road, moves like a rocket ship, entirely electric, 412 00:27:20,920 --> 00:27:25,160 Speaker 1: of course, and it has a range far beyond any 413 00:27:25,400 --> 00:27:30,760 Speaker 1: reasonable needs. The the material, the composite, stronger than steel, 414 00:27:30,920 --> 00:27:32,840 Speaker 1: but a fraction of the weight is that the goal. 415 00:27:33,080 --> 00:27:38,000 Speaker 1: It's ten times more capable of absorbing injury and still 416 00:27:38,040 --> 00:27:42,240 Speaker 1: bouncing back than steel, and of course very much lighter. 417 00:27:42,280 --> 00:27:45,080 Speaker 1: Whether it's a tenth of as light, I should think 418 00:27:45,200 --> 00:27:48,560 Speaker 1: probably something like that. And you mentioned the potato beetle. 419 00:27:49,320 --> 00:27:52,720 Speaker 1: I have to ask about agriculture in general, because I 420 00:27:52,800 --> 00:27:56,560 Speaker 1: know this is a topic that's been very worrisome for you. Um. 421 00:27:56,600 --> 00:27:59,800 Speaker 1: I think most people are aware of the great die 422 00:27:59,880 --> 00:28:03,360 Speaker 1: or of bees. Maybe it's a pesticide, We're not exactly 423 00:28:03,400 --> 00:28:09,000 Speaker 1: sure what it is. How dangerous, How threatened is the 424 00:28:09,040 --> 00:28:13,520 Speaker 1: food supply of Homo sapiens given all the changes that's 425 00:28:13,560 --> 00:28:17,000 Speaker 1: going on. I actually think that the intestation of food 426 00:28:17,040 --> 00:28:21,360 Speaker 1: problems with a rapidly growing population, particularly in Africa, is 427 00:28:21,560 --> 00:28:26,359 Speaker 1: the most direct threat of climate change, because climate change 428 00:28:26,400 --> 00:28:30,040 Speaker 1: makes the growing of food that much harder. A report 429 00:28:30,160 --> 00:28:33,960 Speaker 1: from the Proceedings of the National Academy said that they expect, 430 00:28:34,040 --> 00:28:38,720 Speaker 1: if nothing has changed in the current agricultural processes, that 431 00:28:39,400 --> 00:28:44,080 Speaker 1: the grain productivity will drop by thirty by the middle 432 00:28:44,120 --> 00:28:47,880 Speaker 1: of this century. Around the corner and and the u 433 00:28:48,000 --> 00:28:51,400 Speaker 1: N will tell you we need a increment to keep 434 00:28:51,440 --> 00:28:55,840 Speaker 1: feeding the cattle that the Chinese want to eat, et cetera. 435 00:28:56,440 --> 00:29:01,360 Speaker 1: And the second big this problem that may be burning 436 00:29:01,400 --> 00:29:05,920 Speaker 1: faster even than climate change is toxicity, and they have 437 00:29:06,040 --> 00:29:08,520 Speaker 1: kind of flashed onto We're not looking for trouble. We 438 00:29:08,560 --> 00:29:11,240 Speaker 1: want to keep life simple, and we can't because these 439 00:29:11,240 --> 00:29:14,720 Speaker 1: problems are all interrelated. But let's start with the insects. 440 00:29:14,800 --> 00:29:18,160 Speaker 1: Two years ago, a wonderful group of amateur insect lovers 441 00:29:18,200 --> 00:29:24,160 Speaker 1: in Germany looked at sixty three forest preserves in Germany, 442 00:29:24,240 --> 00:29:28,000 Speaker 1: so they're not around refineries, that in a forest protected forest, 443 00:29:28,440 --> 00:29:35,840 Speaker 1: and they measured that from nine until now all flying 444 00:29:35,880 --> 00:29:38,520 Speaker 1: insects have gone missing. I mean, this is absolutely catastrophic. 445 00:29:38,840 --> 00:29:42,160 Speaker 1: People felt there must be something wrong, but it was 446 00:29:42,200 --> 00:29:46,120 Speaker 1: done so meticulously, with Germanic thoroughness, one has to say, 447 00:29:47,000 --> 00:29:50,400 Speaker 1: and there is no possibility of a major era. They 448 00:29:50,440 --> 00:29:53,320 Speaker 1: put out the same net, exact same net in the 449 00:29:53,360 --> 00:29:55,560 Speaker 1: same part of the forest on the same day of 450 00:29:55,600 --> 00:29:58,480 Speaker 1: the year, and they'd go back and back and had 451 00:29:58,520 --> 00:30:03,840 Speaker 1: thousands of measurement periods over that time period. And then, 452 00:30:03,880 --> 00:30:07,560 Speaker 1: to make matters worse, in the last six weeks, a 453 00:30:07,880 --> 00:30:12,000 Speaker 1: similar study in the proceedings National Academy of Science, once 454 00:30:12,000 --> 00:30:16,600 Speaker 1: again which is generally considered the second most important science journal, 455 00:30:16,760 --> 00:30:20,920 Speaker 1: came out with an insects study in a protected semi 456 00:30:20,920 --> 00:30:24,840 Speaker 1: tropical forest in Puerto Rico which was protected by the 457 00:30:24,920 --> 00:30:30,080 Speaker 1: King of Spain long ago. And again to everyone's horror, 458 00:30:30,120 --> 00:30:34,080 Speaker 1: se approximately of the flying insects were missing. The birds 459 00:30:34,120 --> 00:30:36,960 Speaker 1: that fed on insects were down by the birds that 460 00:30:37,040 --> 00:30:39,640 Speaker 1: fed on seeds weren't down at all, the frogs and 461 00:30:39,760 --> 00:30:43,680 Speaker 1: lizards at the insects were down by And the impact 462 00:30:43,760 --> 00:30:46,680 Speaker 1: on the soil, it's very hard to find out. But 463 00:30:47,960 --> 00:30:52,320 Speaker 1: unless we're careful, a lot of the compost and leaves 464 00:30:52,720 --> 00:30:56,080 Speaker 1: and and dong is going to be left there unprocessed, 465 00:30:56,400 --> 00:30:59,080 Speaker 1: and pretty soon soil will not be able to do 466 00:30:59,440 --> 00:31:02,080 Speaker 1: what it does us. And also, of course the effect 467 00:31:02,120 --> 00:31:06,120 Speaker 1: on pollinators. You lose the pollinators, you lose the value 468 00:31:06,120 --> 00:31:09,080 Speaker 1: of all your agriculture, a lot of the all the 469 00:31:09,120 --> 00:31:14,880 Speaker 1: fruits need pollination, all flowers need pollination. And no one 470 00:31:15,280 --> 00:31:18,000 Speaker 1: yet we've been able to find, can tell us the 471 00:31:18,040 --> 00:31:21,920 Speaker 1: cascade effect of going from where we are minus a hundred. 472 00:31:22,120 --> 00:31:23,960 Speaker 1: So how come no one knew this? And it turns 473 00:31:23,960 --> 00:31:26,520 Speaker 1: out no one has been studying insects, so why not? 474 00:31:26,720 --> 00:31:29,200 Speaker 1: And it turns out because you can't get grants because 475 00:31:29,200 --> 00:31:32,320 Speaker 1: it's a boring damn topic in the past, and and 476 00:31:32,360 --> 00:31:34,880 Speaker 1: no one was funding the research. The only research that 477 00:31:34,960 --> 00:31:40,280 Speaker 1: we knew were on monarch butterflies because they're kind of 478 00:31:40,400 --> 00:31:44,959 Speaker 1: trophy insects and bees because they are commercially important, and 479 00:31:45,000 --> 00:31:47,160 Speaker 1: we knew that they were under terrible duress, and we 480 00:31:47,160 --> 00:31:50,960 Speaker 1: assumed that was unique to monarchs and bees, and it isn't. 481 00:31:51,000 --> 00:31:53,960 Speaker 1: It's you know, it's common to all flying insects. So 482 00:31:54,040 --> 00:31:55,880 Speaker 1: the be die off that's been in the news for 483 00:31:55,920 --> 00:31:58,680 Speaker 1: the past five or so years is not so much 484 00:31:58,680 --> 00:32:00,760 Speaker 1: a bee die off as it is a winged insector 485 00:32:00,840 --> 00:32:03,720 Speaker 1: the wind a flying insect die off. Yes, we know 486 00:32:03,920 --> 00:32:08,320 Speaker 1: that chemicals that are commonly used can have terrible effects 487 00:32:08,320 --> 00:32:11,640 Speaker 1: on fertility rates. Now we know by a study that's 488 00:32:11,680 --> 00:32:15,120 Speaker 1: only two weeks old where some guys in East Anglia, 489 00:32:15,280 --> 00:32:19,120 Speaker 1: responding to the Puerto Rica study, grabbed a beetle and quickly, 490 00:32:19,560 --> 00:32:23,400 Speaker 1: because they reproduced so quickly, ran it through various cycles 491 00:32:23,440 --> 00:32:25,920 Speaker 1: and found out what happened when you raised the temperature. 492 00:32:26,720 --> 00:32:30,720 Speaker 1: And because everyone supposed that in Puerto Rica study it 493 00:32:30,840 --> 00:32:32,960 Speaker 1: was the rising temperature of the forest that was doing 494 00:32:33,000 --> 00:32:35,760 Speaker 1: the damage. Insects in the tropical forest are used to 495 00:32:35,880 --> 00:32:38,960 Speaker 1: no change in temperature and suddenly you have bumped it up, 496 00:32:39,720 --> 00:32:43,320 Speaker 1: almost overnight in a way two degrees centigrade. And the 497 00:32:43,440 --> 00:32:46,560 Speaker 1: distribution means that out there in the tail, those rare 498 00:32:46,680 --> 00:32:49,560 Speaker 1: nights when it's four degrees have gone from one a 499 00:32:49,640 --> 00:32:52,800 Speaker 1: year to fifteen. So they put these beetles in the lab, 500 00:32:52,840 --> 00:32:55,200 Speaker 1: and they gave them a heat wave of four degrees 501 00:32:55,320 --> 00:32:58,440 Speaker 1: extra for five days, a typical heat wave that we've 502 00:32:58,480 --> 00:33:03,080 Speaker 1: all suffered through, and it lowered their fertility by and 503 00:33:03,120 --> 00:33:05,720 Speaker 1: then two weeks later they gave them a second, the 504 00:33:05,880 --> 00:33:10,000 Speaker 1: second heat wave, and they were stera And a lot 505 00:33:10,040 --> 00:33:13,120 Speaker 1: of people wrote in who were studying humans and other 506 00:33:13,240 --> 00:33:17,440 Speaker 1: mammals and saying, yes, of course sperm count is terribly 507 00:33:17,480 --> 00:33:20,960 Speaker 1: sensitive to heat and this ring, this ring is very true. 508 00:33:21,080 --> 00:33:24,120 Speaker 1: But in Germany, where they have tolerance, where the temperature 509 00:33:24,160 --> 00:33:26,800 Speaker 1: does change, we know it's more insecticides. There are these 510 00:33:26,920 --> 00:33:33,840 Speaker 1: multiple reasons, exotic insecticides, fumes from coal burning, mercury, etcetera 511 00:33:33,960 --> 00:33:37,800 Speaker 1: wafting through the air, and temperature changes. It's just turning 512 00:33:37,800 --> 00:33:43,080 Speaker 1: out to be a brutal war for insects and without them. EO. Wilson, 513 00:33:43,080 --> 00:33:46,440 Speaker 1: the famous insect and guy, would say, we can do 514 00:33:46,520 --> 00:33:50,000 Speaker 1: without humans, but we absolutely can't do without insects. Last 515 00:33:50,040 --> 00:33:54,440 Speaker 1: question on on philanthropy, Um, you created a prize for 516 00:33:54,560 --> 00:33:59,240 Speaker 1: excellence in reporting on the environment. What why is such 517 00:33:59,240 --> 00:34:04,240 Speaker 1: a prize? Nous? Sorry? Uh, We created it because there 518 00:34:04,320 --> 00:34:07,800 Speaker 1: wasn't enough going on, and we abandoned it after a 519 00:34:07,840 --> 00:34:16,080 Speaker 1: few years. Because in the great fall off on print, uh, 520 00:34:17,080 --> 00:34:19,799 Speaker 1: the first guys to go with the bottom of the 521 00:34:19,800 --> 00:34:21,840 Speaker 1: totem pole, and the bottom of the totem pole, sadly 522 00:34:21,920 --> 00:34:25,200 Speaker 1: to say, with their environmental journalists. So pretty soon we 523 00:34:25,239 --> 00:34:27,400 Speaker 1: found we were trying to award a prize to a 524 00:34:27,480 --> 00:34:31,279 Speaker 1: non existent group of journalists, and we thought, we can 525 00:34:31,440 --> 00:34:34,680 Speaker 1: use that money. It wasn't tiny. We can use it 526 00:34:34,880 --> 00:34:40,680 Speaker 1: to get direct investigative journalism done and research, direct research done. 527 00:34:41,160 --> 00:34:44,360 Speaker 1: And it was much I think, much more effective to 528 00:34:44,360 --> 00:34:47,920 Speaker 1: do that. Quite fascinating. So let's talk a little bit 529 00:34:47,960 --> 00:34:52,600 Speaker 1: about the current state of investing. I read something you 530 00:34:52,680 --> 00:34:55,920 Speaker 1: had written some time ago that I found somewhat shocking, 531 00:34:55,920 --> 00:35:01,160 Speaker 1: but I guess I shouldn't. From two thousand in you 532 00:35:01,200 --> 00:35:05,560 Speaker 1: wrote that GMO lost half of its book of business. Uh. 533 00:35:05,719 --> 00:35:09,600 Speaker 1: You guys had turned cautious while the market was screaming higher, 534 00:35:10,040 --> 00:35:12,480 Speaker 1: warning of the dot com bubble. In fact, I should 535 00:35:13,239 --> 00:35:18,319 Speaker 1: preface my remarks by saying you presciently warned of the 536 00:35:18,440 --> 00:35:21,600 Speaker 1: Japanese bubble in the late eighties, the dot com bubble 537 00:35:22,200 --> 00:35:26,040 Speaker 1: uh in the late nineties, the financial crisis and housing 538 00:35:26,080 --> 00:35:30,000 Speaker 1: collapse in the mid two thousand's. What was that experience 539 00:35:30,040 --> 00:35:33,880 Speaker 1: like in two thousand and did you sort of have 540 00:35:33,960 --> 00:35:37,160 Speaker 1: a repeat of it in oh seven oh eight O 541 00:35:37,320 --> 00:35:39,799 Speaker 1: seven oh. Wait was the only thing we nailed. We 542 00:35:39,800 --> 00:35:44,160 Speaker 1: we got it pretty well, the timing down right, and 543 00:35:44,920 --> 00:35:52,080 Speaker 1: lost very little business going into it. Um is entirely different. 544 00:35:52,120 --> 00:35:55,800 Speaker 1: We had a good record running through and you normally 545 00:35:55,880 --> 00:35:58,960 Speaker 1: think you have three years in the institutional business and 546 00:35:58,960 --> 00:36:01,480 Speaker 1: and we lost half of business in less than two 547 00:36:01,480 --> 00:36:04,200 Speaker 1: and a quarter years. Uh and and why was that? 548 00:36:04,320 --> 00:36:08,520 Speaker 1: It's it's because it's completely untrue that you lose business 549 00:36:08,600 --> 00:36:11,839 Speaker 1: in down markets. In down markets, the clients become catatonic 550 00:36:12,200 --> 00:36:14,520 Speaker 1: in a serious decline, and they wait to see what 551 00:36:14,640 --> 00:36:16,680 Speaker 1: has happened when the smoke is cleared and their nerve 552 00:36:16,719 --> 00:36:19,719 Speaker 1: has returned. But in a bull market, they are absolutely 553 00:36:19,800 --> 00:36:23,879 Speaker 1: dripping with adrenaline and there exchanging ideas on the golf 554 00:36:23,960 --> 00:36:26,960 Speaker 1: course and they can't wait to to make more money 555 00:36:26,960 --> 00:36:30,080 Speaker 1: than their neighbor. And you want to perform in a 556 00:36:30,160 --> 00:36:35,680 Speaker 1: bull market, and your life um is is reduced in 557 00:36:35,800 --> 00:36:40,760 Speaker 1: length that their patients drops like a stone. Barton Biggs 558 00:36:40,880 --> 00:36:44,839 Speaker 1: had a famous quote, um bullish and wrong, and they're 559 00:36:44,840 --> 00:36:47,480 Speaker 1: angry at you, bearish and wrong, and they fire you 560 00:36:47,760 --> 00:36:50,520 Speaker 1: is that Is that a fair statement? Yes, I think 561 00:36:50,560 --> 00:36:54,359 Speaker 1: that's a very fair statement. There is nothing you can 562 00:36:54,440 --> 00:37:00,040 Speaker 1: do more dangerous to your career than than underperform in 563 00:37:00,400 --> 00:37:04,600 Speaker 1: one of the great enthusiastic bubbles. And anyone who was 564 00:37:04,640 --> 00:37:10,160 Speaker 1: around in is lucky they experienced a bubble bigger and 565 00:37:10,239 --> 00:37:15,760 Speaker 1: better than a full of sound and fury and dot coms. 566 00:37:16,440 --> 00:37:19,160 Speaker 1: And the real test that I love is that you 567 00:37:19,200 --> 00:37:22,400 Speaker 1: went to the Greasy Spoon in Boston and instead of 568 00:37:22,400 --> 00:37:26,000 Speaker 1: watching the Celtic replays, you were suddenly watching talking heads 569 00:37:26,040 --> 00:37:30,840 Speaker 1: on MSNBC and other channels recommending the latest dot com, 570 00:37:30,840 --> 00:37:33,560 Speaker 1: pets dot com or whatever. And that was right before 571 00:37:34,480 --> 00:37:39,240 Speaker 1: or so collapse. Um, we actually predicted, and we're quoted 572 00:37:39,320 --> 00:37:41,680 Speaker 1: in the Economists of saying the SMP we expected to 573 00:37:41,760 --> 00:37:46,320 Speaker 1: drop and the NAS deck by And the SMP dropped 574 00:37:46,320 --> 00:37:50,440 Speaker 1: by fifty point zero and the NAS deck by two. 575 00:37:51,320 --> 00:37:55,759 Speaker 1: So um, they are not too bad. They were catastrophic 576 00:37:55,800 --> 00:37:59,000 Speaker 1: declines for almost everybody. So after you were proven right 577 00:37:59,040 --> 00:38:02,000 Speaker 1: about the dot com, did the clients come the half 578 00:38:02,000 --> 00:38:04,000 Speaker 1: of the book that left, did they come back? I'm 579 00:38:04,040 --> 00:38:06,720 Speaker 1: afraid to say not a single client that I'm aware 580 00:38:06,719 --> 00:38:11,040 Speaker 1: of came back on the grounds that yes, we had 581 00:38:11,040 --> 00:38:12,919 Speaker 1: been right and would have saved a lot of money 582 00:38:12,960 --> 00:38:16,080 Speaker 1: and they've made a mistake. Many other clients came back 583 00:38:16,960 --> 00:38:19,200 Speaker 1: who felt that they would have stood their ground and 584 00:38:19,239 --> 00:38:21,880 Speaker 1: we were that kind of guys, and so the business 585 00:38:22,000 --> 00:38:24,160 Speaker 1: flooded in and we made up all our losses with 586 00:38:24,239 --> 00:38:28,840 Speaker 1: a lot of interest. Indeed, that was a lovely time 587 00:38:28,960 --> 00:38:31,640 Speaker 1: to live through for us. So let's talk about the 588 00:38:31,680 --> 00:38:36,840 Speaker 1: current circumstances. I would describe you as bullish on emerging 589 00:38:36,920 --> 00:38:42,160 Speaker 1: market value but bearish on US large cap stocks. I'm 590 00:38:42,320 --> 00:38:47,560 Speaker 1: using your forward seven year forecast as a basis. Uh, 591 00:38:47,640 --> 00:38:50,200 Speaker 1: let me put a little little some numbers on that 592 00:38:50,719 --> 00:38:54,439 Speaker 1: seven year forecast US large cap stocks minus three point 593 00:38:54,560 --> 00:38:56,720 Speaker 1: nine percent is that per anum? Or is that total 594 00:38:57,360 --> 00:38:59,560 Speaker 1: per annum for seven years to get it down to 595 00:38:59,600 --> 00:39:03,720 Speaker 1: fair and then e M value you're talking about seven 596 00:39:03,719 --> 00:39:06,319 Speaker 1: point seven percent on the positive side, which is in 597 00:39:06,360 --> 00:39:08,360 Speaker 1: fact a little cheaper than it needs to be in 598 00:39:08,400 --> 00:39:10,919 Speaker 1: the long run. So that means you could sit back 599 00:39:10,960 --> 00:39:13,879 Speaker 1: with that and hope to get a decent return in perpetuity. 600 00:39:14,680 --> 00:39:17,920 Speaker 1: So one would think, um, you should be lightning up 601 00:39:17,920 --> 00:39:20,879 Speaker 1: on US stocks here and buying EM value is a well, 602 00:39:20,920 --> 00:39:24,120 Speaker 1: that would be a very conservative statement. I think what 603 00:39:24,160 --> 00:39:27,239 Speaker 1: you should do here is sell all of your US. 604 00:39:27,360 --> 00:39:30,239 Speaker 1: There has never been a bigger gap between the US 605 00:39:30,280 --> 00:39:33,919 Speaker 1: and Emerging than there is now. And those opportunities don't 606 00:39:33,920 --> 00:39:37,600 Speaker 1: come very often, and they have a very old fashioned 607 00:39:37,640 --> 00:39:40,759 Speaker 1: feel to them. And I describe it basically as you 608 00:39:40,800 --> 00:39:44,800 Speaker 1: buy when they're very cheap, they become extraordinarily cheap, you suffer, 609 00:39:45,320 --> 00:39:48,239 Speaker 1: you double down, maybe suffer a bit more, and then 610 00:39:48,280 --> 00:39:52,719 Speaker 1: you win. And if you can take the pain, you 611 00:39:52,840 --> 00:39:55,799 Speaker 1: always win. On those kind of bets. There's very little 612 00:39:55,880 --> 00:39:58,440 Speaker 1: chance that you'll come back in ten or twenty years 613 00:39:58,480 --> 00:40:01,080 Speaker 1: and Emerging will not have been the pants off the US. 614 00:40:01,280 --> 00:40:04,360 Speaker 1: Do you look at specific countries or regions or is 615 00:40:04,400 --> 00:40:07,440 Speaker 1: it just by all of the um You do the 616 00:40:07,480 --> 00:40:10,640 Speaker 1: best you can to optimize the return. And I don't 617 00:40:10,680 --> 00:40:13,960 Speaker 1: want to get into my colleagues territory, but yes, you 618 00:40:14,040 --> 00:40:17,879 Speaker 1: would wait the better looking countries in terms of true 619 00:40:17,960 --> 00:40:23,399 Speaker 1: value growth compared to cost, and and pick the best 620 00:40:23,400 --> 00:40:26,920 Speaker 1: stocks and the best industries to the best of your ability. 621 00:40:27,200 --> 00:40:30,680 Speaker 1: Earlier this year, you talked about a potential US equities 622 00:40:30,760 --> 00:40:33,680 Speaker 1: melt up before the next down cycle. Are we still 623 00:40:33,719 --> 00:40:36,480 Speaker 1: looking for a melt up? I think the odds of 624 00:40:38,120 --> 00:40:42,680 Speaker 1: dropped way down because we're living in a rather ancient 625 00:40:42,719 --> 00:40:45,560 Speaker 1: economy and a rather ancient stock market. Both of them 626 00:40:45,560 --> 00:40:50,560 Speaker 1: are two of the longest that there's ever been UM 627 00:40:50,640 --> 00:40:54,720 Speaker 1: and we were doing splendidly through January. January, as you remember, 628 00:40:54,800 --> 00:40:58,640 Speaker 1: was a wonderful speculative month. Uh and and the market 629 00:40:58,680 --> 00:41:01,920 Speaker 1: was up eight percent for the month. And and then 630 00:41:01,960 --> 00:41:07,000 Speaker 1: we got into this strange era where the administration rattled 631 00:41:07,040 --> 00:41:11,520 Speaker 1: the currency markets, which whiplashed through as it usually does, 632 00:41:11,840 --> 00:41:16,960 Speaker 1: to the riskier end, the emerging market end, and the 633 00:41:17,000 --> 00:41:20,000 Speaker 1: dollar is in a crisis, the blue chap so the 634 00:41:20,040 --> 00:41:25,520 Speaker 1: dollar was strong, helping local stock prices. And and then 635 00:41:26,080 --> 00:41:33,400 Speaker 1: we had trouble with agreements and allies and NATO and 636 00:41:34,280 --> 00:41:37,080 Speaker 1: go down the list, go go down the list. And 637 00:41:37,160 --> 00:41:40,399 Speaker 1: it created a not an undercurrent, but an overcurrent, if 638 00:41:40,400 --> 00:41:44,080 Speaker 1: you will, of of nervousness on on many fronts. And 639 00:41:44,160 --> 00:41:48,720 Speaker 1: that is not the juice with which a a great 640 00:41:48,760 --> 00:41:55,720 Speaker 1: bubble proceeds. That didn't exist in we had Greenspan saying 641 00:41:56,680 --> 00:42:00,080 Speaker 1: the dot com and and the internet would dry have 642 00:42:00,080 --> 00:42:02,520 Speaker 1: a way the dark clouds of ignorance and introduce a 643 00:42:02,560 --> 00:42:04,920 Speaker 1: permanent new era of higher this and higher that and 644 00:42:05,000 --> 00:42:09,120 Speaker 1: better this. It was almost poetic, and this time we 645 00:42:09,200 --> 00:42:13,040 Speaker 1: had everyone going from one little nervous twitch to another, 646 00:42:13,640 --> 00:42:16,120 Speaker 1: So I think it was nipped in the bud. Now, 647 00:42:16,400 --> 00:42:20,440 Speaker 1: having said that, the market has a history of being resilient, 648 00:42:21,880 --> 00:42:25,640 Speaker 1: I think it's quite likely. Since we're in the sweet 649 00:42:25,680 --> 00:42:28,520 Speaker 1: spot of the presidential cycle, this is the time when 650 00:42:28,600 --> 00:42:32,280 Speaker 1: presidents look to the federal reserve to stimulate the economy 651 00:42:32,640 --> 00:42:36,799 Speaker 1: because it needs at least the year running start to 652 00:42:36,920 --> 00:42:42,239 Speaker 1: produce the best labor for election. And what moves the 653 00:42:42,320 --> 00:42:46,120 Speaker 1: dial on election day we studied at some considerable length, 654 00:42:46,200 --> 00:42:50,560 Speaker 1: and it's the shifting employment six months up to the election. 655 00:42:52,080 --> 00:42:54,720 Speaker 1: A year before, it doesn't matter, it's all forgotten. Six 656 00:42:54,760 --> 00:42:58,640 Speaker 1: months before the election. You've got to have a strong 657 00:42:58,719 --> 00:43:04,839 Speaker 1: looking labor movement, a labor results, and to do that, 658 00:43:04,920 --> 00:43:07,480 Speaker 1: you've got to stimulate the economy a year or eighteen 659 00:43:07,520 --> 00:43:10,239 Speaker 1: months ahead of it to get the lag effect. And 660 00:43:10,320 --> 00:43:13,680 Speaker 1: that's what they do, and they've done it since nineteen two. 661 00:43:14,400 --> 00:43:19,120 Speaker 1: The returns in the seven month window from October of 662 00:43:19,160 --> 00:43:22,800 Speaker 1: this year through April of next year in every presidential cycle, 663 00:43:23,239 --> 00:43:27,239 Speaker 1: which is the theoretically perfect time to do economic stimulus 664 00:43:27,239 --> 00:43:30,919 Speaker 1: since ninety two, that has beaten the remaining forty one 665 00:43:30,960 --> 00:43:34,640 Speaker 1: months the forty eight month presidential cycle. Just think about that. 666 00:43:34,680 --> 00:43:37,400 Speaker 1: The seven months has beaten the forty one months. So 667 00:43:37,440 --> 00:43:41,080 Speaker 1: that's since nine two. So this is the last gasp 668 00:43:41,239 --> 00:43:44,960 Speaker 1: opportunity for a melt up. I don't think it's any longer, 669 00:43:45,120 --> 00:43:48,560 Speaker 1: but I think it's maybe twenty five chance that we 670 00:43:48,600 --> 00:43:51,440 Speaker 1: will have a handsome rally between now and the end 671 00:43:51,600 --> 00:43:57,840 Speaker 1: of April. You mentioned all of the international intrigues and 672 00:43:58,520 --> 00:44:03,680 Speaker 1: various policies and packs and what have you. I would be, um, 673 00:44:03,680 --> 00:44:05,720 Speaker 1: not doing my job if I didn't ask you about 674 00:44:06,080 --> 00:44:10,320 Speaker 1: the tariffs and trade wars. What is the impact of 675 00:44:10,360 --> 00:44:13,960 Speaker 1: this president's who has said it's easy to win a 676 00:44:14,000 --> 00:44:17,600 Speaker 1: trade war? Um? What what is the impact of these tariffs? 677 00:44:17,680 --> 00:44:22,640 Speaker 1: Is this potentially inflationary? Is this potentially um something that 678 00:44:22,719 --> 00:44:27,400 Speaker 1: could knock the economy off its footing? So net net, 679 00:44:27,960 --> 00:44:33,160 Speaker 1: it's deflationary because because it discourages global growth, okay, and 680 00:44:33,200 --> 00:44:38,120 Speaker 1: so you have weaker growth, slightly higher unemployment, and and 681 00:44:39,760 --> 00:44:42,360 Speaker 1: as we're playing with general motors, and that puts pressure 682 00:44:42,400 --> 00:44:46,120 Speaker 1: on wages. And it's very hard to have inflation when 683 00:44:46,120 --> 00:44:48,560 Speaker 1: you have downward pressure on wages. So how are you 684 00:44:48,640 --> 00:44:52,759 Speaker 1: going to have a stimulative presidential cycle eighteen months in advance? 685 00:44:53,360 --> 00:44:56,800 Speaker 1: If there's a tariff trade war going on that doesn't 686 00:44:56,800 --> 00:44:59,600 Speaker 1: sound like it's productive for the party that has the 687 00:44:59,600 --> 00:45:02,399 Speaker 1: White House. No, it's not productive. So two things would 688 00:45:02,440 --> 00:45:06,359 Speaker 1: have to happen from chance to come right. You'd have 689 00:45:06,440 --> 00:45:11,120 Speaker 1: to have the FED ease up a bit slow slow 690 00:45:11,200 --> 00:45:14,239 Speaker 1: the rate hikes. Slow the rate hikes. No, they can 691 00:45:14,280 --> 00:45:18,240 Speaker 1: have one or two, but not four or five. And 692 00:45:18,239 --> 00:45:22,080 Speaker 1: and to have the administration cool it on trade wars 693 00:45:22,160 --> 00:45:26,600 Speaker 1: and make a quote surprise announcement of an agreement with China. 694 00:45:27,440 --> 00:45:30,279 Speaker 1: And and there's your milk. And then you get some resilience. 695 00:45:30,920 --> 00:45:33,120 Speaker 1: That sounds pretty good. Can you stick around a little bit? 696 00:45:33,120 --> 00:45:35,799 Speaker 1: I have some more questions for you. We have been 697 00:45:35,840 --> 00:45:40,120 Speaker 1: speaking with GMOs Jeremy Grantham. If you enjoy this conversation, 698 00:45:40,239 --> 00:45:43,080 Speaker 1: check out our podcast extras, where we keep the tape 699 00:45:43,160 --> 00:45:47,480 Speaker 1: rolling and continue discussing all things investment related. You can 700 00:45:47,520 --> 00:45:52,920 Speaker 1: find that at iTunes, Overcast, Stitcher, Bloomberg dot com, wherever 701 00:45:53,160 --> 00:45:56,560 Speaker 1: your final podcasts are sold. We love your comments, feedback 702 00:45:56,600 --> 00:46:00,680 Speaker 1: in suggestions right to us at m IB podcast at 703 00:46:00,680 --> 00:46:03,800 Speaker 1: Bloomberg dot net. You can check out my daily column 704 00:46:03,880 --> 00:46:07,320 Speaker 1: at Bloomberg dot com slash Opinion. Follow me on Twitter 705 00:46:07,480 --> 00:46:10,799 Speaker 1: at rid Holts. I'm Barry rid Holts. You're listening to 706 00:46:10,880 --> 00:46:21,600 Speaker 1: Masters in Business on Bloomberg Radio. Welcome to the podcast, Jeremy. 707 00:46:21,640 --> 00:46:24,000 Speaker 1: Thank you so much for doing this. I've been looking 708 00:46:24,040 --> 00:46:27,359 Speaker 1: forward to having this conversation with you for so long. 709 00:46:27,400 --> 00:46:29,200 Speaker 1: I don't know if you remember. You and I had 710 00:46:29,200 --> 00:46:33,560 Speaker 1: a lunch, uh sometime last year, and uh, I should 711 00:46:33,560 --> 00:46:37,200 Speaker 1: have recorded that. That was endlessly fascinating. And all it 712 00:46:37,280 --> 00:46:40,440 Speaker 1: did was remind me of all the questions I had 713 00:46:40,440 --> 00:46:43,880 Speaker 1: for you. Before I get to my favorite questions, there's 714 00:46:43,920 --> 00:46:49,439 Speaker 1: one or two things I missed that I wanna get to. Um. God, 715 00:46:49,480 --> 00:46:51,040 Speaker 1: I could keep you here for another hour, but I 716 00:46:51,080 --> 00:46:54,640 Speaker 1: know you have places to be. So first, you describe 717 00:46:54,640 --> 00:47:02,239 Speaker 1: yourself as GMOs Chief of Propaganda, explain that title. To 718 00:47:02,280 --> 00:47:08,120 Speaker 1: be honest, I have not been making important investment decisions 719 00:47:08,160 --> 00:47:10,800 Speaker 1: for quite a few years. I think my last input 720 00:47:11,040 --> 00:47:16,520 Speaker 1: was exiting emerging markets in July of oh eight. That 721 00:47:16,560 --> 00:47:19,239 Speaker 1: worked out to be pretty good. That worked out splendidly, 722 00:47:19,719 --> 00:47:22,080 Speaker 1: and it was the twelve hour But what the hell 723 00:47:22,920 --> 00:47:27,239 Speaker 1: saved an amazing amount of money? Um. But other than 724 00:47:27,239 --> 00:47:31,759 Speaker 1: that we have terrific teams. I'm eighty years old. They 725 00:47:31,800 --> 00:47:35,920 Speaker 1: should be making their own mistakes and and and making 726 00:47:36,000 --> 00:47:40,520 Speaker 1: their own hits. Um. So what what did that leave me? 727 00:47:40,640 --> 00:47:46,040 Speaker 1: I asked myself? UM? And Lucy speaking communications, or as 728 00:47:46,080 --> 00:47:49,719 Speaker 1: I like to call it, propaganda. Um. And since I've 729 00:47:49,719 --> 00:47:52,239 Speaker 1: always been drawn to big picture items, that that's a 730 00:47:52,320 --> 00:47:57,440 Speaker 1: natural cannon fodder for propaganda. I have overwhelmingly more interest 731 00:47:57,680 --> 00:48:02,560 Speaker 1: in the big, the big issues of climate change. Do 732 00:48:02,640 --> 00:48:05,160 Speaker 1: we have enough resources to get the job done? What 733 00:48:05,320 --> 00:48:07,360 Speaker 1: is the role of growth in the long term economy 734 00:48:07,400 --> 00:48:09,840 Speaker 1: when you can't have compound growth in a finite planet. 735 00:48:10,200 --> 00:48:12,880 Speaker 1: How are we going to deal with that? What is 736 00:48:12,880 --> 00:48:16,520 Speaker 1: the role of capitalism now that it's so profit centered 737 00:48:16,560 --> 00:48:18,799 Speaker 1: for the short term and has little interest in the 738 00:48:18,840 --> 00:48:22,440 Speaker 1: long term. What are the consequences? What are the consequences 739 00:48:22,560 --> 00:48:26,319 Speaker 1: of the US corporate system having so much power that 740 00:48:26,400 --> 00:48:29,800 Speaker 1: it practically controls the government and the profit margins have 741 00:48:29,880 --> 00:48:33,600 Speaker 1: gone up and squeeze labored down by three or four points. 742 00:48:34,160 --> 00:48:38,080 Speaker 1: The consequences of these kind of issues absolutely fascinating and 743 00:48:38,600 --> 00:48:41,840 Speaker 1: frankly being there done that in terms of stock picking 744 00:48:41,840 --> 00:48:45,440 Speaker 1: and industry picking and sanct to picking and I'm happy 745 00:48:45,480 --> 00:48:49,120 Speaker 1: to leave that to my colleagues. And um, so you 746 00:48:49,160 --> 00:48:52,000 Speaker 1: mentioned big picture, let's talk a little bit about the 747 00:48:52,040 --> 00:48:56,120 Speaker 1: world's of bubbles. You were right there on the Japanese bubble, 748 00:48:56,880 --> 00:48:59,239 Speaker 1: perhaps a little early on the dot com bubble, on 749 00:48:59,320 --> 00:49:03,200 Speaker 1: the Great Financial Crisis. The timing was as good as 750 00:49:03,200 --> 00:49:06,839 Speaker 1: it gets. So the first question I have to ask 751 00:49:06,840 --> 00:49:11,520 Speaker 1: related to bubbles is are there any visible these days? Where? 752 00:49:11,560 --> 00:49:14,360 Speaker 1: And when? What do you see to take a little 753 00:49:14,360 --> 00:49:20,880 Speaker 1: bit of credit from a generally tough h environment. Back 754 00:49:21,400 --> 00:49:25,440 Speaker 1: when I suggested a melt up, I did point out 755 00:49:25,520 --> 00:49:28,520 Speaker 1: in a little box in that paper that I thought 756 00:49:28,560 --> 00:49:33,080 Speaker 1: bitcoin was a classic bubble, the essence of bubble, And 757 00:49:33,120 --> 00:49:35,600 Speaker 1: it was fifteen thousands the day I wrote right well, 758 00:49:35,719 --> 00:49:39,880 Speaker 1: from the highest were down word about So for something 759 00:49:39,920 --> 00:49:44,560 Speaker 1: that volatile, this is by no means impressive decline. Would 760 00:49:44,640 --> 00:49:48,000 Speaker 1: would be an intra week setback when down to about 761 00:49:48,040 --> 00:49:51,080 Speaker 1: four thousand from about four thousand from fifteen thousand. But 762 00:49:51,120 --> 00:49:54,320 Speaker 1: when you've gone up fifteen times in no time flat, 763 00:49:54,760 --> 00:49:58,200 Speaker 1: you might reason reasonably think of bubble breaking as a 764 00:49:58,320 --> 00:50:02,240 Speaker 1: ninety declin. We're we're else? Are you looking at bubbles? 765 00:50:02,280 --> 00:50:09,680 Speaker 1: Anything else standing out for me? A bubble requires overt 766 00:50:10,040 --> 00:50:15,799 Speaker 1: euphoria and other demonstrations, and they to me have been 767 00:50:15,960 --> 00:50:21,320 Speaker 1: a little lacking. Perhaps they were beginning to take place 768 00:50:21,760 --> 00:50:27,120 Speaker 1: in in the fangs, and the fangs have now receded 769 00:50:27,200 --> 00:50:32,880 Speaker 1: in what feels more like um reorienting the market moving 770 00:50:32,880 --> 00:50:36,680 Speaker 1: from one group to another than the beginning of the 771 00:50:36,800 --> 00:50:40,320 Speaker 1: end of a major collapse. A rotation, not a bubble rotation, 772 00:50:40,400 --> 00:50:43,840 Speaker 1: thank you, not a bubble pop. To me, it feels 773 00:50:43,840 --> 00:50:46,960 Speaker 1: that way. Uh. And and at the moment, once again, 774 00:50:47,400 --> 00:50:50,720 Speaker 1: as we've had dominating this tenure nine year ball market, 775 00:50:51,400 --> 00:50:53,520 Speaker 1: we have been climbing the wall of worry. There's always 776 00:50:53,520 --> 00:50:56,600 Speaker 1: plenty to worry about. And you read it freely. It's 777 00:50:56,680 --> 00:51:00,160 Speaker 1: not dripping with optimism. When was it. I'll tell you when. 778 00:51:00,200 --> 00:51:03,520 Speaker 1: It was for a brief period back in January. Other 779 00:51:03,560 --> 00:51:07,360 Speaker 1: than that, this has been quite a pessimistic major bull market. 780 00:51:07,400 --> 00:51:11,960 Speaker 1: Hasn't the most hated bull market in history. Um. In fact, 781 00:51:12,239 --> 00:51:14,600 Speaker 1: there's an argument to be made that since the dot 782 00:51:14,640 --> 00:51:18,640 Speaker 1: com I'm sorry, since the Great Financial Collapse, investors seemed 783 00:51:18,719 --> 00:51:22,080 Speaker 1: to be suffering from a form of post traumatic stress, 784 00:51:22,200 --> 00:51:26,480 Speaker 1: and they've been very reluctant to embrace the bull with 785 00:51:26,560 --> 00:51:30,000 Speaker 1: both hands. Yeah, is that what's needed in order for 786 00:51:30,080 --> 00:51:35,080 Speaker 1: that to get a classic bubble breaking um, that's what's needed. 787 00:51:35,480 --> 00:51:39,680 Speaker 1: And what provided the juice in oh eight was the 788 00:51:39,680 --> 00:51:44,080 Speaker 1: housing market, because we defined in the old days a 789 00:51:44,120 --> 00:51:47,719 Speaker 1: bubble as a two sigma once in a forty year breakout, 790 00:51:48,480 --> 00:51:52,759 Speaker 1: and the US housing bubble did a three sigma. That's 791 00:51:52,760 --> 00:51:56,120 Speaker 1: the once in several hundred years. Never in history had 792 00:51:56,200 --> 00:52:00,359 Speaker 1: the entire US real estate market gone up a lot 793 00:52:00,440 --> 00:52:02,960 Speaker 1: at the same time it would bubble in Chicago, crash 794 00:52:03,000 --> 00:52:08,240 Speaker 1: in Florida. Oh, but this one, previously, this one, everything 795 00:52:08,320 --> 00:52:12,440 Speaker 1: went up together. And it took years of moral hazard 796 00:52:12,520 --> 00:52:15,279 Speaker 1: and the FED talking it up, and and and the 797 00:52:15,280 --> 00:52:18,280 Speaker 1: FED saying things about the housing market that the US 798 00:52:18,360 --> 00:52:23,520 Speaker 1: housing market unquote merely reflects a strong US economy, etcetera, etcetera, 799 00:52:23,600 --> 00:52:25,680 Speaker 1: And and then the one I really loved. The US 800 00:52:25,920 --> 00:52:29,480 Speaker 1: housing market has never declined, meaning it never would, which 801 00:52:29,560 --> 00:52:31,960 Speaker 1: by the way, is completely false. If you go through history, 802 00:52:31,960 --> 00:52:35,200 Speaker 1: there are many examples of the housing market supplin it declining, 803 00:52:35,200 --> 00:52:37,160 Speaker 1: but only a little bit. And what he should have 804 00:52:37,160 --> 00:52:40,040 Speaker 1: said is the U s hasing market has never had 805 00:52:40,040 --> 00:52:43,120 Speaker 1: a major bust because it has never had a collective 806 00:52:43,120 --> 00:52:46,040 Speaker 1: major bubble, and now it has had a major bubble. 807 00:52:46,239 --> 00:52:48,560 Speaker 1: The question that they should have been asking is has 808 00:52:48,600 --> 00:52:52,280 Speaker 1: there ever been a major bubble in anything that didn't bust? 809 00:52:52,800 --> 00:52:56,040 Speaker 1: And the answer to that is, in general terms no, 810 00:52:56,680 --> 00:52:59,520 Speaker 1: But there is a special case in real estate. If 811 00:52:59,520 --> 00:53:01,760 Speaker 1: you live in a real estate market where the zoning 812 00:53:01,880 --> 00:53:07,759 Speaker 1: is tightly controlled Sydney, London, you can San Francisco. You 813 00:53:07,800 --> 00:53:10,719 Speaker 1: can have aberrant looking bubbles. If you live in a 814 00:53:10,760 --> 00:53:16,720 Speaker 1: real capitalist market like the US Spain Island, where house 815 00:53:16,760 --> 00:53:19,000 Speaker 1: prices went up and you covered the whole of Ireland 816 00:53:19,040 --> 00:53:21,960 Speaker 1: and new houses and you and the south of Spain 817 00:53:22,040 --> 00:53:24,080 Speaker 1: began to sink under the water from the weight of 818 00:53:24,160 --> 00:53:28,400 Speaker 1: new apartment building, and the US built an extra million 819 00:53:28,480 --> 00:53:31,600 Speaker 1: and a half houses over Trent in response, then you 820 00:53:31,640 --> 00:53:35,040 Speaker 1: will have a classic, well behaved bubble, which we had 821 00:53:35,040 --> 00:53:38,040 Speaker 1: in the US housing market. Without that, the world would 822 00:53:38,040 --> 00:53:40,280 Speaker 1: have been quite different. It was driven and the power 823 00:53:40,320 --> 00:53:42,880 Speaker 1: and the juice was provided by the housing market and 824 00:53:42,920 --> 00:53:46,440 Speaker 1: all the amazing subprime stuff that went with us. So 825 00:53:46,520 --> 00:53:50,360 Speaker 1: you mentioned moral house hazard. Um, I don't find a 826 00:53:50,440 --> 00:53:52,839 Speaker 1: lot of people who share my belief on this, but 827 00:53:53,440 --> 00:53:57,239 Speaker 1: I have to bring up yours. You have suggested that 828 00:53:57,320 --> 00:54:00,320 Speaker 1: we should have let more than just Lehman bro others. 829 00:54:00,880 --> 00:54:04,520 Speaker 1: Visit that lovely building downtown with the columns and the 830 00:54:04,560 --> 00:54:09,799 Speaker 1: bankruptcy judges inside, tell us about that. Yeah. I think 831 00:54:09,840 --> 00:54:12,560 Speaker 1: one of the problems we have today, with the steadily 832 00:54:12,640 --> 00:54:16,239 Speaker 1: increasing levels of debt on each cycle wave, is that 833 00:54:16,280 --> 00:54:19,279 Speaker 1: the moral hazard has never been truly broken. In the end. 834 00:54:19,320 --> 00:54:21,839 Speaker 1: The bet has been if things are going well, you're 835 00:54:21,840 --> 00:54:23,880 Speaker 1: on your own to make money, and if things go badly, 836 00:54:23,920 --> 00:54:26,319 Speaker 1: we will come and help you. And as long as 837 00:54:26,320 --> 00:54:29,840 Speaker 1: that is there, there will be more risk taken each cycle, 838 00:54:30,000 --> 00:54:32,600 Speaker 1: as more or less there has been, so you end 839 00:54:32,680 --> 00:54:37,120 Speaker 1: up with privatized profits, but socialized losses. Socialized losses. They 840 00:54:37,160 --> 00:54:39,960 Speaker 1: bailed out the rich bankers and made the homeowners suffer, 841 00:54:40,560 --> 00:54:42,480 Speaker 1: and I thought that was a bad choice. They should 842 00:54:42,480 --> 00:54:45,640 Speaker 1: have done more to help the homeowners and and less 843 00:54:45,680 --> 00:54:49,160 Speaker 1: to help the bankers. And I think obviously you can't 844 00:54:49,200 --> 00:54:52,319 Speaker 1: let a I G. City and the others all go 845 00:54:52,480 --> 00:54:55,680 Speaker 1: under together, but you could and should probably have let 846 00:54:55,719 --> 00:54:59,799 Speaker 1: one of them go. The difference between City and and 847 00:55:00,080 --> 00:55:03,160 Speaker 1: Lehman and a I G. Is that Goldman Sacks had 848 00:55:03,200 --> 00:55:06,800 Speaker 1: an enormous amount of its future wealth and income hinging 849 00:55:06,800 --> 00:55:10,279 Speaker 1: on a i G insurance products that were insuring all 850 00:55:10,280 --> 00:55:13,720 Speaker 1: the derivatives, and yeah, the derivatives which no sane person 851 00:55:13,760 --> 00:55:17,960 Speaker 1: would ever have ensured, was offered insurance by some dope 852 00:55:18,120 --> 00:55:21,200 Speaker 1: department of a I G. In such enormous quantity that 853 00:55:21,280 --> 00:55:24,680 Speaker 1: had they defaulted, the future of Goldman Sacks is an 854 00:55:24,680 --> 00:55:27,520 Speaker 1: extreme doubt. I think they would have failed. Really, it's yes. 855 00:55:27,920 --> 00:55:30,520 Speaker 1: And if you say, what is really different between Lehman 856 00:55:30,600 --> 00:55:35,720 Speaker 1: and a I G. They said they couldn't bail out Lehman, 857 00:55:35,800 --> 00:55:38,040 Speaker 1: but they could bail out a I G. And one 858 00:55:38,080 --> 00:55:41,760 Speaker 1: of the huge differences is that enormous amount of junk 859 00:55:42,880 --> 00:55:47,640 Speaker 1: of which was covering Goldman Sacks and everyone else at 860 00:55:47,640 --> 00:55:52,040 Speaker 1: it together. But my choice, nevertheless would have been city. Well, 861 00:55:52,120 --> 00:55:54,680 Speaker 1: what is this the third bail out they've gone through? 862 00:55:54,680 --> 00:55:57,720 Speaker 1: And they were technically bankrupt if you mark them to market, 863 00:55:57,760 --> 00:56:02,120 Speaker 1: they were way under and badget and banking authorities say, 864 00:56:02,200 --> 00:56:03,560 Speaker 1: you know, if you have a run on the bank, 865 00:56:03,760 --> 00:56:06,000 Speaker 1: you'd better protect them. This wasn't a run on the bank. 866 00:56:06,080 --> 00:56:08,759 Speaker 1: This was technical bankruptcy. They had made a lot of 867 00:56:08,760 --> 00:56:11,279 Speaker 1: bets that didn't work. They were bankrupt. There's a big 868 00:56:11,320 --> 00:56:14,920 Speaker 1: difference between liquidity and insolvents and and insolvency. And this 869 00:56:15,120 --> 00:56:18,840 Speaker 1: was way on the wrong side of insolvency. And you 870 00:56:18,840 --> 00:56:20,799 Speaker 1: you should have picked one of a I G or 871 00:56:20,840 --> 00:56:23,040 Speaker 1: city and let it go, and you would have had 872 00:56:23,080 --> 00:56:26,040 Speaker 1: a deeper You would have had a deeper pull back 873 00:56:26,080 --> 00:56:31,120 Speaker 1: in something like yeah down five thousand. It would have 874 00:56:31,120 --> 00:56:33,600 Speaker 1: been healthier in but it would have recovered just the same. 875 00:56:33,680 --> 00:56:37,719 Speaker 1: And today the undertone would be slightly different and most 876 00:56:37,719 --> 00:56:39,880 Speaker 1: of the data would be the same. In my opinion, 877 00:56:40,040 --> 00:56:42,480 Speaker 1: quite fascinating. I only have you for a few more minutes, 878 00:56:42,560 --> 00:56:45,000 Speaker 1: can I? There are two a couple of issues. Sure, 879 00:56:45,040 --> 00:56:48,080 Speaker 1: I really think that I have missed. You asked me 880 00:56:48,160 --> 00:56:51,040 Speaker 1: what we do with the Grantham Foundation. Yes, and I 881 00:56:51,040 --> 00:56:54,480 Speaker 1: should say a very important of all our grant making 882 00:56:54,680 --> 00:56:59,960 Speaker 1: is done to communications fifteen little groups who do investigative journalism, 883 00:57:00,000 --> 00:57:03,680 Speaker 1: who try and change the hearts and minds of politicians 884 00:57:03,840 --> 00:57:09,239 Speaker 1: and the general public to counterbalance the forces of obfuscation 885 00:57:09,320 --> 00:57:11,920 Speaker 1: that we have discussed. Is that effective? Are you seeing 886 00:57:11,960 --> 00:57:15,520 Speaker 1: progress in that space? Well, it's a bit of an 887 00:57:15,560 --> 00:57:19,479 Speaker 1: unequal struggle. We put some money into the carbon tax 888 00:57:19,520 --> 00:57:22,840 Speaker 1: in Washington State and lost. We were outspent twelve to one. 889 00:57:23,120 --> 00:57:25,440 Speaker 1: But you have to do pick your spots and do 890 00:57:25,520 --> 00:57:28,560 Speaker 1: the best you can, uh. And that's what we try 891 00:57:28,600 --> 00:57:31,000 Speaker 1: and do. And I think in terms of investigative journalism 892 00:57:31,040 --> 00:57:34,760 Speaker 1: and other efforts, it's it's first rate. Um. Otherwise, we 893 00:57:34,840 --> 00:57:39,840 Speaker 1: look for the point of maximum leverage where uh a 894 00:57:39,880 --> 00:57:43,240 Speaker 1: big organization like w w F for the Nature Conservancy 895 00:57:44,080 --> 00:57:48,280 Speaker 1: is doing something that we think really impacts the problems 896 00:57:48,280 --> 00:57:53,640 Speaker 1: of agriculture or a climate change, the water, uh fishing, 897 00:57:54,480 --> 00:57:57,000 Speaker 1: things that will really matter to the well being of 898 00:57:57,040 --> 00:57:58,880 Speaker 1: the world as we go forward. Let me ask you 899 00:57:58,960 --> 00:58:01,520 Speaker 1: about to go on? Sorry. Yeah. The The other thing 900 00:58:01,600 --> 00:58:05,560 Speaker 1: is I wanted to elaborate on the population problem in Africa, 901 00:58:06,080 --> 00:58:09,200 Speaker 1: where all of the three billion that's forecasts for incremental 902 00:58:09,280 --> 00:58:14,600 Speaker 1: population between now and is basically an Africa. And let 903 00:58:14,600 --> 00:58:16,600 Speaker 1: me just give you some terrible numbers. When I was born, 904 00:58:16,640 --> 00:58:19,400 Speaker 1: the twenty eight million Nigerians there are a hundred ninety 905 00:58:19,400 --> 00:58:22,800 Speaker 1: today and the mid range forecast twenty one from the 906 00:58:22,920 --> 00:58:26,240 Speaker 1: u N is seven hundred and eighty million. Okay, that 907 00:58:26,320 --> 00:58:29,880 Speaker 1: country's support of course, not so between now and then 908 00:58:30,320 --> 00:58:37,120 Speaker 1: what misery and collapse and basically Robert Barons and regional 909 00:58:37,240 --> 00:58:40,600 Speaker 1: bandit chiefs are going to go on that will be 910 00:58:40,600 --> 00:58:42,919 Speaker 1: your notemare over there a nightmare? And if you ask 911 00:58:43,000 --> 00:58:46,680 Speaker 1: them today would like to emigrate? And what that will 912 00:58:46,760 --> 00:58:50,520 Speaker 1: be in ten twenty years? Lord and leaned Nes. And 913 00:58:50,560 --> 00:58:53,800 Speaker 1: you see the damage that hundreds of thousands of immigrants 914 00:58:53,880 --> 00:58:56,800 Speaker 1: have done to the liberal traditions of Europe and the 915 00:58:56,840 --> 00:59:00,840 Speaker 1: stability of politics. And you replace that an attempt to 916 00:59:00,880 --> 00:59:04,400 Speaker 1: have hundreds of millions you simply can't get there from. 917 00:59:04,440 --> 00:59:09,160 Speaker 1: And how much does the destabilizing of European politics effect 918 00:59:09,320 --> 00:59:12,240 Speaker 1: the behavior of the Russias and China's and the us 919 00:59:12,400 --> 00:59:15,200 Speaker 1: is of the world, the megapowers And where does that 920 00:59:15,280 --> 00:59:17,320 Speaker 1: leave us? I think that is the thing we should 921 00:59:17,360 --> 00:59:22,440 Speaker 1: really focus our attention quite quite uh frightening. Um. You 922 00:59:22,480 --> 00:59:27,160 Speaker 1: mentioned the Nature Conservancy. I was curious as to because 923 00:59:27,200 --> 00:59:30,680 Speaker 1: I noticed in this part of the country I frequently 924 00:59:30,800 --> 00:59:35,720 Speaker 1: see spaces purchased or donated to the nature Conservancy. There's 925 00:59:35,760 --> 00:59:39,280 Speaker 1: the little sign with the green leaf. How effective as 926 00:59:39,280 --> 00:59:44,800 Speaker 1: an environmental strategy is the idea of taking a parcel 927 00:59:44,840 --> 00:59:48,920 Speaker 1: of land and removing it from farming, from development, from housing. 928 00:59:48,960 --> 00:59:52,800 Speaker 1: What does that do for us? You need them genuinely 929 00:59:52,960 --> 00:59:56,840 Speaker 1: wild pockets and cards between them to maintain a hope 930 00:59:56,880 --> 01:00:01,680 Speaker 1: of having a successful wildlife any sort of biodiversity. Yes, 931 01:00:02,080 --> 01:00:05,840 Speaker 1: WWF recently said that we had lost six of the 932 01:00:05,880 --> 01:00:09,360 Speaker 1: mass of all the wildlife added together above the level 933 01:00:09,360 --> 01:00:12,680 Speaker 1: of insects. So we are not exactly winning the struggle. 934 01:00:12,840 --> 01:00:16,600 Speaker 1: So you need that, But you also need to to 935 01:00:16,760 --> 01:00:21,080 Speaker 1: limit climate change. If you have all these lovely cards 936 01:00:21,520 --> 01:00:23,240 Speaker 1: and the climate goes up by four and a half 937 01:00:23,240 --> 01:00:27,400 Speaker 1: degrees centigrade, most of what you've done, it's wasted any difference. Alright, 938 01:00:27,400 --> 01:00:29,600 Speaker 1: So I only have you for another five minutes. Let's 939 01:00:29,640 --> 01:00:32,800 Speaker 1: get to our speed round with our favorite questions. God, 940 01:00:32,840 --> 01:00:34,800 Speaker 1: I could keep you here for hours and hours more, 941 01:00:34,840 --> 01:00:39,400 Speaker 1: but your wife will kill me. So all right, So 942 01:00:39,520 --> 01:00:43,880 Speaker 1: tell us the most important thing we don't know about you. No, 943 01:00:44,000 --> 01:00:46,880 Speaker 1: I'm an open book, open Why don't you see? That's 944 01:00:46,920 --> 01:00:49,840 Speaker 1: what you get Early mentors. Who are the people who 945 01:00:49,920 --> 01:00:54,360 Speaker 1: helped shape your career. I think my grandfather. He was 946 01:00:54,400 --> 01:00:58,440 Speaker 1: brought up Quaker. He gave up quakery, but he stayed 947 01:00:58,920 --> 01:01:02,200 Speaker 1: with the spirit of of being a Quaker. He was 948 01:01:02,320 --> 01:01:06,080 Speaker 1: a good person. He didn't believe in flamboyant spending. He 949 01:01:06,200 --> 01:01:12,400 Speaker 1: became quite wealthy and used his money very wisely and discreetly. 950 01:01:13,320 --> 01:01:17,280 Speaker 1: I think that's set an excellent example. And and by 951 01:01:17,280 --> 01:01:23,560 Speaker 1: the way, Yorkshire values are very much value oriented from 952 01:01:23,560 --> 01:01:25,800 Speaker 1: an investor's point of view, and so that when you 953 01:01:25,880 --> 01:01:30,360 Speaker 1: read Ben Graham, you you tend to go, you know, 954 01:01:30,520 --> 01:01:34,040 Speaker 1: cheaper is better than more expensive. I get that, and 955 01:01:35,320 --> 01:01:38,200 Speaker 1: I don't. I don't see quite as much magic in 956 01:01:38,680 --> 01:01:42,520 Speaker 1: the value here is perhaps because of that background. So 957 01:01:42,520 --> 01:01:44,920 Speaker 1: so let's talk a little bit about the investors that 958 01:01:45,040 --> 01:01:49,840 Speaker 1: influenced your approach to investing, What thinkers have shaped the 959 01:01:49,840 --> 01:01:54,680 Speaker 1: way you look at markets. Ben Graham obviously, um no, 960 01:01:54,800 --> 01:01:57,160 Speaker 1: I don't think Ben Graham did much. I will give 961 01:01:57,200 --> 01:01:59,800 Speaker 1: it to Dean le Baron, who I had a hard 962 01:01:59,840 --> 01:02:05,720 Speaker 1: time with. In general, he was brilliant propagandist. He he 963 01:02:05,840 --> 01:02:10,400 Speaker 1: could sweet talk the pension fund officers out of the 964 01:02:10,440 --> 01:02:15,160 Speaker 1: trees and take them off to Russia and on trips 965 01:02:15,200 --> 01:02:17,840 Speaker 1: and things like this. And what he he showed me 966 01:02:18,000 --> 01:02:20,480 Speaker 1: was that we're a pretty boring industry and a little 967 01:02:20,480 --> 01:02:24,000 Speaker 1: bit of bazaars can go a long way, and how 968 01:02:24,040 --> 01:02:28,040 Speaker 1: important it is to project your ideas. Having great ideas 969 01:02:28,480 --> 01:02:31,320 Speaker 1: and not projecting them doesn't get you that far. So 970 01:02:31,400 --> 01:02:34,200 Speaker 1: I owe him that. So let me get that on 971 01:02:34,280 --> 01:02:36,320 Speaker 1: paper at least, I've said one good thing about being 972 01:02:36,400 --> 01:02:41,320 Speaker 1: the baron, and that's a pretty good thing. And I 973 01:02:41,400 --> 01:02:44,840 Speaker 1: learned an enormous amount from personal experience speculating in in 974 01:02:44,920 --> 01:02:51,320 Speaker 1: what was a very uh interesting speculative surge in nine 975 01:02:51,520 --> 01:02:56,480 Speaker 1: in tertiary quaternary stocks, tiny little stocks that would tend 976 01:02:56,520 --> 01:02:59,720 Speaker 1: to pull and then collapse. And we had an interesting 977 01:02:59,760 --> 01:03:02,360 Speaker 1: group of people like changing ideas, and we made and 978 01:03:02,480 --> 01:03:06,320 Speaker 1: lost fortunes. And I made enough to buy a house 979 01:03:07,680 --> 01:03:11,400 Speaker 1: in Newton without without a mortgage and a BMW. But 980 01:03:11,440 --> 01:03:14,880 Speaker 1: I didn't do it I could have done. Instead, I 981 01:03:15,000 --> 01:03:21,400 Speaker 1: maintained my speculative position in stocks that disintegrated, and from 982 01:03:21,440 --> 01:03:24,480 Speaker 1: then on, rather like Canes getting it out of his 983 01:03:24,600 --> 01:03:29,600 Speaker 1: system with commodities and and Ben Graham going into the 984 01:03:29,600 --> 01:03:34,680 Speaker 1: Great Crash, leveraged long from then on you get to 985 01:03:34,720 --> 01:03:38,320 Speaker 1: be much more conservative. Let's since you mentioned Keynes, let's 986 01:03:38,320 --> 01:03:41,400 Speaker 1: talk about some of your favorite books. What what fiction? 987 01:03:41,440 --> 01:03:44,000 Speaker 1: Non fiction, investing or not. What are some of your 988 01:03:44,040 --> 01:03:48,640 Speaker 1: favorite Well, I made a little list quickly. The ones 989 01:03:48,720 --> 01:03:51,120 Speaker 1: I like to recommend is one is called Dirt, The 990 01:03:51,160 --> 01:03:56,919 Speaker 1: Erosion of Civilizations Dirt by David Montgomery, and and it 991 01:03:57,000 --> 01:04:00,160 Speaker 1: looks at what happened to bad farming practices, and it 992 01:04:00,240 --> 01:04:04,440 Speaker 1: did to the ancient Greeks, the Assyrians, the Babylonians, and 993 01:04:04,440 --> 01:04:07,440 Speaker 1: and and the Romans and the Mayans and the commerce. 994 01:04:07,840 --> 01:04:12,040 Speaker 1: They overworked their local territory and when the weather turned 995 01:04:12,040 --> 01:04:14,560 Speaker 1: against them, that was it. It wasn't that was They 996 01:04:14,560 --> 01:04:18,880 Speaker 1: didn't have any resilience. Another one somewhat the same theme 997 01:04:18,960 --> 01:04:22,840 Speaker 1: was called in Moderate Greatness, which I recommended and moderate 998 01:04:22,920 --> 01:04:25,880 Speaker 1: Greatness Yes, which is a quote from the Decline and 999 01:04:25,920 --> 01:04:29,600 Speaker 1: Fall of the Roman Empire. And the subtitle is Why 1000 01:04:29,720 --> 01:04:33,680 Speaker 1: Civilizations Fail by William Oval, And that's a very short 1001 01:04:33,720 --> 01:04:38,919 Speaker 1: book that covers all the reasons hubrists, complexity, overworking your 1002 01:04:38,920 --> 01:04:44,880 Speaker 1: local resources, and and so on m that brings civilizations down, 1003 01:04:44,920 --> 01:04:47,880 Speaker 1: which is really quite terrifying because almost everything they list 1004 01:04:48,160 --> 01:04:53,520 Speaker 1: applies to today's modern world to some considerable degree. And 1005 01:04:53,680 --> 01:04:56,000 Speaker 1: the one that I like the most really as hubris, 1006 01:04:56,120 --> 01:04:58,920 Speaker 1: because every civilization tends to think that they're going to 1007 01:04:58,960 --> 01:05:03,200 Speaker 1: survive because they're so god damn brilliant. And and the 1008 01:05:03,280 --> 01:05:07,880 Speaker 1: infinite capacity of the human brain, which is illiterate historically, 1009 01:05:07,960 --> 01:05:10,480 Speaker 1: because the brains were the same for the Assyrians and 1010 01:05:10,480 --> 01:05:13,960 Speaker 1: the Babylonians, as we have today on the Mayans. But 1011 01:05:14,080 --> 01:05:18,000 Speaker 1: every civilization thinks it's special. And after four hundred years 1012 01:05:18,000 --> 01:05:20,720 Speaker 1: and you're brilliant viaducts, the Romans get pretty confident, and 1013 01:05:20,800 --> 01:05:25,400 Speaker 1: finally the way of bad luck and bad fortune brings 1014 01:05:25,440 --> 01:05:29,919 Speaker 1: them down. And that's what we have. We're at two 1015 01:05:30,000 --> 01:05:35,000 Speaker 1: or three hundred year old organization, sorry civilization, modern modern society, 1016 01:05:35,040 --> 01:05:37,280 Speaker 1: and we're the first global one. But we're not old, 1017 01:05:37,360 --> 01:05:41,320 Speaker 1: we're not seasoned, and we're nothing. There are Mayan civilizations. 1018 01:05:41,880 --> 01:05:45,880 Speaker 1: To Carl, it's twelve hundred years of of of civilization 1019 01:05:45,960 --> 01:05:48,959 Speaker 1: before it was brought down. Any of the books before 1020 01:05:49,000 --> 01:05:52,960 Speaker 1: we get to our final question. Um, yes, there's a 1021 01:05:53,040 --> 01:05:56,760 Speaker 1: very good book by Charles Man called The Wizard and 1022 01:05:56,800 --> 01:06:00,360 Speaker 1: the Prophet, and he looks at really this continuous struggle 1023 01:06:00,400 --> 01:06:03,800 Speaker 1: between the Optimists and the Mathusians corn Ucopeans I call them, 1024 01:06:03,800 --> 01:06:07,720 Speaker 1: and the Marthusians bullog who who who engineered the green 1025 01:06:07,760 --> 01:06:12,280 Speaker 1: revolution that saved millions from starvation? And a guy called 1026 01:06:12,480 --> 01:06:16,200 Speaker 1: back two who represented mouth Thus and be careful and 1027 01:06:16,520 --> 01:06:20,000 Speaker 1: try and sustain your long term ability. The Wizard and 1028 01:06:20,040 --> 01:06:23,200 Speaker 1: the Prophet, The Wizard and the Prophet, And that sounds fascinating. 1029 01:06:23,240 --> 01:06:25,920 Speaker 1: And our final question, what do you know about the 1030 01:06:25,960 --> 01:06:29,240 Speaker 1: world of investing today? You wish you knew forty years 1031 01:06:29,320 --> 01:06:36,120 Speaker 1: or so ago when you were getting started. The world 1032 01:06:36,200 --> 01:06:38,400 Speaker 1: was so straightforward for years ago, and there was so 1033 01:06:38,600 --> 01:06:41,000 Speaker 1: such a limit on the on the talent in the 1034 01:06:41,040 --> 01:06:44,240 Speaker 1: business that if you showed up and used your brains, 1035 01:06:44,440 --> 01:06:49,080 Speaker 1: you were likely to do pretty well. And he didn't 1036 01:06:49,080 --> 01:06:53,120 Speaker 1: need any help. And now when I've learned all my lessons, 1037 01:06:53,200 --> 01:06:55,600 Speaker 1: the market is so difficult and so full of talent 1038 01:06:56,360 --> 01:07:01,040 Speaker 1: you need lots of help. So that question doesn't really 1039 01:07:01,040 --> 01:07:04,120 Speaker 1: compute for me. Well, thank you so much, Jeremy for 1040 01:07:04,160 --> 01:07:08,160 Speaker 1: doing this. This was absolutely fascinating. We have been speaking 1041 01:07:08,240 --> 01:07:12,760 Speaker 1: to Jeremy Grantham. He is the chairman and co founder 1042 01:07:13,200 --> 01:07:18,080 Speaker 1: of GMO, managing over seventy one billion dollars. If you 1043 01:07:18,240 --> 01:07:21,360 Speaker 1: enjoy this conversation, well, be sure to look Up an 1044 01:07:21,360 --> 01:07:25,640 Speaker 1: Inch or Down an Inch on Apple iTunes, overcast at 1045 01:07:25,680 --> 01:07:29,400 Speaker 1: your Bloomberg dot com wherever your final podcasts are sold. 1046 01:07:29,400 --> 01:07:33,400 Speaker 1: Then you can see the other coming up on twoft. 1047 01:07:33,480 --> 01:07:38,280 Speaker 1: I want to say to prior conversations we've had, uh, 1048 01:07:38,320 --> 01:07:42,680 Speaker 1: They're available for download for free. UH. We love your comments, 1049 01:07:42,680 --> 01:07:46,640 Speaker 1: feedback and suggestions. You can write to us at m 1050 01:07:46,680 --> 01:07:50,120 Speaker 1: IB podcast at Bloomberg dot net. Uh, you check out 1051 01:07:50,120 --> 01:07:53,480 Speaker 1: my daily column. You can find that at Bloomberg dot 1052 01:07:53,480 --> 01:07:58,120 Speaker 1: com slash Opinion. Follow me on Twitter at Ritholtz. I 1053 01:07:58,240 --> 01:08:01,680 Speaker 1: would be remiss if I did not think the crack 1054 01:08:01,760 --> 01:08:06,600 Speaker 1: team that helps put these conversations together each week. Michael 1055 01:08:06,680 --> 01:08:10,760 Speaker 1: Batnick is my head of research. Alatica val Bron is 1056 01:08:10,800 --> 01:08:16,479 Speaker 1: our project manager, Taylor Riggs is our booker. Slash producer 1057 01:08:16,840 --> 01:08:21,559 Speaker 1: Carolin O'Brien is our audio engineer. This year, I'm Barry Ridholts. 1058 01:08:21,720 --> 01:08:25,400 Speaker 1: You've been listening to Masters in Business on Bloomberg Radio