WEBVTT - Quick to Fall, Quick to Rise 0:00:13.400 --> 0:00:16.680 Hello, and welcome to What Goes Up a Bloomberg Weekly 0:00:16.720 --> 0:00:20.600 market podcast. I'm Sarah Plante, reporter on the Cross Asset 0:00:20.680 --> 0:00:23.200 team and on Mike Reagan, a senior editor on the 0:00:23.200 --> 0:00:25.920 Markets team. This week on the show, in the stock 0:00:25.960 --> 0:00:29.479 market today, it seems there's only one thing that's constant speed. 0:00:30.000 --> 0:00:32.760 The fastest fall into a bear market on record was 0:00:32.840 --> 0:00:35.960 met with a forceful rally, In fact, the fastest in 0:00:36.000 --> 0:00:39.720 about ninety years. We talked to one investor who through 0:00:39.800 --> 0:00:42.560 all the back and forth, has been looking for opportunities, 0:00:43.360 --> 0:00:46.519 and as always, will close out the episode with our tradition, 0:00:46.560 --> 0:00:50.120 the craziest thing I saw in markets this week, And Sarah, 0:00:50.159 --> 0:00:52.680 I will have you know I this podcast is a 0:00:52.720 --> 0:00:55.520 special occasion because I actually took a shower for this podcast. 0:00:56.040 --> 0:00:58.480 I can't really explain why, but I felt the need 0:00:59.080 --> 0:01:00.320 if I was going to talk to you and our 0:01:00.360 --> 0:01:02.920 distinguished guests, that that I needed to take a shower. 0:01:02.960 --> 0:01:05.520 I have not felt that need when I'm writing and editing, though, 0:01:05.720 --> 0:01:09.800 for whatever reason, it's all mental. We're not in the office. 0:01:09.920 --> 0:01:13.000 No one knows what we look like, what anyone here 0:01:13.160 --> 0:01:15.959 is wearing. How long it's been since anyone showered but 0:01:16.000 --> 0:01:19.479 there's something about talking to someone to each other where 0:01:19.480 --> 0:01:21.840 it feels like you need to at least feel presentable. 0:01:22.160 --> 0:01:25.960 That's right. Well, everyone out there listening can take confidence 0:01:26.000 --> 0:01:28.440 that I smell that's somewhat decent. You know, better better 0:01:28.480 --> 0:01:33.240 than I did half an hour ago. But but let's 0:01:33.280 --> 0:01:35.839 welcome to the show. Our guest for the first time. 0:01:36.080 --> 0:01:40.120 He is the CEO of the investment management firm alger. 0:01:40.560 --> 0:01:42.839 His name is Dan Chung. Dan, welcome to the show. 0:01:43.319 --> 0:01:47.039 Thank you and Sarah, why don't you tell the folks 0:01:47.080 --> 0:01:49.600 about the podcast hot line. We've we've haven't been getting 0:01:49.640 --> 0:01:51.120 much love on the hot line. What do you let 0:01:51.200 --> 0:01:53.920 them know about the number? Yeah, come on, everyone's at home. 0:01:53.960 --> 0:01:55.880 You should have more time to give us a call. 0:01:56.080 --> 0:01:58.880 You know the drill. If you hear or see any 0:01:58.920 --> 0:02:01.320 crazy stories in the marks, you have any questions for us, 0:02:01.400 --> 0:02:03.280 you just want to give us any feedback, you can 0:02:03.320 --> 0:02:05.639 give us a call. That number is six four six 0:02:05.880 --> 0:02:10.240 three two four three four nine zero. And remember, if 0:02:10.240 --> 0:02:12.040 you leave us a message, we may even play it 0:02:12.280 --> 0:02:14.720 on the show for you to hear yourself. That's right, 0:02:14.800 --> 0:02:16.400 and you do as a listener. Do not have to 0:02:16.440 --> 0:02:18.560 shower for the podcast I'll just throw that out there. 0:02:18.760 --> 0:02:22.119 There's no rule, no rules, no rules. But then I'm 0:02:22.160 --> 0:02:26.040 curious to hear your take on this, this ferocious rebound 0:02:26.040 --> 0:02:28.400 in the markets we've seen this week. I was reading 0:02:28.440 --> 0:02:31.440 some of your thoughts about how this will all play out, 0:02:31.960 --> 0:02:34.520 and you did mention that you think, well, the economic 0:02:34.680 --> 0:02:37.480 recovery may be kind of slow and gradual, but you 0:02:37.520 --> 0:02:41.280 did expect sort of a V shaped recovery in stocks, 0:02:41.720 --> 0:02:43.360 and sure enough this week. I mean, we've seen the 0:02:43.440 --> 0:02:47.720 dal Jones industrial rise about something like in three days 0:02:48.240 --> 0:02:50.840 in the middle of this week. Is this the that 0:02:50.960 --> 0:02:53.400 V shaped recovery or is this kind of just a 0:02:53.560 --> 0:02:56.400 head fake and we'll get the real recovery when there's 0:02:56.400 --> 0:03:01.320 more clarity on the economic situation in the virus. I 0:03:01.320 --> 0:03:05.440 think it's a little combination of two things. So, first 0:03:05.440 --> 0:03:09.120 of all, it's a natural snap back to UM just 0:03:09.240 --> 0:03:14.800 the rapidity and the ferociousness of the decline, which, as 0:03:15.080 --> 0:03:17.320 as you've not that we haven't seen in ninety years. 0:03:18.919 --> 0:03:23.160 But um, I think it is also fundamentally the signs 0:03:23.320 --> 0:03:27.960 of UM the market's recovery in the pattern that will 0:03:28.160 --> 0:03:31.200 that will probably unfold over the next couple of months. 0:03:31.960 --> 0:03:34.880 UM So in particular, I think we're likely to see 0:03:35.600 --> 0:03:40.119 uh you know, uh, some retest I markets falling back 0:03:40.120 --> 0:03:42.000 a bit from where we are as we process a 0:03:42.000 --> 0:03:46.720 lot of news um over the next couple of months. UM. 0:03:46.840 --> 0:03:52.280 But I am actually fairly confident that the absolute lows 0:03:52.360 --> 0:03:56.440 that we just saw will probably be um, you know, 0:03:57.880 --> 0:04:00.320 the hold. They won't be any level. We won't going 0:04:00.320 --> 0:04:02.640 lower than that, and it is kind of the process 0:04:02.640 --> 0:04:06.800 of beginning of recovery. Actually, So how do you kind 0:04:06.800 --> 0:04:09.760 of go about couching market action with what's going on 0:04:09.800 --> 0:04:13.600 in the economy. This past week we got that unbelievable 0:04:14.440 --> 0:04:17.600 initial jobless claims number three point to eight million, more 0:04:17.640 --> 0:04:21.599 than quadruple the previous record, and it seems there's there's 0:04:21.640 --> 0:04:23.720 a worry that over the next couple of months we're 0:04:23.720 --> 0:04:25.839 going to continue to get economic data it's going to 0:04:25.880 --> 0:04:29.480 continue to be really rough. What does the market typically 0:04:29.480 --> 0:04:31.719 do in these situations, Well, the market look past the 0:04:31.760 --> 0:04:35.279 economic data to see what's coming in the future. What 0:04:35.360 --> 0:04:39.000 can we expect there? Right, So I think what we'll 0:04:39.040 --> 0:04:42.440 see is, um, the market is always looking forward and 0:04:42.480 --> 0:04:45.320 there therefore, oddly enough, on the rapidity of the down 0:04:45.800 --> 0:04:49.040 the decline, you know, it's sort of, uh, the fear, 0:04:49.480 --> 0:04:54.640 um the uh, the the shock of things going from 0:04:54.640 --> 0:04:57.640 basically so good in February too so bad so quickly, 0:04:57.680 --> 0:05:01.240 and also the in particularly unknown, unexpected nature of this. 0:05:01.320 --> 0:05:04.320 I mean, this is this is really the first major 0:05:04.320 --> 0:05:09.479 health scare that we've had since uh, the influenza of 0:05:11.640 --> 0:05:16.560 But UM, I think the markets, UM will also see that. 0:05:17.680 --> 0:05:21.359 We're going to see, you know, a peek in the 0:05:21.400 --> 0:05:27.120 COVID nineteen cases. UM Italy seems to have peaked, and UM, 0:05:27.160 --> 0:05:30.320 you know that's a positive sign really for what the 0:05:30.400 --> 0:05:32.600 pattern might be in the US. And I don't want 0:05:32.600 --> 0:05:35.039 to minimize, of course, I mean, this is still a 0:05:35.160 --> 0:05:39.560 terrible healthcare crisis, and many people are sick, and unfortunately 0:05:39.640 --> 0:05:44.280 many people will will die. But I think, you know, 0:05:44.440 --> 0:05:47.840 like in Italy, we will see a peak and then 0:05:47.839 --> 0:05:52.000 a decline of the cases. We'll see um, the beginnings 0:05:52.000 --> 0:05:54.719 of recovery in that, and the market will anticipate that. 0:05:55.120 --> 0:05:58.240 It is also, of course, the market reacting to and 0:05:58.279 --> 0:06:02.080 I have to commend you know, the Federal Reserve and 0:06:02.200 --> 0:06:07.280 even Congress, I mean, they are acting very quickly to offset, 0:06:07.920 --> 0:06:13.560 uh the economic damage that is being created by the UM. 0:06:13.640 --> 0:06:18.120 You know, the shutdowns and the precautions that we're taking 0:06:18.160 --> 0:06:21.680 to blunt the the worst of the impacts of of 0:06:21.760 --> 0:06:25.560 COVID nineteen. You know, Dad, I think you know, the 0:06:25.600 --> 0:06:30.120 assumption is that this is a very harsh but sort 0:06:30.120 --> 0:06:34.880 of temporary shock to the economy. But from an investing standpoint, 0:06:34.920 --> 0:06:37.839 I wonder if you you know, are there any areas 0:06:37.839 --> 0:06:41.559 of the market that you see perhaps permanently changed because 0:06:41.600 --> 0:06:44.400 of this, you know, uh, And I'm thinking obviously it's 0:06:44.400 --> 0:06:46.839 gonna be a long time I think before the say, 0:06:46.880 --> 0:06:50.400 the cruise ship businesses is back to where it was, uh, 0:06:50.839 --> 0:06:54.520 and and travel and leisure across the board. Are there 0:06:54.520 --> 0:06:59.039 any sort of permanent or semi permanent dislocations, uh, that 0:06:59.160 --> 0:07:01.920 you see that an investor should be aware of as 0:07:01.960 --> 0:07:05.120 a result of this. That's a great question. I mean, 0:07:05.160 --> 0:07:14.480 I do think that consumers might for several years rethink um, travel, um. 0:07:14.640 --> 0:07:16.720 And you know, in terms of what do I think 0:07:16.760 --> 0:07:21.440 will come back slowly and gradually, it's definitely things like 0:07:22.440 --> 0:07:29.800 the cruise ships, airlines, you know, hotels probably probably actually 0:07:29.880 --> 0:07:32.680 you know, slowest will be cruise ships. But I think 0:07:32.680 --> 0:07:37.000 you might see consumers really reconsider a little bit um, 0:07:37.040 --> 0:07:39.480 you know how and where and what they like to 0:07:39.520 --> 0:07:44.200 do when they travel and take vacations. UM, So that 0:07:44.360 --> 0:07:46.640 that's I don't think the industry is permanently damaged in 0:07:46.680 --> 0:07:49.360 any sense. I mean, people love travel. But I do 0:07:49.480 --> 0:07:55.400 wonder about, for example, whether UM airlines will have to 0:07:55.480 --> 0:07:58.680 adjust uh and cruise ships will adjust to consumers wanting 0:07:58.720 --> 0:08:02.960 to be a little less tightly packed into airplanes and 0:08:03.000 --> 0:08:07.520 cruise ships and therefore maybe you know, cru cruises will 0:08:07.560 --> 0:08:09.360 adjust to that, but they'll be maybe a little bit 0:08:09.400 --> 0:08:11.960 more expensive and so fewer people will be interested in 0:08:12.000 --> 0:08:14.600 taking them. You know, there are other things that that 0:08:14.600 --> 0:08:17.600 I'm pretty sure we'll come back really quite quickly, and 0:08:17.680 --> 0:08:19.600 I would think, you know, the top of the list 0:08:19.680 --> 0:08:24.360 would be dining out restaurants. Something that hasn't changed Dan though, 0:08:24.400 --> 0:08:27.400 and I think it's been surprising to some is the 0:08:27.400 --> 0:08:29.960 fact that even on the way down, it's a lot 0:08:30.000 --> 0:08:32.200 of the areas of the market, a lot of companies 0:08:32.200 --> 0:08:34.320 that lead on the way up during the bowl market 0:08:34.559 --> 0:08:37.400 that have actually still outperformed. So you think a lot 0:08:37.400 --> 0:08:40.679 of growth companies, particularly a lot of tech the fang 0:08:40.840 --> 0:08:45.000 name sure Amazon, Netflix might be doing particularly well in 0:08:45.000 --> 0:08:47.880 a situation that we're dealing with now, with the spreading outbreak. 0:08:48.320 --> 0:08:50.960 But is it surprising to you at all or do 0:08:51.040 --> 0:08:55.280 people maybe underestimate how healthy some of these companies have 0:08:55.360 --> 0:08:58.160 become over time. Sure they lead the bowl market on 0:08:58.200 --> 0:09:00.240 the way up, but a lot of them are pretty 0:09:00.280 --> 0:09:05.240 muture now. And I think you're absolutely right. Actually, high 0:09:05.320 --> 0:09:10.079 quality growth companies have performed UM very well in this downturn, 0:09:11.080 --> 0:09:13.640 and and and based on history that's actually a little 0:09:13.640 --> 0:09:20.440 bit anomalous. However, I think based on modern current trends, UM, 0:09:20.480 --> 0:09:24.040 it's actually something that we're pleased to see. It says 0:09:24.080 --> 0:09:28.640 that in many places UM investors are still understanding that 0:09:28.679 --> 0:09:33.199 there are some really strong innovation and growth drivers UM 0:09:33.240 --> 0:09:36.280 in our economy, and that the companies that are leading 0:09:36.720 --> 0:09:41.800 those trends UM, you know, despite the disruption that this 0:09:41.840 --> 0:09:44.960 will cause for their businesses near term, UM, you know, 0:09:45.000 --> 0:09:49.240 many of them still will benefit from UM you know, 0:09:49.280 --> 0:09:56.160 the trends towards big data, cloud computing, e commerce, UM 0:09:56.200 --> 0:09:59.240 you know, and streaming media. And in fact, I do 0:09:59.360 --> 0:10:02.040 think actually you asked about the you know, if some 0:10:02.080 --> 0:10:05.160 industries will be sort of negatively impaired, I think actually 0:10:05.280 --> 0:10:09.560 what might happen is that some industries will be positively 0:10:09.600 --> 0:10:13.040 benefited by this, and it may result in sort of 0:10:13.080 --> 0:10:16.320 you know uh. For example, I mean the easiest is 0:10:16.320 --> 0:10:20.640 online shopping is clearly taking a huge surge up from 0:10:20.679 --> 0:10:24.280 already a very long twenty five year growth trend. And 0:10:24.320 --> 0:10:28.680 it may actually um be something that consumers now that 0:10:28.679 --> 0:10:32.240 they're comfortable ordering groceries and necessities online, a large part 0:10:32.280 --> 0:10:35.480 of them uh you know uh continue to do so 0:10:35.559 --> 0:10:39.079 after the crisis has faded, because Amazon and the other 0:10:39.120 --> 0:10:42.920 groceries that are doing online delivery are doing a great 0:10:42.960 --> 0:10:45.880 and important job right now. The same thing would be 0:10:45.880 --> 0:10:51.800 true for streaming streaming media, where clearly Netflix, Hulu, Disney 0:10:51.840 --> 0:10:55.960 plus they're all seeing a tremendous usage and interest in 0:10:56.000 --> 0:11:00.840 their um uh you know services. But on more serious side, 0:11:00.920 --> 0:11:04.320 um some of the most important cloud software and enterprise 0:11:04.559 --> 0:11:07.240 technology companies are also benefiting because we are all having 0:11:07.280 --> 0:11:10.360 to work from home and we are testing, really in 0:11:10.400 --> 0:11:14.320 a dramatic fashion, the technology some of the newest technologies 0:11:14.600 --> 0:11:17.120 that allow us to do that. Um So a lot 0:11:17.160 --> 0:11:19.480 of that is data center based and cloud center based, 0:11:19.520 --> 0:11:23.400 but also software as a service. And you know, I 0:11:23.440 --> 0:11:27.000 think a lot of the new technologies are proving um 0:11:27.120 --> 0:11:29.959 their ability to adapt, their ability to allow us to 0:11:30.000 --> 0:11:32.920 continue to function and run our businesses at a high level. 0:11:33.440 --> 0:11:36.760 And even uh, you know, as we speak here, many 0:11:36.800 --> 0:11:39.440 are using Zoom. I just got off a Zoom conference call, 0:11:40.080 --> 0:11:44.000 and uh, I've also had my first Zoom cocktail hour 0:11:44.080 --> 0:11:47.840 with a bunch of friends. Uh. And I think we'll 0:11:47.880 --> 0:11:50.319 find that some of these companies and the new products 0:11:50.320 --> 0:11:54.000 that they're delivering, we're already in a growth trend, and 0:11:54.160 --> 0:11:58.840 in fact, this crisis is causing us to actually uh 0:11:59.040 --> 0:12:01.000 you know, use and better fit from their products. And 0:12:01.040 --> 0:12:04.400 so I do think that there's very good fundamental reasons 0:12:04.440 --> 0:12:08.080 why um, those companies and their stocks have held up well, 0:12:08.120 --> 0:12:11.000 and I think many of them, when we come out 0:12:11.000 --> 0:12:13.560 of this crisis, will continue to reclaim their leadership in 0:12:13.559 --> 0:12:32.920 the market. You know, Dan at Alger, you offer several 0:12:32.960 --> 0:12:36.560 different strategy strategies. UM. I wanted to ask a little 0:12:36.600 --> 0:12:40.840 bit about the dynamic opportunity strategy. It's a long short 0:12:40.880 --> 0:12:45.480 head strategy. The whole sort of long short style UM 0:12:45.600 --> 0:12:48.040 seemed to be slowly going out of style for a 0:12:48.080 --> 0:12:50.960 long time there when we had this just what seemed 0:12:50.960 --> 0:12:54.600 like an endless bowl market. UM, is this crisis kind 0:12:54.600 --> 0:12:57.520 of breathing new new life into that strategy is there. 0:12:57.760 --> 0:12:59.760 Do you do you suspect they'll be sort of a 0:13:00.040 --> 0:13:03.480 new interest in a long short strategy going forward, even 0:13:03.559 --> 0:13:07.480 even after we recovery recover from this, well, I certainly 0:13:07.760 --> 0:13:11.360 think so. I mean, we created this strategy for actually 0:13:11.920 --> 0:13:17.080 UM first out of a desire for Algier's own shareholders, 0:13:17.480 --> 0:13:20.680 which is a family, multiple multiple multiple branches of a 0:13:20.720 --> 0:13:25.760 family that you know, up until we created the strategy, 0:13:25.840 --> 0:13:28.640 they'd only invested in our long only strategies and basically 0:13:28.720 --> 0:13:31.320 a very simple bond portfolio, you know, almost like the 0:13:31.360 --> 0:13:35.480 classic sixty except we were more like se because we 0:13:35.480 --> 0:13:39.240 were big believers in our strategies UM. But we created 0:13:39.240 --> 0:13:43.679 it to to you know, preserve capital and down markets UM, 0:13:43.800 --> 0:13:47.120 to be opportunistic about the opposide in in in bowl 0:13:47.200 --> 0:13:51.000 markets UM, and and also to give investors a much 0:13:51.000 --> 0:13:54.959 smoother ride. So, uh, you know, half or less than 0:13:55.000 --> 0:13:59.079 half the volatility of the SMP five. You know, it 0:13:59.120 --> 0:14:04.640 has actually performed exceptionally well recently. This year to date, 0:14:04.720 --> 0:14:10.000 it's down maybe one or two percent against an SMP 0:14:10.160 --> 0:14:13.960 that's down I think twenty three percent. And if you 0:14:13.960 --> 0:14:16.679 look also over the last three and five years, the 0:14:16.760 --> 0:14:20.760 strategy is actually outperformed the SMP over the three year period, 0:14:20.800 --> 0:14:23.440 and it's about you know, it's about equal to the SMP. 0:14:23.600 --> 0:14:26.720 I think over the five UM. Now there's a lot 0:14:26.760 --> 0:14:28.800 of ultimate in the markets that might change a little bit. 0:14:28.840 --> 0:14:31.560 But the point, but the point I would make is 0:14:31.600 --> 0:14:34.840 that I think long short, actively managed you get the 0:14:34.880 --> 0:14:38.640 benefit of downside protection, you know, protecting your capital and 0:14:38.720 --> 0:14:43.040 markets like this, but with a modest participation in the 0:14:43.120 --> 0:14:46.320 upside of equities over the long term, uh, you know, 0:14:46.400 --> 0:14:51.480 you're able to in particular handily outperform many bond funds. 0:14:51.600 --> 0:14:53.800 I think, you know, one of my concerns is many 0:14:54.040 --> 0:14:57.800 many investors have too much in cash and bonds. UM. 0:14:57.880 --> 0:15:02.560 They've benefited recently from you know, low interest rate cycle, 0:15:02.640 --> 0:15:04.480 but that it really ended a few years ago and 0:15:04.520 --> 0:15:07.720 for a lot of investors, if you want to meet 0:15:07.760 --> 0:15:13.000 your long term needs, have your wealth grow, um, you 0:15:13.080 --> 0:15:18.320 really need to have a good combination of equities, bonds, cash. 0:15:18.480 --> 0:15:21.280 Of course, there's a reserve for times like this, but 0:15:21.440 --> 0:15:25.080 also I think long short strategies that can kind of 0:15:25.120 --> 0:15:28.400 straddle between bonds and equities. Now the words bonds are 0:15:28.400 --> 0:15:31.480 obviously less volatile, but the returns on an absolute basis 0:15:31.560 --> 0:15:34.840 have not been particularly good for quite a while. I mean, 0:15:34.840 --> 0:15:37.840 while equities, of course, unfortunately it's a lot of volatility, 0:15:37.840 --> 0:15:40.920 even though they are in the end the long term winners. 0:15:40.960 --> 0:15:43.080 And you know, there's a lot of data that shows 0:15:43.120 --> 0:15:47.120 over I think a twenty year period, there's never been 0:15:47.160 --> 0:15:50.320 a rolling twenty year period where bonds that perform equities, 0:15:50.360 --> 0:15:55.640 and in fact, over tenure periods of equities dominate. But 0:15:55.720 --> 0:15:59.000 of course the intermediate volatility, the times like this UM, 0:15:59.080 --> 0:16:02.760 you know, are very shocking, and they're they're difficult for 0:16:02.760 --> 0:16:06.600 for you know, regular investors, you know, we're not you know, 0:16:06.680 --> 0:16:09.760 professionals and watching the market. They're difficult for them to handle. 0:16:09.840 --> 0:16:12.040 And you know, the biggest fear I have is that 0:16:12.040 --> 0:16:15.720 that so many individual investors will make the classic mistake of, 0:16:15.720 --> 0:16:18.640 for example, selling out of equities now and putting it 0:16:18.680 --> 0:16:23.920 into cash um uh. And you know, inevitably, this crisis 0:16:23.920 --> 0:16:26.880 will fade, markets will recover I think in a vciate 0:16:26.920 --> 0:16:30.320 pattern well ahead of the economic recovery. Uh, And they'll 0:16:30.320 --> 0:16:32.840 miss out on a lot of gains over the next 0:16:32.880 --> 0:16:35.600 couple of years. So that's why I believe the long 0:16:35.600 --> 0:16:38.320 short equity really has a great place UM in in 0:16:38.360 --> 0:16:42.600 everyone's portfolio. Say you're talking to that kind of individual 0:16:42.640 --> 0:16:44.320 at this point in time where we're at now. I 0:16:44.360 --> 0:16:47.600 mean you you mentioned a couple of companies like Zoom Video, 0:16:47.600 --> 0:16:50.720 which I looked up more than this year shares have 0:16:50.760 --> 0:16:55.040 more than doubled UM, that are potentially going to advance 0:16:55.120 --> 0:16:58.760 because of an unfortunate situation like this. Is it better 0:16:58.920 --> 0:17:01.440 at this point in time, I'm seeing where we're at 0:17:01.480 --> 0:17:04.720 in markets and also with the development of the virus, 0:17:04.800 --> 0:17:08.800 to be thinking about companies that could see structural change 0:17:08.880 --> 0:17:11.960 to the upside due to an event of this sort. 0:17:12.119 --> 0:17:14.160 Or is it better to now be looking at companies 0:17:14.520 --> 0:17:17.280 that might be miss price, may have been beaten down, 0:17:17.440 --> 0:17:20.040 brought down as people say, through the baby out with 0:17:20.040 --> 0:17:22.880 the bathwater. Um. I guess it's ultimately a question about 0:17:23.000 --> 0:17:25.520 value versus growth maybe, but is it better to be 0:17:25.560 --> 0:17:27.320 looking at companies that might be miss priced at this 0:17:27.359 --> 0:17:30.240 point in time or companies that could see positive change? 0:17:31.760 --> 0:17:34.879 So I'm going to frustrate to you it's actually better 0:17:34.920 --> 0:17:39.320 to be doing both of those things plus one. More so, 0:17:39.440 --> 0:17:42.200 what we're doing at Algae right now is we are 0:17:42.720 --> 0:17:46.160 literally looking to make sure our portfolios have a good 0:17:46.200 --> 0:17:49.480 balance between companies that are actually going to benefit from this, 0:17:49.840 --> 0:17:54.359 and the benefits might be structural and long term and enduring. Um. 0:17:54.400 --> 0:17:58.640 I think Amazon and Netflix, who stocks actually haven't done 0:17:58.720 --> 0:18:01.640 much this year, which has been defensive, but I think 0:18:01.680 --> 0:18:05.800 actually could could could really benefit from what's happening now. 0:18:06.359 --> 0:18:08.680 But we're also looking at stocks, you know, I would 0:18:08.680 --> 0:18:12.080 say at the opposite end where they've come down extremely 0:18:12.119 --> 0:18:15.679 hard and hopefully you know, we're trying to look for 0:18:15.720 --> 0:18:20.040 the companies that are actually quality companies. Um. Good balance 0:18:20.040 --> 0:18:23.439 sheets can wet to the storm, um, you know, and 0:18:23.480 --> 0:18:27.639 we believe will recover, you know, nicely or fully. And 0:18:27.960 --> 0:18:30.679 then and that because of the sell off, um, you know, 0:18:30.760 --> 0:18:32.960 the returns in the near term might be well well 0:18:33.000 --> 0:18:36.760 above average, in fact, might be significantly better than to say, 0:18:36.800 --> 0:18:39.439 the first category. And you know, there really are some 0:18:39.560 --> 0:18:45.560 interesting opportunities there. Because um, in the last week or so, 0:18:45.640 --> 0:18:48.000 what we really saw that we took the markets down 0:18:48.040 --> 0:18:50.600 so sharply, and I think this is really interesting, is 0:18:50.640 --> 0:18:54.960 correlations rose to near across asset classes. So you saw 0:18:55.080 --> 0:18:59.080 bonds as well as preferred equities also take extreme hits 0:18:59.400 --> 0:19:02.720 in the last week or so after they'd held up 0:19:02.720 --> 0:19:05.719 pretty well until then and part of the reason is 0:19:06.359 --> 0:19:08.919 at that stage of the market, this stage of the market, 0:19:09.280 --> 0:19:12.040 a lot of investors were really simply looking to raise 0:19:12.119 --> 0:19:15.560 cash and also concerns about bankruptcy. Is liquidity of companies 0:19:15.600 --> 0:19:18.600 became an issue, and so you saw extreme blowout of 0:19:19.359 --> 0:19:22.040 spreads and the and the bond markets. Now in the 0:19:22.080 --> 0:19:24.520 equity markets, you know, we look for those situations too, 0:19:24.560 --> 0:19:26.440 and then we're trying to identify the companies that were 0:19:26.440 --> 0:19:32.040 pretty confident will survive, UM, that will have UM businesses 0:19:32.040 --> 0:19:34.520 that will come back, and and that actually won't be 0:19:34.600 --> 0:19:37.439 particularly impaired. And actually I would have to say, like 0:19:37.800 --> 0:19:39.240 you know, one of the industries that we think is 0:19:39.320 --> 0:19:42.359 very interesting is the is the restaurant industry, which has 0:19:42.400 --> 0:19:46.000 been forced to shut down. UM. So we've been looking 0:19:46.000 --> 0:19:49.960 at you know, the restaurant industry. It's distributor suppliers as 0:19:49.960 --> 0:19:52.040 well as its vendors, many of whom have been hit, 0:19:52.359 --> 0:19:55.600 you know, just broad swaths UM stocks that have gone 0:19:55.640 --> 0:20:00.040 down um, you know, thirty, forty, you know, fifty, and 0:20:00.840 --> 0:20:04.240 we look at them as you know, opportunities, especially when 0:20:04.240 --> 0:20:08.600 we find companies that you know, um, we think, uh, 0:20:08.640 --> 0:20:11.840 you know, have liquidity short term uh and then longer 0:20:11.960 --> 0:20:15.080 term actually you know, we're operating well, well run companies 0:20:15.119 --> 0:20:18.119 and in vital to the success of the industry. And 0:20:18.160 --> 0:20:20.160 then and then there, and then there's a final there's 0:20:20.160 --> 0:20:24.080 a final third category, which is you know, not necessarily 0:20:24.119 --> 0:20:27.040 companies that are going to benefit from this and nor 0:20:27.119 --> 0:20:30.800 companies that are bombed out, but simply high quality growth companies, 0:20:31.280 --> 0:20:34.680 um that we're doing well before. Um, you know, they're 0:20:34.720 --> 0:20:37.040 they're maybe not bombed out, but they're you know, they're 0:20:37.080 --> 0:20:39.200 they're cheaper than they were on average, they'd be about 0:20:39.200 --> 0:20:42.000 twenty to deeper since that's how much the market is. 0:20:42.400 --> 0:20:45.960 And there, you know, we're trying to to sort pick 0:20:46.000 --> 0:20:50.360 and short between you know, um, which ones are offering 0:20:50.560 --> 0:20:55.480 you know, the best upside, but also you know, uh 0:20:55.000 --> 0:20:57.720 uh where we think that the growth trends are stronger 0:20:57.840 --> 0:21:00.200 versus maybe slightly weaker. I mean, we are entering into 0:21:00.240 --> 0:21:03.520 a period of economic weakness. Clearly a lot of consumers 0:21:03.520 --> 0:21:06.040 and businesses are going to pull back. So one example 0:21:06.119 --> 0:21:09.200 I could I would highlight is we're looking carefully at 0:21:09.240 --> 0:21:11.679 those quality companies, but how much exposure do they have, 0:21:11.720 --> 0:21:15.359 for example, to small medium businesses, how much exposure do 0:21:15.400 --> 0:21:19.080 they have to say the travel industry versus the same 0:21:19.160 --> 0:21:23.240 kind of companies, but perhaps they have more exposure to China, 0:21:23.359 --> 0:21:27.360 which is already recovering apparently, or you know, more exposure 0:21:27.440 --> 0:21:30.600 to you know, Fortune one thousand companies that will clearly 0:21:30.840 --> 0:21:34.040 pay their bills stay in business. And uh, you know, 0:21:34.080 --> 0:21:37.160 we're sorting through that with a pretty big analyst team 0:21:37.160 --> 0:21:40.800 of about fifty five analysts and portfolio managers. And so 0:21:40.840 --> 0:21:43.399 those are the three categories that we're looking at, and 0:21:43.680 --> 0:21:45.840 when we try to construct the portfolio we actually really 0:21:45.840 --> 0:21:48.600 want to be um I would say at this time 0:21:48.840 --> 0:21:52.600 we were very fortunate to be allocated mostly to sort 0:21:52.640 --> 0:21:56.040 of long term growth leaders and beneficiaries and high quality 0:21:56.359 --> 0:21:58.760 not so much of course bombed out companies a month ago. 0:21:59.040 --> 0:22:02.800 But right now we're looking to sort of, uh, take 0:22:02.840 --> 0:22:05.800 advantage of the market dislocation. We're definitely adding to some 0:22:05.840 --> 0:22:09.480 companies that would be considered you know, bombed out, uh 0:22:09.520 --> 0:22:13.600 and also looking for those sort of UM quality companies 0:22:13.640 --> 0:22:15.920 at a discount. So I hope that helps. But those 0:22:15.920 --> 0:22:18.320 are the three buckets we're looking at. I think that's 0:22:18.440 --> 0:22:21.200 uh an excellent point, and I hope if anyone's out 0:22:21.200 --> 0:22:23.840 there in the power to to listen to Dan and 0:22:23.840 --> 0:22:28.000 and take those recommendations they do. So, Um, Sara, I 0:22:28.119 --> 0:22:29.919 like to think of what goes up as a small 0:22:30.040 --> 0:22:32.800 mom and pop operation, you know. And uh, you know 0:22:32.840 --> 0:22:35.280 what our our main product is the craziest thing that 0:22:35.320 --> 0:22:40.880 we all are saw on markets? Very good? It's our prototype. 0:22:42.320 --> 0:22:45.760 That's that's that is our flagship product, Uh Dan, I know, 0:22:45.920 --> 0:22:48.359 I hopefully they warned you about our gimmick. Here the 0:22:48.359 --> 0:22:51.520 craziest thing we saw in markets this week, A lot 0:22:51.560 --> 0:22:54.200 of contenders, I think, Sarah, why don't you you kick 0:22:54.240 --> 0:22:56.040 it off? What's the craziest thing you saw this week? 0:22:56.440 --> 0:22:58.600 All right? So to me, something that was really just 0:22:58.720 --> 0:23:03.640 unbelievable and encapsulates everything that we are witnessing right now 0:23:03.760 --> 0:23:06.760 is the fact that at one point on Thursday, um, 0:23:06.880 --> 0:23:10.240 full disclosure, Yes we record on Thursdays, the doll was 0:23:10.280 --> 0:23:13.479 more than twent off of its bottom. So if you 0:23:13.520 --> 0:23:16.760 are a very technical person, technically, that would mean the 0:23:16.800 --> 0:23:20.679 doll had entered a bowl market at one point, just 0:23:20.760 --> 0:23:23.359 a couple of weeks after it fell into a bear market, 0:23:23.760 --> 0:23:28.520 just with three days of a rally, So just pretty crazy. Sure, 0:23:28.560 --> 0:23:30.840 it's very technical call at a bear market, callable market 0:23:30.880 --> 0:23:33.240 called whatever you want to, but I think it's just 0:23:33.359 --> 0:23:38.240 really highlights, uh, the manic, crazy situation that we're in 0:23:38.320 --> 0:23:43.560 right now. Absolutely, it's I know the word unprecedented has 0:23:43.560 --> 0:23:47.200 been used unprecedented amount of times, but that's got that's 0:23:47.200 --> 0:23:52.280 got to be. Yeah, but three days of a bull 0:23:52.359 --> 0:23:56.560 market basically is that all took? Um, Dan, how about 0:23:56.560 --> 0:23:59.160