1 00:00:00,080 --> 00:00:06,080 Speaker 1: M This is Mesters in Business with Very Results on 2 00:00:06,240 --> 00:00:11,800 Speaker 1: Bluebird Radio this weekend. On the podcast man Strap Yourself In. 3 00:00:12,080 --> 00:00:17,280 Speaker 1: I love finding these people, just rockstar fund managers who 4 00:00:17,440 --> 00:00:22,200 Speaker 1: who just blow everybody else's doors off, but have somehow 5 00:00:22,239 --> 00:00:26,680 Speaker 1: managed to maintain a relatively low profile over the decades 6 00:00:26,720 --> 00:00:30,360 Speaker 1: they've been in in the business, and today's guest is 7 00:00:30,440 --> 00:00:34,320 Speaker 1: absolutely an example of that. James Anderson has been at 8 00:00:34,320 --> 00:00:40,839 Speaker 1: Bailey Gifford since nine His track record is superlative. But 9 00:00:41,000 --> 00:00:44,360 Speaker 1: what I'm really fascinated by is not just the outcomes 10 00:00:44,360 --> 00:00:50,640 Speaker 1: of his investments. It's how his process is so atypical 11 00:00:50,760 --> 00:00:55,480 Speaker 1: of what we see in the world of investment. Very thoughtful, 12 00:00:55,720 --> 00:01:01,280 Speaker 1: very eccentric, really considers investments in in terms of decades, 13 00:01:01,600 --> 00:01:05,480 Speaker 1: forget years, decades. I don't know how else to describe 14 00:01:05,560 --> 00:01:10,080 Speaker 1: it other than strap yourself in. For this one, it's spectacular. 15 00:01:10,600 --> 00:01:14,679 Speaker 1: With no further ado. My conversation with the soon to 16 00:01:14,840 --> 00:01:18,800 Speaker 1: be retiring manager of the Scottish Mortgage Investment Trust and 17 00:01:18,920 --> 00:01:25,120 Speaker 1: partner at Bailey Gifford, James Anderson. This is Mesters in 18 00:01:25,160 --> 00:01:31,560 Speaker 1: Business with very renorlts on Bluebird Radio. My extra special 19 00:01:31,600 --> 00:01:34,920 Speaker 1: guests this week is James Anderson. He is a partner 20 00:01:35,000 --> 00:01:38,280 Speaker 1: at Bailey Gifford, where he runs the Footsie one hundred 21 00:01:38,280 --> 00:01:43,160 Speaker 1: listed Scottis Mortgage Investment trust funds. It's about twenty three 22 00:01:43,160 --> 00:01:45,840 Speaker 1: and a half billion dollars last I checked. He has 23 00:01:45,959 --> 00:01:53,640 Speaker 1: generated returns over the past two decades of over. Bailey 24 00:01:53,680 --> 00:01:57,520 Speaker 1: Gifford also manages about four hundred and seventy billion dollars. 25 00:01:57,880 --> 00:02:02,160 Speaker 1: James Anderson, Welcome to Moomberg. Thank you. It's a pleasure 26 00:02:02,160 --> 00:02:04,800 Speaker 1: to be with you. Let's talk about your career. You 27 00:02:05,320 --> 00:02:09,560 Speaker 1: join Billy Gifford back. Tell us how you found your 28 00:02:09,600 --> 00:02:13,680 Speaker 1: way into finance and how did your financial career begin. Barry. 29 00:02:13,760 --> 00:02:18,560 Speaker 1: I think it's a combination of a fairly um normal 30 00:02:19,120 --> 00:02:23,880 Speaker 1: British establishment story with a few twists. UM. I came 31 00:02:23,919 --> 00:02:27,359 Speaker 1: from a very medical family. UM I didn't much care 32 00:02:27,400 --> 00:02:30,280 Speaker 1: for the idea of being a doctor, although everybody assumed 33 00:02:30,320 --> 00:02:33,040 Speaker 1: that's because I wasn't remotely clever enough, which used to 34 00:02:33,080 --> 00:02:36,400 Speaker 1: annoy be a bit. I did a history degree at Oxford, 35 00:02:36,400 --> 00:02:39,200 Speaker 1: which may or may not have been relevant, and I 36 00:02:39,280 --> 00:02:42,680 Speaker 1: then spent a couple of years at university abroad, in 37 00:02:42,720 --> 00:02:46,760 Speaker 1: particular a year at Johns Hopkins and Bologna in Italy, 38 00:02:47,280 --> 00:02:50,160 Speaker 1: which was originally set up to use for the c 39 00:02:50,320 --> 00:02:53,839 Speaker 1: I spent spy on the Italian communist parties involved by then, 40 00:02:54,480 --> 00:02:57,760 Speaker 1: but it gave me a first for hearing different interpretations. 41 00:02:57,840 --> 00:03:00,840 Speaker 1: There were people from approximately forty different tris and really 42 00:03:01,160 --> 00:03:03,560 Speaker 1: made me a great deal more curious than I was 43 00:03:03,639 --> 00:03:06,040 Speaker 1: when I was being talked down straight lines at Oxford. 44 00:03:06,600 --> 00:03:08,760 Speaker 1: And I think, and I think you would probably agree, 45 00:03:09,040 --> 00:03:13,000 Speaker 1: fund management is great if you're really curious about the world. 46 00:03:13,680 --> 00:03:17,320 Speaker 1: Journalism was the only other thing I considered um and 47 00:03:17,400 --> 00:03:22,079 Speaker 1: I didn't much like London, so Edinburgh was quite interesting. 48 00:03:22,160 --> 00:03:25,360 Speaker 1: So so you're barely Gifford in eighty three, how do 49 00:03:25,400 --> 00:03:30,519 Speaker 1: you eventually become the manager of the Scottish Mortgage Investment Trust, 50 00:03:30,560 --> 00:03:33,760 Speaker 1: which dates back to practically the turn of the last centric. 51 00:03:34,600 --> 00:03:37,000 Speaker 1: That's right, and to be honest, Barry, I think that 52 00:03:37,640 --> 00:03:40,760 Speaker 1: some of the events in the early years of Scottish 53 00:03:40,760 --> 00:03:45,720 Speaker 1: bortgage quite fascinating. You might be intrigued to read, for instances, 54 00:03:45,760 --> 00:03:50,200 Speaker 1: accounts of UH ninety thirty, where it was much more 55 00:03:50,200 --> 00:03:53,240 Speaker 1: concerned about which member of the Scottish middle classes was 56 00:03:53,280 --> 00:03:55,320 Speaker 1: going to be appointed to the board than it was 57 00:03:55,440 --> 00:03:58,440 Speaker 1: by what was happening on Wall Street. It's account of 58 00:03:58,440 --> 00:04:03,560 Speaker 1: why Canada and Argentina were more interesting than America was 59 00:04:03,720 --> 00:04:07,800 Speaker 1: interesting the backstory that for many years, UM, but I've 60 00:04:07,840 --> 00:04:13,560 Speaker 1: always thought that investment trusts are a fantastic instrument UH 61 00:04:13,600 --> 00:04:16,120 Speaker 1: and you know that's come across even more in recent 62 00:04:16,240 --> 00:04:19,240 Speaker 1: years because our freedom to go where we want an 63 00:04:19,240 --> 00:04:23,080 Speaker 1: investor in whichever form we want UH, and to try 64 00:04:23,120 --> 00:04:26,880 Speaker 1: and offer at low costs to retail investors has been 65 00:04:26,960 --> 00:04:31,360 Speaker 1: something that I really value. And so the unpopularity of 66 00:04:31,400 --> 00:04:35,400 Speaker 1: that form which existed back in UM, you know, it 67 00:04:35,480 --> 00:04:37,960 Speaker 1: was just a fascinating project to try and get involved 68 00:04:38,000 --> 00:04:41,599 Speaker 1: and gradually UM see the benefits of it. And I 69 00:04:41,720 --> 00:04:46,560 Speaker 1: much admired my predecessor, Max Would, who had the same 70 00:04:46,640 --> 00:04:50,160 Speaker 1: thirst for growth investing. Billy Gifford made a huge mistake 71 00:04:50,839 --> 00:04:53,599 Speaker 1: because in the late nineties seventies Max was by far 72 00:04:53,680 --> 00:04:57,920 Speaker 1: our most outstanding investor UM, and of course so many 73 00:04:57,960 --> 00:05:00,240 Speaker 1: of our assets were in the UK at that time. 74 00:05:00,960 --> 00:05:03,039 Speaker 1: Max was persuaded to be in charge of the UK 75 00:05:03,200 --> 00:05:07,000 Speaker 1: market when his heart was in America. And I think 76 00:05:07,040 --> 00:05:09,680 Speaker 1: Scottish Borgage shouldn't really give a right had been further onwards. 77 00:05:09,680 --> 00:05:14,599 Speaker 1: If we'd revert that last year you happened to say 78 00:05:14,960 --> 00:05:19,920 Speaker 1: fund management was irretrievably broken. Um explained that a little bit. 79 00:05:19,920 --> 00:05:24,440 Speaker 1: That's a fascinating quote. Yeah, well, and I'd be very 80 00:05:24,480 --> 00:05:28,440 Speaker 1: interested to pursue this and follow up questions from you Berry, 81 00:05:28,480 --> 00:05:32,520 Speaker 1: because I think it's a critically important issue. I think 82 00:05:32,560 --> 00:05:37,359 Speaker 1: fun of management has inherently become inward looking. And you 83 00:05:37,480 --> 00:05:40,960 Speaker 1: know this as well as I do. People measure themselves 84 00:05:41,000 --> 00:05:43,960 Speaker 1: by how they do to their comparators. If I go 85 00:05:44,080 --> 00:05:48,280 Speaker 1: back to the early days of stock markets, what we 86 00:05:48,279 --> 00:05:52,840 Speaker 1: were in the business of was helping to create a 87 00:05:53,120 --> 00:05:57,880 Speaker 1: nurture great companies. So we're going to move society as 88 00:05:57,880 --> 00:06:01,520 Speaker 1: well as investors onwards, and I think that we've lost 89 00:06:01,600 --> 00:06:04,960 Speaker 1: that sense of purpose over the years. So that is 90 00:06:05,000 --> 00:06:08,120 Speaker 1: absolutely central to how I see it. I would evidence 91 00:06:08,200 --> 00:06:11,640 Speaker 1: it by not just all the type of short run 92 00:06:12,160 --> 00:06:16,200 Speaker 1: performance statistics and short run media coverage there is, but 93 00:06:16,400 --> 00:06:21,560 Speaker 1: by the lacerating overall facts that both in Britain and America, 94 00:06:21,760 --> 00:06:26,200 Speaker 1: for a very long decade now, more money has been 95 00:06:26,240 --> 00:06:30,080 Speaker 1: given back by companies in the quoted markets than has 96 00:06:30,200 --> 00:06:34,719 Speaker 1: been raised. Um. You know, he's become a machine for 97 00:06:34,800 --> 00:06:38,839 Speaker 1: recycling rather than a machine for creation. Now I could 98 00:06:38,920 --> 00:06:42,599 Speaker 1: go on, but fundamentally, I think that is the great 99 00:06:42,640 --> 00:06:46,800 Speaker 1: trouble and has led us to have have to reinvent 100 00:06:47,080 --> 00:06:51,040 Speaker 1: a different way of really providing serious equity capital outside 101 00:06:51,040 --> 00:06:55,320 Speaker 1: the public markets. That's really interesting. So when you say 102 00:06:55,720 --> 00:06:59,880 Speaker 1: a machine for recycling rather than inventing, are you referring 103 00:06:59,880 --> 00:07:03,520 Speaker 1: to share buy backs rather than R and D, research 104 00:07:03,560 --> 00:07:08,200 Speaker 1: and development and investment in new ideas. Yeah, that that's 105 00:07:08,200 --> 00:07:12,640 Speaker 1: absolutely right. Share back buy backs um in many cases 106 00:07:12,680 --> 00:07:18,160 Speaker 1: successive divid and insufficient investment UM, and particularly in capital 107 00:07:18,200 --> 00:07:20,600 Speaker 1: intensive business, which, as you know of not on the 108 00:07:20,600 --> 00:07:23,120 Speaker 1: whole being what's been on people's minds for most of 109 00:07:23,120 --> 00:07:25,640 Speaker 1: the last that he is. But yeah, I think this 110 00:07:25,800 --> 00:07:29,000 Speaker 1: is a real problem. And to build these companies you 111 00:07:29,120 --> 00:07:32,920 Speaker 1: need a time horizon that is well longer earth than 112 00:07:33,080 --> 00:07:38,040 Speaker 1: quarters years and possibly even the decades. Huh. There's another 113 00:07:38,120 --> 00:07:40,960 Speaker 1: quarte of yours related to this exact issue that I 114 00:07:41,080 --> 00:07:45,640 Speaker 1: found very amusing. Fund managers are addicted to the near 115 00:07:45,800 --> 00:07:51,960 Speaker 1: pornographic allure of earnings reports and macro economic headlines. Is 116 00:07:52,000 --> 00:07:55,800 Speaker 1: that just a colorful way of saying they're too short term, 117 00:07:55,800 --> 00:08:02,640 Speaker 1: They're not thinking long term enough. That's that's certainly part 118 00:08:02,880 --> 00:08:08,160 Speaker 1: of it, but I don't think it is underneath even 119 00:08:08,240 --> 00:08:13,480 Speaker 1: in terms of the moment the critical part of it. UM. 120 00:08:14,560 --> 00:08:19,360 Speaker 1: I'd cite for instance that I spend a lot of 121 00:08:19,440 --> 00:08:25,560 Speaker 1: time asking companies when they've been fortunate enough to be successful, 122 00:08:25,760 --> 00:08:32,000 Speaker 1: what have been the critical moments, critical decisions? And very rarely, Barry, 123 00:08:32,120 --> 00:08:35,440 Speaker 1: do they say it was because we had a great 124 00:08:35,520 --> 00:08:40,880 Speaker 1: quarter in or of course we beat ourn ex expectations 125 00:08:40,880 --> 00:08:43,840 Speaker 1: in two thousand and five. And indeed, I think if 126 00:08:43,880 --> 00:08:47,800 Speaker 1: you if you drill down from that, very often the 127 00:08:47,840 --> 00:08:53,760 Speaker 1: most significant moments of companies history have been when they've 128 00:08:53,800 --> 00:08:58,760 Speaker 1: done something that is annoyed in the quarterly reports sense um. 129 00:08:58,800 --> 00:09:01,920 Speaker 1: And you know, I I would cite, for instance, the 130 00:09:02,200 --> 00:09:08,000 Speaker 1: extreme drawdowns we saw with Amazon around the time of 131 00:09:08,120 --> 00:09:14,120 Speaker 1: developing Prime, which was plainly a fantastically good long run 132 00:09:14,280 --> 00:09:21,320 Speaker 1: term value creating proposition, but yet the preoccupation was with 133 00:09:21,400 --> 00:09:24,720 Speaker 1: the short term impact on earnings. And you know, I 134 00:09:24,720 --> 00:09:27,280 Speaker 1: think you can drill into that again in a different 135 00:09:27,320 --> 00:09:32,280 Speaker 1: way by asking what are the questions that happen in 136 00:09:32,360 --> 00:09:36,800 Speaker 1: quarterly earning schools? As you know, very rarely do you 137 00:09:36,880 --> 00:09:42,920 Speaker 1: see major investors in the company. UM. The focus of 138 00:09:42,960 --> 00:09:48,520 Speaker 1: those discussions. It is about the brokerage industry, the investment banks, 139 00:09:48,559 --> 00:09:52,200 Speaker 1: and the next quarter, and I think that is profoundly 140 00:09:52,320 --> 00:09:55,440 Speaker 1: dangerous and does have an impact. So I think it 141 00:09:55,440 --> 00:10:00,640 Speaker 1: actually goes well beyond just the time frame a justice 142 00:10:00,679 --> 00:10:04,160 Speaker 1: though that's a unimportant when plainly it's deeply, deeply important. 143 00:10:05,040 --> 00:10:09,439 Speaker 1: But I think you actually get the immediate discussions as 144 00:10:09,440 --> 00:10:13,680 Speaker 1: well as the long term discussions bias towards whether the 145 00:10:13,760 --> 00:10:16,760 Speaker 1: next quarter is going to be up or down relative 146 00:10:16,800 --> 00:10:21,280 Speaker 1: to a set of analyst expectations. You were early desparked 147 00:10:21,320 --> 00:10:25,880 Speaker 1: the potential for some really explosive growth stocks, and they're 148 00:10:25,920 --> 00:10:30,600 Speaker 1: all very different. I'm thinking about Tesla Ali, Barba, Amazon, 149 00:10:31,360 --> 00:10:34,720 Speaker 1: What were the tells of each of these that led 150 00:10:34,760 --> 00:10:39,480 Speaker 1: you to think, Hey, there's really something special here. I 151 00:10:39,520 --> 00:10:44,960 Speaker 1: think fundamentally there are two important tracks in this Barry 152 00:10:45,720 --> 00:10:51,200 Speaker 1: uh to discuss try and um elucidate our thought process 153 00:10:51,240 --> 00:10:57,240 Speaker 1: of now. I think really you're looking for the scale 154 00:10:57,320 --> 00:11:00,520 Speaker 1: and this has become almost bernal to say, but the 155 00:11:00,600 --> 00:11:05,400 Speaker 1: scale of the addressable market that is there, and very 156 00:11:05,440 --> 00:11:09,080 Speaker 1: often I think it's it's it's key to stress this 157 00:11:09,480 --> 00:11:15,679 Speaker 1: that scale is not necessarily all that obvious at the 158 00:11:15,720 --> 00:11:18,359 Speaker 1: start of it. You know when Amazon was a bookseller, 159 00:11:19,120 --> 00:11:21,880 Speaker 1: when Tester was a sporting goods company, or you read 160 00:11:21,920 --> 00:11:24,160 Speaker 1: about the early days of Ali Baba when there were 161 00:11:24,200 --> 00:11:27,400 Speaker 1: twenty of it, but you can't really guess to that. 162 00:11:27,559 --> 00:11:31,880 Speaker 1: But I think that means that a critical important part 163 00:11:31,920 --> 00:11:37,200 Speaker 1: of this is a management that can accept that type 164 00:11:37,200 --> 00:11:41,080 Speaker 1: of open endedness and that type of time horizon and 165 00:11:41,200 --> 00:11:45,320 Speaker 1: that type of business decisions that we were talking about. Now, 166 00:11:45,440 --> 00:11:48,679 Speaker 1: if I look at this from an intellectual point of view, 167 00:11:49,640 --> 00:11:58,079 Speaker 1: we've had a splendid relationship with a set of academics 168 00:11:58,160 --> 00:12:01,280 Speaker 1: who have tried to focus on what really happened in 169 00:12:01,320 --> 00:12:06,040 Speaker 1: the stock market from that that point of view, UM 170 00:12:06,080 --> 00:12:09,480 Speaker 1: And you know, I think the history is going right 171 00:12:09,559 --> 00:12:12,680 Speaker 1: back to the Dutch East India company that a very 172 00:12:12,720 --> 00:12:17,000 Speaker 1: small number of people dominate. And this was our experience 173 00:12:17,080 --> 00:12:20,560 Speaker 1: ourselves that you had to have that ability of the 174 00:12:20,600 --> 00:12:25,080 Speaker 1: management to think in those brought raw terms. But we 175 00:12:24,760 --> 00:12:28,240 Speaker 1: we we we acquired ever greater conviction of this when 176 00:12:28,240 --> 00:12:31,480 Speaker 1: it wasn't just our own experience but from the work 177 00:12:31,520 --> 00:12:35,680 Speaker 1: of Hendrick Bessing Bhind at Arizona State University UM in 178 00:12:36,000 --> 00:12:38,760 Speaker 1: just stocks out performing treasury builds and they're onwards and 179 00:12:39,040 --> 00:12:42,120 Speaker 1: to put this in context. Um, you know, his data 180 00:12:42,400 --> 00:12:46,560 Speaker 1: on the American market goes back to twenty four thousand 181 00:12:46,559 --> 00:12:52,000 Speaker 1: companies in US common stock. Since then, um, now, over 182 00:12:52,000 --> 00:12:55,480 Speaker 1: that time, half the value of the key bills has 183 00:12:55,520 --> 00:12:59,760 Speaker 1: been created by just ninety companies. Now, talking to Hendrick, 184 00:12:59,840 --> 00:13:03,479 Speaker 1: he would agree that these companies don't just have huge markets, 185 00:13:04,200 --> 00:13:08,440 Speaker 1: but they have a willingness to say, we don't know 186 00:13:08,559 --> 00:13:11,480 Speaker 1: there's going to take us. And you mentioned there as 187 00:13:11,559 --> 00:13:15,000 Speaker 1: we we we all often do Amazon within this now, 188 00:13:16,000 --> 00:13:19,240 Speaker 1: possibly of all the many brilliant things that Jeff Bezos 189 00:13:19,280 --> 00:13:22,520 Speaker 1: has said and done, I think it was one of 190 00:13:22,559 --> 00:13:26,000 Speaker 1: his initial comments that there was this weirdness about his 191 00:13:26,080 --> 00:13:30,679 Speaker 1: business that everything he and Amazon News got better and cheaper, 192 00:13:30,920 --> 00:13:36,120 Speaker 1: usually by around perannum um. And then he paused and 193 00:13:36,200 --> 00:13:39,440 Speaker 1: probably gave a characteristic laugh and said, which I think 194 00:13:39,559 --> 00:13:42,200 Speaker 1: is really important. I don't know where this is going 195 00:13:42,240 --> 00:13:44,320 Speaker 1: to take me, but I think it is going to 196 00:13:44,400 --> 00:13:48,120 Speaker 1: be very exciting. Now we don't know, and surely we 197 00:13:48,160 --> 00:13:52,520 Speaker 1: didn't know about a WS and the like. And you know, 198 00:13:52,800 --> 00:13:55,440 Speaker 1: I think what you're there by looking for is both 199 00:13:55,480 --> 00:13:59,559 Speaker 1: that type of management attu in general and something specifically 200 00:13:59,679 --> 00:14:02,720 Speaker 1: in the vigil. We'd be lucky to have on the 201 00:14:02,760 --> 00:14:08,520 Speaker 1: board of Scottish Mortgage and sadly now retired professor per 202 00:14:08,559 --> 00:14:12,600 Speaker 1: s John Kum, who is his work. You probably know 203 00:14:13,720 --> 00:14:18,080 Speaker 1: m but you know a truly brilliant and thoughtful economist 204 00:14:18,120 --> 00:14:21,880 Speaker 1: who really puts Tom Slater. You've talked to him myself 205 00:14:23,520 --> 00:14:27,920 Speaker 1: on our biggest tests, board meetings and other discussions. But 206 00:14:28,040 --> 00:14:31,640 Speaker 1: I think one of the best sentences that even John 207 00:14:31,720 --> 00:14:35,240 Speaker 1: has as written um is the start of one of 208 00:14:35,280 --> 00:14:41,720 Speaker 1: his books where he compares great companies with fiction, and 209 00:14:41,840 --> 00:14:45,480 Speaker 1: he cites the first line of Van Karenina, which says 210 00:14:45,600 --> 00:14:50,040 Speaker 1: that all unhappy marriages are different, but all happy marriages 211 00:14:50,160 --> 00:14:53,280 Speaker 1: the same. And John's take as a second line is 212 00:14:53,320 --> 00:14:57,120 Speaker 1: it's the reverse in companies, that all great companies are 213 00:14:57,240 --> 00:15:00,760 Speaker 1: unique and all mediocre companies that are saying. And I 214 00:15:00,760 --> 00:15:03,440 Speaker 1: think if he runs through all these examples, and we 215 00:15:03,520 --> 00:15:06,800 Speaker 1: may well do with some of those, they are unique 216 00:15:06,920 --> 00:15:11,400 Speaker 1: and they have a different interpretation. So my challenge to myself, 217 00:15:11,960 --> 00:15:15,960 Speaker 1: you know, sticking with the Amazon example, is instead of 218 00:15:16,080 --> 00:15:19,520 Speaker 1: we spotted it early, what took us so long? Because 219 00:15:19,560 --> 00:15:22,680 Speaker 1: we only became major owners of Amazon in approximately two 220 00:15:22,760 --> 00:15:26,400 Speaker 1: thousand and four. I think if you go back and 221 00:15:26,560 --> 00:15:29,200 Speaker 1: read and try and x out you know, all the 222 00:15:29,240 --> 00:15:35,720 Speaker 1: subsequent UM successes. But if you read what Jeff based 223 00:15:35,760 --> 00:15:39,320 Speaker 1: Us wrote, I think you and I would agree that 224 00:15:39,440 --> 00:15:42,360 Speaker 1: it is a unique document, and I think you can 225 00:15:42,480 --> 00:15:47,280 Speaker 1: find that form of thought processes about the future of 226 00:15:47,320 --> 00:15:51,480 Speaker 1: their companies in all the truly great companies. Yeah, I 227 00:15:51,480 --> 00:15:55,120 Speaker 1: think a lot of us read that initial letter to shareholders, 228 00:15:56,080 --> 00:15:58,800 Speaker 1: but we probably didn't see it for a fifteen or 229 00:15:58,800 --> 00:16:01,880 Speaker 1: twenty years. Not a lot but read it and really 230 00:16:02,040 --> 00:16:07,920 Speaker 1: understood it back in that that may be. I mean, 231 00:16:07,960 --> 00:16:10,720 Speaker 1: I I almost think of, you know, to come back 232 00:16:10,720 --> 00:16:13,400 Speaker 1: to my comments about our ownership, we made it more 233 00:16:13,840 --> 00:16:18,960 Speaker 1: more difficult for ourselves varied by waiting those intervening six 234 00:16:19,080 --> 00:16:22,480 Speaker 1: or seven years, because you know, I think one skepticism 235 00:16:22,520 --> 00:16:25,440 Speaker 1: had only grown over that point. And you know, I'm 236 00:16:25,480 --> 00:16:32,360 Speaker 1: always amuse frustrated now when people UM talk about the 237 00:16:32,440 --> 00:16:37,760 Speaker 1: late ninety nineties as some sort of just simply a bubble. 238 00:16:37,960 --> 00:16:40,520 Speaker 1: I think there was also and here for once I 239 00:16:40,560 --> 00:16:43,240 Speaker 1: would find myself agreeing with Peter Deal. There was also 240 00:16:43,360 --> 00:16:46,400 Speaker 1: a huge amount of clarity around that point, and I 241 00:16:46,480 --> 00:16:51,040 Speaker 1: think people's ability to explore those ideas was there. But yet, 242 00:16:51,040 --> 00:16:54,480 Speaker 1: if I compare what Amazon was saying what Jeff Besis 243 00:16:54,560 --> 00:16:57,840 Speaker 1: was saying about that point of time, UM, compared to 244 00:16:58,240 --> 00:17:03,440 Speaker 1: what the average telecoms or media company equally sucked up 245 00:17:03,440 --> 00:17:05,480 Speaker 1: in the whole boom was. I think you could make 246 00:17:05,520 --> 00:17:09,320 Speaker 1: those differentiations. So you know, I know that a periods 247 00:17:09,320 --> 00:17:12,240 Speaker 1: of stress, and plainly there's another one at the beginning 248 00:17:12,280 --> 00:17:16,879 Speaker 1: of this year. Um, the correlations go to one and 249 00:17:16,920 --> 00:17:20,480 Speaker 1: all companies are regarded as the same. But I genuinely 250 00:17:20,520 --> 00:17:24,960 Speaker 1: believe that the market and the articulation given by individuals 251 00:17:24,960 --> 00:17:28,520 Speaker 1: and companies of their culture and ambitions does enable you 252 00:17:28,600 --> 00:17:34,639 Speaker 1: to differentiate. Really interesting, So you mentioned Jeff Bezos and 253 00:17:34,720 --> 00:17:38,640 Speaker 1: Peter Till, what is the allure of the enigmatic founder? 254 00:17:39,000 --> 00:17:41,719 Speaker 1: How much of the buyers you made in companies like 255 00:17:41,760 --> 00:17:46,800 Speaker 1: Amazon and Tesla are because the companies were helmed by 256 00:17:46,920 --> 00:17:52,520 Speaker 1: visionaries like Jeff Bezos and Eon musk H. Of course, 257 00:17:52,920 --> 00:17:56,760 Speaker 1: of what I've said about the power of truly great 258 00:17:56,760 --> 00:18:01,240 Speaker 1: businesses has come from reinterpreting uh the industries in which 259 00:18:01,280 --> 00:18:05,359 Speaker 1: they operate, and very often, as the examples you side show, 260 00:18:05,840 --> 00:18:09,320 Speaker 1: there are people who are basically from outside the industry. 261 00:18:09,600 --> 00:18:14,439 Speaker 1: I think it is very very hard, um, not to 262 00:18:14,520 --> 00:18:17,480 Speaker 1: think that that is an absolutely critical factor. Um. You know, 263 00:18:17,520 --> 00:18:21,480 Speaker 1: I would be intrigued. Uh. And you know we may 264 00:18:21,480 --> 00:18:24,120 Speaker 1: come onto one or two counterexamples, but I wouldn't treat 265 00:18:24,160 --> 00:18:27,680 Speaker 1: as how many companies have managed to rise to Chew 266 00:18:27,760 --> 00:18:32,360 Speaker 1: greatness without having had that at the start of the Uh. 267 00:18:32,440 --> 00:18:35,879 Speaker 1: There that the life stories And again that's something that 268 00:18:36,040 --> 00:18:38,560 Speaker 1: basically Henry Bess and Binder would agree with us. If 269 00:18:38,560 --> 00:18:42,520 Speaker 1: you go back early companies, that is also true of them. 270 00:18:43,359 --> 00:18:47,520 Speaker 1: You know, I find we were talking Amazon them. But 271 00:18:47,560 --> 00:18:49,439 Speaker 1: I think the test A story in that sense is 272 00:18:49,480 --> 00:18:54,720 Speaker 1: even more remarkable. Um. Somebody I much admard within the industry, 273 00:18:54,840 --> 00:18:59,240 Speaker 1: John L. Kind of Ferrari installantis um As has said 274 00:18:59,400 --> 00:19:02,840 Speaker 1: very clearly that he didn't think it could have Tessler, 275 00:19:02,920 --> 00:19:07,120 Speaker 1: could have been done by anybody from inside the industry. 276 00:19:07,200 --> 00:19:12,000 Speaker 1: So I think that different vision It very rarely comes 277 00:19:12,040 --> 00:19:16,800 Speaker 1: about without there being one single individual funders now to 278 00:19:16,920 --> 00:19:20,800 Speaker 1: undermine my own case Bury because you know, I think 279 00:19:20,880 --> 00:19:24,880 Speaker 1: that the nuance and the discussion is important here. Funny enough, 280 00:19:25,160 --> 00:19:28,919 Speaker 1: one of the companies that people don't seem to focus 281 00:19:28,960 --> 00:19:31,280 Speaker 1: on a lot, and they don't seem to ask me 282 00:19:31,359 --> 00:19:34,640 Speaker 1: a lot lot or about all my colleagues, But which 283 00:19:34,680 --> 00:19:38,159 Speaker 1: we probably most admire in the changes that have happened 284 00:19:38,160 --> 00:19:41,680 Speaker 1: in the world, would be ASML in Holland, and I 285 00:19:42,240 --> 00:19:48,160 Speaker 1: consider that both the extraordinary European example of a really 286 00:19:48,280 --> 00:19:52,919 Speaker 1: deep technology company that has actually succeeded. I also consider 287 00:19:53,000 --> 00:19:56,960 Speaker 1: it's possibly, in terms of what it enables, the most 288 00:19:56,960 --> 00:20:00,320 Speaker 1: deeply incomportant company in the world. You're not one of 289 00:20:00,400 --> 00:20:06,400 Speaker 1: the Internet helpfullys would basically exist unless, as abuts continued 290 00:20:06,440 --> 00:20:10,120 Speaker 1: More's law. But although there are individuals who have done 291 00:20:10,200 --> 00:20:15,479 Speaker 1: absolutely superb jobs, it's not so much associated with the 292 00:20:15,520 --> 00:20:20,639 Speaker 1: philosophy of one all domineering founders. And I find that 293 00:20:20,680 --> 00:20:24,320 Speaker 1: thereby an example that is even more intriguing. How do 294 00:20:24,400 --> 00:20:27,639 Speaker 1: you get to this level of ambition, this level of attainment, 295 00:20:27,760 --> 00:20:31,880 Speaker 1: this level of world leadership without having that sort of leader. 296 00:20:31,960 --> 00:20:34,800 Speaker 1: But I'm assuredly of the view that having one of 297 00:20:34,840 --> 00:20:38,080 Speaker 1: these sort of visionary leaders at the start is hugely important. 298 00:20:38,600 --> 00:20:43,159 Speaker 1: So that raises a fascinating quandary, which is, how do 299 00:20:43,240 --> 00:20:48,000 Speaker 1: you separate the true disruptor, the folks like bezos and musk, 300 00:20:49,000 --> 00:20:52,560 Speaker 1: from the crowded fields of those who you know, promise 301 00:20:52,880 --> 00:20:56,040 Speaker 1: over promise and under deliver um. And I'm thinking of 302 00:20:56,080 --> 00:21:00,480 Speaker 1: either Adam Newman of of WE Work or Travis Clentic 303 00:21:00,640 --> 00:21:07,679 Speaker 1: of of Uber. Well, firstly, I I don't think I 304 00:21:07,720 --> 00:21:10,359 Speaker 1: will have any difficulty persuading you of this very let 305 00:21:10,400 --> 00:21:14,119 Speaker 1: alone the audience. Um, I think one accepts that the 306 00:21:14,240 --> 00:21:18,520 Speaker 1: hit rate is going to be comparatively low. You know, 307 00:21:18,560 --> 00:21:21,200 Speaker 1: another one of the points that Hedrick best of mind 308 00:21:21,200 --> 00:21:24,040 Speaker 1: who would make, is that he can stick up a 309 00:21:24,119 --> 00:21:27,520 Speaker 1: chart of where the returns in public equity markets, whether 310 00:21:27,560 --> 00:21:31,880 Speaker 1: in America or internationally, have come from, and people assume 311 00:21:32,560 --> 00:21:36,440 Speaker 1: it's a return structure of the venture capital industry rather 312 00:21:36,440 --> 00:21:40,560 Speaker 1: than the public equity markets. And inevitably that means you are, 313 00:21:40,840 --> 00:21:43,800 Speaker 1: just as in the venture capital We're going to have failures. 314 00:21:44,520 --> 00:21:47,320 Speaker 1: But yes, of course you both try and capture the 315 00:21:47,359 --> 00:21:51,840 Speaker 1: extreme and try and winnow out um where the differences, 316 00:21:52,240 --> 00:21:55,399 Speaker 1: and you know, I think it genuinely has to come 317 00:21:55,440 --> 00:22:00,680 Speaker 1: down to a judgment of the caliber and the persuades 318 00:22:00,800 --> 00:22:04,240 Speaker 1: us of those individual ideas. You know, to be quite 319 00:22:04,280 --> 00:22:07,800 Speaker 1: frank with you, we did talk to WE Work, but 320 00:22:07,880 --> 00:22:10,919 Speaker 1: we didn't invest. We did talk to to run Us, 321 00:22:10,960 --> 00:22:14,320 Speaker 1: but we didn't invest. Now, to some extent, you're relying 322 00:22:14,359 --> 00:22:17,840 Speaker 1: on network of people who you will have good conversations 323 00:22:17,880 --> 00:22:19,879 Speaker 1: with them when we might come that. Come back to 324 00:22:19,960 --> 00:22:25,640 Speaker 1: that later. But I think it is about whether when 325 00:22:25,680 --> 00:22:29,640 Speaker 1: you put to these people the difficulties, the drawbacks, why 326 00:22:29,680 --> 00:22:33,520 Speaker 1: do they believe in what they're saying, um, and why 327 00:22:33,560 --> 00:22:36,320 Speaker 1: do they think they might have a chance? Then I 328 00:22:36,359 --> 00:22:40,240 Speaker 1: think you can make a more intelligent answer to that 329 00:22:40,359 --> 00:22:43,719 Speaker 1: than you think. And you know, I think thereby and 330 00:22:43,760 --> 00:22:46,879 Speaker 1: this is I think a very are the easy question 331 00:22:47,080 --> 00:22:51,920 Speaker 1: for most investment managers. You are thereby coming down on 332 00:22:52,080 --> 00:22:59,560 Speaker 1: it being critically about making qualitative judgments rather than quantitative ones. 333 00:22:59,600 --> 00:23:03,600 Speaker 1: And when we were discussing earlier Ernie his cause and 334 00:23:03,720 --> 00:23:06,800 Speaker 1: the like, I think that that rushed to what you 335 00:23:06,960 --> 00:23:11,000 Speaker 1: can measure rather than what you can think about and 336 00:23:11,160 --> 00:23:17,160 Speaker 1: not even analyze but creatively enquire about is hugely important UM. 337 00:23:17,160 --> 00:23:20,240 Speaker 1: And I think your biggest single objective on that is 338 00:23:20,280 --> 00:23:24,320 Speaker 1: to try and understand whether there is a reason that 339 00:23:24,520 --> 00:23:28,000 Speaker 1: only the one company who are investing in can do 340 00:23:28,080 --> 00:23:31,240 Speaker 1: what was happening. So we we worry a lot about 341 00:23:31,280 --> 00:23:35,520 Speaker 1: companies in which the clones can easily happen. On that score, 342 00:23:37,080 --> 00:23:40,000 Speaker 1: one of my takeaways from the Bess and Binder studies 343 00:23:40,640 --> 00:23:45,120 Speaker 1: was that a lot of fund managers and staff pickers 344 00:23:45,760 --> 00:23:50,640 Speaker 1: were excellent at identifying the companies to buy, but they 345 00:23:50,760 --> 00:23:56,200 Speaker 1: weren't especially good at determining when to sell. And I 346 00:23:56,320 --> 00:23:59,720 Speaker 1: bring this up in light of you essentially cutting your 347 00:23:59,760 --> 00:24:04,600 Speaker 1: tes So steake in half at a time after it 348 00:24:04,680 --> 00:24:08,879 Speaker 1: had really ballooned up and was very fortunate timing. Was 349 00:24:08,920 --> 00:24:13,160 Speaker 1: this just a function of rebalancing or valuation or what 350 00:24:13,240 --> 00:24:17,240 Speaker 1: was the thinking behind the cell in in a substantial 351 00:24:17,280 --> 00:24:22,879 Speaker 1: stake of of your Tesla Holden. I'll try and answer 352 00:24:22,920 --> 00:24:26,399 Speaker 1: that directly first, but then I'd like to cover a 353 00:24:26,400 --> 00:24:29,960 Speaker 1: bit of the intermediary stage, because you know, I think 354 00:24:29,960 --> 00:24:32,840 Speaker 1: it is it is the holding on that is critically 355 00:24:32,880 --> 00:24:36,560 Speaker 1: important in this um. You know, I was very interesting 356 00:24:37,160 --> 00:24:39,359 Speaker 1: interesting you had a discussion a few months ago, I 357 00:24:39,400 --> 00:24:42,920 Speaker 1: think with Bill Gurley about the importance of the holding 358 00:24:42,920 --> 00:24:46,119 Speaker 1: all elements of this which you know I think is 359 00:24:46,359 --> 00:24:49,320 Speaker 1: essential to it. But let let me try and run 360 00:24:49,320 --> 00:24:53,439 Speaker 1: the testa one to you. So what we're constantly trying 361 00:24:53,440 --> 00:24:58,640 Speaker 1: to answer, and I will mention some less excience successful 362 00:24:58,680 --> 00:25:02,520 Speaker 1: examples of this, uh than how Tesla has seemed, at 363 00:25:02,560 --> 00:25:06,440 Speaker 1: least so far. What we're trying constantly to ask ourselves 364 00:25:07,280 --> 00:25:11,000 Speaker 1: is has this company got the possibility to be in 365 00:25:11,000 --> 00:25:13,920 Speaker 1: the top five pc of outcomes over the next five 366 00:25:14,040 --> 00:25:18,120 Speaker 1: years UM and even longer if if if we can, 367 00:25:18,200 --> 00:25:20,520 Speaker 1: and we do, we try to make it longer, so 368 00:25:20,760 --> 00:25:24,840 Speaker 1: you're sticking out, can it still produce enough return to 369 00:25:24,960 --> 00:25:29,840 Speaker 1: make it into that sort of very high level competition. UM. 370 00:25:29,920 --> 00:25:35,240 Speaker 1: We did not think last January that at the total 371 00:25:35,320 --> 00:25:39,639 Speaker 1: market capitalization, total enterprise values that Tesla was getting to, 372 00:25:40,200 --> 00:25:42,879 Speaker 1: that we could see that degree of upside. It was 373 00:25:43,000 --> 00:25:47,080 Speaker 1: not about a worry that it would go down, which, 374 00:25:47,119 --> 00:25:49,479 Speaker 1: of course, in the case of Teslary even more than 375 00:25:49,520 --> 00:25:53,879 Speaker 1: the case of ny NY companies always existed. It's that 376 00:25:53,960 --> 00:25:57,560 Speaker 1: we doubted there was sufficient upside. Now to bring that 377 00:25:57,720 --> 00:26:04,200 Speaker 1: up to day have to say that, if anything, we 378 00:26:04,320 --> 00:26:10,720 Speaker 1: have been i'd almost say taken aback by the excellence 379 00:26:10,840 --> 00:26:15,040 Speaker 1: the brilliance of Texas executions since that period of time. 380 00:26:15,440 --> 00:26:17,840 Speaker 1: And I don't think it's just in quarterly and it's 381 00:26:17,920 --> 00:26:22,120 Speaker 1: terms again to go back that I think their ability 382 00:26:22,160 --> 00:26:25,840 Speaker 1: to build out the factories, to build out their expertise 383 00:26:26,160 --> 00:26:31,920 Speaker 1: in the batteries broadly defined, their ability to internationalize, their 384 00:26:31,960 --> 00:26:35,240 Speaker 1: ability to in fact increase their leadership over the industry 385 00:26:35,320 --> 00:26:39,400 Speaker 1: rather than Saturn is truly remarkable. So you know you're 386 00:26:39,440 --> 00:26:42,360 Speaker 1: being kind enough to say it was not an ill 387 00:26:42,480 --> 00:26:46,480 Speaker 1: timed reduction, which it wasn't in terms of having held 388 00:26:46,520 --> 00:26:49,840 Speaker 1: on before. But it's perfectly possible we'll be wrong. And 389 00:26:49,880 --> 00:26:53,879 Speaker 1: that's much of my mind, Barry, because you know, I think, 390 00:26:54,160 --> 00:26:59,480 Speaker 1: if anything, although we pride ourselves hugely on our ability 391 00:26:59,640 --> 00:27:02,840 Speaker 1: to in juror and back companies for for years and 392 00:27:02,920 --> 00:27:06,359 Speaker 1: years and years, um, I think our longest holding is 393 00:27:06,400 --> 00:27:09,080 Speaker 1: in Atlas Copca in Sweden, which I first brought in 394 00:27:09,359 --> 00:27:13,320 Speaker 1: I think, and we still own it, but sometimes we've 395 00:27:13,320 --> 00:27:15,960 Speaker 1: given up and made very bad mistakes on that point 396 00:27:15,960 --> 00:27:18,280 Speaker 1: of view. You know, we were large owners of Apple. 397 00:27:18,840 --> 00:27:21,920 Speaker 1: I myself did the exercise of trying to see whether 398 00:27:21,960 --> 00:27:24,200 Speaker 1: I thought it could be in the top five cent 399 00:27:24,280 --> 00:27:27,280 Speaker 1: of outcomes over the next ten years, and I didn't 400 00:27:27,280 --> 00:27:30,360 Speaker 1: think it could do could be now that's approximately five 401 00:27:30,440 --> 00:27:32,600 Speaker 1: years ago now, um, so you know there is a 402 00:27:32,800 --> 00:27:36,640 Speaker 1: fallibility about this process, but it's absolutely about it. Does 403 00:27:36,680 --> 00:27:41,280 Speaker 1: it have the chance from here to continue to replicate 404 00:27:41,440 --> 00:27:45,159 Speaker 1: the style of performance that with successes we think is 405 00:27:45,640 --> 00:27:49,880 Speaker 1: the outcome? M hm. That's quite fascinating and it leads 406 00:27:49,920 --> 00:27:55,840 Speaker 1: to another question. I'm hearing you describe yourself as less 407 00:27:56,000 --> 00:28:00,960 Speaker 1: of a pure bottom up stock picker, unless of a 408 00:28:01,080 --> 00:28:05,760 Speaker 1: sort of macro market cycle economic guy, than someone who 409 00:28:05,840 --> 00:28:09,720 Speaker 1: is trying to visualize what the future might look like 410 00:28:09,960 --> 00:28:14,239 Speaker 1: and which companies can help shape it. Is that a 411 00:28:14,280 --> 00:28:20,000 Speaker 1: fair assessment. I don't want to oversimplify this, no, but 412 00:28:20,160 --> 00:28:25,320 Speaker 1: I respect that. But I think it's a decent simplification. 413 00:28:25,520 --> 00:28:28,680 Speaker 1: Or if I might trump put in a slightly different terminology, 414 00:28:29,200 --> 00:28:33,879 Speaker 1: what we're looking for, uh the era defining companies, and 415 00:28:34,119 --> 00:28:39,320 Speaker 1: I've never really understood this attempt to define it purely 416 00:28:39,360 --> 00:28:43,360 Speaker 1: as bottom up or top down. Now, I think we 417 00:28:43,440 --> 00:28:45,640 Speaker 1: haven't really talked about as yet, but I wouldn't be 418 00:28:45,680 --> 00:28:49,720 Speaker 1: surprised if we if we do in the coming minutes. 419 00:28:50,400 --> 00:28:55,320 Speaker 1: I think that we are also doing an element of 420 00:28:55,400 --> 00:28:58,760 Speaker 1: top down envisioning of what the world looks like. But 421 00:28:58,880 --> 00:29:01,520 Speaker 1: it's not from you know, to go back to the 422 00:29:01,600 --> 00:29:04,800 Speaker 1: analogy with the quarterly earnings, it's not from what is 423 00:29:04,840 --> 00:29:08,200 Speaker 1: the FED about to do? And you know, to be frank, 424 00:29:08,360 --> 00:29:10,160 Speaker 1: even if I knew what the Fed was about to do, 425 00:29:10,240 --> 00:29:12,640 Speaker 1: I'm not sure it would help me make good decisions. 426 00:29:12,680 --> 00:29:15,440 Speaker 1: But it is trying to think what are going to 427 00:29:15,520 --> 00:29:19,239 Speaker 1: be the main driving forces of our economy over the 428 00:29:19,320 --> 00:29:22,840 Speaker 1: years to come, and where can there be those forces 429 00:29:22,880 --> 00:29:26,080 Speaker 1: of change and where can we get insight into them? So, 430 00:29:26,440 --> 00:29:31,240 Speaker 1: rather than looking for what a bunch of market commentators 431 00:29:31,320 --> 00:29:35,440 Speaker 1: or hedge funds are saying, we try and talk to 432 00:29:35,640 --> 00:29:40,600 Speaker 1: academics and scientists who can give us some checkpoints on 433 00:29:40,800 --> 00:29:45,800 Speaker 1: whether you know, those fundamental points are happening. Um, So 434 00:29:46,080 --> 00:29:49,000 Speaker 1: you know, to continue with the TESTA one on that theme. 435 00:29:49,440 --> 00:29:53,040 Speaker 1: You know, what was critically important to us remains quickly 436 00:29:53,080 --> 00:29:57,080 Speaker 1: important to us. Um in thinking about that scale of 437 00:29:57,120 --> 00:30:01,280 Speaker 1: the market that we were addressing earlier, was do we 438 00:30:01,440 --> 00:30:08,240 Speaker 1: have that confidence that the whole panoply of technologies connected 439 00:30:08,520 --> 00:30:13,760 Speaker 1: with making electric vehicles better and cheaper can continue to 440 00:30:13,880 --> 00:30:19,240 Speaker 1: compound at somewhere between fifteen per annum that we had 441 00:30:19,320 --> 00:30:22,840 Speaker 1: back in two thousand and thirteen fourteen. And you know, 442 00:30:23,080 --> 00:30:30,000 Speaker 1: to me, that's both are far more valuable background to investing. 443 00:30:30,120 --> 00:30:33,600 Speaker 1: But also you know, here I would be particularly interested 444 00:30:33,640 --> 00:30:39,120 Speaker 1: in your thoughts a far higher probability of being right. Um. 445 00:30:39,200 --> 00:30:42,560 Speaker 1: You know, I think that back in two thousand and fourteen, 446 00:30:42,800 --> 00:30:51,280 Speaker 1: we had approximately seventy five confidence interval that that across 447 00:30:51,760 --> 00:30:56,920 Speaker 1: all the different parts of the industry was the improvement rate. Now, 448 00:30:57,040 --> 00:30:59,800 Speaker 1: if you have that seventy five cent and it's competing 449 00:30:59,840 --> 00:31:02,560 Speaker 1: with an industry improving a three percent to bit, as 450 00:31:02,600 --> 00:31:05,480 Speaker 1: long as you've got patients, it's going to work out 451 00:31:05,480 --> 00:31:08,160 Speaker 1: in your favor. So I think you've not just got 452 00:31:09,320 --> 00:31:15,320 Speaker 1: um a more impactful set of findings, but I think 453 00:31:15,360 --> 00:31:20,000 Speaker 1: you've also got i'm far greater probability. And you know, 454 00:31:20,200 --> 00:31:23,960 Speaker 1: come if I bring that up to date a year 455 00:31:24,080 --> 00:31:28,840 Speaker 1: or so ago, I think the probabilities of that we're 456 00:31:28,840 --> 00:31:32,800 Speaker 1: moving up towards somewhere around in most stock market bets. 457 00:31:32,840 --> 00:31:36,760 Speaker 1: You know you're lucky if you get wow that that's 458 00:31:36,800 --> 00:31:39,280 Speaker 1: really interesting. So so I want to stay with the 459 00:31:39,320 --> 00:31:45,560 Speaker 1: concept of evaluating early stage, emerging growth companies and ask 460 00:31:45,640 --> 00:31:50,320 Speaker 1: you how important do you find it is to listen 461 00:31:50,440 --> 00:31:56,760 Speaker 1: to scientists, technologists and other people who have an expertise 462 00:31:57,280 --> 00:32:03,520 Speaker 1: that might be beyond what your particular our skill set is. Absolutely, 463 00:32:03,560 --> 00:32:08,200 Speaker 1: and I mentioned curiosity earlier. I think you've got to 464 00:32:08,280 --> 00:32:12,280 Speaker 1: be interested in everything that forms that. Now, I know, 465 00:32:12,400 --> 00:32:16,200 Speaker 1: in a certain sense, people in recent years have paid 466 00:32:16,240 --> 00:32:19,400 Speaker 1: a lot of attention to the psychology and the behavioral 467 00:32:19,480 --> 00:32:23,320 Speaker 1: factors in markets. But I think you can do it 468 00:32:24,200 --> 00:32:28,520 Speaker 1: with a different set of thinkers. UM. Some of them 469 00:32:28,720 --> 00:32:33,120 Speaker 1: are directly scientists. There are some I would almost classify 470 00:32:33,600 --> 00:32:37,920 Speaker 1: barriers being most important to us. UM. I put it 471 00:32:37,960 --> 00:32:43,120 Speaker 1: as the philosophers of change UM. For instance, not just 472 00:32:43,280 --> 00:32:50,040 Speaker 1: in reading but also in extraordinary helpful direct conversations. UM. 473 00:32:50,600 --> 00:32:53,840 Speaker 1: The work of Colot of Paris at Sussex University have 474 00:32:53,920 --> 00:32:58,080 Speaker 1: been extremely valuable to us. You know, how do technologies, 475 00:32:58,200 --> 00:33:02,840 Speaker 1: finance and innovation work together? And you know I won't 476 00:33:02,880 --> 00:33:06,200 Speaker 1: go through them are of course plainly You've had many 477 00:33:06,280 --> 00:33:09,360 Speaker 1: distinguished guests in the past who talked about this a lot, 478 00:33:09,760 --> 00:33:11,920 Speaker 1: and many have done them more to creative but the 479 00:33:12,000 --> 00:33:15,880 Speaker 1: whole emphasis of the work around in the Santa Fe 480 00:33:15,960 --> 00:33:19,880 Speaker 1: Institute about the process of change, from hard technologies like 481 00:33:19,920 --> 00:33:23,760 Speaker 1: the work of Justice on batteries to the more general 482 00:33:23,840 --> 00:33:28,400 Speaker 1: conceptual work of Bran Arthur and Jeffrey West. I think, 483 00:33:28,480 --> 00:33:32,960 Speaker 1: you know, thinking about how the world changes is hugely 484 00:33:33,120 --> 00:33:37,600 Speaker 1: important to us. And you know I'd make two observations 485 00:33:37,640 --> 00:33:40,560 Speaker 1: about Santa Fe Institute on that score. One would be 486 00:33:41,360 --> 00:33:43,800 Speaker 1: a huge offer of thanks to Bill Miller for his 487 00:33:43,920 --> 00:33:48,200 Speaker 1: work in establishing and financing it. UM and and Secondly, 488 00:33:48,520 --> 00:33:51,400 Speaker 1: I think most of the successful investors of the last 489 00:33:51,440 --> 00:33:54,840 Speaker 1: fifteen to thirty years have owed a lot to the 490 00:33:54,880 --> 00:33:59,160 Speaker 1: Santa Fe Institute. And it's very different take on economics, 491 00:33:59,240 --> 00:34:04,160 Speaker 1: on chain, on increasing returns, on dis equilibrium, and you know, 492 00:34:04,240 --> 00:34:08,520 Speaker 1: I think we're all in the sense as Keen said, 493 00:34:08,600 --> 00:34:14,320 Speaker 1: you know, we're we're often much more in practical circles 494 00:34:14,360 --> 00:34:17,040 Speaker 1: at the whim of as he said, dead economists. But 495 00:34:17,120 --> 00:34:19,440 Speaker 1: hopefully most of these people are still very much living. 496 00:34:19,480 --> 00:34:21,880 Speaker 1: But they are still very much living. But you know, 497 00:34:21,960 --> 00:34:24,719 Speaker 1: I think we own much more to not just economists, 498 00:34:24,719 --> 00:34:28,440 Speaker 1: but philosophers, to scientists and thinking about the process of 499 00:34:28,520 --> 00:34:31,719 Speaker 1: change than we care to acknowledge in markets. And I think, 500 00:34:31,719 --> 00:34:34,719 Speaker 1: you know, if I go back to when you were 501 00:34:34,760 --> 00:34:37,480 Speaker 1: asking me about what I see as problems in the 502 00:34:37,560 --> 00:34:40,160 Speaker 1: stock market, I think a lot of it is this 503 00:34:40,320 --> 00:34:43,680 Speaker 1: other element of the self referential. We believe only finance 504 00:34:43,920 --> 00:34:48,520 Speaker 1: only market developments are worthier study. And I think that 505 00:34:48,719 --> 00:34:52,280 Speaker 1: is a tragedy in both for the world but also 506 00:34:52,320 --> 00:34:55,520 Speaker 1: in terms of trying to do reasonable investment. You will 507 00:34:55,560 --> 00:34:58,480 Speaker 1: not make the point even more forcibly, you will not 508 00:34:58,600 --> 00:35:04,239 Speaker 1: find much of what I'm talking about in the requirements 509 00:35:04,239 --> 00:35:08,320 Speaker 1: of new investors. So let's stay with that because a 510 00:35:08,480 --> 00:35:12,080 Speaker 1: question I have for you a little later. Uh, there 511 00:35:12,120 --> 00:35:14,560 Speaker 1: was a headline not too long ago quote see if 512 00:35:14,560 --> 00:35:18,200 Speaker 1: a study cast doubts on weather, passing the test is 513 00:35:18,239 --> 00:35:22,000 Speaker 1: a key to a fund manager's success, which raises a 514 00:35:22,080 --> 00:35:25,400 Speaker 1: broad question what makes for a good investment manager? But 515 00:35:25,840 --> 00:35:29,200 Speaker 1: in doing my research about Bailey Gifford, I get the 516 00:35:29,280 --> 00:35:35,000 Speaker 1: sense that c f A isn't a particularly desirable designation 517 00:35:35,160 --> 00:35:38,600 Speaker 1: for your firm. Uh, what do you do to attract 518 00:35:38,640 --> 00:35:43,520 Speaker 1: and retain the best talents in Edinburgh UM, which is 519 00:35:43,520 --> 00:35:46,480 Speaker 1: really more of an academic center than a financial center. 520 00:35:47,000 --> 00:35:53,919 Speaker 1: And how have you been able to do this so consistently? Well, Verry, 521 00:35:53,960 --> 00:35:59,480 Speaker 1: It's something that I absolutely owe a lot to our predecessors, 522 00:36:00,000 --> 00:36:03,000 Speaker 1: and this sort of intrigues me as to how they 523 00:36:03,120 --> 00:36:08,000 Speaker 1: managed to come to this view of themselves and instigated 524 00:36:08,040 --> 00:36:11,480 Speaker 1: across the firms in such a strong way. We we 525 00:36:11,640 --> 00:36:16,640 Speaker 1: always believed that you needed this broader set of background, 526 00:36:16,719 --> 00:36:22,040 Speaker 1: so always deeply skeptical of whether it be UM finance 527 00:36:22,120 --> 00:36:26,720 Speaker 1: qualifications or whether it be academic training. In those scenario words, 528 00:36:27,440 --> 00:36:31,640 Speaker 1: one of the investors who I most admired in, Betty Gifford, 529 00:36:31,680 --> 00:36:36,600 Speaker 1: and worked with for a long time. Although Japanese specialist 530 00:36:36,680 --> 00:36:39,640 Speaker 1: Sarah Whitley was a psychology graduate and you know, I 531 00:36:39,640 --> 00:36:42,680 Speaker 1: think embodied many of these values, so that principle was 532 00:36:42,800 --> 00:36:48,279 Speaker 1: always absolutely there. What we've tried to work on over 533 00:36:48,320 --> 00:36:52,520 Speaker 1: the last twenty or thirty years is trying to broaden 534 00:36:52,600 --> 00:36:56,719 Speaker 1: that out. You know, naturally one needs to get rid 535 00:36:56,719 --> 00:37:01,280 Speaker 1: of the prejudices that were thirty years ago established around 536 00:37:02,080 --> 00:37:05,400 Speaker 1: employing females, employing people of a different ethnic background. But 537 00:37:05,480 --> 00:37:08,080 Speaker 1: I think it has to go much more broadly that 538 00:37:08,160 --> 00:37:15,000 Speaker 1: you're looking for a great cognitive diversity, that diversity of 539 00:37:15,160 --> 00:37:18,359 Speaker 1: real thought and approaching where you are, and I think 540 00:37:18,440 --> 00:37:23,759 Speaker 1: that is absolutely critical. Um. Now, at one level, it's 541 00:37:23,760 --> 00:37:25,480 Speaker 1: not difficult for us to do. You know, we have 542 00:37:25,640 --> 00:37:29,640 Speaker 1: many thousands of people as you know, as is you 543 00:37:29,760 --> 00:37:32,640 Speaker 1: probably expect applying to us, as and do many other 544 00:37:32,640 --> 00:37:35,719 Speaker 1: fund managers. But it then becomes a question of having 545 00:37:35,760 --> 00:37:39,520 Speaker 1: the bride bravery of the right ones and persuading them 546 00:37:39,560 --> 00:37:42,760 Speaker 1: either to come to Edinburgh. Um. And on that one 547 00:37:43,280 --> 00:37:47,399 Speaker 1: I will make some comments. You know, I think that 548 00:37:47,640 --> 00:37:52,040 Speaker 1: Edinburgh has got fantastic attributes and fantastic drawbacks. You know, 549 00:37:52,239 --> 00:37:55,520 Speaker 1: I can wander out five or ten minutes, and I 550 00:37:55,520 --> 00:37:59,000 Speaker 1: can visit the graveyards of David Hume, I mean, and 551 00:37:59,080 --> 00:38:04,440 Speaker 1: Adam Smith, and that whole intellectual heritage, which you know, 552 00:38:04,520 --> 00:38:07,040 Speaker 1: in a sense you were being fair enough by saying academic, 553 00:38:07,080 --> 00:38:09,080 Speaker 1: but I think it ought to be much broader. You know, 554 00:38:09,160 --> 00:38:12,280 Speaker 1: there is an intellectual heritage, and we need to get 555 00:38:12,280 --> 00:38:16,600 Speaker 1: back to the bravery that Scottland demonstrated then, which was 556 00:38:16,600 --> 00:38:19,759 Speaker 1: actually inherent in the history of the Investment Trusts, rather 557 00:38:19,800 --> 00:38:24,360 Speaker 1: than becoming an instudent inward looking um and rather parochial place. 558 00:38:24,400 --> 00:38:26,359 Speaker 1: And I think that's a battle you have to fight. 559 00:38:26,760 --> 00:38:28,960 Speaker 1: But there is enough of the good here, you know, 560 00:38:29,080 --> 00:38:31,880 Speaker 1: for instance, what they do at the Edinburgh Fest intellects 561 00:38:31,920 --> 00:38:35,680 Speaker 1: to come here is still incredibly valuable to us. But 562 00:38:35,800 --> 00:38:38,640 Speaker 1: we also have to offer the option of people working elsewhere, 563 00:38:39,320 --> 00:38:43,680 Speaker 1: so we have offices in America and China as well 564 00:38:43,719 --> 00:38:48,560 Speaker 1: as a probably less imposing one in London. Um. So 565 00:38:48,680 --> 00:38:51,200 Speaker 1: you know, I think we need to combine the history 566 00:38:51,200 --> 00:38:54,360 Speaker 1: of the firm with the evolution with the good of 567 00:38:54,480 --> 00:38:57,480 Speaker 1: Edinburgh rather than the limitations. And equally we have to 568 00:38:57,520 --> 00:39:00,839 Speaker 1: be prepared to follow great people around the world. HM. 569 00:39:01,320 --> 00:39:08,000 Speaker 1: Fantastic descriptor and really helps to explain how Bailey Gifford 570 00:39:08,000 --> 00:39:13,120 Speaker 1: has been as successful as it has been. Uh and 571 00:39:13,280 --> 00:39:17,520 Speaker 1: taking such a non traditional approach. You know, we've been 572 00:39:17,520 --> 00:39:22,000 Speaker 1: talking about mostly US companies for a while. UM, let's 573 00:39:22,000 --> 00:39:24,439 Speaker 1: talk a little bit about what what you see that's 574 00:39:24,440 --> 00:39:29,560 Speaker 1: attractive overseas. In fact, you've you've recommended Chinese and other 575 00:39:29,680 --> 00:39:34,680 Speaker 1: emerging markets markets before, other emerging stocks before. Tell us 576 00:39:34,680 --> 00:39:36,680 Speaker 1: a little bit about the mindset you have to have 577 00:39:36,880 --> 00:39:40,600 Speaker 1: to invest in these or is it the same process 578 00:39:40,640 --> 00:39:46,360 Speaker 1: no matter what country you're investing in? Fundamentally, Barry, it 579 00:39:46,680 --> 00:39:50,840 Speaker 1: is the same processs But of course the standards of 580 00:39:51,000 --> 00:39:56,920 Speaker 1: proof need absolutely to be there, and I we we 581 00:39:56,600 --> 00:40:03,279 Speaker 1: we we were talking earlier about the hortons of science 582 00:40:03,520 --> 00:40:07,879 Speaker 1: and academia. Now, what I think the corollary of that 583 00:40:08,080 --> 00:40:14,480 Speaker 1: is is what's critically important to us um in determining 584 00:40:15,000 --> 00:40:20,200 Speaker 1: where we are searching, where we're looking for, is that 585 00:40:20,280 --> 00:40:24,600 Speaker 1: we need to see evidence of, if you like, that 586 00:40:25,280 --> 00:40:31,160 Speaker 1: rising educational standards, those rising academic stars in the markets 587 00:40:31,200 --> 00:40:34,359 Speaker 1: that we're talking about, and we need those to be, 588 00:40:34,560 --> 00:40:38,120 Speaker 1: if you like, in charge of society. So you know, 589 00:40:38,600 --> 00:40:41,960 Speaker 1: I've always felt very uncomfortable, uncomfortable, I don't know about you. 590 00:40:42,080 --> 00:40:45,880 Speaker 1: With this label emerging markets, it's always been made up 591 00:40:45,920 --> 00:40:49,480 Speaker 1: of some countries which emerged two thousand years ago and 592 00:40:49,520 --> 00:40:53,560 Speaker 1: then retreated with comping countries that are genuinely moving forward. 593 00:40:54,080 --> 00:40:59,720 Speaker 1: And I'd never liked at all, in particular the whole 594 00:41:00,040 --> 00:41:03,560 Speaker 1: brick discussion that used to happen. You know, I think 595 00:41:03,600 --> 00:41:09,759 Speaker 1: the differences between Brazil and Russia, UM, and to a 596 00:41:09,840 --> 00:41:12,719 Speaker 1: quite a large extent, India and China are profound on 597 00:41:12,760 --> 00:41:15,279 Speaker 1: the level we're talking about, UM. You know, when there 598 00:41:15,280 --> 00:41:19,000 Speaker 1: are some extraordinarily brains within Russia, but I do not 599 00:41:19,160 --> 00:41:22,160 Speaker 1: think they are central to the economic system, based as 600 00:41:22,200 --> 00:41:28,960 Speaker 1: it is on comparative exhaustion, extortion and energy production. UM. 601 00:41:29,000 --> 00:41:31,160 Speaker 1: So I think, you know, you start with making that. 602 00:41:31,480 --> 00:41:35,080 Speaker 1: But at the company level, and I found this intriguing, 603 00:41:36,160 --> 00:41:42,040 Speaker 1: we make exactly the same AH discussions. We may have 604 00:41:42,160 --> 00:41:46,080 Speaker 1: exactly the same set of ten questions that we asked 605 00:41:46,120 --> 00:41:49,480 Speaker 1: the companies in these areas, and we're looking for the 606 00:41:49,520 --> 00:41:53,960 Speaker 1: similar outcomes that we have in America or to some 607 00:41:54,080 --> 00:41:57,759 Speaker 1: extent in in Europe. And you know, I my my 608 00:41:58,520 --> 00:42:03,359 Speaker 1: real emotion about this is that, and I'm sure we'll 609 00:42:03,360 --> 00:42:07,240 Speaker 1: come back. There's despite the difficulties that this can sometimes 610 00:42:07,320 --> 00:42:11,239 Speaker 1: leads in operations, and the one shouldn't be naive about that. 611 00:42:11,400 --> 00:42:16,480 Speaker 1: The companies have absolutely lived up to that bargain um. 612 00:42:16,560 --> 00:42:21,839 Speaker 1: You know. For instance, we've been large investors since well 613 00:42:21,880 --> 00:42:24,600 Speaker 1: before it was a public company in May Juan the 614 00:42:24,680 --> 00:42:28,920 Speaker 1: service company now that the food delivery and service companies now. 615 00:42:29,719 --> 00:42:33,799 Speaker 1: I remember so acutely, and it follows on nicely from 616 00:42:33,800 --> 00:42:39,400 Speaker 1: our discussions about Edinburgh. When the founder of Matuan first 617 00:42:39,480 --> 00:42:42,120 Speaker 1: visitors here, obviously we've seen him in China before, but 618 00:42:42,160 --> 00:42:46,920 Speaker 1: when he first visitors here, he organized a room that 619 00:42:47,080 --> 00:42:51,440 Speaker 1: looks out over historic Edinburgh and the castle. But before 620 00:42:51,600 --> 00:42:55,880 Speaker 1: he would speak to me about the company, he required 621 00:42:55,920 --> 00:42:58,960 Speaker 1: to me to give him somewhere between half an hour 622 00:42:59,000 --> 00:43:04,280 Speaker 1: and ours full disquisition on the difference between the Scottish, 623 00:43:04,520 --> 00:43:10,080 Speaker 1: the Edinburgh Enlightenment and the English Enlightenment. Now, fortunately, as 624 00:43:10,120 --> 00:43:12,680 Speaker 1: I was majesting, I've studied quite a lot of history, 625 00:43:12,719 --> 00:43:14,360 Speaker 1: and I've had to study quite a lot of Adams 626 00:43:14,400 --> 00:43:16,359 Speaker 1: with over the ages, so I could just about all 627 00:43:16,400 --> 00:43:18,879 Speaker 1: the way end up. But not the notion that this 628 00:43:18,960 --> 00:43:24,480 Speaker 1: is a standardized company that batually wants lawstened to its 629 00:43:24,520 --> 00:43:27,400 Speaker 1: slides about its next quarter or whatever. It's a long 630 00:43:27,480 --> 00:43:29,920 Speaker 1: long way way. And you know, I think many of 631 00:43:29,960 --> 00:43:32,400 Speaker 1: the individuals we've had the privilege of a meeting in 632 00:43:32,520 --> 00:43:36,479 Speaker 1: China absolutely stack up with some of the remarkable people 633 00:43:36,640 --> 00:43:41,040 Speaker 1: in America that we talked about. So let me ask 634 00:43:41,160 --> 00:43:46,919 Speaker 1: the question that seems to be challenging so many when 635 00:43:46,920 --> 00:43:51,040 Speaker 1: we look at what took place with China last year, 636 00:43:52,239 --> 00:43:56,680 Speaker 1: going after the leadership of their own tech sector, essentially 637 00:43:57,880 --> 00:44:00,680 Speaker 1: raising questions as to whether or not there there is 638 00:44:00,760 --> 00:44:04,359 Speaker 1: a well, at least a rule of law the way 639 00:44:04,400 --> 00:44:08,920 Speaker 1: we think of it in the traditional Anglo sense. Um. 640 00:44:08,960 --> 00:44:11,440 Speaker 1: You know, it led some people to wonder if China 641 00:44:11,560 --> 00:44:16,319 Speaker 1: was uninvestable. How do you respond when the leadership of 642 00:44:16,320 --> 00:44:22,319 Speaker 1: a country basically puts a series of policies and programs 643 00:44:22,360 --> 00:44:25,400 Speaker 1: that you know, the whole text actor there really has 644 00:44:25,440 --> 00:44:31,720 Speaker 1: gotten shelat Yeah, right, um, And again, you know, I 645 00:44:30,760 --> 00:44:35,560 Speaker 1: I appreciate having the chance to explore these questions rather 646 00:44:35,560 --> 00:44:39,680 Speaker 1: than just simply provide one word I agree or I disagree, 647 00:44:40,120 --> 00:44:44,560 Speaker 1: No two words our answers to to you. So can 648 00:44:44,600 --> 00:44:47,200 Speaker 1: I go back and Barry and I perhaps should have 649 00:44:47,280 --> 00:44:49,440 Speaker 1: should have said it when I was talking about the 650 00:44:49,480 --> 00:44:54,640 Speaker 1: attractions of distant countries. I would have considered myself by 651 00:44:54,760 --> 00:44:58,839 Speaker 1: colleagues in Shanghai, by being diffident large to be incredibly 652 00:44:58,960 --> 00:45:04,760 Speaker 1: naive if we thought about these issues beforehand. The Chinese 653 00:45:04,800 --> 00:45:07,759 Speaker 1: government does not conceal that it has the leading role 654 00:45:07,840 --> 00:45:10,680 Speaker 1: in society, and you know, surely we ought to have 655 00:45:10,760 --> 00:45:14,800 Speaker 1: known that. Um So, you know, I think that we 656 00:45:14,800 --> 00:45:18,480 Speaker 1: we we did have a mentality around this, that we 657 00:45:18,560 --> 00:45:22,920 Speaker 1: had to accept that there were risk suspective. But if 658 00:45:22,920 --> 00:45:27,720 Speaker 1: I then move on, I would differentiate in three ways 659 00:45:27,760 --> 00:45:32,040 Speaker 1: that I think are critically important for why we are 660 00:45:32,160 --> 00:45:34,759 Speaker 1: where we are now and what we might want to 661 00:45:34,800 --> 00:45:38,600 Speaker 1: do going forward. The first one is I think there 662 00:45:38,680 --> 00:45:43,160 Speaker 1: was a set of companies which both the Chinese authorities 663 00:45:43,280 --> 00:45:47,640 Speaker 1: and moreover many in society, many writing in the media domestically, 664 00:45:48,280 --> 00:45:50,840 Speaker 1: many authors who have listened to and I mentioned and 665 00:45:51,000 --> 00:45:55,200 Speaker 1: the book festival obviously, who had made it absolutely clear 666 00:45:55,360 --> 00:45:58,520 Speaker 1: that they thought the educational system and the tutoring system 667 00:45:58,840 --> 00:46:02,799 Speaker 1: was a very bad thing for Chinese society, and in 668 00:46:02,880 --> 00:46:06,840 Speaker 1: retrospect it's coming now. Scottish Mortgage did not hasten to 669 00:46:06,880 --> 00:46:10,240 Speaker 1: add invest in these companies, but we did have holdings 670 00:46:10,239 --> 00:46:13,680 Speaker 1: in some, particularly tell of the educational companies that needs 671 00:46:13,680 --> 00:46:16,600 Speaker 1: to be honest about and in some mandates for which 672 00:46:16,719 --> 00:46:18,840 Speaker 1: you know I have for some responsibility as well, So 673 00:46:19,360 --> 00:46:21,319 Speaker 1: I don't want to conceive that. And I think that 674 00:46:21,400 --> 00:46:25,120 Speaker 1: was a very bad, very serious mistake because we were 675 00:46:25,160 --> 00:46:29,200 Speaker 1: not listening to what the available information, the available flow 676 00:46:31,840 --> 00:46:34,920 Speaker 1: a government was saying about those areas. So, you know, 677 00:46:35,239 --> 00:46:38,960 Speaker 1: bad mistake. Absolutely agreed, I will at that point bringing 678 00:46:39,080 --> 00:46:44,120 Speaker 1: your uninvestable are it? Both amused and annoyed me that 679 00:46:44,160 --> 00:46:49,400 Speaker 1: many analysts in investment banks, having recommended all the educational 680 00:46:49,440 --> 00:46:53,520 Speaker 1: companies subsequent to the announcements, then said they were uninvestable. 681 00:46:53,800 --> 00:46:56,400 Speaker 1: It was not a great way to handle it. You know, 682 00:46:56,480 --> 00:46:58,239 Speaker 1: they have made a mistake, and I think we need 683 00:46:58,280 --> 00:46:59,879 Speaker 1: to be they need to be honest, like we need 684 00:46:59,880 --> 00:47:03,080 Speaker 1: to be honest about that. The second part of it 685 00:47:03,120 --> 00:47:09,040 Speaker 1: would be about regulation of the e commerce world. Now 686 00:47:09,320 --> 00:47:12,359 Speaker 1: I'm wary as are come on too is saying that 687 00:47:12,560 --> 00:47:14,880 Speaker 1: is all of technology. But let's deal with that at 688 00:47:14,880 --> 00:47:20,520 Speaker 1: the moment. In my view, in our view, all of 689 00:47:20,600 --> 00:47:25,480 Speaker 1: us in the West, whether it be Europe, whether it 690 00:47:25,520 --> 00:47:29,560 Speaker 1: be the UK, or whether it be still more America, 691 00:47:29,880 --> 00:47:35,640 Speaker 1: have to think through very seriously what the correct societal attitude, 692 00:47:35,800 --> 00:47:41,120 Speaker 1: regulatory attitude, government policy is towards the Internet companies and 693 00:47:41,200 --> 00:47:44,680 Speaker 1: the e commerce companies. You know, I think they're untrammeled. 694 00:47:44,680 --> 00:47:50,520 Speaker 1: Dominance has many both economic and societal problems within it. 695 00:47:51,040 --> 00:47:54,520 Speaker 1: If I look at it in that light, I think 696 00:47:54,600 --> 00:48:00,080 Speaker 1: the governance that the Chinese authorities are looking for and 697 00:48:00,200 --> 00:48:07,120 Speaker 1: currently obtaining from those Internet companies is justifiable, and more 698 00:48:07,200 --> 00:48:10,560 Speaker 1: than justifiable. I think in the long run, it makes 699 00:48:10,640 --> 00:48:14,000 Speaker 1: for a better functioning of the whole sector. It doesn't 700 00:48:14,040 --> 00:48:18,040 Speaker 1: crush new competition, it doesn't have such maligned social impacts. 701 00:48:18,400 --> 00:48:20,879 Speaker 1: And you know, I still don't think that America has 702 00:48:20,920 --> 00:48:23,920 Speaker 1: faced up to those issues in broad terms, And you know, 703 00:48:23,960 --> 00:48:26,240 Speaker 1: I think that would be fascinating to see what happens 704 00:48:26,280 --> 00:48:29,600 Speaker 1: over the next two years. I don't if I may, 705 00:48:29,640 --> 00:48:32,200 Speaker 1: and I know we're all struggling for the right words. 706 00:48:32,960 --> 00:48:36,880 Speaker 1: View the policy and the attitudes of the Chinese government 707 00:48:37,000 --> 00:48:43,520 Speaker 1: as in any way either illegitimate, unfecastable, or something that 708 00:48:43,600 --> 00:48:50,440 Speaker 1: one doesn't regard as perfectly intellectually and practically and humanitarianly 709 00:48:50,560 --> 00:48:53,120 Speaker 1: legal from the point of view of the overall set 710 00:48:53,200 --> 00:48:56,120 Speaker 1: of the society. Yes, it happened a great deal quicker 711 00:48:56,560 --> 00:48:58,560 Speaker 1: than we are used to in the West and without 712 00:48:58,600 --> 00:49:02,000 Speaker 1: as many abilities to control it. But you know, how 713 00:49:02,120 --> 00:49:05,080 Speaker 1: far does that tell us that really the West has 714 00:49:05,080 --> 00:49:08,600 Speaker 1: a problem with over overdominant companies. So you know, I 715 00:49:08,680 --> 00:49:12,799 Speaker 1: am not a wholehearted opponent either for the long term 716 00:49:12,840 --> 00:49:16,040 Speaker 1: good of the technology sector or at least the internet 717 00:49:16,080 --> 00:49:19,080 Speaker 1: sector and what has happened in China, and I think 718 00:49:19,120 --> 00:49:22,400 Speaker 1: it may actually be good policy and not bad for 719 00:49:22,480 --> 00:49:26,160 Speaker 1: economic outcomes in the long run. Lastly, I would as 720 00:49:26,320 --> 00:49:32,200 Speaker 1: probably been implying differentiate between this and hard technology. You know, 721 00:49:32,280 --> 00:49:36,840 Speaker 1: I think it's a point that Dan Wang of Gavical 722 00:49:37,000 --> 00:49:40,960 Speaker 1: makes of extremely artical in an extremely articulate manner, but 723 00:49:41,040 --> 00:49:44,759 Speaker 1: it's one that we would share. We don't necessarily think 724 00:49:44,880 --> 00:49:49,799 Speaker 1: that the Chinese government sees internet consumer consumer internet companies 725 00:49:50,320 --> 00:49:54,799 Speaker 1: as the peak of attainment UM in technology, technological and 726 00:49:54,840 --> 00:49:58,200 Speaker 1: societal advants. You know, I think those who think that 727 00:49:58,239 --> 00:50:00,760 Speaker 1: perhaps it's not a good thing for the rightist brains 728 00:50:00,760 --> 00:50:03,440 Speaker 1: in the West to spending their time on getting us 729 00:50:03,440 --> 00:50:07,799 Speaker 1: to click on more adverts possibly have a point, and 730 00:50:07,880 --> 00:50:12,080 Speaker 1: we don't really see. For instance, if we look either 731 00:50:12,239 --> 00:50:17,880 Speaker 1: in a beneficial sense about what's going on batteries, electrical 732 00:50:18,440 --> 00:50:20,880 Speaker 1: autonomous vehicles and the like, or in a more worrying 733 00:50:20,960 --> 00:50:24,760 Speaker 1: sense in ai that you know that there is actually 734 00:50:24,760 --> 00:50:26,560 Speaker 1: a tasa and the Chinese part to say that, I 735 00:50:26,600 --> 00:50:29,880 Speaker 1: think there's a desire to say we don't think that 736 00:50:30,040 --> 00:50:36,600 Speaker 1: the untrammeled dominance of the few um internet and e 737 00:50:36,680 --> 00:50:40,200 Speaker 1: commerce dominant companies is a good thing for society at large. 738 00:50:40,800 --> 00:50:46,040 Speaker 1: Really quite interesting. Before we leave Asia, what other countries 739 00:50:46,080 --> 00:50:52,040 Speaker 1: in the region do you find particularly intriguing, Vietnam, Korea, 740 00:50:52,320 --> 00:50:58,120 Speaker 1: what what catches your fancy? Well, firstly, I would stay 741 00:50:58,560 --> 00:51:02,520 Speaker 1: close to um to China, and I think it's consistent 742 00:51:02,680 --> 00:51:05,320 Speaker 1: with what we're talking about. Perhaps it is China. Um 743 00:51:05,360 --> 00:51:08,400 Speaker 1: you know, I think what TSMC has done in Taiwan 744 00:51:08,640 --> 00:51:12,000 Speaker 1: is truly remarkable. Now we don't really see that as 745 00:51:12,080 --> 00:51:14,759 Speaker 1: part of an overall pattern, but I think it would 746 00:51:14,760 --> 00:51:18,719 Speaker 1: probably also incline you to uh to guess that probably 747 00:51:18,800 --> 00:51:21,120 Speaker 1: career has been the place that's most interested at this 748 00:51:21,200 --> 00:51:24,120 Speaker 1: point of view. But could I just add one more thing, 749 00:51:24,280 --> 00:51:28,440 Speaker 1: very you know, I I quipped quibbled earlier at the 750 00:51:28,480 --> 00:51:30,879 Speaker 1: notion of emerging markets, and I think, you know, we're 751 00:51:30,920 --> 00:51:34,799 Speaker 1: probably both create shorthand, but one of the elements that 752 00:51:35,120 --> 00:51:40,120 Speaker 1: I feel incredibly strongly about in the world at large. 753 00:51:41,120 --> 00:51:46,799 Speaker 1: Is that really? Um, It's not about countries, whether it's 754 00:51:46,800 --> 00:51:50,840 Speaker 1: an inverted commas emerging markets or in inverted commas the West. 755 00:51:51,480 --> 00:51:55,879 Speaker 1: It is about individual cities and regions. And I say 756 00:51:55,920 --> 00:51:59,920 Speaker 1: that both in the current context, um. And you know, 757 00:52:00,360 --> 00:52:03,680 Speaker 1: historically this has been the way, you know, for a 758 00:52:03,719 --> 00:52:07,240 Speaker 1: long period of time. It's not quite so at the moment, 759 00:52:07,760 --> 00:52:10,440 Speaker 1: but for a long period of time, we didn't have 760 00:52:10,960 --> 00:52:16,120 Speaker 1: anything resembling a portfolio of American stocks. We had a 761 00:52:16,239 --> 00:52:21,960 Speaker 1: set of West Coast a conceptualized as a business. And 762 00:52:22,040 --> 00:52:25,200 Speaker 1: you know, I think the difference between New York capitalism 763 00:52:25,200 --> 00:52:28,560 Speaker 1: and San Francisco capitalism it may have softened somewhat now, 764 00:52:28,960 --> 00:52:31,200 Speaker 1: but was so strong for some reason that I think 765 00:52:31,320 --> 00:52:33,279 Speaker 1: that that's important to consider it. You know, I would 766 00:52:33,280 --> 00:52:38,480 Speaker 1: say this was true about China too, you know, predominantly, okay, 767 00:52:38,520 --> 00:52:42,879 Speaker 1: Beijing has become more important, but predominantly ours has been 768 00:52:42,960 --> 00:52:46,359 Speaker 1: a Ran Joe and Grand Dong and shen Zen portfolio 769 00:52:47,719 --> 00:52:50,400 Speaker 1: or set of individual companies rather than anything else. And 770 00:52:50,600 --> 00:52:53,040 Speaker 1: you know, I would even say that was true in Europe. 771 00:52:53,040 --> 00:52:55,719 Speaker 1: You know, we were talking earlier about the odditis of America. 772 00:52:56,160 --> 00:53:01,480 Speaker 1: But you know, I'm really interested in why a Eindhoven 773 00:53:01,960 --> 00:53:06,359 Speaker 1: or um Amsterdam or Stockholm or Berlin can do things 774 00:53:06,440 --> 00:53:09,600 Speaker 1: which doesn't seem to happen elsewhere in Europe. So, you know, 775 00:53:09,680 --> 00:53:13,640 Speaker 1: I think I'm much more a believer in the culture 776 00:53:13,840 --> 00:53:17,520 Speaker 1: of individual cities. And for a long time it's been 777 00:53:17,520 --> 00:53:21,960 Speaker 1: a real frustration under COVID and lockdowns. What what what? 778 00:53:21,960 --> 00:53:24,720 Speaker 1: One of my practices was was to go and spend 779 00:53:27,080 --> 00:53:32,399 Speaker 1: a year in a different city each year and took 780 00:53:32,440 --> 00:53:34,680 Speaker 1: actually usually carry on for two or three years. And 781 00:53:34,719 --> 00:53:37,080 Speaker 1: I did this in Berlin, I did this in Amsterdam. 782 00:53:37,400 --> 00:53:39,320 Speaker 1: I was just starting to em Paris. I was wanting 783 00:53:39,360 --> 00:53:41,760 Speaker 1: to do is in one of the cities in China 784 00:53:41,800 --> 00:53:44,359 Speaker 1: that we were talking about. Um. You know, I think 785 00:53:44,360 --> 00:53:48,279 Speaker 1: trying to understand the culture of individual citizen regions is 786 00:53:48,360 --> 00:53:52,319 Speaker 1: probably much more relevant than talking about countries at large. 787 00:53:52,320 --> 00:53:56,200 Speaker 1: And I feel that quite strongly about about about the USA, 788 00:53:56,360 --> 00:53:59,200 Speaker 1: for for instance. I think that fits with history. UM. 789 00:53:59,320 --> 00:54:02,320 Speaker 1: There was something book called, what's it called the geo 790 00:54:02,520 --> 00:54:05,160 Speaker 1: Geography of Genius in the Past, and one of the 791 00:54:05,160 --> 00:54:08,440 Speaker 1: points it was making is that the truly great ideas 792 00:54:09,040 --> 00:54:12,359 Speaker 1: very rarely came from the major cities, they came from 793 00:54:12,440 --> 00:54:15,520 Speaker 1: quite smaller places. Um. And you know, I think from 794 00:54:15,520 --> 00:54:18,920 Speaker 1: from Athens to Edinburgh and onwards that that was the 795 00:54:18,960 --> 00:54:20,719 Speaker 1: case in point and I think that, you know, it 796 00:54:20,880 --> 00:54:24,440 Speaker 1: is the differences in these individual cities and regions that 797 00:54:25,120 --> 00:54:30,520 Speaker 1: is truly important and investing. Huh, that's quite fascinating. That's um. 798 00:54:30,680 --> 00:54:33,640 Speaker 1: Eric Weiner wrote the book Lessons from the World's Most 799 00:54:33,760 --> 00:54:37,440 Speaker 1: Creative Places. So let's talk a little bit about Europe, 800 00:54:37,520 --> 00:54:44,040 Speaker 1: which has been lagging for what seems like forever. Uh. 801 00:54:44,160 --> 00:54:47,520 Speaker 1: Is Europe ever going to reach a point where it 802 00:54:47,880 --> 00:54:52,440 Speaker 1: can outperform or am am I being too optimistic to 803 00:54:52,520 --> 00:54:59,120 Speaker 1: expect that any time in our lifetimes? Ah? Well, it 804 00:54:59,320 --> 00:55:01,520 Speaker 1: arry it probably seems even longer to be because I 805 00:55:01,560 --> 00:55:04,200 Speaker 1: spent my most of my first fifty years or so 806 00:55:04,360 --> 00:55:07,719 Speaker 1: as an investor in Europe um. And so you know, 807 00:55:08,440 --> 00:55:13,560 Speaker 1: it's been something that's intrigued, frustrated and occasionally given hope 808 00:55:13,600 --> 00:55:17,000 Speaker 1: to me for a very very long period of time. UM. 809 00:55:17,040 --> 00:55:19,479 Speaker 1: And you know I have tended to carry on having 810 00:55:19,560 --> 00:55:24,000 Speaker 1: having quite a big interest in him. Well, let's think 811 00:55:24,040 --> 00:55:28,160 Speaker 1: about what we've been discussing. I think the real issue 812 00:55:28,200 --> 00:55:32,480 Speaker 1: in Europe is much more about scaling. You know, I 813 00:55:32,520 --> 00:55:37,040 Speaker 1: think there are plenty of decent companies, some outstanding companies. 814 00:55:37,400 --> 00:55:40,880 Speaker 1: You know. One of my worst miscalculation SINS have emissioned 815 00:55:40,920 --> 00:55:43,960 Speaker 1: over the years has been that I got very annoyed 816 00:55:44,960 --> 00:55:51,400 Speaker 1: by way back in time Morie Hennessey, the MH of LVMH, 817 00:55:51,719 --> 00:55:54,399 Speaker 1: buying the LV part because it was the LV part 818 00:55:54,480 --> 00:55:58,479 Speaker 1: that I admired, and I felt that that Monsieur Arno 819 00:55:58,560 --> 00:56:01,839 Speaker 1: would managed to, how we put it, rather aggressively take 820 00:56:01,880 --> 00:56:05,200 Speaker 1: over LV. And you know, plainly he's done a fantastic 821 00:56:05,280 --> 00:56:08,920 Speaker 1: job and his colleagues have done a fantastically job in LVMH. 822 00:56:09,120 --> 00:56:11,520 Speaker 1: And you know we've owned Caring and Ferrari from much 823 00:56:11,560 --> 00:56:14,000 Speaker 1: the same point of view. But I think the real 824 00:56:14,200 --> 00:56:19,880 Speaker 1: failure has come in consumer facing technology. I expressed my 825 00:56:19,960 --> 00:56:23,839 Speaker 1: admiration earlier for for for what air Smell is doing, 826 00:56:23,840 --> 00:56:27,279 Speaker 1: which is truly profoundly ment out there. And I think 827 00:56:27,320 --> 00:56:32,239 Speaker 1: it's about the inability scale that really matters here. And 828 00:56:32,280 --> 00:56:35,400 Speaker 1: I think this has got deep cultural roots, and to 829 00:56:35,480 --> 00:56:38,360 Speaker 1: be honest, and I think this is not how most 830 00:56:38,360 --> 00:56:43,240 Speaker 1: people think about it. It bothers me more in Britain 831 00:56:43,400 --> 00:56:46,840 Speaker 1: than it doesn't anywhere else. And it's not that we 832 00:56:46,960 --> 00:56:53,319 Speaker 1: don't have the ability in academia in science to generate companies. 833 00:56:53,640 --> 00:56:57,080 Speaker 1: It is that somehow, and I think the capital markets 834 00:56:57,080 --> 00:56:59,799 Speaker 1: have a lot to do with this. Britain does not 835 00:57:00,200 --> 00:57:05,239 Speaker 1: possess the ability to scale companies um and you know, 836 00:57:05,760 --> 00:57:08,520 Speaker 1: I think that is such a deep and serious problem 837 00:57:08,719 --> 00:57:11,799 Speaker 1: that there needs to be much more willingness to address it. 838 00:57:12,520 --> 00:57:14,759 Speaker 1: Give you a couple of quick examples on that's kind 839 00:57:14,760 --> 00:57:18,760 Speaker 1: of huge, very contemporary. One is ARM and you know 840 00:57:18,840 --> 00:57:20,960 Speaker 1: it may or may not be me that the video 841 00:57:21,040 --> 00:57:23,520 Speaker 1: giving up and taking them, but you know, when ARM 842 00:57:23,640 --> 00:57:27,520 Speaker 1: was first taken over by soft Bank, you know, we tried, 843 00:57:27,640 --> 00:57:30,600 Speaker 1: we were Arms speaking shohold as we tried to persuade 844 00:57:30,640 --> 00:57:33,200 Speaker 1: them they shouldn't be get selling out, that it was 845 00:57:33,240 --> 00:57:38,080 Speaker 1: important to have a critical mass world leading technology companies. 846 00:57:38,400 --> 00:57:41,600 Speaker 1: Now we got very little support from that at all levels, 847 00:57:41,640 --> 00:57:45,920 Speaker 1: and I think that is symbolic of the problems equally, 848 00:57:46,600 --> 00:57:49,440 Speaker 1: as you may know, we've been investors in Ilumina for 849 00:57:49,480 --> 00:57:51,880 Speaker 1: a very long period of time. Now. One of my 850 00:57:51,920 --> 00:57:55,200 Speaker 1: other directors on the board of Scottish Scottish Mortgage gentleman 851 00:57:55,200 --> 00:57:59,200 Speaker 1: called Patrick Maxwell, who's professor of physics at Cambridge lives 852 00:57:59,480 --> 00:58:02,360 Speaker 1: three or four doors down in Cambridge from the person 853 00:58:02,440 --> 00:58:06,760 Speaker 1: who actually invented the core net technology behind a lumna. 854 00:58:07,520 --> 00:58:10,600 Speaker 1: They invented it literally in a pub in Cambridge. But 855 00:58:10,960 --> 00:58:14,040 Speaker 1: you know, they couldn't commercialize that, they couldn't scale it. 856 00:58:14,080 --> 00:58:16,200 Speaker 1: And you know, I think the depth of the problem 857 00:58:16,240 --> 00:58:21,120 Speaker 1: in Britain is very much there. Come back to places 858 00:58:21,200 --> 00:58:25,120 Speaker 1: that might do better on this this score. Um. You know, 859 00:58:25,320 --> 00:58:28,240 Speaker 1: I am um and I have my biases here, but 860 00:58:28,800 --> 00:58:34,680 Speaker 1: I think that Scandinavia and particularly the environs of Stockholm 861 00:58:34,720 --> 00:58:37,720 Speaker 1: has more chance of doing this. You know, the record 862 00:58:37,800 --> 00:58:41,680 Speaker 1: of company creation, of long term company, of creation of 863 00:58:41,760 --> 00:58:47,120 Speaker 1: companies that can globalize, it's still being maintained in Sweden. Um. 864 00:58:47,240 --> 00:58:52,160 Speaker 1: You know, again a quick two countervating examples. Now, there 865 00:58:52,200 --> 00:58:55,280 Speaker 1: are plenty of challenges for it, but you know, Spotify 866 00:58:55,520 --> 00:59:00,920 Speaker 1: is genuinely the world leader in terms of podcasts as 867 00:59:00,920 --> 00:59:03,640 Speaker 1: well as audire um. And you know, I think that 868 00:59:03,680 --> 00:59:08,160 Speaker 1: has come about through having in Danielic somebody who thinks 869 00:59:08,160 --> 00:59:11,680 Speaker 1: in much the same individualistic and global terms that we've 870 00:59:11,680 --> 00:59:15,640 Speaker 1: been discussing in China and America equally, and perhaps this 871 00:59:15,760 --> 00:59:18,840 Speaker 1: is one looking forward, I think Europe needs to have 872 00:59:19,000 --> 00:59:23,120 Speaker 1: more self confidence in its different models. And we've been 873 00:59:23,120 --> 00:59:29,080 Speaker 1: backers of Norfolk, the major battery company UM in Scandinavia, 874 00:59:30,080 --> 00:59:33,520 Speaker 1: where the progress has been deeply encouraging. And I think 875 00:59:33,600 --> 00:59:37,120 Speaker 1: it's by focusing on those sort of individual strengths that 876 00:59:37,200 --> 00:59:39,400 Speaker 1: really matters. So I think you've got to build the 877 00:59:39,400 --> 00:59:43,000 Speaker 1: exceptional countries. One last point, and it's something that I 878 00:59:43,040 --> 00:59:45,720 Speaker 1: hope in the future to spend some time, some thought 879 00:59:45,800 --> 00:59:49,720 Speaker 1: process about some involvement on. You know, I think you 880 00:59:49,760 --> 00:59:52,840 Speaker 1: and I would say that in America and in China 881 00:59:53,320 --> 01:00:00,000 Speaker 1: there are networks of people who could act at scale UM, 882 01:00:00,040 --> 01:00:02,920 Speaker 1: and I don't think that really exists in Europe. Europe 883 01:00:03,000 --> 01:00:07,360 Speaker 1: is still way to atomize. There's not amos communication between 884 01:00:07,880 --> 01:00:12,240 Speaker 1: the truly exceptional in different countries on the industrial level, 885 01:00:12,240 --> 01:00:14,919 Speaker 1: on an entrepreneurial level, on a looking to the future level, 886 01:00:15,360 --> 01:00:18,200 Speaker 1: and I think we need to do a much better 887 01:00:18,320 --> 01:00:21,360 Speaker 1: job on that. And it's just impossible to have the 888 01:00:21,400 --> 01:00:25,120 Speaker 1: sort of scale that really Europe needs without those connections 889 01:00:25,160 --> 01:00:28,960 Speaker 1: being built much more in the future. There's a couple 890 01:00:28,960 --> 01:00:31,520 Speaker 1: of other places I want to ask you about in 891 01:00:31,600 --> 01:00:37,440 Speaker 1: the world, namely India, But before I get to that country, 892 01:00:37,480 --> 01:00:42,440 Speaker 1: are there any other regions, be they cities or nations 893 01:00:42,480 --> 01:00:45,640 Speaker 1: that are catching your eye as Hey, there's some really 894 01:00:45,680 --> 01:00:52,680 Speaker 1: interesting intellectual capital here and some fascinating things occurring. Yeah, um, well, 895 01:00:52,760 --> 01:00:55,320 Speaker 1: let's let's do an American one. And I don't think 896 01:00:55,360 --> 01:00:59,160 Speaker 1: I would have said this, um, three or five years ago. 897 01:01:00,560 --> 01:01:05,040 Speaker 1: I thought that three or five years ago that both 898 01:01:05,680 --> 01:01:11,320 Speaker 1: innovation in biotechnology and healthcare in America was fairly limited, 899 01:01:11,760 --> 01:01:15,400 Speaker 1: and that where it was happening, it was emigrating under 900 01:01:15,440 --> 01:01:19,960 Speaker 1: the power of combination of genomics and machine learning to 901 01:01:20,120 --> 01:01:23,360 Speaker 1: be a West Coast phenomena. I think what's happened in 902 01:01:23,480 --> 01:01:28,880 Speaker 1: Boston since then is pretty awe inspiring and actually touches 903 01:01:28,920 --> 01:01:31,160 Speaker 1: back on some of the questions that we're talking about. 904 01:01:31,240 --> 01:01:35,920 Speaker 1: So UM, we've been shareholders in Maderna for some period 905 01:01:35,960 --> 01:01:39,160 Speaker 1: of time, UM, and both at the Maderna direct level 906 01:01:39,280 --> 01:01:41,800 Speaker 1: as well as the flagship one. We've done a lot 907 01:01:41,880 --> 01:01:45,600 Speaker 1: of talking with Stephan Manzell and New barth and about 908 01:01:45,680 --> 01:01:47,760 Speaker 1: you know, what can be done and what are the 909 01:01:47,800 --> 01:01:51,120 Speaker 1: advantages different places. And you know, one of the things 910 01:01:51,120 --> 01:01:54,520 Speaker 1: that stays with me is an article that Stephan Manzell 911 01:01:54,760 --> 01:01:59,680 Speaker 1: wrote for Figaro in France and the Figura about um, 912 01:02:00,040 --> 01:02:04,000 Speaker 1: I could happen in Boston rather than or in America 913 01:02:04,240 --> 01:02:07,240 Speaker 1: rather than in France. And a lot of that was 914 01:02:07,360 --> 01:02:11,960 Speaker 1: around the backing from a venture capital community. And I 915 01:02:12,000 --> 01:02:15,640 Speaker 1: think that's what some of the healthcare venture capitals have 916 01:02:15,720 --> 01:02:20,280 Speaker 1: done to add to that expertise by making it a 917 01:02:20,440 --> 01:02:24,320 Speaker 1: much more scale with much bigger resources, has been something 918 01:02:24,360 --> 01:02:29,200 Speaker 1: that's potentially going to enable serious development in healthcare and 919 01:02:29,360 --> 01:02:33,480 Speaker 1: healthcare plus technology companies over the coming years. So you know, 920 01:02:33,560 --> 01:02:38,240 Speaker 1: that's a revival that I think we ought to note. Verry, 921 01:02:38,360 --> 01:02:42,640 Speaker 1: I find India very difficult, um. You know, to me, 922 01:02:42,880 --> 01:02:46,200 Speaker 1: there are far too many companies that are reliant on 923 01:02:46,360 --> 01:02:52,000 Speaker 1: their connections, their political health, aft their wealth and a 924 01:02:52,080 --> 01:02:56,360 Speaker 1: far too short term run um from my real liking, 925 01:02:56,800 --> 01:02:59,880 Speaker 1: and it's become mentally quite a problem for me. So 926 01:03:00,120 --> 01:03:02,440 Speaker 1: what I've said to some of my younger colleagues is 927 01:03:02,840 --> 01:03:06,120 Speaker 1: to ignore me and to go on and see whether 928 01:03:06,160 --> 01:03:09,120 Speaker 1: there are companies that fit this, because you know, I 929 01:03:09,520 --> 01:03:13,080 Speaker 1: found it difficult historically. I don't think I'm necessarily wholly 930 01:03:13,120 --> 01:03:15,880 Speaker 1: been wrong, but I think it needs a more open 931 01:03:15,960 --> 01:03:19,840 Speaker 1: mind than I have at this juncture. So um, hopefully 932 01:03:19,840 --> 01:03:24,880 Speaker 1: youthful out in this case, that's really really intriguing. So 933 01:03:25,000 --> 01:03:28,120 Speaker 1: if the past decade or so, the U S stocks 934 01:03:28,120 --> 01:03:32,720 Speaker 1: have been really dominant, lately we're seeing signs at the 935 01:03:32,760 --> 01:03:36,640 Speaker 1: rest of the world is starting to on a relative 936 01:03:36,800 --> 01:03:41,200 Speaker 1: basis performed pretty well. What are the odds that the 937 01:03:41,840 --> 01:03:45,880 Speaker 1: U S streak of out performance is coming to uh 938 01:03:45,920 --> 01:03:49,280 Speaker 1: an end or at least uh cyclically this time and 939 01:03:49,520 --> 01:03:51,320 Speaker 1: we're gonna start to see the rest of the world 940 01:03:51,800 --> 01:03:57,600 Speaker 1: on a relative basis outperform what's taking place in the US. So, 941 01:03:58,240 --> 01:04:02,800 Speaker 1: um Berry, I could adventure some comments that may not 942 01:04:02,960 --> 01:04:08,720 Speaker 1: necessarily be wholly popular with your listeners, but I think 943 01:04:08,760 --> 01:04:14,960 Speaker 1: it's important to say, um, you know, absolutely America still 944 01:04:15,000 --> 01:04:22,680 Speaker 1: possesses the combination of the right individuals, often coming from 945 01:04:22,720 --> 01:04:25,000 Speaker 1: outside in the world. As some of the examples we've 946 01:04:25,000 --> 01:04:29,080 Speaker 1: been talking about the scale of the market, the scale 947 01:04:29,080 --> 01:04:33,200 Speaker 1: of the financial apparatus, that it will remain formidable. But 948 01:04:34,680 --> 01:04:39,480 Speaker 1: I have to say I've increasingly had some reservations. You know, 949 01:04:39,840 --> 01:04:43,800 Speaker 1: I'm not We were talking a few minutes ago about 950 01:04:44,840 --> 01:04:51,680 Speaker 1: Chinese regulation. I wonder whether the lack of regulation of 951 01:04:51,760 --> 01:04:57,120 Speaker 1: the American internet world and the complications even in healthcare, 952 01:04:57,120 --> 01:04:59,160 Speaker 1: which I was talking in an upbeating way, about a 953 01:04:59,200 --> 01:05:04,200 Speaker 1: few minutes ago. Um, mean that the ability of new 954 01:05:04,280 --> 01:05:08,080 Speaker 1: young companies to rise in America is more constrained than 955 01:05:08,160 --> 01:05:13,480 Speaker 1: it was. You know, we are effectively talking about entrenched 956 01:05:13,480 --> 01:05:16,520 Speaker 1: Dolly Apolis in many cases which were not necessarily helping 957 01:05:16,560 --> 01:05:20,440 Speaker 1: the up and comers, you know. To make the point, Firmer, Um, 958 01:05:20,480 --> 01:05:25,280 Speaker 1: what TikTok by Dance has done is much more interesting 959 01:05:25,520 --> 01:05:28,760 Speaker 1: in the social media world than what anybody in America 960 01:05:28,800 --> 01:05:30,880 Speaker 1: has accomplished, it would seemed to us, seemed to me 961 01:05:31,280 --> 01:05:33,600 Speaker 1: over the last few years. So I think there is 962 01:05:33,720 --> 01:05:37,480 Speaker 1: some erosion the course of the excess dominance of the 963 01:05:37,560 --> 01:05:40,800 Speaker 1: companies that we all grew to know in many cases 964 01:05:40,880 --> 01:05:44,560 Speaker 1: love over the past. Um the second one, which is 965 01:05:44,680 --> 01:05:48,160 Speaker 1: much much more controversial, but I think one cannot exclude. 966 01:05:49,320 --> 01:05:54,040 Speaker 1: I found it very difficult in the last two years 967 01:05:54,120 --> 01:05:58,520 Speaker 1: or so when people ask me, as indeed you did, 968 01:05:59,000 --> 01:06:06,240 Speaker 1: about are illegitimate anti democratic actions as they're perceived to 969 01:06:06,240 --> 01:06:10,640 Speaker 1: be in China. To wonder in all honesty whether America 970 01:06:10,840 --> 01:06:15,000 Speaker 1: will be a democracy in five years time appeared particularly 971 01:06:15,040 --> 01:06:18,720 Speaker 1: ironic session when on January the sixth, last year, I 972 01:06:18,800 --> 01:06:21,000 Speaker 1: was big asked about this type of action, even if 973 01:06:21,040 --> 01:06:25,320 Speaker 1: it was in early days of it in China, Um, 974 01:06:25,840 --> 01:06:29,000 Speaker 1: when what was going on in America was going on. Um, 975 01:06:29,040 --> 01:06:32,520 Speaker 1: you know, I I'm surprised the capital markets are not 976 01:06:32,760 --> 01:06:37,720 Speaker 1: more bothered by what's happening in American politics and society 977 01:06:37,960 --> 01:06:41,280 Speaker 1: than they are. And I think it's consistent to say, 978 01:06:41,400 --> 01:06:44,640 Speaker 1: given what I've been talking about, that it's rational in 979 01:06:44,800 --> 01:06:49,240 Speaker 1: terms of deep underlying movements to worry about a society 980 01:06:49,240 --> 01:06:52,160 Speaker 1: where life expectation is falling. And I believe him right 981 01:06:52,200 --> 01:06:54,800 Speaker 1: in saying that life expectancy in China is now above 982 01:06:54,880 --> 01:06:59,080 Speaker 1: that in America. You know, these are deep systemic problems 983 01:06:59,160 --> 01:07:02,400 Speaker 1: that you know, I do get concerned about when do 984 01:07:02,520 --> 01:07:06,000 Speaker 1: those start influencing the markets? That that's that's much more 985 01:07:06,000 --> 01:07:09,040 Speaker 1: difficult to say. But if I was sort of twenty 986 01:07:09,120 --> 01:07:11,480 Speaker 1: years earlier in my career, I think I would be 987 01:07:11,520 --> 01:07:14,840 Speaker 1: concerned about these issues. Well, a lot of us here 988 01:07:14,840 --> 01:07:18,160 Speaker 1: in the US are are similarly concerned about those issues, 989 01:07:18,760 --> 01:07:24,000 Speaker 1: especially the movement away from democracy and the movement towards 990 01:07:24,760 --> 01:07:29,440 Speaker 1: politicizing parts of the election that used to be a 991 01:07:29,600 --> 01:07:34,520 Speaker 1: political or nonpartisan, and that certainly is a deep concern. 992 01:07:34,960 --> 01:07:40,440 Speaker 1: I've similarly wrestled with the question, why hasn't the markets 993 01:07:40,520 --> 01:07:45,520 Speaker 1: considered this a potential threat. And I keep coming back 994 01:07:45,600 --> 01:07:51,080 Speaker 1: to U two alternative. THESS one is, well, it's unlikely 995 01:07:51,120 --> 01:07:53,360 Speaker 1: to happen in the market is discounting it. That's the 996 01:07:53,440 --> 01:07:59,600 Speaker 1: sort of sanguine approach. But the more frightening conclusion is 997 01:08:00,120 --> 01:08:03,080 Speaker 1: the markets have considered it, and you know, think that 998 01:08:03,120 --> 01:08:06,960 Speaker 1: people are still going to be buying iPhones and and 999 01:08:07,320 --> 01:08:11,680 Speaker 1: uh tesla's and so the market doesn't care. Yeah, well 1000 01:08:11,720 --> 01:08:14,360 Speaker 1: I was. I was talking about John Kay earlier, and 1001 01:08:14,640 --> 01:08:19,000 Speaker 1: you know, I remember one discussion we had. We're discussing 1002 01:08:19,040 --> 01:08:24,040 Speaker 1: potential regulation of the major um social media and into 1003 01:08:24,040 --> 01:08:27,400 Speaker 1: that companies in America. And instead of being said, you 1004 01:08:27,439 --> 01:08:30,200 Speaker 1: don't seriously mean to tell me that you don't think 1005 01:08:30,200 --> 01:08:34,800 Speaker 1: American companies don't already dominate American democracy, and I bust 1006 01:08:34,800 --> 01:08:37,960 Speaker 1: confess it may be that as well. Then that that's 1007 01:08:37,960 --> 01:08:40,200 Speaker 1: sort of effectively in the quiet where we are. But 1008 01:08:40,439 --> 01:08:43,480 Speaker 1: you know, I still think preserving the forms of democracy 1009 01:08:43,520 --> 01:08:46,280 Speaker 1: and hopefully some of the substance as well, does ultimately 1010 01:08:46,280 --> 01:08:50,200 Speaker 1: matter an awful lot. I think you're absolutely right about that. 1011 01:08:50,920 --> 01:08:55,280 Speaker 1: Let's talk a little bit about private markets. You pioneered 1012 01:08:55,920 --> 01:09:02,160 Speaker 1: Bailey Gifford's moving towards a mix of public and private markets. 1013 01:09:02,200 --> 01:09:05,559 Speaker 1: Tell us about that experience. What was that like. It's 1014 01:09:05,560 --> 01:09:11,080 Speaker 1: been a scintillating experience, Verry um And you know, I 1015 01:09:11,120 --> 01:09:18,000 Speaker 1: feel immensely privilege that we seem to have managed to 1016 01:09:18,120 --> 01:09:24,240 Speaker 1: make the adaption from public markets to private markets much 1017 01:09:24,280 --> 01:09:28,040 Speaker 1: more easily than I would expect it. You know, I 1018 01:09:28,120 --> 01:09:32,880 Speaker 1: thought this would be a decades long project that we 1019 01:09:32,880 --> 01:09:36,400 Speaker 1: were barely be getting started on at this juncture. But 1020 01:09:36,600 --> 01:09:39,480 Speaker 1: in many parts of the world it's moved more quickly 1021 01:09:39,920 --> 01:09:45,560 Speaker 1: and more um. I think helpfully and hopefully that I 1022 01:09:45,600 --> 01:09:48,280 Speaker 1: would expect it, because you know, as we touched on earlier. 1023 01:09:48,680 --> 01:09:50,760 Speaker 1: You know, I think we now live in a world 1024 01:09:50,800 --> 01:09:53,640 Speaker 1: where it's very hard, and I think this was in 1025 01:09:53,640 --> 01:09:56,080 Speaker 1: many ways part of the issue with TEDSLA. Are all 1026 01:09:56,120 --> 01:09:59,760 Speaker 1: along very hard for public companies to do heavy in 1027 01:10:00,080 --> 01:10:04,400 Speaker 1: estament over a long period of time in contentious ideas, 1028 01:10:04,439 --> 01:10:07,040 Speaker 1: and I think it's much better done in private markets 1029 01:10:07,680 --> 01:10:13,120 Speaker 1: are in some ways I think that we've been helped that. 1030 01:10:13,280 --> 01:10:16,519 Speaker 1: To be honest, the process we have, the ten questions 1031 01:10:16,560 --> 01:10:19,479 Speaker 1: we asked companies very much can be applied to the 1032 01:10:19,520 --> 01:10:25,080 Speaker 1: set of companies that we've invested in private markets. And 1033 01:10:25,880 --> 01:10:28,240 Speaker 1: that you know, we've got used to the style of 1034 01:10:28,360 --> 01:10:33,120 Speaker 1: returns in public markets which are reliant on some extreme winners, 1035 01:10:33,400 --> 01:10:36,960 Speaker 1: and accepting that there will be individual problems, so that 1036 01:10:36,960 --> 01:10:41,080 Speaker 1: that helped. But you know, I think as well, UM 1037 01:10:41,120 --> 01:10:48,679 Speaker 1: the fact that we we tried very hard not to interfere. UM. Yes, 1038 01:10:48,800 --> 01:10:53,439 Speaker 1: we're absolutely taken interest, but I don't consider Tom and 1039 01:10:53,479 --> 01:10:58,479 Speaker 1: I don't consider we can possibly run companies better than 1040 01:10:58,520 --> 01:11:01,280 Speaker 1: their current incumbents, and we try and be supportive at 1041 01:11:01,280 --> 01:11:05,720 Speaker 1: different times. It may ultimately be a good thing that 1042 01:11:06,120 --> 01:11:09,000 Speaker 1: by and large, if and when companies do go public, 1043 01:11:09,040 --> 01:11:11,800 Speaker 1: and we're not pressing them to do so. But on 1044 01:11:11,880 --> 01:11:16,599 Speaker 1: the whole, unlike many traditional venture capitalists, we can usually 1045 01:11:16,960 --> 01:11:20,439 Speaker 1: buy more stock rather than look to have an avenue 1046 01:11:20,479 --> 01:11:24,480 Speaker 1: to sell out, and I think that's important in conceptualizing 1047 01:11:24,479 --> 01:11:29,800 Speaker 1: our position. Really intriguing lately, private companies have been really 1048 01:11:29,840 --> 01:11:34,240 Speaker 1: attracting a lot of attention from UM, both the professional 1049 01:11:34,320 --> 01:11:40,040 Speaker 1: investing world and and the labors and the private sector. 1050 01:11:40,520 --> 01:11:47,639 Speaker 1: At what point do private markets risk overheating? Oh? I think, 1051 01:11:49,040 --> 01:11:54,040 Speaker 1: but I would probably argue that they started overheating in 1052 01:11:54,360 --> 01:11:59,439 Speaker 1: December of what we're what we're talking about December January 1053 01:11:59,439 --> 01:12:02,280 Speaker 1: February of twenty one, and I think that you know 1054 01:12:02,439 --> 01:12:06,240 Speaker 1: the warning science once so at that point, um, you know, 1055 01:12:06,320 --> 01:12:08,600 Speaker 1: one can talk about anything from the SPACs onwards to 1056 01:12:08,720 --> 01:12:13,519 Speaker 1: individual valuations. UM. Quite serious. But I think I would 1057 01:12:13,560 --> 01:12:20,280 Speaker 1: want to differentiate between the cyclical and the structural. And 1058 01:12:20,400 --> 01:12:23,599 Speaker 1: for sure, what you're talking about means that you're even 1059 01:12:23,640 --> 01:12:28,000 Speaker 1: more vulnerable to the cyclical. But I would be absolutely 1060 01:12:28,160 --> 01:12:35,720 Speaker 1: amazed if, after some resetting of prices and expectations, if 1061 01:12:35,720 --> 01:12:39,400 Speaker 1: this industry doesn't continue to grow and become more important. 1062 01:12:39,960 --> 01:12:44,120 Speaker 1: And I think a lot of that is because actually 1063 01:12:44,280 --> 01:12:48,280 Speaker 1: it has generated the ability not just in America, but 1064 01:12:48,400 --> 01:12:50,599 Speaker 1: in China and to a certain expense, in other countries 1065 01:12:50,600 --> 01:12:56,799 Speaker 1: of the world, the ability to inculcate to help create 1066 01:12:57,479 --> 01:13:00,280 Speaker 1: these great companies that we're talking about at SCARE. And 1067 01:13:00,320 --> 01:13:02,479 Speaker 1: I don't think that's going away. I think it is 1068 01:13:02,520 --> 01:13:06,320 Speaker 1: a better way of doing finance. Um. You know, I 1069 01:13:06,960 --> 01:13:08,880 Speaker 1: always say I mentioned at the beginning that I was 1070 01:13:09,040 --> 01:13:12,320 Speaker 1: semi trained as a historian. I think, um, And you know, 1071 01:13:12,400 --> 01:13:15,200 Speaker 1: there was a British foreign secretary in the nineteenth century 1072 01:13:15,200 --> 01:13:17,719 Speaker 1: who said that he had to create a new world 1073 01:13:18,200 --> 01:13:20,599 Speaker 1: to re establish the balance of the old. And if 1074 01:13:20,640 --> 01:13:23,920 Speaker 1: you know, we'll go back to our discussion about the 1075 01:13:23,960 --> 01:13:27,799 Speaker 1: failings of public equity markets. I think we need private 1076 01:13:27,840 --> 01:13:31,479 Speaker 1: equity markets to do what the nineteenth century would have 1077 01:13:31,479 --> 01:13:34,920 Speaker 1: regarded as a critical element of creating companies. So yeah, 1078 01:13:35,080 --> 01:13:39,160 Speaker 1: absolutely that can and will be setbacks and over exuberance. 1079 01:13:39,240 --> 01:13:41,479 Speaker 1: But do I think it's going away. No, I don't 1080 01:13:41,479 --> 01:13:44,960 Speaker 1: think it's going away at all. There are some quotes 1081 01:13:44,960 --> 01:13:47,360 Speaker 1: of yours I want to throw your way because it's 1082 01:13:47,400 --> 01:13:51,559 Speaker 1: really some of these are really quite fascinating. Let's start 1083 01:13:51,600 --> 01:13:56,479 Speaker 1: with quote the secret to successful investing was understanding change, 1084 01:13:56,560 --> 01:14:01,040 Speaker 1: how it happens, how much happens, and it's implications over 1085 01:14:01,080 --> 01:14:04,679 Speaker 1: the long term. Now that sounds pretty simple, but I'm 1086 01:14:04,720 --> 01:14:08,480 Speaker 1: going to assume it's a lot more challenging in execution 1087 01:14:08,560 --> 01:14:16,439 Speaker 1: than conception. Yea, yeah, I absolutely think it is. But 1088 01:14:16,800 --> 01:14:22,640 Speaker 1: you know, equally, I think that there are certain advantages 1089 01:14:22,680 --> 01:14:26,160 Speaker 1: of doing this. Um. You know, I think the puzzle 1090 01:14:26,240 --> 01:14:31,200 Speaker 1: to me of so much of finance, there's so much 1091 01:14:32,479 --> 01:14:41,120 Speaker 1: of intellectual discourse about the economy has been that effectively 1092 01:14:41,880 --> 01:14:46,439 Speaker 1: everybody is trying to think about as being an equilibrium 1093 01:14:46,479 --> 01:14:49,800 Speaker 1: and the mild adjustments that you could have within that. 1094 01:14:50,680 --> 01:14:53,679 Speaker 1: You know, whether it be in traditional value investing, whether 1095 01:14:53,760 --> 01:14:57,439 Speaker 1: it be in the conception that the economy effectively always 1096 01:14:57,479 --> 01:15:01,960 Speaker 1: mean reverted to the whole act demic professions at the 1097 01:15:02,040 --> 01:15:05,320 Speaker 1: last thirty or forty years, and and their formulas for 1098 01:15:05,400 --> 01:15:09,479 Speaker 1: doing this. I cited Santa Fe earlier. I just think 1099 01:15:09,680 --> 01:15:12,800 Speaker 1: I'm probably gonna misquote, but I would cite you Ran 1100 01:15:13,000 --> 01:15:17,160 Speaker 1: Arthur about this as saying, the most important element and 1101 01:15:17,240 --> 01:15:20,800 Speaker 1: the most interesting time to invest is when there are 1102 01:15:20,840 --> 01:15:24,960 Speaker 1: major disill ecqui liberals. And that's what happens when you 1103 01:15:25,040 --> 01:15:28,439 Speaker 1: get this process of change that is so much more 1104 01:15:28,560 --> 01:15:33,240 Speaker 1: dramatic than than we tend to think about. So I 1105 01:15:33,439 --> 01:15:36,840 Speaker 1: think that you know, ones aided because we tend to 1106 01:15:36,840 --> 01:15:39,160 Speaker 1: be very static. It's partly a time train problem, but 1107 01:15:39,200 --> 01:15:42,439 Speaker 1: it's partly because that's the way we've been trained. And 1108 01:15:42,479 --> 01:15:46,160 Speaker 1: thereby it's a lot less competitive to think about this 1109 01:15:46,200 --> 01:15:48,960 Speaker 1: process of change, you know, as opposed to the hundred 1110 01:15:49,000 --> 01:15:50,960 Speaker 1: and fifty different people who will be telling you what 1111 01:15:51,040 --> 01:15:53,400 Speaker 1: the Feds gore to be doing next week. To try 1112 01:15:53,439 --> 01:15:57,439 Speaker 1: and think of those ingredients in structural change and how 1113 01:15:57,479 --> 01:16:02,200 Speaker 1: it can scale. Um is I think a field where 1114 01:16:02,479 --> 01:16:04,840 Speaker 1: it's a little bit easier you know, to make a 1115 01:16:04,880 --> 01:16:09,880 Speaker 1: different analogy, Um, it's it's pretty impossible to think that 1116 01:16:10,080 --> 01:16:14,679 Speaker 1: Scotland would ever win a World championship at say soccer, 1117 01:16:15,479 --> 01:16:18,160 Speaker 1: because everybody competes at it. But if, on the other hand, 1118 01:16:18,200 --> 01:16:22,560 Speaker 1: we translates it to sort of British sports like darts 1119 01:16:22,720 --> 01:16:27,200 Speaker 1: or um, snooker, then it's possible for Scots to be good. 1120 01:16:27,240 --> 01:16:29,720 Speaker 1: You should compete in games where you know that there 1121 01:16:29,800 --> 01:16:35,800 Speaker 1: isn't that much of a of an enduring competitive disadvantage 1122 01:16:35,800 --> 01:16:38,000 Speaker 1: at any rate, and possibly where you know you're doing 1123 01:16:38,040 --> 01:16:41,080 Speaker 1: something that not many other people are doing. So in 1124 01:16:41,080 --> 01:16:44,960 Speaker 1: other words, UM, look for areas where there's less competition 1125 01:16:45,000 --> 01:16:49,080 Speaker 1: and you have the ability to compete where others aren't. 1126 01:16:49,400 --> 01:16:54,320 Speaker 1: Is that the thinking less competition? And also you know, 1127 01:16:54,320 --> 01:16:56,639 Speaker 1: which I think comes back to something we touched on before, 1128 01:16:57,080 --> 01:17:01,000 Speaker 1: where your probability of being right, um, and the impact 1129 01:17:01,080 --> 01:17:04,840 Speaker 1: of being right has has had a greater both chance 1130 01:17:04,920 --> 01:17:09,680 Speaker 1: and a greater degree of importance. Um. You know, I 1131 01:17:09,720 --> 01:17:13,799 Speaker 1: think that's too much. The information we're dealing with in markets, 1132 01:17:13,880 --> 01:17:18,639 Speaker 1: or what purports to the information is fundamentally unimportant. Um. 1133 01:17:18,640 --> 01:17:20,599 Speaker 1: And you know I can imagine we might come back 1134 01:17:20,600 --> 01:17:24,160 Speaker 1: to that too. Huh. Well, let's stay right there. What 1135 01:17:24,240 --> 01:17:28,200 Speaker 1: do you think is fundamentally unimportant that others have a 1136 01:17:28,240 --> 01:17:37,760 Speaker 1: great reliance upon. Oh, I genuinely do not believe that 1137 01:17:38,960 --> 01:17:43,479 Speaker 1: it makes a great deal of difference to the long 1138 01:17:43,600 --> 01:17:49,439 Speaker 1: run value of company as to whether earnings beaten or missed. 1139 01:17:49,840 --> 01:17:53,160 Speaker 1: I genuinely don't believe it creates a lot of change 1140 01:17:53,200 --> 01:17:59,640 Speaker 1: to your long run turns of investment that you could predict, um, 1141 01:17:59,760 --> 01:18:02,559 Speaker 1: what what's going on in the minds of the Federal Reserve, 1142 01:18:02,720 --> 01:18:05,240 Speaker 1: in the minds of what GDP growth will be. You know, 1143 01:18:05,320 --> 01:18:07,960 Speaker 1: there is very little evidence to my mind that these 1144 01:18:07,960 --> 01:18:13,639 Speaker 1: are either significant in the long run, UM, or that 1145 01:18:13,760 --> 01:18:16,519 Speaker 1: they you you have a great margin of success, you 1146 01:18:16,560 --> 01:18:19,800 Speaker 1: know in in in all of these, I think that 1147 01:18:20,080 --> 01:18:26,400 Speaker 1: you are fighting a battle over it. It's the Catholic 1148 01:18:26,520 --> 01:18:31,080 Speaker 1: Church's pre pre Reformation feeling of you know, counting the 1149 01:18:31,120 --> 01:18:34,200 Speaker 1: angels on a pinhead. And I'm just not sure it's 1150 01:18:34,240 --> 01:18:39,200 Speaker 1: either doable or worthwhile. UM, you know, to turn it round, Barry, 1151 01:18:40,320 --> 01:18:48,519 Speaker 1: I I tend to think that, um and I had 1152 01:18:48,520 --> 01:18:50,599 Speaker 1: a conversation with somebody. I think it's been a guest 1153 01:18:50,600 --> 01:18:52,800 Speaker 1: of yours in the past, with Dennis Lynds much at 1154 01:18:52,840 --> 01:18:55,760 Speaker 1: bar on this score about this sort of saying, if 1155 01:18:55,800 --> 01:18:59,920 Speaker 1: I had just known in when I started in nineteen 1156 01:19:00,000 --> 01:19:03,680 Speaker 1: eighty three that Moore's law was going to continue for 1157 01:19:03,720 --> 01:19:07,240 Speaker 1: the rest of my career a ready effort, did I 1158 01:19:07,280 --> 01:19:09,800 Speaker 1: need to know anything else? You know, I needed to 1159 01:19:09,840 --> 01:19:12,840 Speaker 1: be able to translate that into the individual companies, And 1160 01:19:12,920 --> 01:19:15,040 Speaker 1: you know, I might not have known that it was 1161 01:19:15,080 --> 01:19:17,400 Speaker 1: the antebell rather than the Japanese, or that it was 1162 01:19:17,439 --> 01:19:20,800 Speaker 1: Amazon rather than some of the others. But fundamentally, I 1163 01:19:20,840 --> 01:19:24,160 Speaker 1: think if I had taken that seriously at that juncture, 1164 01:19:24,880 --> 01:19:27,360 Speaker 1: I'm not, I'm you know, how much else would one 1165 01:19:27,439 --> 01:19:30,640 Speaker 1: have needed to have known that computer is going to 1166 01:19:30,800 --> 01:19:33,720 Speaker 1: we're going to be big one day, and and semiconductors 1167 01:19:33,720 --> 01:19:38,439 Speaker 1: were going to continue to become increasingly powerful at at 1168 01:19:38,479 --> 01:19:43,760 Speaker 1: a decreasing cost. I think even when people understood then intellectually, 1169 01:19:44,400 --> 01:19:47,880 Speaker 1: they had a hard time first believing it that it 1170 01:19:47,920 --> 01:19:51,919 Speaker 1: would last for as many decades as it has at second, 1171 01:19:52,840 --> 01:19:56,599 Speaker 1: even with that knowledge, you know, are you are you 1172 01:19:56,840 --> 01:20:00,599 Speaker 1: investing first level in the PC companies or even the 1173 01:20:00,680 --> 01:20:05,200 Speaker 1: semiconductor companies, in the PC companies or the companies like 1174 01:20:05,320 --> 01:20:10,240 Speaker 1: Google and others that figure out how best to use 1175 01:20:10,280 --> 01:20:18,719 Speaker 1: it it really raises some fascinating questions. Oh totally. Um, well, 1176 01:20:17,720 --> 01:20:21,439 Speaker 1: I would add in Barry, which I suspect you would 1177 01:20:21,479 --> 01:20:24,920 Speaker 1: agree with that. I don't think the human mind is 1178 01:20:25,000 --> 01:20:27,760 Speaker 1: very good at exponential change, for sure. You know I 1179 01:20:27,880 --> 01:20:32,599 Speaker 1: talked about some different aspects. But you know this is this, 1180 01:20:32,600 --> 01:20:36,600 Speaker 1: This is Jeffrey west in scale talking about the exponential chessboard, 1181 01:20:36,640 --> 01:20:39,400 Speaker 1: isn't it? And way you get to us as you 1182 01:20:39,439 --> 01:20:42,479 Speaker 1: add what are the group grades of rice or multiply 1183 01:20:42,560 --> 01:20:45,160 Speaker 1: out at More's law? So you know, I think it's 1184 01:20:45,240 --> 01:20:49,320 Speaker 1: partly that I think you could have got some degree 1185 01:20:49,360 --> 01:20:54,280 Speaker 1: of confidence over the longevity of it. Again, to cite 1186 01:20:54,360 --> 01:20:56,720 Speaker 1: a smol you know what they will tell you that 1187 01:20:56,840 --> 01:21:00,720 Speaker 1: in fact More's law existed in it is just a 1188 01:21:00,800 --> 01:21:03,960 Speaker 1: Gordon Molready wrote about in the nine. And you know 1189 01:21:04,600 --> 01:21:08,000 Speaker 1: this doubling has continued. And also you know, to quote 1190 01:21:08,000 --> 01:21:10,680 Speaker 1: something they said to my absolute amazement, I guessing three 1191 01:21:10,760 --> 01:21:13,360 Speaker 1: or four years ago now, but it was when they 1192 01:21:13,360 --> 01:21:18,439 Speaker 1: were finally thought the next generation of technologists was was there? 1193 01:21:18,600 --> 01:21:22,320 Speaker 1: They said, neither you or nor I would claim that 1194 01:21:22,360 --> 01:21:24,320 Speaker 1: it would have been so for us, But the next 1195 01:21:24,400 --> 01:21:28,320 Speaker 1: ten or fifteen years would therefore be easy in inverted commerce. 1196 01:21:28,920 --> 01:21:31,679 Speaker 1: Uh that's a direct quote. So you know, I could 1197 01:21:31,680 --> 01:21:34,360 Speaker 1: you have come to a view I totally agree with 1198 01:21:34,439 --> 01:21:37,000 Speaker 1: you about it then becomes but this is what I 1199 01:21:37,040 --> 01:21:40,760 Speaker 1: could to spend all my time on thinking about the 1200 01:21:40,880 --> 01:21:43,600 Speaker 1: second third round effects and how you get to the 1201 01:21:43,640 --> 01:21:46,800 Speaker 1: companies that created Yeah, I I absolutely agree with that. 1202 01:21:47,000 --> 01:21:48,560 Speaker 1: But you know, I think if you're arm with that 1203 01:21:48,680 --> 01:21:50,760 Speaker 1: confidence that the process is going to again, whether you're 1204 01:21:50,800 --> 01:21:53,400 Speaker 1: happy that all that stuff we talked about about Jeff 1205 01:21:53,400 --> 01:21:56,920 Speaker 1: Bezos saying in the late nineties was was there, you know, 1206 01:21:57,000 --> 01:21:59,840 Speaker 1: kept your mind open to all the exciting opportunities that 1207 01:22:00,000 --> 01:22:04,519 Speaker 1: would happen and can still happen. Huh. Really interesting. One 1208 01:22:04,520 --> 01:22:07,479 Speaker 1: of the quotes of yours that I found fascinating was 1209 01:22:07,800 --> 01:22:12,640 Speaker 1: someone compared you to Warren Buffett and your response was 1210 01:22:13,200 --> 01:22:16,879 Speaker 1: you think of yourself as more Monger than Buffett. Explain 1211 01:22:16,960 --> 01:22:27,520 Speaker 1: that if you would, um hm, I to me, um, 1212 01:22:27,640 --> 01:22:32,880 Speaker 1: jolly Boger benefits that extreme curiosity about everything, and it's 1213 01:22:32,920 --> 01:22:35,320 Speaker 1: been very much and you know, I about to you 1214 01:22:35,560 --> 01:22:39,880 Speaker 1: defer to your experience of this an essential part of 1215 01:22:40,080 --> 01:22:48,280 Speaker 1: pushing Larren Buffett and Berkshire Hathaway into areas where they 1216 01:22:48,360 --> 01:22:51,400 Speaker 1: might not have ventured otherwise. UM. And you know, I 1217 01:22:51,439 --> 01:22:54,920 Speaker 1: think he has an astonishing ability to be honest about 1218 01:22:54,960 --> 01:22:57,240 Speaker 1: some of the feelings. You know. For instance, his words 1219 01:22:57,320 --> 01:23:01,000 Speaker 1: about how Google has this, I think he said the 1220 01:23:01,000 --> 01:23:07,200 Speaker 1: greatest competitive of vartage out there, UM, and that I 1221 01:23:08,640 --> 01:23:10,920 Speaker 1: therefore they ought to have understood it is I think 1222 01:23:11,240 --> 01:23:16,080 Speaker 1: quite revealing of the whole process. I probably also slightly 1223 01:23:16,120 --> 01:23:24,479 Speaker 1: empathize with. UM. I think Buffett is more, to my mind, 1224 01:23:24,560 --> 01:23:28,840 Speaker 1: a creature who is comfortable with broad scale, popular and 1225 01:23:28,960 --> 01:23:33,400 Speaker 1: media exposure. UM. I think Charlie Banger is rather less so, 1226 01:23:33,520 --> 01:23:39,000 Speaker 1: and I probably feel more similar that that dec as well. Well. Well, 1227 01:23:39,040 --> 01:23:43,080 Speaker 1: I could tell you from my personal experience researching and 1228 01:23:43,120 --> 01:23:46,720 Speaker 1: prepping for this conversation. It's not like there was a 1229 01:23:46,880 --> 01:23:51,000 Speaker 1: broad pool of public statements I had to work with. 1230 01:23:51,520 --> 01:23:55,479 Speaker 1: You've been pretty behind the scenes for a long time. 1231 01:23:55,760 --> 01:23:58,280 Speaker 1: I don't know if you're a co manager. Tom Slayer, 1232 01:23:58,360 --> 01:24:02,559 Speaker 1: who's scheduled to take over after you retire, is going 1233 01:24:02,600 --> 01:24:05,400 Speaker 1: to continue in that vein. Although I have to ask, 1234 01:24:05,439 --> 01:24:10,479 Speaker 1: I love your comments. It's the fun manager's job to 1235 01:24:10,600 --> 01:24:15,080 Speaker 1: remain accentric. How is Tom slaterter going to remain a 1236 01:24:15,200 --> 01:24:21,400 Speaker 1: centric Yeah? Well, I think you know it's been. Firstly, 1237 01:24:21,479 --> 01:24:25,920 Speaker 1: it's been a great joy to work with Tom. Um. 1238 01:24:25,960 --> 01:24:29,679 Speaker 1: We often are You probably know or recall that Tom 1239 01:24:29,760 --> 01:24:33,360 Speaker 1: has a more mathematical background than I do, but very 1240 01:24:33,400 --> 01:24:36,479 Speaker 1: often we leave each other the chance to come to 1241 01:24:36,560 --> 01:24:39,759 Speaker 1: a view, and it's quite interesting how often we agree, 1242 01:24:40,360 --> 01:24:43,080 Speaker 1: but for different reasons. And you know, I found that 1243 01:24:43,200 --> 01:24:47,200 Speaker 1: particularly delightful over the years. Um, I think Tommy is 1244 01:24:47,200 --> 01:24:49,639 Speaker 1: a hundred percent committed to the idea that we need 1245 01:24:49,680 --> 01:24:52,760 Speaker 1: to keep evolving. He might not have used the word eccentric, 1246 01:24:53,240 --> 01:24:56,599 Speaker 1: but I think the desire to keep pushing on Tom 1247 01:24:56,720 --> 01:25:01,679 Speaker 1: and indeed Uh the next next um Uh as next 1248 01:25:01,760 --> 01:25:05,800 Speaker 1: likely assistant, Lawrence Burns, share that view. I think, you know, 1249 01:25:06,160 --> 01:25:10,679 Speaker 1: if there is a word of caution here, I think 1250 01:25:10,800 --> 01:25:15,440 Speaker 1: that it's very important that Baby Gifford as an organization 1251 01:25:15,680 --> 01:25:19,920 Speaker 1: allows Tom to have this freedom of course, you know, 1252 01:25:20,080 --> 01:25:22,280 Speaker 1: and perhaps this is back to among the things I 1253 01:25:22,320 --> 01:25:26,959 Speaker 1: think you need the ability to stand out from the ordinary, 1254 01:25:27,080 --> 01:25:31,360 Speaker 1: to occasionally annoy your colleagues quite a lot in doing 1255 01:25:31,400 --> 01:25:34,160 Speaker 1: all this, and I think it's quite important that Tom 1256 01:25:34,200 --> 01:25:38,680 Speaker 1: has given supporting patients to to do that really quite interesting. 1257 01:25:39,200 --> 01:25:41,800 Speaker 1: Before we get to our favorite questions that we ask 1258 01:25:41,960 --> 01:25:45,200 Speaker 1: all of our guests. I have to throw a curveball 1259 01:25:45,320 --> 01:25:49,520 Speaker 1: question at you. You're a well known fan and contributor 1260 01:25:49,560 --> 01:25:54,479 Speaker 1: to Edinburgh's Heart of mid Lothian football club. What are 1261 01:25:54,560 --> 01:25:58,719 Speaker 1: your thoughts on private equity and sporting clubs? This seems 1262 01:25:58,760 --> 01:26:03,280 Speaker 1: to have become quite a hobby horse for a lot 1263 01:26:03,320 --> 01:26:05,200 Speaker 1: of people in Pe. What what do you think of 1264 01:26:05,240 --> 01:26:10,000 Speaker 1: what's going on in football these days? Uh? To be honest, Berry, 1265 01:26:10,280 --> 01:26:15,280 Speaker 1: I'm perfectly happy to talk about it, but mentally and 1266 01:26:15,439 --> 01:26:20,800 Speaker 1: practically I separate the two fields a lot. I feel 1267 01:26:20,960 --> 01:26:25,479 Speaker 1: very uncomfortable with not just the private equity, but still 1268 01:26:25,520 --> 01:26:31,240 Speaker 1: more the greenwashing of various unpleasant states that it's done 1269 01:26:31,320 --> 01:26:35,240 Speaker 1: through sport, and particularly through soccer in Europe. Explain what 1270 01:26:35,560 --> 01:26:38,320 Speaker 1: do you mean by when I hear greenwashing? I usually 1271 01:26:38,360 --> 01:26:43,080 Speaker 1: think of companies pretending to do e s g. Environmental 1272 01:26:43,120 --> 01:26:46,559 Speaker 1: social government investing when it's really just a press release 1273 01:26:46,600 --> 01:26:52,559 Speaker 1: and no follow through. What what's the greenwashing in British peoples? 1274 01:26:52,840 --> 01:26:56,000 Speaker 1: I am I am spending it, but more broadly, but 1275 01:26:56,600 --> 01:27:00,720 Speaker 1: um the most prominent and most successful for clubs, and 1276 01:27:00,760 --> 01:27:05,320 Speaker 1: this is much more England than Scotland m are effectively 1277 01:27:05,360 --> 01:27:11,000 Speaker 1: owned either by Russians or by Middle Eastern states with 1278 01:27:11,160 --> 01:27:15,479 Speaker 1: questionable human rights records UM, and I think that they 1279 01:27:15,520 --> 01:27:19,360 Speaker 1: are effectively doing the functional equivalent of what you're talking 1280 01:27:19,400 --> 01:27:23,040 Speaker 1: about there with the s g U in trying to 1281 01:27:23,120 --> 01:27:27,519 Speaker 1: make themselves cuddly and approachable by spending hundreds of millions 1282 01:27:27,520 --> 01:27:30,960 Speaker 1: on football clubs rather than anything else. But you know 1283 01:27:31,160 --> 01:27:34,840 Speaker 1: my take on football and I would not the same level. 1284 01:27:34,920 --> 01:27:38,360 Speaker 1: But I worry about the financial imperatives of many of 1285 01:27:38,439 --> 01:27:41,320 Speaker 1: the American sort of private equity drived owners as well. 1286 01:27:42,120 --> 01:27:47,800 Speaker 1: My belief is that soccer football is an intensely important 1287 01:27:47,960 --> 01:27:56,960 Speaker 1: part of local communities and of the increasingly rare ability 1288 01:27:57,040 --> 01:28:04,760 Speaker 1: of an activity to go through all the different um groups, classes, 1289 01:28:05,000 --> 01:28:09,760 Speaker 1: income levels of society and to attract everything from recent 1290 01:28:09,800 --> 01:28:13,240 Speaker 1: immigrants to people very badly down on their luck. I 1291 01:28:13,320 --> 01:28:16,400 Speaker 1: have no interest in trying to make money out of it, 1292 01:28:16,880 --> 01:28:20,680 Speaker 1: and indeed I've structured, as regards hearts, my activities as 1293 01:28:20,920 --> 01:28:25,040 Speaker 1: donations rather than any way wanting to have ownership. And 1294 01:28:25,120 --> 01:28:28,240 Speaker 1: you know, it's something that I believe should be done 1295 01:28:28,280 --> 01:28:31,160 Speaker 1: more broadly. You know, I've done this with to no 1296 01:28:31,320 --> 01:28:35,400 Speaker 1: particular but all particular clubs in Scotland by making donations 1297 01:28:35,439 --> 01:28:38,880 Speaker 1: of that level at the lower level. Um, my wife 1298 01:28:38,920 --> 01:28:42,759 Speaker 1: and daughter are both on the boards or the board 1299 01:28:42,840 --> 01:28:46,559 Speaker 1: of Scotland's most successful female football clubs. So it's it's 1300 01:28:46,640 --> 01:28:50,599 Speaker 1: much more about the societal centrality of it than it 1301 01:28:50,640 --> 01:28:53,880 Speaker 1: is about the financial parts, which I feel uneasy about, 1302 01:28:53,920 --> 01:28:58,040 Speaker 1: to be frank, really intriguing answer, and I was not 1303 01:28:58,120 --> 01:29:00,920 Speaker 1: expecting to go in that direction. All right, I know 1304 01:29:01,000 --> 01:29:04,320 Speaker 1: I only have the studio for another ten minutes or so, 1305 01:29:04,320 --> 01:29:07,559 Speaker 1: so let me jump. Let me jump to my favorite 1306 01:29:07,640 --> 01:29:10,960 Speaker 1: question that we ask all of our guests, starting with 1307 01:29:12,320 --> 01:29:15,960 Speaker 1: what was keeping you entertained during the lockdown? Any any 1308 01:29:16,000 --> 01:29:21,439 Speaker 1: favorite Netflix or Amazon streams or any podcast? What what 1309 01:29:21,600 --> 01:29:25,800 Speaker 1: kept you entertained when we were all stuck at home? Yes? Yes, 1310 01:29:25,880 --> 01:29:30,360 Speaker 1: well it's continuing to be a battle, isn't it? Ok? Really, 1311 01:29:30,640 --> 01:29:35,120 Speaker 1: oh gosh. The two most recent Netflix productions we've been 1312 01:29:36,000 --> 01:29:41,479 Speaker 1: we've watched actually both films. Um, we were watching the 1313 01:29:41,479 --> 01:29:44,880 Speaker 1: The Abandoned Daughter, the film of the Elena for Anti book, 1314 01:29:45,800 --> 01:29:50,160 Speaker 1: which deeply annoyed me. Fantastic acting, but why did it 1315 01:29:50,200 --> 01:29:52,439 Speaker 1: need to be made into the story of an American 1316 01:29:52,479 --> 01:29:56,760 Speaker 1: academic or off the middle class um individual from Naples 1317 01:29:57,240 --> 01:29:59,559 Speaker 1: to Bude? Everything? From my point of view, and I 1318 01:29:59,600 --> 01:30:02,519 Speaker 1: think just just how far you know, there are still 1319 01:30:02,560 --> 01:30:05,080 Speaker 1: for all the thoughts that Netflix and Amazon could provide 1320 01:30:05,080 --> 01:30:08,519 Speaker 1: international insights, there are biased of that. And the other 1321 01:30:08,560 --> 01:30:11,639 Speaker 1: film we watched this score, oddly enough, was The Hand 1322 01:30:11,680 --> 01:30:14,680 Speaker 1: of God, the Sorrantino version, which is about Naples, and 1323 01:30:14,760 --> 01:30:18,280 Speaker 1: thereby we much much much improved it. UM, if I 1324 01:30:18,320 --> 01:30:22,760 Speaker 1: may risk a local one, UM the documentary, the documentary 1325 01:30:23,200 --> 01:30:27,040 Speaker 1: on Amazon about Andy Murray is a tennis player. UM, 1326 01:30:27,200 --> 01:30:33,679 Speaker 1: Resurfacing is I think a fantastic description of just how hard, 1327 01:30:33,960 --> 01:30:38,519 Speaker 1: how competitive that sport, at individual sport could be. And 1328 01:30:38,760 --> 01:30:41,240 Speaker 1: you know, I think it is, you know, gives me 1329 01:30:41,320 --> 01:30:43,920 Speaker 1: pause for thought when we think we're struggling markets any 1330 01:30:43,920 --> 01:30:46,200 Speaker 1: one day or anything like that. What what these people 1331 01:30:46,200 --> 01:30:50,320 Speaker 1: put themselves through is truly remarkable. As a podcast. Last one, 1332 01:30:51,400 --> 01:30:53,599 Speaker 1: I suspect it's been cited to you before, but I 1333 01:30:53,600 --> 01:30:57,280 Speaker 1: haven't come across it. UM. I'm a great fan of 1334 01:30:57,320 --> 01:31:02,240 Speaker 1: what the Long Now Foundation do, and I think they're 1335 01:31:02,439 --> 01:31:05,559 Speaker 1: seminars on long term thinking and the podcast is on 1336 01:31:05,720 --> 01:31:09,880 Speaker 1: that are just absolutely top class and have been for years, 1337 01:31:09,960 --> 01:31:13,200 Speaker 1: both before the pandemic and during it. You know, you know, 1338 01:31:13,240 --> 01:31:17,960 Speaker 1: it's funny you mentioned the Netflix film that they decided 1339 01:31:18,040 --> 01:31:22,880 Speaker 1: to move locations from Middle Plus UK to the US. 1340 01:31:23,160 --> 01:31:27,800 Speaker 1: There was actually a hilariously filthy series some years ago 1341 01:31:27,960 --> 01:31:32,800 Speaker 1: called Episodes about two British comedy writers who had this 1342 01:31:33,520 --> 01:31:39,200 Speaker 1: you know, very thoughtful, um sort of merchant ivory like 1343 01:31:39,960 --> 01:31:44,800 Speaker 1: series in the UK. Within this series and the show 1344 01:31:44,880 --> 01:31:48,559 Speaker 1: is about them relocating to Hollywood and trying to retain 1345 01:31:48,720 --> 01:31:54,559 Speaker 1: some shred of their original um work and dignity in 1346 01:31:54,680 --> 01:31:59,240 Speaker 1: face of all of the just you know, aggressively horrific 1347 01:31:59,320 --> 01:32:05,680 Speaker 1: Hollywood e chase. And it's surprisingly funny and just absolutely filthy. 1348 01:32:05,720 --> 01:32:07,439 Speaker 1: I don't know if you're familiar with it, but if 1349 01:32:07,520 --> 01:32:12,599 Speaker 1: your tastes run in that direction, it's really entertaining. Um, 1350 01:32:12,840 --> 01:32:15,559 Speaker 1: thank you, because I actually the lack of a long 1351 01:32:15,600 --> 01:32:18,400 Speaker 1: tail as a board. Sorry to let you get on. Well, no, 1352 01:32:18,560 --> 01:32:21,000 Speaker 1: it's a perfect example of one of those things that 1353 01:32:22,080 --> 01:32:25,760 Speaker 1: just about any plot concept or idea there's going to 1354 01:32:25,840 --> 01:32:28,600 Speaker 1: be a variation of it somewhere that either does or 1355 01:32:28,680 --> 01:32:31,840 Speaker 1: doesn't work, or does or doesn't appeal to it to 1356 01:32:32,000 --> 01:32:34,960 Speaker 1: a specific set of tastes. Um, And the challenge is 1357 01:32:35,000 --> 01:32:38,439 Speaker 1: always in identifying what what works for you. Let me 1358 01:32:38,479 --> 01:32:41,680 Speaker 1: go onto my next question, which is who are some 1359 01:32:41,760 --> 01:32:48,240 Speaker 1: of your early mentors who helped to shape your career. Well. 1360 01:32:48,280 --> 01:32:53,880 Speaker 1: I I mentioned Barry max Ward earlier internally, who's been fantastic. 1361 01:32:54,320 --> 01:32:57,440 Speaker 1: Um there was a chairman of the board of Scottishavortgage 1362 01:32:57,479 --> 01:33:03,559 Speaker 1: called Donald Mackay, who was a Scottishcolomys who correct day 1363 01:33:03,560 --> 01:33:07,400 Speaker 1: to be saying it he absolutely tried, in the spirit 1364 01:33:07,479 --> 01:33:10,080 Speaker 1: of what he quoted frequently Robert Burns the like, in 1365 01:33:10,120 --> 01:33:12,680 Speaker 1: the way I couldn't as to try and raise our 1366 01:33:12,800 --> 01:33:16,280 Speaker 1: horizons from the local and the index plus to the world. 1367 01:33:16,320 --> 01:33:19,599 Speaker 1: And incredibly grateful that the last one I would mention, 1368 01:33:19,760 --> 01:33:22,719 Speaker 1: because you know we've been focusing on Scottish mortgage etcetera, 1369 01:33:22,960 --> 01:33:26,200 Speaker 1: that it's not not not not a problem, but another 1370 01:33:26,320 --> 01:33:30,360 Speaker 1: part of my career that's been you know, really really 1371 01:33:31,200 --> 01:33:34,719 Speaker 1: beneficial to me which I've enjoyed immensely is we run 1372 01:33:34,760 --> 01:33:37,760 Speaker 1: money for Vanguard in the International Growth Fund as one 1373 01:33:37,760 --> 01:33:41,080 Speaker 1: of the managers. And the first year we went to 1374 01:33:41,080 --> 01:33:44,360 Speaker 1: see Vantangard close to twenty years ago after having been appointed, 1375 01:33:44,960 --> 01:33:48,679 Speaker 1: we're done really badly in the performance terms, and the 1376 01:33:48,680 --> 01:33:51,160 Speaker 1: then boss of that Guard set us down in a 1377 01:33:51,200 --> 01:33:55,479 Speaker 1: big formal room with all his colleagues and said, I've 1378 01:33:55,479 --> 01:33:58,679 Speaker 1: got something to say seriously to you. And I looked 1379 01:33:58,680 --> 01:34:00,600 Speaker 1: at my colleague and colleague look to me, and we 1380 01:34:00,720 --> 01:34:03,519 Speaker 1: both thought we were about to be reprimanded or even 1381 01:34:03,600 --> 01:34:07,120 Speaker 1: sat and he paused and said, we're really pleased with you. 1382 01:34:07,439 --> 01:34:10,800 Speaker 1: Of course you did exactly what you said you would do. 1383 01:34:11,000 --> 01:34:13,200 Speaker 1: It just wasn't working at the market so over that 1384 01:34:13,280 --> 01:34:17,840 Speaker 1: period of die and you know, as a piece of 1385 01:34:17,880 --> 01:34:22,240 Speaker 1: help from a client, that was an enormously important moment 1386 01:34:22,439 --> 01:34:25,160 Speaker 1: to me that you know, you could go back and say, look, 1387 01:34:25,240 --> 01:34:27,000 Speaker 1: they believe in what we're doing. They're going to have 1388 01:34:27,080 --> 01:34:30,200 Speaker 1: confidence in the long term. They know that ups and 1389 01:34:30,280 --> 01:34:33,720 Speaker 1: down happened, and I am so grateful for for that. 1390 01:34:35,320 --> 01:34:38,840 Speaker 1: You've mentioned a few books along our conversation. Tell us 1391 01:34:39,160 --> 01:34:41,760 Speaker 1: some of your favorites, and what are you reading right now. 1392 01:34:43,560 --> 01:34:46,679 Speaker 1: Some of the favorites are I think consistent with what 1393 01:34:46,760 --> 01:34:50,080 Speaker 1: we've been talking about. So you know, I mentioned Scale 1394 01:34:50,160 --> 01:34:54,800 Speaker 1: by Jeffrey West. I think it's a fantastic book. Um. 1395 01:34:54,080 --> 01:34:58,840 Speaker 1: I I do think though that one uh that his 1396 01:34:59,240 --> 01:35:03,920 Speaker 1: underestimate he's hugely in this score is the late great 1397 01:35:04,160 --> 01:35:06,920 Speaker 1: Hans Rosling, who was another person we talked to a 1398 01:35:06,960 --> 01:35:13,599 Speaker 1: lot um. He's factfulness as opposed to you know what 1399 01:35:13,760 --> 01:35:17,040 Speaker 1: we all perceived to be going onto the world, which 1400 01:35:17,040 --> 01:35:19,800 Speaker 1: he wrote as he was dying, is a book which 1401 01:35:19,840 --> 01:35:23,760 Speaker 1: I think is incredibly valuable and important in investing in 1402 01:35:23,760 --> 01:35:26,439 Speaker 1: thinking about the world. Um. You know what he says 1403 01:35:26,840 --> 01:35:29,360 Speaker 1: phrase it stays with me. The secret, silent miracle of 1404 01:35:29,479 --> 01:35:32,160 Speaker 1: human progress and how we've actually been advancing on this 1405 01:35:32,240 --> 01:35:36,960 Speaker 1: score is I think very very important. There's an as 1406 01:35:36,960 --> 01:35:40,200 Speaker 1: the last one, a category of people, whether in books 1407 01:35:40,280 --> 01:35:43,840 Speaker 1: or podcasts or blogs or whatever, who we found really 1408 01:35:43,880 --> 01:35:47,719 Speaker 1: interesting in recent times, which is, if you like left 1409 01:35:47,760 --> 01:35:51,559 Speaker 1: wing commentators on what's going on in the world and 1410 01:35:51,600 --> 01:35:54,880 Speaker 1: going on in China and Russia, are people like Adam 1411 01:35:54,960 --> 01:35:58,200 Speaker 1: two Sa Branko Milanovich. I think they bring the depth 1412 01:35:58,280 --> 01:36:01,479 Speaker 1: of commentary, a debt of understanding to some of the 1413 01:36:01,520 --> 01:36:03,760 Speaker 1: issues that you know, I think we could all do 1414 01:36:03,920 --> 01:36:07,720 Speaker 1: with more of and a deeply interesting people. But if 1415 01:36:07,760 --> 01:36:10,479 Speaker 1: you ask me what I've been reading, um, you know, 1416 01:36:10,640 --> 01:36:13,960 Speaker 1: in a way it's connected with all this. Um. I 1417 01:36:14,040 --> 01:36:16,519 Speaker 1: was mentioning that we've been trying to go to various 1418 01:36:16,560 --> 01:36:18,759 Speaker 1: citiespend time, and we were we were about to spend 1419 01:36:18,800 --> 01:36:23,160 Speaker 1: time in Paris and I've become rather addicted to the 1420 01:36:23,200 --> 01:36:28,559 Speaker 1: works of nineteenth century French novelists, particularly a Zola, And 1421 01:36:28,760 --> 01:36:33,439 Speaker 1: you know, I think they make our only seem so pathetic. Um. 1422 01:36:33,560 --> 01:36:37,960 Speaker 1: You know, the dramas, the tragedies, the triumphs were so 1423 01:36:38,080 --> 01:36:42,040 Speaker 1: much more ethical than our own. Um. And I think that, 1424 01:36:42,120 --> 01:36:44,800 Speaker 1: you know, I find it fascinated a contrast with the 1425 01:36:44,880 --> 01:36:47,639 Speaker 1: UK novelists of the same era, who you know, everything 1426 01:36:47,680 --> 01:36:50,720 Speaker 1: always ends up happily, or they joined the middle classes, 1427 01:36:50,840 --> 01:36:54,479 Speaker 1: or you know, it's just minor social inconveniences. Um. And 1428 01:36:54,520 --> 01:36:57,680 Speaker 1: you know, I'd love to see something, you know, the 1429 01:36:58,080 --> 01:37:03,960 Speaker 1: novel of America or Britain today being written. I don't 1430 01:37:04,000 --> 01:37:06,720 Speaker 1: see much of that. You know, we could do with 1431 01:37:06,760 --> 01:37:10,280 Speaker 1: the tom Wolf for gour Vidal. These days there are 1432 01:37:10,400 --> 01:37:13,360 Speaker 1: going back to the nineteenth century versions of it. So 1433 01:37:13,800 --> 01:37:18,120 Speaker 1: when you you're referring to Amila Emily Zola, things like 1434 01:37:18,200 --> 01:37:22,520 Speaker 1: The Masterpiece or The Ladies Paradise or A Belly of Paradise, 1435 01:37:23,160 --> 01:37:26,880 Speaker 1: A Belly of Paris. Yeah, the Ladies Paradise is I 1436 01:37:26,880 --> 01:37:30,000 Speaker 1: think a fantastic example of that. You know, it is 1437 01:37:30,040 --> 01:37:33,439 Speaker 1: about creating the Amazon of its day, and I think 1438 01:37:33,439 --> 01:37:36,479 Speaker 1: it's ability to tell the story is wondrous on this, 1439 01:37:36,760 --> 01:37:39,880 Speaker 1: but then at the other end you have something like, uh, 1440 01:37:40,760 --> 01:37:44,599 Speaker 1: the kill or which is you know about the deep 1441 01:37:44,640 --> 01:37:49,480 Speaker 1: tragedies involved in this and germaniw which you know how 1442 01:37:49,640 --> 01:37:52,240 Speaker 1: terrible the existency was? And you know, I think this 1443 01:37:52,400 --> 01:37:55,040 Speaker 1: telling of a story of the whole society is something 1444 01:37:55,080 --> 01:37:57,720 Speaker 1: that are novels today lack, and I'm not quite sure 1445 01:37:57,760 --> 01:38:02,880 Speaker 1: that they need to lack. Huh really quite quite quite fascinating. Uh, 1446 01:38:02,960 --> 01:38:05,559 Speaker 1: we're down to our last two questions. What sort of 1447 01:38:05,600 --> 01:38:08,679 Speaker 1: advice would you give to a recent college grad who 1448 01:38:08,760 --> 01:38:13,960 Speaker 1: was interested in a career in fund management? Uh, it's 1449 01:38:14,000 --> 01:38:18,600 Speaker 1: precisely that I think is absolutely essential that they're interested 1450 01:38:18,880 --> 01:38:22,160 Speaker 1: in the task, the curiosity, and it's not about the 1451 01:38:22,240 --> 01:38:25,400 Speaker 1: financial rewards. I've seen far too many people are doing 1452 01:38:25,439 --> 01:38:29,320 Speaker 1: it and get stuck at it because it's a good job. 1453 01:38:29,439 --> 01:38:32,439 Speaker 1: In inverted comments that it provides rewards and status of 1454 01:38:32,520 --> 01:38:35,599 Speaker 1: the like, you have to be obsessed about the fund 1455 01:38:35,600 --> 01:38:38,080 Speaker 1: management path of it. So I'd asked them to examine 1456 01:38:38,120 --> 01:38:40,840 Speaker 1: their conscience about where they were, not give them five 1457 01:38:40,920 --> 01:38:44,799 Speaker 1: years to decide. That really interesting and our final question, 1458 01:38:45,320 --> 01:38:47,839 Speaker 1: what do you know about the world of investing today 1459 01:38:47,880 --> 01:38:50,719 Speaker 1: that you wish you knew forty or so years ago 1460 01:38:50,760 --> 01:38:58,320 Speaker 1: when you first got started in the field. It's about extremes, um. 1461 01:38:58,360 --> 01:39:02,000 Speaker 1: And you know the a conventional will not work over 1462 01:39:02,040 --> 01:39:05,240 Speaker 1: the course of time. UM. And you know, I think, 1463 01:39:05,439 --> 01:39:10,000 Speaker 1: as we've discussed very in depth, you sometimes don't know 1464 01:39:10,040 --> 01:39:12,320 Speaker 1: what the extreme will be. You've got to have that 1465 01:39:12,439 --> 01:39:16,320 Speaker 1: consciousness that it is about the extreme, either about information 1466 01:39:16,960 --> 01:39:20,720 Speaker 1: or about companies or about individual teams. And I think 1467 01:39:20,800 --> 01:39:24,400 Speaker 1: it's it's embracing those extremes that it's central. And I 1468 01:39:24,439 --> 01:39:27,800 Speaker 1: really didn't realize that at all when I started. Huh, 1469 01:39:28,080 --> 01:39:32,640 Speaker 1: really quite fascinating. We have been speaking with James Anderson, 1470 01:39:32,760 --> 01:39:36,759 Speaker 1: partner at Bailey Gifford soon to be departing co manager 1471 01:39:36,840 --> 01:39:42,040 Speaker 1: of the Scottage Mortgage Investment Trust. If you enjoy this conversation, 1472 01:39:42,080 --> 01:39:44,360 Speaker 1: well be sure and look at any of our previous 1473 01:39:44,479 --> 01:39:50,200 Speaker 1: nearly four hundred prior discussions. You can find those at iTunes, Spotify, 1474 01:39:50,439 --> 01:39:55,080 Speaker 1: wherever you find your favorite podcasts. We love your comments, 1475 01:39:55,080 --> 01:39:58,719 Speaker 1: feedback in suggestions right to us at m IB podcast 1476 01:39:58,800 --> 01:40:01,920 Speaker 1: at Bloomberg dot net. Sign up for my daily reading 1477 01:40:01,960 --> 01:40:05,000 Speaker 1: list at Ritoltz dot com. Follow me on Twitter at Ridolts. 1478 01:40:05,560 --> 01:40:07,479 Speaker 1: I would be remiss if I did not thank the 1479 01:40:07,520 --> 01:40:11,719 Speaker 1: crack team that helps you put these conversations together each week. 1480 01:40:12,360 --> 01:40:17,960 Speaker 1: Jared James is my audio engineer. Atika Valbrund is our 1481 01:40:18,080 --> 01:40:23,200 Speaker 1: project manager. Michael Batnick is my head of research. Harris 1482 01:40:23,280 --> 01:40:28,120 Speaker 1: Woald is my producer. I'm Barry Ridolts. You've been listening 1483 01:40:28,120 --> 01:40:30,759 Speaker 1: to Masters in Business on Bloomberg Radio