WEBVTT - Where Money Goes to Die 0:00:00.400 --> 0:00:03.960 Strap on your parachute. It's time for What Goes Up 0:00:04.120 --> 0:00:13.840 with Sarah Ponzick and Mike Reagan. Hello and welcome to 0:00:13.880 --> 0:00:17.800 What Goes Up, a Bloomberg weekly markets podcast. I'm Sarah Ponza, 0:00:17.880 --> 0:00:20.840 a reporter on the Cross Asset team, and up Mike Reagan, 0:00:21.000 --> 0:00:24.120 a senior editor at Bloomberg. This week on the show, 0:00:24.480 --> 0:00:27.440 news of a vaccine has ignited a rotation in markets. 0:00:27.440 --> 0:00:30.760 For evidence, some stats, as of midday Tuesday, the SMP 0:00:31.440 --> 0:00:35.120 energy sector was already up thirty seven percent in November, 0:00:35.360 --> 0:00:37.879 which would be the best month on record. Financials are 0:00:37.880 --> 0:00:39.640 in the midst of their best month since two thousand 0:00:39.640 --> 0:00:42.159 and nine. The Russell two thousand, or small caps is 0:00:42.159 --> 0:00:44.239 also on track for its best month in history. Up 0:00:45.440 --> 0:00:48.320 but still. Our guest says the news of a vaccine 0:00:48.400 --> 0:00:51.880 does not change anything about the types of companies he owns. 0:00:52.159 --> 0:00:55.200 The fund he manages is in the nine percentile year 0:00:55.240 --> 0:00:58.240 to date according to Bloomberg data and over the last year, 0:00:58.520 --> 0:01:01.639 three years, and five years. So he'll explain why, and 0:01:01.680 --> 0:01:04.040 as always, we will close out the episode with our 0:01:04.120 --> 0:01:07.119 tradition or gimmick, if you would prefer to call it, 0:01:07.240 --> 0:01:10.600 the craziest thing I saw in markets this week. Uh, sorry, 0:01:10.640 --> 0:01:13.520 you came prepared. I trust I did come prepared. I'd argue, though, 0:01:13.560 --> 0:01:15.600 it's not a gimmick, Mike, it's a tradition. This is 0:01:15.640 --> 0:01:20.640 a real, true tradition tradition, just like mashed potatoes and 0:01:20.720 --> 0:01:24.000 turkey on exactly are you a turkey? Something tells me 0:01:24.040 --> 0:01:26.640 you're like a vegetarian or something. No, Thanksgiving is my 0:01:26.640 --> 0:01:29.000 favorite meal of the air, Mike. I do have a 0:01:29.080 --> 0:01:30.760 vegan brother, which is maybe why you think that, But 0:01:30.800 --> 0:01:34.880 no Thanksgiving. I could eat Thanksgiving dinner every single night 0:01:35.080 --> 0:01:37.240 of the year. I could see you. I have a 0:01:37.360 --> 0:01:40.399 daughter who is a newly minted vegetarian. So it's a 0:01:40.400 --> 0:01:43.440 little challenging this year because I noticed that even my 0:01:43.560 --> 0:01:47.039 vegetable dishes have meat in them, like the bacon bacon. 0:01:48.440 --> 0:01:51.120 It's a tough one. But anyway, as you said, this 0:01:51.160 --> 0:01:56.160 week's guest really uh phenomenal performance from the Investco Global 0:01:56.280 --> 0:02:00.440 Focused Strategy Fund. As you mentioned, Sarah up pretty six, 0:02:00.520 --> 0:02:02.920 closing it on a fifty percent year today gain for 0:02:02.960 --> 0:02:07.880 that fund, top one percentile of similar funds. His name 0:02:08.040 --> 0:02:11.640 is Randy Dishman. Randy, welcome to the show. Thanks glad 0:02:11.680 --> 0:02:14.200 to be here, So, Randy, I you know, I'm looking 0:02:14.240 --> 0:02:16.160 at the holdings of your fund and a lot of 0:02:16.200 --> 0:02:19.160 sort of Internet big tech. I think what this year 0:02:19.600 --> 0:02:22.120 sort of got shorthanded is some of the stay at 0:02:22.120 --> 0:02:24.280 home names, which I know is not what you had 0:02:24.280 --> 0:02:26.240 in mind when you you probably picked them out. But 0:02:27.080 --> 0:02:30.800 talk to us about this whole buzz in the markets, 0:02:30.800 --> 0:02:34.080 about a rotation out of sort of the big growth, 0:02:34.520 --> 0:02:36.920 the real high flying stocks that we've seen over the 0:02:36.960 --> 0:02:39.360 last few years, the facebooks and Googles of the world, 0:02:39.360 --> 0:02:43.440 and into more value oriented stocks and small caps. Is 0:02:43.440 --> 0:02:45.480 this keeping you up at night, this rotation or do 0:02:45.320 --> 0:02:47.600 you do you think it's just a flash in the pen. No, 0:02:47.760 --> 0:02:50.079 it's not keeping me up at night. I mean, I've 0:02:50.120 --> 0:02:54.200 been something in Oppenheimer Now invest Go for twenty years 0:02:54.240 --> 0:02:56.160 and it's not the first time I've seen this kind 0:02:56.200 --> 0:03:00.720 of thing. But you know, everyone's getting excited about maybe 0:03:00.760 --> 0:03:03.280 the end of COVID because of a vaccine. But the 0:03:03.320 --> 0:03:06.720 truth is the economy has been substantially better than most 0:03:06.720 --> 0:03:10.680 people realize. And even if we do get back out 0:03:10.720 --> 0:03:13.320 of our houses, which seems kind of strange right now, 0:03:14.320 --> 0:03:18.160 it's not going to change the structural trends that were started, 0:03:18.440 --> 0:03:20.919 the ones that I've been looking at years ago. They've 0:03:20.960 --> 0:03:24.440 got really nothing to do with COVID. And we'll continue 0:03:24.639 --> 0:03:27.480 long after we stopped talking about COVID, Brandy, I want 0:03:27.480 --> 0:03:29.080 to circle back a little bit. You spoke with one 0:03:29.080 --> 0:03:31.720 of my colleagues, Bill Donna Hiary because also Mike and I, 0:03:32.200 --> 0:03:34.360 she's a crazy Things correspondent we like to color on 0:03:34.400 --> 0:03:36.600 this show. But you spoke earlier this year, and I 0:03:36.600 --> 0:03:38.880 wanted to read a quote from the story that she 0:03:38.880 --> 0:03:42.040 wrote from your conversation, and you said, I've heard bubble 0:03:42.160 --> 0:03:44.800 used to describe it. That's laughably incorrect. I've heard popular 0:03:44.840 --> 0:03:47.640 momentum trade laughably incorrect. And then you went on to say, 0:03:47.800 --> 0:03:49.960 people look at tech and they see what they think 0:03:50.000 --> 0:03:52.920 are high valuations, but they don't fully understand what's going 0:03:52.960 --> 0:03:55.880 on structurally. Can you walk us through what that structural 0:03:56.000 --> 0:03:59.400 change actually is and how that maybe has been affected 0:03:59.600 --> 0:04:02.840 or or unaffected um from what we've seen and experience 0:04:02.880 --> 0:04:06.960 in ding COVID. Sure, So you know, I look at 0:04:07.000 --> 0:04:10.080 the world and try to figure out what's changing structurally 0:04:10.160 --> 0:04:12.840 and and the difference. I mean, to be a good investor, 0:04:12.960 --> 0:04:15.880 you really have to understand the difference between cyclical and 0:04:15.920 --> 0:04:19.800 structural because people talk about growth and value all the 0:04:19.880 --> 0:04:23.560 time and that's the current narrative. But you know, if 0:04:23.600 --> 0:04:27.839 the underlying phenomenon is structural, structural doesn't separate the world 0:04:27.839 --> 0:04:31.440 into growth and value. That's what cyclical does. But if 0:04:31.560 --> 0:04:34.960 if the underlying phenomenon is structural, structural separates the world 0:04:35.000 --> 0:04:38.600 into winners and losers, and losers go bankrupt. You know, 0:04:38.760 --> 0:04:43.200 for instance, e commerce, the rise of e commerce and 0:04:43.680 --> 0:04:46.960 the move to digital is not cyclical. It's not like 0:04:47.000 --> 0:04:50.119 you and I are gonna use Amazon for three years 0:04:50.120 --> 0:04:52.600 and to go, hey, you know what, that was pretty cool, 0:04:52.839 --> 0:04:55.240 Let's go back to the store for the next three years. 0:04:55.880 --> 0:05:00.800 Cyclical is you know, I wear blue things my wardrobe 0:05:00.839 --> 0:05:03.640 this year and orange things next year. I mean, we 0:05:03.720 --> 0:05:06.599 all know the difference, but as an investor, you have 0:05:06.720 --> 0:05:10.599 to really look to see what that difference is. You know, 0:05:10.760 --> 0:05:14.280 you can't really have a discussion about valuation without an 0:05:14.360 --> 0:05:18.359 understanding of what's going on. And the fundamentals of the 0:05:18.400 --> 0:05:22.240 move to the cloud and the fundamentals of e commerce 0:05:22.279 --> 0:05:26.760 are off the chart phenomenal more than justify the valuation. 0:05:27.040 --> 0:05:30.320 And when these growth rates continue for another couple of years, 0:05:30.800 --> 0:05:34.080 the valuation gets swamped. I would say most of what 0:05:34.240 --> 0:05:38.560 I owned today is fairly attractive on a two and 0:05:38.640 --> 0:05:41.440 three year basis, which is all I care about. You know, ready, 0:05:41.520 --> 0:05:44.240 Is it possible though, that the sort of trends we've 0:05:44.279 --> 0:05:48.000 seen this year have pulled forward some of the returns 0:05:48.279 --> 0:05:51.360 of the sort of internet and growth stocks, and that 0:05:51.400 --> 0:05:55.080 they could be sort of infra sort of middling weaker 0:05:55.120 --> 0:05:58.400 returns in one or even the rest of it this year. 0:05:58.440 --> 0:06:01.200 And and um, you know, I don't know whether you 0:06:01.240 --> 0:06:03.039 agree with that or not, But if so, would that 0:06:03.680 --> 0:06:07.320 sort of cause you to to adjust your portfolio at all? 0:06:07.400 --> 0:06:10.200 Or you just kind of the guy that would buy 0:06:10.200 --> 0:06:12.760 and hold and sort of just bear, you know, bear 0:06:12.839 --> 0:06:16.520 through those those weaker quarters if they if they are 0:06:16.520 --> 0:06:19.599 in store for us. Well, you use the word growth stock. 0:06:19.640 --> 0:06:22.120 I believe you didn't say tech. So you asked me 0:06:22.120 --> 0:06:29.040 about growth stocks? Correct, Well, maybe answer growth and for tech? Okay, sure, 0:06:29.200 --> 0:06:31.960 So so the people that know me know that in general, 0:06:32.160 --> 0:06:35.480 I hate labels like that. You know, a growth stock 0:06:35.640 --> 0:06:39.479 is what something that has a high pe something that's growing. 0:06:39.800 --> 0:06:42.880 I don't really know, you know, if you're talking about 0:06:42.880 --> 0:06:46.560 morning Star, you're talking about very quantitative metrics on what 0:06:46.600 --> 0:06:48.920 a growth stock is. If you're talking about what most 0:06:48.920 --> 0:06:52.520 people think about, they're thinking about high growth. You know, 0:06:52.560 --> 0:06:56.200 I don't buy anything because of the label. I buy 0:06:56.279 --> 0:06:59.720 things that you know. Let me put it this way, 0:07:00.440 --> 0:07:04.000 Every great investment ever made in history, regardless of what 0:07:04.120 --> 0:07:08.720 you called it, growth value, large, small, domestic, international, started 0:07:09.160 --> 0:07:12.360 with one thing in common, buying something for less than 0:07:12.400 --> 0:07:16.560 it's worth. And so that's all that matters. You pay something, 0:07:16.640 --> 0:07:19.880 you get something in return. And so I look at 0:07:19.920 --> 0:07:24.960 companies and figure out what the fundamentals warrant. And you know, 0:07:25.160 --> 0:07:29.040 to your point, perhaps some demand has been pulled forward 0:07:29.120 --> 0:07:32.200 in certain areas. But when I was talking to two 0:07:32.280 --> 0:07:35.280 c e o s about the cloud six months ago, 0:07:36.200 --> 0:07:38.800 eight months ago, they were talking about it as well, 0:07:38.880 --> 0:07:41.240 it's a nice to have, but it's not a must have, 0:07:41.920 --> 0:07:44.080 and so we'll get there over the next five or 0:07:44.160 --> 0:07:46.880 seven years. When I was talking to c e O 0:07:47.040 --> 0:07:50.960 s in the depths of COVID, their response was quite different. 0:07:51.400 --> 0:07:54.200 It was if I don't get to the cloud tomorrow, 0:07:54.320 --> 0:07:57.520 I don't have a business in a year. And so 0:07:57.920 --> 0:08:01.520 it pulled forward some demand. But this is structural, it's 0:08:01.520 --> 0:08:05.560 not cyclical. It's going to continue. It was happening before 0:08:05.600 --> 0:08:09.240 COVID started, it was happening during COVID, and it's going 0:08:09.280 --> 0:08:11.960 to continue to happen after COVID. Those are the kinds 0:08:12.000 --> 0:08:15.320 of investments I look for. So with that said, has 0:08:16.360 --> 0:08:18.520 and everything we've been through this year, I mean, granted 0:08:18.560 --> 0:08:22.000 not over yet. Has this at all changed your view 0:08:22.160 --> 0:08:25.960 on companies that have the most leeway for structural growth 0:08:25.960 --> 0:08:29.320 going forwards? Have you made tweaks to your portfolios? Is 0:08:29.360 --> 0:08:33.000 there something that you've seen as a true change at all, 0:08:33.040 --> 0:08:36.319 whether that means adding um new companies or industries and 0:08:36.600 --> 0:08:40.120 detracting from others or the opposite, anything at all. In 0:08:40.160 --> 0:08:42.920 a lot of ways, not really, you know, I was 0:08:43.440 --> 0:08:45.760 one part of being a good investor is to be 0:08:45.800 --> 0:08:49.920 fully prepared to act with conviction when the market makes mistakes. 0:08:50.600 --> 0:08:53.440 And so much of this job is you know, most 0:08:53.440 --> 0:08:55.319 people that have been doing this a long time and 0:08:55.679 --> 0:08:59.200 doing it well read five six hours a day, over 0:08:59.679 --> 0:09:03.440 over decades, and so you know you're going to be 0:09:03.520 --> 0:09:06.360 prepared when the market makes mistakes. Back in March, the 0:09:06.440 --> 0:09:09.560 market made some fairly large mistakes, some of the biggest 0:09:09.559 --> 0:09:12.480 I've seen in my career, and I was able to 0:09:12.520 --> 0:09:15.640 take advantage of those. In many cases it was things 0:09:15.679 --> 0:09:18.760 that I already owned. In a few cases, I was 0:09:18.840 --> 0:09:21.040 able to add some companies that I had wanted to 0:09:21.080 --> 0:09:24.600 own at a better price for a long time, and 0:09:24.640 --> 0:09:28.480 the market mistakenly threw everything out at once, and I 0:09:28.559 --> 0:09:30.880 was able to do that. And so I haven't really 0:09:31.000 --> 0:09:35.080 changed much in terms of the names and the composition 0:09:35.120 --> 0:09:38.040 of the fund, which is not not unusual for me 0:09:38.080 --> 0:09:41.480 in times of stress. Though I was very active in 0:09:41.840 --> 0:10:01.280 adding to the opportunities that I saw ready. I was 0:10:01.320 --> 0:10:04.199 reading one of your blog posts and you sort of 0:10:04.280 --> 0:10:06.920 laid out some of the main themes that you've talked about, 0:10:06.920 --> 0:10:09.680 you know, the move to the cloud, the rise of 0:10:09.679 --> 0:10:14.160 e commerce, diagnostics and research. One ball point you haven't here. 0:10:14.200 --> 0:10:16.640 I found really interesting and also it cracked me up 0:10:16.640 --> 0:10:17.920 a little bit. Let me just read a little bit 0:10:17.960 --> 0:10:21.240 from this post. You're talking about the electronification of money, 0:10:21.720 --> 0:10:23.800 and you say, but you're right basically that you expect 0:10:23.880 --> 0:10:26.600 that to continue. And you say, why ever, look at 0:10:26.600 --> 0:10:32.200 money under a microscope, don't it's discussing I guess in 0:10:32.240 --> 0:10:35.920 the in a in a newly germ germophobic world, that 0:10:35.920 --> 0:10:38.679 that that's a trend to accelerate. But yeah, so I'm 0:10:38.720 --> 0:10:41.560 looking at it through some of the big holdings, the 0:10:41.559 --> 0:10:43.839 top holdings in the focus fund. I see PayPal. That's 0:10:43.920 --> 0:10:46.839 kind of an obvious expression of that theme. Is there 0:10:46.840 --> 0:10:49.160 anything else that we're not saying? You know, I think 0:10:49.200 --> 0:10:51.080 I'm only looking at the top holdings though, But are 0:10:51.120 --> 0:10:54.560 there other sort of holdings that that expressed that theme 0:10:54.600 --> 0:10:56.640 of the electronification of money? And if and if you 0:10:56.640 --> 0:10:58.600 allow me to turn this into a three part question, 0:10:59.440 --> 0:11:05.319 he usually asks amount taking it easy? Does cryptocurrencies play 0:11:05.520 --> 0:11:09.800 any role in that thinking? And given that theme is 0:11:09.800 --> 0:11:11.520 is one of your top teams? I'm I was kind 0:11:11.559 --> 0:11:14.200 of surprised not to see Square in the portfolio, although 0:11:14.240 --> 0:11:16.400 maybe it's down lower in the in the lower waitings. 0:11:16.440 --> 0:11:18.880 But if it's not in the portfolio, something about square 0:11:18.880 --> 0:11:21.559 you don't like? And again about the crypto, what's what 0:11:21.640 --> 0:11:24.520 you're thinking on crypto? Okay? So, so when it comes 0:11:24.559 --> 0:11:28.360 to the electronification of money, I don't think people see 0:11:28.400 --> 0:11:31.240 it for what it is. One. It started in the 0:11:31.320 --> 0:11:35.400 nineteen fifties with the rise of the first credit cards, 0:11:35.960 --> 0:11:38.959 and back then, to get a credit card meant basically 0:11:39.000 --> 0:11:40.719 you didn't need one, you had to be wealthy to 0:11:40.760 --> 0:11:43.680 get a credit card. Uh, and it was a true 0:11:43.720 --> 0:11:47.160 convenience right. And then in the eighties, about the time 0:11:47.200 --> 0:11:49.320 I was coming out of college, you could get a 0:11:49.320 --> 0:11:52.760 credit card, but socially, what it implied was you couldn't 0:11:52.760 --> 0:11:55.240 afford what you were buying if you if you used it. 0:11:56.160 --> 0:11:59.840 And so through my whole life, I've watched the social 0:12:00.000 --> 0:12:03.480 attitudes change around a credit card and the late nineties 0:12:03.520 --> 0:12:07.360 and early two thousands, and I think, you know you 0:12:07.400 --> 0:12:10.800 can identify with this is you would use a credit card. 0:12:10.880 --> 0:12:14.200 There was no social stigma around you couldn't afford what 0:12:14.240 --> 0:12:16.280 you were buying, but you still only used it for 0:12:16.360 --> 0:12:21.480 large purchases. And nowadays the social attitude is it's back 0:12:21.480 --> 0:12:24.800 to being a true convenience. People will now go into 0:12:25.040 --> 0:12:27.719 a convenience store by a bottle of water and a 0:12:27.760 --> 0:12:29.960 back of potato chips on a credit card and think 0:12:30.040 --> 0:12:32.120 nothing of it. But ten years ago you wouldn't have 0:12:32.160 --> 0:12:37.040 done that. And so it's become a convenience item in 0:12:37.080 --> 0:12:40.640 your life. You don't have to carry money. Covide comes 0:12:40.679 --> 0:12:44.760 along and just reminds you that money is one of 0:12:44.800 --> 0:12:47.440 the is one of the biggest common touch points in 0:12:47.520 --> 0:12:50.440 your life. Money is filthy. We just got lucky on 0:12:50.480 --> 0:12:53.760 that one. But social attitudes around credit cards have been 0:12:53.840 --> 0:12:58.040 changing literally for sixty years, and we're still only about 0:12:58.760 --> 0:13:02.480 penetrated globally in terms of all purchases. You asked about 0:13:02.640 --> 0:13:04.760 you know, so I own MasterCard as part of that, 0:13:04.840 --> 0:13:07.240 and I have for quite a while. But you asked 0:13:07.240 --> 0:13:11.880 about crypto. I've looked at crypto, and for the life 0:13:11.920 --> 0:13:14.800 of me, I can't figure out what purposes What is 0:13:14.840 --> 0:13:17.120 it that you want to do with crypto that you 0:13:17.200 --> 0:13:21.000 can't already do. The one thing I can do with 0:13:21.080 --> 0:13:26.520 crypto that I can't already do is hide, And you know, 0:13:27.080 --> 0:13:30.280 hiding suggests something to me that I might not want 0:13:30.280 --> 0:13:33.240 to be part of as an investor. I'll leave it 0:13:33.280 --> 0:13:36.800 at that. And you asked about Square as well. Square. 0:13:36.920 --> 0:13:40.120 I looked at Square. I knew Square had a great product. 0:13:40.200 --> 0:13:43.000 This is years ago. I knew Square had a nice 0:13:43.040 --> 0:13:46.160 business model. I knew it would take the long tail, 0:13:46.800 --> 0:13:49.400 and I made a mistake in not buying it. I 0:13:49.400 --> 0:13:52.440 thought the valuation was a bit rich. I thought there 0:13:52.520 --> 0:13:55.559 was little technology in its platform that it could hold 0:13:55.600 --> 0:13:59.560 onto from a from the standpoint of advantage, And turns 0:13:59.600 --> 0:14:02.720 out the first mover advantage was enough and so I 0:14:02.800 --> 0:14:05.080 missed it. Sorry. I think he's the first one to 0:14:05.160 --> 0:14:07.959 answer every part of a multi pronged question like that. 0:14:07.960 --> 0:14:09.800 That was pretty good. I think I might agree with 0:14:09.840 --> 0:14:12.840 that too. Congratulations, you deserve a pad on the back. 0:14:13.280 --> 0:14:15.080 I want to I want to run through a couple 0:14:15.160 --> 0:14:17.439 more of your top holdings though, Randy, and then kind 0:14:17.440 --> 0:14:19.400 of dig a little bit deeper into this idea of 0:14:19.400 --> 0:14:22.400 the rotation that a lot of sell side strategists are 0:14:22.440 --> 0:14:23.840 at least calling for us. So if I look at 0:14:23.880 --> 0:14:28.320 some of your top holdings on all your funds fact sheet, Facebook, Twilio, Salesforce, 0:14:28.360 --> 0:14:32.840 Service now, CrowdStrike, i'd say usually when I get and 0:14:32.880 --> 0:14:35.800 it's been often lately, sell side strategist notes are just 0:14:35.960 --> 0:14:38.880 filled with this idea of a rotation. I won't even 0:14:39.000 --> 0:14:43.520 use style or I won't use these descriptions or boxes, 0:14:43.800 --> 0:14:46.560 but just this idea that companies that have performed very 0:14:46.560 --> 0:14:48.720 well recently over the last couple of years, they're going 0:14:48.760 --> 0:14:51.680 to start underperforming areas of the market that just haven't 0:14:51.680 --> 0:14:56.440 performed quite as well. What is it, though, about the 0:14:56.480 --> 0:14:58.560 way that you see the world in a in a 0:14:58.600 --> 0:15:02.440 structural way that you maybe don't believe that a bank 0:15:02.920 --> 0:15:06.720 or an energy company is all of a sudden going 0:15:06.760 --> 0:15:11.160 to truly, for a long term period, start to outrun 0:15:11.240 --> 0:15:15.160 say these five companies that I just listed, Well, you 0:15:15.200 --> 0:15:18.840 know the boxes that you're that you're not talking about 0:15:18.920 --> 0:15:23.120 but talking about. I remember stepping up in front of 0:15:23.120 --> 0:15:26.320 a room full of people twelve thirteen years ago when 0:15:26.360 --> 0:15:29.560 I first launched the fund, and I put those boxes 0:15:29.640 --> 0:15:32.280 up and I said, this is where money goes to die. 0:15:33.080 --> 0:15:37.680 And I stand by where I said thirteen years ago. Um, 0:15:37.800 --> 0:15:41.120 the world doesn't work that way, and allocating that way 0:15:41.160 --> 0:15:43.200 has never made any sense to me. It's a great 0:15:43.200 --> 0:15:46.840 way to own too much, too many things, and to 0:15:47.480 --> 0:15:52.760 lock in under performance. But but anyway, you know, cyclicals 0:15:52.880 --> 0:15:56.240 will rebound. I mean, you're already seeing it now. But 0:15:56.320 --> 0:16:00.000 that doesn't change the fundamentals. I'm talking about the different 0:16:00.280 --> 0:16:07.280 between price action and fundamentals. It's not surprising to me 0:16:07.400 --> 0:16:10.840 that some of these things are rebounding because many of 0:16:10.880 --> 0:16:13.560 them were priced for bankruptcy. But at the end of 0:16:13.560 --> 0:16:18.520 the day, you know, take energy. Energy is going against 0:16:18.560 --> 0:16:20.920 the trend. I mean, there's no doubt in my mind 0:16:21.000 --> 0:16:23.920 that electric cars are going to continue to take percent 0:16:23.960 --> 0:16:27.640 of the fleet. Transportation is twenty plus percent of the 0:16:27.720 --> 0:16:32.520 energy uses in this country. GDP continues to be less 0:16:32.600 --> 0:16:36.240 energy intensive globally. It's not a place I would want 0:16:36.280 --> 0:16:39.800 to invest money under the best of circumstances. This is 0:16:39.800 --> 0:16:44.640 certainly not the best of circumstances. Might you get a bounce, Sure, 0:16:44.880 --> 0:16:48.960 you're already getting it, But you know, that's a trading 0:16:49.040 --> 0:16:53.040 kind of mindset that I think makes it very difficult 0:16:53.080 --> 0:16:56.840 to be a really great long term investor. Some of 0:16:56.880 --> 0:17:00.920 the other things financials financials to me, the money center banks, 0:17:01.040 --> 0:17:04.320 particularly things like JP Morgan c Group, Bank of America, 0:17:04.400 --> 0:17:08.560 Wells Fargo, I think Post DoD Frank Their balance sheets 0:17:08.560 --> 0:17:12.560 are so gold plated that it's very difficult to lose 0:17:12.640 --> 0:17:17.000 money in those in those banks at these prices. I'm 0:17:17.040 --> 0:17:19.719 not saying it won't be dead money for a few years, 0:17:20.200 --> 0:17:23.719 but I find that situation interesting as an investor, and 0:17:23.760 --> 0:17:26.760 so I'll set those off to the side. Most of 0:17:26.800 --> 0:17:31.399 the other cyclical value type rotation things that you're talking about, 0:17:32.160 --> 0:17:35.080 I think are a waste of time. I think you 0:17:35.160 --> 0:17:37.879 might get a good short term trade in those things, 0:17:38.320 --> 0:17:41.520 but short term trading is a very difficult way to 0:17:41.560 --> 0:17:46.240 make real money, and whatever rotation is happening is definitely 0:17:46.240 --> 0:17:49.160 not changing the trends that I'm invested in right now. 0:17:51.840 --> 0:18:11.080 M You know, Renny, one thing I wanted to ask you. 0:18:11.359 --> 0:18:14.000 The Global Focus Fund, as its name implies, it is 0:18:14.000 --> 0:18:17.960 a global fund, pretty decent allocation to China about ten. 0:18:19.280 --> 0:18:22.240 I'm curious how all of the tensions between the US 0:18:22.480 --> 0:18:26.360 and China over the recent years if they affected you're 0:18:26.440 --> 0:18:28.639 you're buying it all? You know, were you were you 0:18:28.720 --> 0:18:32.840 restrained on sort of looking at Chinese stocks because of that? 0:18:33.040 --> 0:18:35.840 Were you know, under a Biden administration, would you be 0:18:36.600 --> 0:18:39.080 inclined to look a little harder in China? Or does it? 0:18:39.200 --> 0:18:41.440 Does it not really matter that the whole trade war 0:18:41.480 --> 0:18:44.800 and geopolitical situation to you? I appreciate that question. I 0:18:44.880 --> 0:18:47.560 get that question a lot, and my short answer would 0:18:47.600 --> 0:18:49.880 be total waste of time to even think about it. 0:18:50.800 --> 0:18:53.840 I've been through many elections as an investor, I've been 0:18:53.880 --> 0:18:58.359 through many pretty severe macro phenomenon and I've not yet 0:18:58.400 --> 0:19:02.399 seen the one that mattered to long term outcomes. China, 0:19:02.480 --> 0:19:08.000 to me, I recognized fifteen years ago is a phenomenon 0:19:08.200 --> 0:19:11.520 that I'm unlikely to see again in my lifetime. A 0:19:11.560 --> 0:19:16.439 country at that scale coming out into the modern world 0:19:16.600 --> 0:19:20.800 from emerging two developed. There are other countries that will 0:19:20.840 --> 0:19:23.560 do that. There aren't any other countries left that will 0:19:23.600 --> 0:19:26.960 do it at that scale. And you know the advantage 0:19:27.400 --> 0:19:30.919 that China had, you think about something like Amazon. For 0:19:31.040 --> 0:19:36.680 Amazon to become Amazon, it had competitors, thousands of competitors 0:19:36.720 --> 0:19:39.679 that had a one year head start. They had the 0:19:39.720 --> 0:19:44.280 best real estate, They had four generations of customer relations 0:19:44.320 --> 0:19:47.840 that they could use against you. Amazon had to bankrupt 0:19:48.000 --> 0:19:53.320 twenty thousand different companies just to become Amazon. Ali Baba 0:19:53.440 --> 0:19:56.840 was competing with nothing Ali Baba. You know, there was 0:19:56.880 --> 0:20:00.760 no organized retail in China prior, and so Ali Baba 0:20:00.840 --> 0:20:04.800 could become Ali Baba quite quickly. I knew that China 0:20:04.880 --> 0:20:08.080 would happen faster than the analogs people look to in 0:20:08.119 --> 0:20:11.600 the United States, and so it was just a matter 0:20:11.680 --> 0:20:14.639 of going there, figuring out who the winners were, what 0:20:14.760 --> 0:20:18.760 advantages were necessary to win obviously, and then finding them 0:20:18.920 --> 0:20:22.320 and it wasn't really that difficult. I continue to be 0:20:22.400 --> 0:20:26.120 impressed by what they're able to do and how relevant 0:20:26.160 --> 0:20:29.080 they are globally. Most of the political noise is just 0:20:29.240 --> 0:20:32.359 that noise, and it doesn't really affect the outcol So 0:20:32.400 --> 0:20:35.440 another question that maybe fits into this bucket. Ali Baba 0:20:35.440 --> 0:20:38.600 also one of your top holdings the regulatory front. There's 0:20:38.640 --> 0:20:40.919 been a lot of talk lately about regulation over in 0:20:41.040 --> 0:20:44.680 China for big tech companies. Also here in the US, uh, 0:20:44.800 --> 0:20:46.960 Facebook being one of your top holdings. Of of course, 0:20:46.960 --> 0:20:49.960 there's a lot of talk about Facebook and other big 0:20:50.000 --> 0:20:53.760 tech companies facing antitrust concerns here in the US. Does 0:20:53.800 --> 0:20:56.600 that at all concern you know? And it's not for 0:20:56.680 --> 0:20:58.840 lack of thinking about it and for lack of looking 0:20:58.960 --> 0:21:01.080 One of the best things you've du to Facebook from 0:21:01.080 --> 0:21:03.240 an investment point of view would be to break it up. 0:21:03.560 --> 0:21:08.439 Most people don't really look at and understand Instagram for 0:21:08.520 --> 0:21:11.720 what it is. Instagram is one of the best e 0:21:11.840 --> 0:21:17.560 commerce and advertising assets ever created and will definitely at 0:21:17.600 --> 0:21:20.200 some point be as big as core Facebook, and could 0:21:20.200 --> 0:21:23.679 even be bigger because of the e commerce aspect of 0:21:23.720 --> 0:21:27.479 it digital advertising. You know. One of the things that 0:21:27.520 --> 0:21:30.359 people aren't looking at when they talk about the recovery 0:21:30.440 --> 0:21:34.679 post COVID is they talk about the rotation back into 0:21:34.920 --> 0:21:39.639 brick and mortar retail and airlines and carnival cruises and 0:21:39.680 --> 0:21:43.200 things like that things that have historically through the cycle 0:21:43.320 --> 0:21:46.840 been terrible investments and this time won't be any different. 0:21:47.640 --> 0:21:52.159 But all of that comes with advertising and digital continues 0:21:52.200 --> 0:21:55.360 to take share. And one of the things that COVID 0:21:55.480 --> 0:22:00.000 did induce was trial. If you were someone who weren't 0:21:59.800 --> 0:22:04.879 advertizing primarily on digital, you had no choice during COVID 0:22:04.960 --> 0:22:09.400 but to do that. And every time I've seen advertisers 0:22:09.520 --> 0:22:14.080 adopt digital, they don't go back. Their return on investment 0:22:14.160 --> 0:22:18.040 for every digital dollar spent is so much greater than 0:22:18.280 --> 0:22:20.800 everything else they could they could do with that dollar, 0:22:21.440 --> 0:22:26.040 they don't go back. And so Facebook, Instagram, Google are 0:22:26.080 --> 0:22:31.879 all natural beneficiaries of a return to a more normalized environment. Ready, 0:22:31.880 --> 0:22:36.719 what are your themes you talk about is diagnostics and research? Um, 0:22:36.760 --> 0:22:40.360 I'm curious, what's uh what you're seeing there that's exciting 0:22:40.760 --> 0:22:43.360 and where do you see that space going? I mean, um, 0:22:43.400 --> 0:22:46.560 this is obviously a trend that predates COVID, got quite 0:22:46.600 --> 0:22:48.720 a shot in the arm from COVID. But where do 0:22:48.760 --> 0:22:50.919 you see you know, what's exciting you in that space? 0:22:50.960 --> 0:22:53.639 Any any stocks we don't know about, um? And and 0:22:53.680 --> 0:22:56.000 where do you see that going in the future? Well, 0:22:56.480 --> 0:22:59.359 you know, diagnostics is something that me and my and 0:22:59.480 --> 0:23:04.359 colleague internally, we're talking about seventeen eighteen years ago. I 0:23:04.600 --> 0:23:07.480 met Aluminium, one of my larger holdings, for the first 0:23:07.480 --> 0:23:10.520 time in two thousand and three and sat on a 0:23:10.560 --> 0:23:13.240 banker's box in the parking lot of the building that 0:23:13.320 --> 0:23:16.320 the founder was in the process of moving into. He 0:23:16.440 --> 0:23:19.520 told me, he told me the advantage that he had, 0:23:19.760 --> 0:23:22.000 how things were going to play out for the company, 0:23:22.040 --> 0:23:25.600 and everything that he said was absolutely correct. You know, 0:23:25.760 --> 0:23:28.680