1 00:00:02,279 --> 00:00:06,840 Speaker 1: This is Masters in Business with Barry Ridholtz on Boomberg Radio. 2 00:00:07,480 --> 00:00:10,280 Speaker 1: This week on the podcast, I have an extra special guest. 3 00:00:10,760 --> 00:00:14,360 Speaker 1: His name is Neil Dwayne and he is the global 4 00:00:14,440 --> 00:00:20,640 Speaker 1: investment strategist for Alian's Global Investors, which is the part 5 00:00:20,720 --> 00:00:24,880 Speaker 1: of Alien's Proper. They own a number of different properties, 6 00:00:25,440 --> 00:00:28,680 Speaker 1: Alien's Global Investors and Pimco being two of the largest 7 00:00:29,160 --> 00:00:32,960 Speaker 1: uh This is really quite a fascinating conversation if you 8 00:00:33,040 --> 00:00:37,840 Speaker 1: are at all interested in what makes the global economy tick, 9 00:00:38,320 --> 00:00:42,040 Speaker 1: what the impact of central banks has been and will 10 00:00:42,080 --> 00:00:44,680 Speaker 1: likely be in the future, what's going to take place 11 00:00:44,720 --> 00:00:49,160 Speaker 1: with Brexit, and why the rise of Asia in general 12 00:00:49,200 --> 00:00:52,920 Speaker 1: and China in particular is going to be so important 13 00:00:53,280 --> 00:00:56,480 Speaker 1: to the world over the next three to five decades. 14 00:00:57,080 --> 00:01:01,600 Speaker 1: You will absolutely find this to be a fascined inning conversation. So, 15 00:01:01,800 --> 00:01:09,959 Speaker 1: with no further ado, my conversation with Alians is Neil Dwayne. 16 00:01:11,080 --> 00:01:14,480 Speaker 1: My special guest this week is Neil Dwayne. He is 17 00:01:14,560 --> 00:01:18,640 Speaker 1: the global strategist with Alians Global Investors. He's also a 18 00:01:18,720 --> 00:01:22,800 Speaker 1: portfolio manager. And you've been with Alliance since two thousand 19 00:01:22,800 --> 00:01:26,520 Speaker 1: and one. But your background is that of a portfolio manager. 20 00:01:26,600 --> 00:01:31,000 Speaker 1: How did you make that journey from actually running money 21 00:01:31,080 --> 00:01:34,280 Speaker 1: to being more of a global market analyst. Well, I 22 00:01:34,319 --> 00:01:36,720 Speaker 1: suppose the way I looked at it, I've always been 23 00:01:36,760 --> 00:01:40,319 Speaker 1: an investor since uh since the late eighties, UM and 24 00:01:40,360 --> 00:01:42,840 Speaker 1: I got a tremendous career opportunity to run the European 25 00:01:42,840 --> 00:01:46,760 Speaker 1: equity business for Alliance in Frankfurt. So I commune was 26 00:01:46,840 --> 00:01:48,680 Speaker 1: two thousand and one and two thousand two. Yes, so 27 00:01:49,160 --> 00:01:50,560 Speaker 1: I'd work for the phone for a year. This is 28 00:01:50,560 --> 00:01:53,560 Speaker 1: when Alliance merged with Dresna, and so we started to 29 00:01:53,560 --> 00:01:55,920 Speaker 1: put together all the asset management businesses. This is a 30 00:01:55,960 --> 00:01:59,200 Speaker 1: lot of giant components that Dresner Pimco. So you know 31 00:01:59,240 --> 00:02:01,360 Speaker 1: we have been a you know, a set of for 32 00:02:01,680 --> 00:02:03,800 Speaker 1: a fund s, A company has been created out of 33 00:02:03,840 --> 00:02:06,240 Speaker 1: a set of boutiques around the around the world, A 34 00:02:06,360 --> 00:02:09,639 Speaker 1: serial acquirer. Well, yes, I think we haven't. We We 35 00:02:09,800 --> 00:02:12,800 Speaker 1: started like a lot of firms buying teams rather than 36 00:02:12,800 --> 00:02:16,080 Speaker 1: buying businesses, because you often don't need everything else that 37 00:02:16,120 --> 00:02:18,440 Speaker 1: comes with the business if you already have the infrastructure. 38 00:02:18,919 --> 00:02:20,679 Speaker 1: But so for me, it was a career opportunity to 39 00:02:20,720 --> 00:02:23,680 Speaker 1: become a CEO lead a hundred and thirty investors. But 40 00:02:23,800 --> 00:02:27,000 Speaker 1: having done it, for thirteen years. I needed a new challenge, 41 00:02:27,040 --> 00:02:29,960 Speaker 1: bared to be honest, and so I chat to my boss. 42 00:02:30,000 --> 00:02:31,800 Speaker 1: I mean some people say, if you're Board of London, 43 00:02:31,800 --> 00:02:34,280 Speaker 1: your board of life. Well after after thirty years, I 44 00:02:34,320 --> 00:02:35,920 Speaker 1: can tell you I was bored of Frankfurt. I know 45 00:02:36,000 --> 00:02:38,560 Speaker 1: that might sound slightly disloyal, but I needed a new 46 00:02:38,600 --> 00:02:41,880 Speaker 1: challenge and we decided to try and help Alliance get 47 00:02:41,880 --> 00:02:44,440 Speaker 1: its message out. We needed an investor to start talking 48 00:02:44,440 --> 00:02:46,960 Speaker 1: to clients, talking to people like yourself, so that we 49 00:02:47,000 --> 00:02:49,720 Speaker 1: could cross the divide and help our clients understand how 50 00:02:49,760 --> 00:02:52,160 Speaker 1: to look at the risks in the portfolios and how 51 00:02:52,160 --> 00:02:54,399 Speaker 1: to think about the returns they were looking. So that's 52 00:02:54,440 --> 00:02:56,520 Speaker 1: my job now is I travel the world trying to 53 00:02:56,520 --> 00:03:00,400 Speaker 1: help clients navigate the markets. So you're located in the London, 54 00:03:00,400 --> 00:03:04,359 Speaker 1: now is that correct? How does the entire UK asset 55 00:03:04,440 --> 00:03:08,280 Speaker 1: management industry compared to the United States, Because there are 56 00:03:08,320 --> 00:03:12,760 Speaker 1: two very distinct styles of doing business that there are, 57 00:03:12,919 --> 00:03:15,520 Speaker 1: although funny enough, I would say they're very similar. You 58 00:03:15,520 --> 00:03:17,679 Speaker 1: know that there's a there's a big retail business which 59 00:03:17,720 --> 00:03:19,680 Speaker 1: is very domestically biased, so you know, when you're in 60 00:03:19,680 --> 00:03:21,480 Speaker 1: the US or they want to know about is the 61 00:03:21,560 --> 00:03:24,240 Speaker 1: NASDAC and the SMP five hundred and what's happening with 62 00:03:24,280 --> 00:03:26,639 Speaker 1: the mini bonds the UK is the same about UK 63 00:03:26,639 --> 00:03:30,560 Speaker 1: equities and UK property And what you're referring to is universal. 64 00:03:30,680 --> 00:03:34,720 Speaker 1: The home country bias, yes, exists everywhere, does even in 65 00:03:35,400 --> 00:03:39,160 Speaker 1: even in countries like Australia where there's such a tiny 66 00:03:39,200 --> 00:03:42,680 Speaker 1: percentage of the global equity market, and yet when you 67 00:03:42,680 --> 00:03:47,280 Speaker 1: look at Australian's portfolios, it's disproportionately Australian. The same with US, 68 00:03:47,320 --> 00:03:50,320 Speaker 1: the same with UK. Do you try and dissuade people 69 00:03:50,400 --> 00:03:53,240 Speaker 1: from that home bias? Um? I suppose I try. I 70 00:03:53,520 --> 00:03:56,640 Speaker 1: think on the equity side that the home biases is 71 00:03:57,160 --> 00:04:00,280 Speaker 1: hard to deflect simply because if you own fires, you're 72 00:04:00,280 --> 00:04:02,520 Speaker 1: by you own a global company anywhere in facts listed 73 00:04:02,560 --> 00:04:05,400 Speaker 1: in the US. Is that is maybe the challenging dynamic. 74 00:04:05,720 --> 00:04:07,920 Speaker 1: But I think as we think about the world in 75 00:04:07,960 --> 00:04:09,960 Speaker 1: the next twenty or thirty years, I mean, one of 76 00:04:09,960 --> 00:04:11,760 Speaker 1: the themes I'm talking to clients about is the rise 77 00:04:11,760 --> 00:04:15,000 Speaker 1: of Asia, because whatever we think about President Trump and 78 00:04:15,080 --> 00:04:17,920 Speaker 1: his trade policy, the next four and a half billion 79 00:04:18,000 --> 00:04:20,159 Speaker 1: emerging people are going to be out of Asia. They're 80 00:04:20,160 --> 00:04:22,560 Speaker 1: not in the US or in Europe, We've we've emerged, 81 00:04:23,040 --> 00:04:25,680 Speaker 1: we've over leveraged, we've over consumed. The growth is not 82 00:04:25,760 --> 00:04:27,800 Speaker 1: going to come from the West. And if and if 83 00:04:27,800 --> 00:04:30,919 Speaker 1: you look at from a valuation perspective, we're recording this 84 00:04:31,000 --> 00:04:35,640 Speaker 1: late in the US. Is let's be generous and call 85 00:04:35,680 --> 00:04:39,600 Speaker 1: it fully valued. Yes, emerging markets tend to be less expensive. 86 00:04:39,640 --> 00:04:43,080 Speaker 1: In China seems fairly cheap. Yes, and I would definitely 87 00:04:43,120 --> 00:04:45,560 Speaker 1: agree with that. What coming back to your earlier question, though, 88 00:04:45,560 --> 00:04:47,839 Speaker 1: I think the challenge I have when I talked to 89 00:04:48,160 --> 00:04:51,279 Speaker 1: UK or US institutions is I tend to feel that 90 00:04:51,440 --> 00:04:54,239 Speaker 1: many of them as now quite I would say risk averse. 91 00:04:54,680 --> 00:04:59,080 Speaker 1: They're managing their liabilities, they're not optimizing their returns, Whereas 92 00:04:59,080 --> 00:05:01,720 Speaker 1: I think when you talk a retail clients, you know 93 00:05:01,800 --> 00:05:03,599 Speaker 1: that they're in the game to make money. You know, 94 00:05:03,640 --> 00:05:05,080 Speaker 1: they don't want to be in the markets when they're 95 00:05:05,080 --> 00:05:06,680 Speaker 1: going down. They want to be in the stocks when 96 00:05:06,680 --> 00:05:09,560 Speaker 1: they're going up, and so they're looking for something completely 97 00:05:10,080 --> 00:05:12,960 Speaker 1: completely different. So so it's the audiences I think are 98 00:05:13,000 --> 00:05:15,760 Speaker 1: now much the same. I think you you with your 99 00:05:15,800 --> 00:05:18,480 Speaker 1: four oh one K, you're probably as as as institutional 100 00:05:18,560 --> 00:05:21,040 Speaker 1: as as cowpers would be. You know, you're looking at 101 00:05:21,080 --> 00:05:22,359 Speaker 1: how do I get from A to B in the 102 00:05:22,400 --> 00:05:24,839 Speaker 1: next ten years before I retire? How much money do 103 00:05:24,880 --> 00:05:27,120 Speaker 1: I need? What risk can I tolerate? What draw downs? 104 00:05:27,160 --> 00:05:29,159 Speaker 1: It's exactly how I think the big pension funds are 105 00:05:29,160 --> 00:05:31,120 Speaker 1: thinking about it now. Now. The only question I have 106 00:05:31,240 --> 00:05:33,880 Speaker 1: is who trades more frequently cowpers or the average for 107 00:05:33,920 --> 00:05:37,000 Speaker 1: all one key participant. I honestly can't answer that question. 108 00:05:37,080 --> 00:05:39,640 Speaker 1: What do you know? I'm not sure I can answer 109 00:05:39,680 --> 00:05:41,719 Speaker 1: it either. What I What I would say, though, is 110 00:05:41,800 --> 00:05:46,640 Speaker 1: I think, um, the trading has really started to hurt 111 00:05:46,680 --> 00:05:51,400 Speaker 1: the markets. Even some of our longest and largest sovereign 112 00:05:51,440 --> 00:05:54,840 Speaker 1: wealth funds now have a rolling twelve month performance horizons. 113 00:05:54,880 --> 00:05:57,120 Speaker 1: So when you say trading, do you mean the high 114 00:05:57,200 --> 00:06:00,760 Speaker 1: frequency traders or do you mean just the tendency to 115 00:06:00,920 --> 00:06:03,839 Speaker 1: trade more than they're used to. People just have this tremendous, 116 00:06:04,160 --> 00:06:07,760 Speaker 1: tremendous tendency to trade, And I think investment. You know, 117 00:06:07,800 --> 00:06:09,680 Speaker 1: when we think about the decision you and I would 118 00:06:09,680 --> 00:06:11,080 Speaker 1: have made when we were younger to buy a house, 119 00:06:11,560 --> 00:06:13,320 Speaker 1: you weren't sitting there thinking, well, I might flip it 120 00:06:13,320 --> 00:06:16,080 Speaker 1: in three months time. You're going I'm going to live here, 121 00:06:16,440 --> 00:06:18,159 Speaker 1: you know, I hope it's a good investment. I hope 122 00:06:18,160 --> 00:06:20,440 Speaker 1: it goes up in price and and that all goes 123 00:06:20,520 --> 00:06:22,200 Speaker 1: up in value. But even if it doesn't, you have 124 00:06:22,240 --> 00:06:24,680 Speaker 1: someplace to exactly can you say the same thing about 125 00:06:24,720 --> 00:06:27,520 Speaker 1: an equity portfolio. Well, I think actually in the end 126 00:06:27,560 --> 00:06:29,560 Speaker 1: you can. But I I sense, you know, one of 127 00:06:29,600 --> 00:06:32,480 Speaker 1: the big journeys that's changed, and it's accelerated post of 128 00:06:32,520 --> 00:06:35,320 Speaker 1: financial crisis has been I think we I talked to 129 00:06:35,400 --> 00:06:37,880 Speaker 1: more and more traders now and fewer and fewer investors, 130 00:06:38,400 --> 00:06:40,680 Speaker 1: And I think that's the same with corporate management. Corporate 131 00:06:40,680 --> 00:06:42,760 Speaker 1: management is not investing for the next ten years, so 132 00:06:42,839 --> 00:06:46,400 Speaker 1: investing for the next three three years whilst their incentive 133 00:06:46,400 --> 00:06:48,200 Speaker 1: plans are at work. So when you say you speak 134 00:06:48,240 --> 00:06:53,440 Speaker 1: to more traders than investors, is that because there are 135 00:06:53,440 --> 00:06:56,800 Speaker 1: more traders out there or are people who are formally 136 00:06:56,880 --> 00:07:02,440 Speaker 1: investors now have a tendency for shorter holder periods, more turnover, 137 00:07:03,120 --> 00:07:07,320 Speaker 1: just more activity. Despite everything we hear about indexing. Yes, 138 00:07:07,400 --> 00:07:11,880 Speaker 1: I think people's investment time horizons have really shortened. Um, 139 00:07:12,000 --> 00:07:14,960 Speaker 1: they don't want to sort of win by just holding 140 00:07:15,000 --> 00:07:17,080 Speaker 1: something that goes up and down like a rising tide 141 00:07:17,080 --> 00:07:19,520 Speaker 1: and eventually travels. They want to get out if it's 142 00:07:19,520 --> 00:07:21,960 Speaker 1: going to fall, and then get back in. And I 143 00:07:22,000 --> 00:07:24,800 Speaker 1: think that makes this really really tricky for us as investors, 144 00:07:24,840 --> 00:07:28,360 Speaker 1: because I would say the view of the world that 145 00:07:28,400 --> 00:07:30,720 Speaker 1: I'm talking to clients about is obvious for the next 146 00:07:30,720 --> 00:07:33,360 Speaker 1: five or ten years, but for the next five or 147 00:07:33,400 --> 00:07:35,480 Speaker 1: ten weeks. You know, I have as little clue as 148 00:07:35,480 --> 00:07:38,080 Speaker 1: anybody else you'll interview about what will drive the markets, 149 00:07:38,640 --> 00:07:40,600 Speaker 1: and yet clients that's what clients are looking for. And 150 00:07:40,640 --> 00:07:43,520 Speaker 1: I called I suppose I see that of spurious accuracy 151 00:07:43,960 --> 00:07:47,560 Speaker 1: quite quite fascinating. There was a quote, Neil in one 152 00:07:47,600 --> 00:07:51,920 Speaker 1: of your recent research pieces that I found intriguing, and 153 00:07:52,040 --> 00:07:56,680 Speaker 1: you wrote, quote, the American dream is still alive, just 154 00:07:56,800 --> 00:07:59,360 Speaker 1: not in America. Tell us what you meant by that? 155 00:07:59,760 --> 00:08:02,560 Speaker 1: What I think when when we were sort of tapping 156 00:08:02,560 --> 00:08:08,120 Speaker 1: into the momentum behind President Trump's or Canada Trump's campaign, 157 00:08:08,680 --> 00:08:11,440 Speaker 1: you know, it was about making America great again. And 158 00:08:11,840 --> 00:08:14,680 Speaker 1: I think one of the one of the appeals that 159 00:08:14,760 --> 00:08:17,040 Speaker 1: he had to many parts of the American electorate was 160 00:08:17,120 --> 00:08:20,240 Speaker 1: that it felt like the world was passing them by. 161 00:08:20,360 --> 00:08:22,560 Speaker 1: They were able to watch, you know, what the Kardashians 162 00:08:22,600 --> 00:08:25,200 Speaker 1: are doing on Twitter and and other things, but they 163 00:08:25,200 --> 00:08:28,280 Speaker 1: couldn't live the same lifestyle because the opportunities were not 164 00:08:28,680 --> 00:08:33,160 Speaker 1: operating offering themselves inside the US economy. But that's an 165 00:08:33,160 --> 00:08:36,560 Speaker 1: opportunity set of two or three. You know, for the 166 00:08:36,600 --> 00:08:39,240 Speaker 1: average American. Are they really thinking if only I could 167 00:08:39,400 --> 00:08:42,360 Speaker 1: endorse products? Is is that really the appeal or is 168 00:08:42,400 --> 00:08:46,960 Speaker 1: it something more fundamental? Well, well, I think it's actually elemental. Um. 169 00:08:47,240 --> 00:08:49,559 Speaker 1: I think that That's why I think politics is under 170 00:08:49,600 --> 00:08:51,680 Speaker 1: a lot of pressure across the West at this moment 171 00:08:51,679 --> 00:08:54,760 Speaker 1: in time, because people feel they take for granted that 172 00:08:54,880 --> 00:08:57,040 Speaker 1: fridges are cheap and TVs are cheap, and you know, 173 00:08:57,120 --> 00:09:00,160 Speaker 1: the lifestyle has since since the Night in seven has 174 00:09:00,160 --> 00:09:02,680 Speaker 1: has become more affordable. But now they're not getting a 175 00:09:02,679 --> 00:09:04,600 Speaker 1: pay rise. Some of them are not even getting a job. 176 00:09:04,640 --> 00:09:08,000 Speaker 1: And so the ability now for I think young Americans 177 00:09:08,040 --> 00:09:11,560 Speaker 1: to earn more than their parents is the lowest percentage 178 00:09:11,559 --> 00:09:15,040 Speaker 1: in first generation. That's not going to the Whereas I 179 00:09:15,080 --> 00:09:17,080 Speaker 1: think when you go to somewhere and I can only 180 00:09:17,240 --> 00:09:19,480 Speaker 1: what I normally do is tell clients to travel around 181 00:09:19,480 --> 00:09:21,760 Speaker 1: Asia and particularly to go to China, but don't go 182 00:09:21,800 --> 00:09:24,600 Speaker 1: to Shanghai or Beijing, go and see the panda bears 183 00:09:24,600 --> 00:09:27,599 Speaker 1: in cheng Do or or the Terragotta warriors in Cheanne. 184 00:09:27,760 --> 00:09:29,880 Speaker 1: The people who take you there, the people who drive 185 00:09:29,920 --> 00:09:34,560 Speaker 1: you there, um, they work hard, they want to educate 186 00:09:34,600 --> 00:09:36,760 Speaker 1: their kids, they want to get rich. That's what I mean. 187 00:09:37,000 --> 00:09:40,480 Speaker 1: Very entrepreneurs. They're very, very entrepreneurial. And so I think 188 00:09:40,520 --> 00:09:42,920 Speaker 1: that's probably what America felt like around the turn of 189 00:09:42,920 --> 00:09:45,880 Speaker 1: the century. People had a can do act a century 190 00:09:46,960 --> 00:09:48,800 Speaker 1: and not to be not to be a wise guy, 191 00:09:48,880 --> 00:09:52,079 Speaker 1: but turn of the nineteenth century, turn of the twentieth century, 192 00:09:52,360 --> 00:09:55,280 Speaker 1: I think to turn of the twentie you know, I 193 00:09:55,320 --> 00:09:57,640 Speaker 1: just think, you know, when America suddenly really got go. 194 00:09:57,760 --> 00:10:00,720 Speaker 1: You think about um, World War One, you know, America 195 00:10:00,760 --> 00:10:03,319 Speaker 1: barely had a navy, and you know, within two years 196 00:10:03,400 --> 00:10:05,839 Speaker 1: you've built the biggest navy in um, you know, the 197 00:10:05,880 --> 00:10:08,280 Speaker 1: world had ever seen. And that's despite the British being 198 00:10:08,320 --> 00:10:10,720 Speaker 1: the naval power of of that time. And I just 199 00:10:10,760 --> 00:10:13,240 Speaker 1: think there was that can do attitude, that can do spirit, 200 00:10:13,320 --> 00:10:16,559 Speaker 1: that teamwork. I sense that that's moved to Asia now. 201 00:10:16,920 --> 00:10:20,480 Speaker 1: That's quite fascinating. When when we look at you mentioned 202 00:10:20,520 --> 00:10:25,120 Speaker 1: a lot of people, a lot of the US electorate 203 00:10:25,480 --> 00:10:30,040 Speaker 1: might have been left behind. It's very very specific when 204 00:10:30,120 --> 00:10:33,240 Speaker 1: when we talked about the economic recovery, but it's not 205 00:10:33,360 --> 00:10:38,400 Speaker 1: evenly distributed. Depending on where you live, your education level, 206 00:10:38,600 --> 00:10:43,960 Speaker 1: and what industry sector you're in, you're either enjoying a 207 00:10:44,080 --> 00:10:47,560 Speaker 1: robust recovery or no recovery at all. It is the 208 00:10:47,640 --> 00:10:51,240 Speaker 1: United States the only country that suffers from that sort 209 00:10:51,240 --> 00:10:54,880 Speaker 1: of bipolar There are some very very lucky halves, and 210 00:10:54,920 --> 00:10:57,079 Speaker 1: there are a whole bunch of half not or an participant. 211 00:10:57,400 --> 00:10:59,440 Speaker 1: I think the West suffers across the board with that. 212 00:10:59,480 --> 00:11:02,360 Speaker 1: I think they The country that doesn't is Japan, where 213 00:11:02,400 --> 00:11:05,800 Speaker 1: society has been much more even so, it's interesting, very 214 00:11:05,880 --> 00:11:07,920 Speaker 1: one of the themes I'm talking to our clients about 215 00:11:07,920 --> 00:11:10,280 Speaker 1: at the moment is inequality. And you might say, well, 216 00:11:10,280 --> 00:11:12,120 Speaker 1: what's I got to do with investment and and and 217 00:11:12,200 --> 00:11:15,000 Speaker 1: asset management? Well, it's got a time. Well, but the 218 00:11:15,000 --> 00:11:17,040 Speaker 1: thing is, I think we may have been making the 219 00:11:17,080 --> 00:11:20,800 Speaker 1: world less equal because if I incentivize you against your 220 00:11:20,800 --> 00:11:22,920 Speaker 1: share price and that's the only thing that makes you 221 00:11:23,040 --> 00:11:25,880 Speaker 1: rich as a manager, then that's all you care about. 222 00:11:25,960 --> 00:11:29,199 Speaker 1: That's the goal you manage, and that makes the world 223 00:11:29,280 --> 00:11:32,600 Speaker 1: more and more unequal. Are you a believer in the 224 00:11:32,600 --> 00:11:36,040 Speaker 1: theory of short termism that a lot of corporate management 225 00:11:36,400 --> 00:11:39,439 Speaker 1: is so focused on their stock price they're not making 226 00:11:39,520 --> 00:11:43,320 Speaker 1: longer term investments. Definitely, because I think, not only I think, 227 00:11:43,400 --> 00:11:45,960 Speaker 1: and it's clear in the US that I think this. 228 00:11:45,960 --> 00:11:48,600 Speaker 1: This addiction now to share buy backs, borrowing money from 229 00:11:48,600 --> 00:11:52,960 Speaker 1: the credit markets. History has always shown management by their 230 00:11:52,960 --> 00:11:55,240 Speaker 1: stock at the worst prices. They never buy them when 231 00:11:55,280 --> 00:11:58,520 Speaker 1: nobody wants it, I really cheat, they buy it right 232 00:11:58,559 --> 00:12:00,240 Speaker 1: at the top of the market. And I think that's 233 00:12:00,280 --> 00:12:03,760 Speaker 1: what we've been seeing throughout two thousand, sixteen, seventeen and eighteen, 234 00:12:03,800 --> 00:12:07,760 Speaker 1: and it's a uniquely US phenomenon. And the other thing, 235 00:12:08,200 --> 00:12:10,360 Speaker 1: just wrapping in the inequality theme, just so you can 236 00:12:10,400 --> 00:12:13,200 Speaker 1: see where I'm trying to go with it, is Yes, 237 00:12:13,240 --> 00:12:16,320 Speaker 1: the short share buy backs are incentivizing the CFO to 238 00:12:16,559 --> 00:12:19,080 Speaker 1: borrow money and leverage the balance sheets and are potentially 239 00:12:19,160 --> 00:12:22,440 Speaker 1: under invest limiting the longer term growth prospects of the 240 00:12:22,520 --> 00:12:25,559 Speaker 1: of the company going forwards. But who's the biggest seller 241 00:12:25,679 --> 00:12:30,160 Speaker 1: of US equities. It's the management management. So we're to 242 00:12:30,240 --> 00:12:33,000 Speaker 1: blame for this because we have over incentivised them in 243 00:12:33,080 --> 00:12:36,480 Speaker 1: one way. And when we do, when we've done quite 244 00:12:36,480 --> 00:12:40,160 Speaker 1: a lot of work on sustainability and this inequality theme. 245 00:12:40,920 --> 00:12:43,240 Speaker 1: What is interesting and it's funny. I'm here at Bloomberg. 246 00:12:43,280 --> 00:12:48,000 Speaker 1: Family owned companies do it better. They know they're passing 247 00:12:48,040 --> 00:12:50,760 Speaker 1: on the franchise to their children or to their grandchildren. 248 00:12:50,840 --> 00:12:53,000 Speaker 1: So what do they do. They make sure it's invested. 249 00:12:53,040 --> 00:12:55,200 Speaker 1: They make sure the roofs working, They make sure the 250 00:12:55,240 --> 00:12:57,360 Speaker 1: central heating is there so that when they pass it 251 00:12:57,360 --> 00:13:00,720 Speaker 1: onto their children, their children then are running for their children. 252 00:13:00,760 --> 00:13:03,000 Speaker 1: They never sit there hat thinking how do I maximize 253 00:13:03,040 --> 00:13:06,199 Speaker 1: returns for my share option scheme? The fascinating thing about 254 00:13:06,200 --> 00:13:08,400 Speaker 1: to share buy backs, and I can talk about that forever. 255 00:13:09,320 --> 00:13:12,840 Speaker 1: A It's the result of a nine nineties Clinton era 256 00:13:13,400 --> 00:13:19,000 Speaker 1: attempt to limit C suite executives compensation, and they put, 257 00:13:19,280 --> 00:13:22,079 Speaker 1: you know, a hard dollar limit and do as much 258 00:13:22,120 --> 00:13:24,440 Speaker 1: stock options as you want. Didn't work out the way 259 00:13:24,480 --> 00:13:27,719 Speaker 1: they expected. I agree with you about stock options, but 260 00:13:27,920 --> 00:13:31,000 Speaker 1: and buy backs. But every time I bring it up, 261 00:13:31,080 --> 00:13:33,800 Speaker 1: all my quant friends say the same thing. Hey, when 262 00:13:33,800 --> 00:13:35,920 Speaker 1: we look at the world of companies that do buy 263 00:13:35,920 --> 00:13:39,680 Speaker 1: backs versus companies that don't, buy backs outperform the companies 264 00:13:40,080 --> 00:13:43,200 Speaker 1: that don't. How do we how do we justify being 265 00:13:43,240 --> 00:13:47,400 Speaker 1: negative on buy backs when they actually help performance well? 266 00:13:47,440 --> 00:13:49,760 Speaker 1: I think, I think maybe what we're going to find 267 00:13:50,040 --> 00:13:52,800 Speaker 1: is that it helps performance in the short term, but 268 00:13:52,920 --> 00:13:57,040 Speaker 1: at the consequence of significant underinvestment, the loss of productivity. 269 00:13:57,400 --> 00:14:00,160 Speaker 1: You know, when you and I think maybe outside siliconly 270 00:14:00,160 --> 00:14:02,760 Speaker 1: about all the industries where America has kind of stopped 271 00:14:03,080 --> 00:14:06,320 Speaker 1: being a world leader, and I'm thinking traditional manufacturing, some 272 00:14:06,400 --> 00:14:08,559 Speaker 1: of these, some of these type of areas, it's because 273 00:14:08,600 --> 00:14:11,000 Speaker 1: actually there was no R and D. There's no capital, 274 00:14:11,040 --> 00:14:15,600 Speaker 1: equipment investment, and and the pushback I get is Apple 275 00:14:15,679 --> 00:14:18,080 Speaker 1: spends billions of dollars on R and D, as does 276 00:14:18,120 --> 00:14:21,360 Speaker 1: all these other companies. I couldn't possibly agree with you more. 277 00:14:21,400 --> 00:14:24,600 Speaker 1: I think you're absolutely right. I would much rather than 278 00:14:24,680 --> 00:14:27,720 Speaker 1: see a company d I p O on I p 279 00:14:27,840 --> 00:14:29,520 Speaker 1: O I don't know if there's even a word like that. 280 00:14:29,800 --> 00:14:32,120 Speaker 1: I would rather see the money. If you're going to 281 00:14:32,200 --> 00:14:35,240 Speaker 1: return capitalist shareholders, give people dividends and let them spend 282 00:14:35,240 --> 00:14:38,320 Speaker 1: the money on what they want after you've exhausted all 283 00:14:38,360 --> 00:14:41,120 Speaker 1: your R and D options. Look at General Motors. They 284 00:14:41,200 --> 00:14:44,080 Speaker 1: bought ten billion dollars worth of stock while all their 285 00:14:44,080 --> 00:14:49,400 Speaker 1: competitors were creating new electronic cars, building infrastructures, filing a 286 00:14:49,400 --> 00:14:52,680 Speaker 1: whole bunch of patents. To me, it's unconscionable that a 287 00:14:52,760 --> 00:14:57,160 Speaker 1: company in as competitive a market as gm is would 288 00:14:57,160 --> 00:15:00,800 Speaker 1: waste a penny buying backstock when their technical argically behind 289 00:15:01,000 --> 00:15:03,800 Speaker 1: all everybody else out there. Let's talk a little bit 290 00:15:03,840 --> 00:15:07,080 Speaker 1: about what's been going on around the world with you 291 00:15:07,200 --> 00:15:13,760 Speaker 1: mentioned popularism and the political changes that income inequality has wrought. 292 00:15:14,280 --> 00:15:17,520 Speaker 1: What do you see happening in Brexit, because from across 293 00:15:17,600 --> 00:15:20,760 Speaker 1: the ponds, it looks like, Wow, I thought we had 294 00:15:20,840 --> 00:15:24,800 Speaker 1: some issues that seems to be just completely mayhem from 295 00:15:24,800 --> 00:15:28,600 Speaker 1: our perspective. Um Barry, You're absolutely right. I mean, there's 296 00:15:28,600 --> 00:15:31,480 Speaker 1: no doubt. I think for the last two years everyone 297 00:15:31,600 --> 00:15:35,920 Speaker 1: has been very confused about how Brexit would work out. 298 00:15:36,120 --> 00:15:39,600 Speaker 1: Hard Brexit, soft Brexit, no Brexit. It's like a Dr 299 00:15:39,680 --> 00:15:42,080 Speaker 1: Seuss book. It is a part of the fact we 300 00:15:42,120 --> 00:15:45,760 Speaker 1: have always said there can be no soft Brexit. Brexit 301 00:15:46,000 --> 00:15:48,840 Speaker 1: is a hard you know, whether we crash out or 302 00:15:48,840 --> 00:15:51,000 Speaker 1: whether we leave with a deal, that both of them 303 00:15:51,040 --> 00:15:54,320 Speaker 1: are hard outcomes. There isn't any sort of cuddly toy 304 00:15:54,400 --> 00:15:56,400 Speaker 1: way of getting from from A to B. And we're 305 00:15:56,400 --> 00:16:00,000 Speaker 1: already seeing all sorts of negative ramifications for Brexit. ESPEC 306 00:16:00,000 --> 00:16:02,560 Speaker 1: actually in London. I don't know how the rest of 307 00:16:02,600 --> 00:16:05,480 Speaker 1: the country is feeling it. But when we look at 308 00:16:05,600 --> 00:16:09,680 Speaker 1: where companies are relocating, when we look at people, especially 309 00:16:09,840 --> 00:16:14,640 Speaker 1: executives and professionals relocating to to Paris, relocating to Frankfort, 310 00:16:15,400 --> 00:16:17,080 Speaker 1: you're right there in the thick of it. What what 311 00:16:17,160 --> 00:16:21,400 Speaker 1: do you see going on pre Brexit? Well, I think 312 00:16:21,760 --> 00:16:23,840 Speaker 1: what I would say is, because there's this drop dead 313 00:16:23,920 --> 00:16:26,200 Speaker 1: date of March the twenty ninth, two thousand and nineteen, 314 00:16:26,560 --> 00:16:29,560 Speaker 1: the dynamic is we're getting closer to a point where companies, 315 00:16:29,560 --> 00:16:32,440 Speaker 1: including Alliance Global investors have to decide do we need 316 00:16:32,480 --> 00:16:35,040 Speaker 1: to change anything inside of our operating business model to 317 00:16:35,080 --> 00:16:37,480 Speaker 1: stay legal in France or see, if you had a 318 00:16:37,560 --> 00:16:40,160 Speaker 1: headquarters it would be a problem, but since you don't 319 00:16:40,160 --> 00:16:43,240 Speaker 1: absolutely um and actually, because we're smaller in the UK 320 00:16:43,320 --> 00:16:44,960 Speaker 1: that we are in Europe, it's less of a problem 321 00:16:45,000 --> 00:16:46,880 Speaker 1: for us than some of our larger competitors who are 322 00:16:46,880 --> 00:16:50,000 Speaker 1: based in London. But what I what what I would 323 00:16:50,000 --> 00:16:52,400 Speaker 1: get over And I think this comes to the populist side. 324 00:16:52,480 --> 00:16:55,040 Speaker 1: You know that's in the US is as as you've seen, 325 00:16:55,120 --> 00:16:57,400 Speaker 1: you know with your recent elections, including the mid terms, 326 00:16:57,600 --> 00:17:00,080 Speaker 1: America is divided. The way the UK is divide I 327 00:17:00,120 --> 00:17:05,560 Speaker 1: did over Brexit of the population. All I can tell 328 00:17:05,600 --> 00:17:08,800 Speaker 1: you is two years on, it's still Is that a fact? 329 00:17:08,840 --> 00:17:11,920 Speaker 1: Because I keep hearing there's two interesting things I keep hearing. 330 00:17:12,359 --> 00:17:15,600 Speaker 1: One is if we have a second referendum. People have 331 00:17:15,800 --> 00:17:19,080 Speaker 1: learned that they were lied to in the first referendum, 332 00:17:19,320 --> 00:17:22,440 Speaker 1: that a lot of the scare tactics about how much 333 00:17:22,480 --> 00:17:24,679 Speaker 1: money was being sucked out of national health system, and 334 00:17:25,240 --> 00:17:27,600 Speaker 1: people realize there was a lot of nonsense. They were 335 00:17:27,600 --> 00:17:31,119 Speaker 1: fed that all you need is one or two or 336 00:17:31,160 --> 00:17:34,560 Speaker 1: three other populations change your vote, and they're talking like 337 00:17:34,640 --> 00:17:38,040 Speaker 1: five or might swing. But then I hear the court 338 00:17:38,119 --> 00:17:41,000 Speaker 1: the data you give and you're not the first. We're 339 00:17:41,400 --> 00:17:45,199 Speaker 1: convinced that the vote would still be identical. We're all 340 00:17:45,280 --> 00:17:48,960 Speaker 1: virtually the same, So so the country is still divided. 341 00:17:49,119 --> 00:17:53,840 Speaker 1: What I would say is the dynamic that is that 342 00:17:54,000 --> 00:17:56,920 Speaker 1: is at work, is that it was a dreadful election 343 00:17:57,000 --> 00:17:58,720 Speaker 1: that might might ring a few bells with you here 344 00:17:58,760 --> 00:18:02,959 Speaker 1: in the US. That tone, the tone on both sides 345 00:18:03,080 --> 00:18:05,760 Speaker 1: was awful. Um and I think with the Bank of 346 00:18:05,800 --> 00:18:08,120 Speaker 1: England coming out with a very very you know, doomsday 347 00:18:08,160 --> 00:18:11,520 Speaker 1: scenario of the world post Brexit, we're back in Project 348 00:18:11,520 --> 00:18:14,040 Speaker 1: Fear territory, which simply annoys the half of the country 349 00:18:14,040 --> 00:18:17,640 Speaker 1: who don't buy the Project Fear story. Now, the other 350 00:18:17,760 --> 00:18:23,439 Speaker 1: interesting thing I read recently was um, and I know 351 00:18:23,520 --> 00:18:27,639 Speaker 1: how our court system works. On that fully cargnizant of 352 00:18:27,640 --> 00:18:31,720 Speaker 1: how your system works. But an advisor to somebody in 353 00:18:31,720 --> 00:18:34,920 Speaker 1: the High Court said, hey, if the House of Lords 354 00:18:35,160 --> 00:18:39,400 Speaker 1: decides to vote against Brexit, they're allowed. They're now bound 355 00:18:39,560 --> 00:18:43,040 Speaker 1: by a nine non binding resolution, which was what effectively 356 00:18:43,040 --> 00:18:46,200 Speaker 1: the reverendum was. UM, yes and no. I mean basically, 357 00:18:46,240 --> 00:18:49,880 Speaker 1: the Houses of Commons that the MPs that we vote 358 00:18:49,920 --> 00:18:53,239 Speaker 1: for get a second chance. So if if they approve it, 359 00:18:53,240 --> 00:18:55,600 Speaker 1: the House of Lord says no, it comes back to 360 00:18:55,640 --> 00:18:58,200 Speaker 1: the Commons that the Commons then have the final vote. 361 00:18:58,600 --> 00:19:01,399 Speaker 1: So how do they need a super majority on just 362 00:19:01,400 --> 00:19:04,240 Speaker 1: just a majority? So I think the scenario that we're 363 00:19:04,280 --> 00:19:07,880 Speaker 1: facing at the moment is Theresa May's deal looks great 364 00:19:07,960 --> 00:19:11,719 Speaker 1: from a European perspective, and that's why it's probably not 365 00:19:11,760 --> 00:19:13,840 Speaker 1: going to pass in the House of Parliament. Now let 366 00:19:13,840 --> 00:19:16,480 Speaker 1: me jump in and ask you, are the Europeans going 367 00:19:16,520 --> 00:19:20,480 Speaker 1: to give anybody anything better than a terrible deal? Otherwise 368 00:19:20,520 --> 00:19:24,240 Speaker 1: they'll encourage other members. So you've answered your own questions, Barry. 369 00:19:24,240 --> 00:19:26,239 Speaker 1: They're not going to offer us a better deal. So 370 00:19:26,280 --> 00:19:29,960 Speaker 1: it's this terrible deal or a hard no deal Brexit. Yes, 371 00:19:30,000 --> 00:19:32,600 Speaker 1: but the key for me is is a hard no 372 00:19:32,800 --> 00:19:35,399 Speaker 1: deal are you going to w t O rules? And 373 00:19:35,400 --> 00:19:37,320 Speaker 1: then the ability to pick up the phone to President 374 00:19:37,320 --> 00:19:39,640 Speaker 1: Trump and say hey, can we catch the next BA 375 00:19:39,800 --> 00:19:42,520 Speaker 1: plane to the US and do a deal is of 376 00:19:42,640 --> 00:19:45,320 Speaker 1: much greater upside to the UK than this deal with 377 00:19:45,359 --> 00:19:48,080 Speaker 1: Theresa May. But you need a change of leadership. So 378 00:19:48,119 --> 00:19:51,720 Speaker 1: I think for international investors like yourselves, the calibration is 379 00:19:51,840 --> 00:19:55,960 Speaker 1: can the Conservative Party change leader if Theresa May's deal 380 00:19:56,080 --> 00:19:59,800 Speaker 1: is thrown out and not face a general election. But 381 00:20:00,000 --> 00:20:02,760 Speaker 1: because the way the way I try to, if I'm honest, 382 00:20:02,800 --> 00:20:06,520 Speaker 1: answer the Brexit question is Brexit is nothing compared to 383 00:20:06,640 --> 00:20:10,400 Speaker 1: the election of a Jeremy Corbyn led labor government. Let's 384 00:20:10,440 --> 00:20:13,280 Speaker 1: talk a little bit about some things going on in technology. 385 00:20:13,760 --> 00:20:17,160 Speaker 1: I was intrigued again. This comes from something you published recently. 386 00:20:17,760 --> 00:20:23,160 Speaker 1: You said that a new tech cold war could disrupt 387 00:20:23,240 --> 00:20:27,280 Speaker 1: the global economy. Explain well, I I believe that whilst 388 00:20:27,320 --> 00:20:30,760 Speaker 1: trade has all the headlines and the President's policy on 389 00:20:30,840 --> 00:20:34,960 Speaker 1: tariffs is clearly disrupting many of the large traded goods 390 00:20:35,000 --> 00:20:37,840 Speaker 1: areas of the of the global economy. I think there's 391 00:20:37,880 --> 00:20:42,760 Speaker 1: a Washington Washington consensus building that China has been cheating 392 00:20:42,920 --> 00:20:47,119 Speaker 1: on tech. Bloomberg itself launched a huge piece that showed 393 00:20:47,160 --> 00:20:49,119 Speaker 1: that there were chips on some of the motherboards that 394 00:20:49,160 --> 00:20:51,520 Speaker 1: are being used this week. Yes, absolutely, and that was 395 00:20:51,600 --> 00:20:53,399 Speaker 1: you know, but I think that goes to the hardest 396 00:20:53,480 --> 00:20:56,480 Speaker 1: Apple and Amazon there was. They all pushed back and 397 00:20:56,480 --> 00:21:00,439 Speaker 1: said it wasn't correct. But I think Bloomber stood by 398 00:21:00,440 --> 00:21:02,560 Speaker 1: the business, and I think you have You're absolutely right 399 00:21:02,600 --> 00:21:05,560 Speaker 1: to do so, because when you look outside the headlines 400 00:21:05,560 --> 00:21:08,720 Speaker 1: that everyone's focused on on trade, you're actually seeing Washington 401 00:21:08,720 --> 00:21:13,720 Speaker 1: a virtue across the entire government um process is now 402 00:21:13,760 --> 00:21:17,800 Speaker 1: identifying that you don't want to have suppliers or Chinese 403 00:21:17,840 --> 00:21:20,760 Speaker 1: supply parts of the Chinese supply chain in your products, 404 00:21:20,800 --> 00:21:24,359 Speaker 1: especially telecom chips, things, and so I I think what 405 00:21:24,480 --> 00:21:26,800 Speaker 1: is happening is that America has decided in the same 406 00:21:26,840 --> 00:21:30,399 Speaker 1: way as Russia is still the old political war horse, 407 00:21:30,800 --> 00:21:34,320 Speaker 1: China is now the new strategic threat in technology. So 408 00:21:34,359 --> 00:21:37,840 Speaker 1: why does that matter to investors? Well, the American business 409 00:21:37,840 --> 00:21:40,760 Speaker 1: model of you know many of the famous American technology 410 00:21:40,760 --> 00:21:43,119 Speaker 1: companies is you design it in Silicon Valley and you 411 00:21:43,200 --> 00:21:45,480 Speaker 1: make it in Asia. And that's one of the things 412 00:21:45,480 --> 00:21:49,000 Speaker 1: that annoys the President of course. UM. Now, if you 413 00:21:49,040 --> 00:21:52,200 Speaker 1: suddenly can't trust your supply chain because they may be 414 00:21:52,320 --> 00:21:54,240 Speaker 1: cheating on your I P or they may be putting 415 00:21:54,280 --> 00:21:57,439 Speaker 1: stuff in your products that allows them to listen and 416 00:21:57,480 --> 00:22:01,919 Speaker 1: watch and spy. Um, then you have to start readjusting 417 00:22:01,960 --> 00:22:04,960 Speaker 1: your supply chain. So I think when you think about 418 00:22:04,960 --> 00:22:07,320 Speaker 1: the fact that say t s MC is the largest 419 00:22:07,320 --> 00:22:11,520 Speaker 1: supply of anything to a yes, then can you trust 420 00:22:11,600 --> 00:22:13,800 Speaker 1: I'm not saying you can't at the moment trust that 421 00:22:13,840 --> 00:22:18,760 Speaker 1: the Taiwanese. But Taiwan is part of China. The Chinese 422 00:22:18,800 --> 00:22:22,919 Speaker 1: say so the Taiwanese. Well, I I mean, for me, 423 00:22:22,960 --> 00:22:25,040 Speaker 1: I think it's fairly certain China will fight for Taiwan. 424 00:22:25,080 --> 00:22:27,040 Speaker 1: I'm not too sure whether America will fight for Taiwan, 425 00:22:27,080 --> 00:22:29,280 Speaker 1: but hopefully we don't have to get there. But my 426 00:22:29,359 --> 00:22:32,199 Speaker 1: point is that this that the supply chain of the 427 00:22:32,200 --> 00:22:36,560 Speaker 1: tech industry is now so complex, and it's so Asian focused, 428 00:22:36,840 --> 00:22:38,919 Speaker 1: and a lot of it relies on cheap assembly in 429 00:22:39,160 --> 00:22:42,560 Speaker 1: Vietnam or China or elsewhere, and that assembly is where 430 00:22:42,800 --> 00:22:46,480 Speaker 1: your confidence in the network could fail. So I think 431 00:22:47,000 --> 00:22:50,240 Speaker 1: under President Trump, the Americans are going to force disruption 432 00:22:50,280 --> 00:22:53,400 Speaker 1: into the supply chains. You're either in the American ecosystem 433 00:22:53,520 --> 00:22:55,639 Speaker 1: or you're going to be in the Chinese ecosystem. And 434 00:22:55,680 --> 00:22:58,440 Speaker 1: just to balance this out, this isn't just a Washington thing. 435 00:22:58,920 --> 00:23:01,520 Speaker 1: In the summer, you will a member where that Washington 436 00:23:01,560 --> 00:23:04,240 Speaker 1: shut down, said t E, the second largest tech company 437 00:23:04,240 --> 00:23:08,440 Speaker 1: in China. Yes, about a big tech company as well. 438 00:23:08,720 --> 00:23:10,840 Speaker 1: What did they What did Beijing learn about that? Well, 439 00:23:10,880 --> 00:23:13,760 Speaker 1: they learned they can't trust American tech because if you 440 00:23:13,800 --> 00:23:17,080 Speaker 1: pull the American tech out, the company collapses. So from 441 00:23:17,080 --> 00:23:20,560 Speaker 1: a Chinese strategic perspective, the next twenty or thirty years, 442 00:23:21,040 --> 00:23:22,880 Speaker 1: our own tech are they Are they going to rely 443 00:23:22,960 --> 00:23:25,040 Speaker 1: on American tech if it can get taken away? Well, 444 00:23:25,080 --> 00:23:27,680 Speaker 1: the answer clearly is no. And if you then look 445 00:23:27,680 --> 00:23:29,640 Speaker 1: at where President g wants to go in the next 446 00:23:29,680 --> 00:23:32,200 Speaker 1: twenty or thirty years, he wants to become a world 447 00:23:32,320 --> 00:23:34,720 Speaker 1: leader in many of the industries that the Germans, the 448 00:23:34,800 --> 00:23:37,639 Speaker 1: Japanese and the Americans still dominate. And the reason he 449 00:23:37,680 --> 00:23:39,119 Speaker 1: wants to is because he doesn't want to buy it 450 00:23:39,160 --> 00:23:41,520 Speaker 1: from America or Germany. He wants to make it in China. 451 00:23:41,720 --> 00:23:43,480 Speaker 1: So let me ask you this about z t E. 452 00:23:44,200 --> 00:23:47,159 Speaker 1: It wasn't that America wasn't going to sell technology to 453 00:23:47,240 --> 00:23:50,359 Speaker 1: zt They said, this is on a restricted list. You 454 00:23:50,440 --> 00:23:53,639 Speaker 1: can't build z t E tech into American tech because 455 00:23:54,080 --> 00:23:58,520 Speaker 1: we don't trust its ability to safeguard secrets. We think 456 00:23:58,560 --> 00:24:02,399 Speaker 1: that this is part of the and these intelligent agencies. 457 00:24:02,600 --> 00:24:04,960 Speaker 1: That's right. So I think in the end President g 458 00:24:05,160 --> 00:24:08,320 Speaker 1: wants his own Chinese ecosystem, and you're gonna where you 459 00:24:08,359 --> 00:24:10,679 Speaker 1: and I are going to have to choose because you 460 00:24:10,720 --> 00:24:12,159 Speaker 1: can't do one and cheap. What do you want a 461 00:24:12,240 --> 00:24:13,840 Speaker 1: good those are you going to be your choices? Well, 462 00:24:13,880 --> 00:24:16,400 Speaker 1: I I what I'm a bit more bolish of China 463 00:24:16,440 --> 00:24:18,200 Speaker 1: than that, you know, I think you know, creating four 464 00:24:18,200 --> 00:24:20,199 Speaker 1: million mass grads a year means a lot of what 465 00:24:20,240 --> 00:24:22,240 Speaker 1: they're doing in AI and everything is going to work 466 00:24:22,560 --> 00:24:24,639 Speaker 1: because they can throw a lot of resources at it. 467 00:24:24,720 --> 00:24:27,040 Speaker 1: I don't doubt that for a second. And and so 468 00:24:27,040 --> 00:24:28,679 Speaker 1: so the way I look at it is there's going 469 00:24:28,720 --> 00:24:31,399 Speaker 1: to be a Chinese ecosystem for China and it's friends, 470 00:24:32,119 --> 00:24:34,080 Speaker 1: which I would when I closed my eyes think most 471 00:24:34,080 --> 00:24:37,840 Speaker 1: of Asia will inevitably pivot to to China, and then 472 00:24:37,880 --> 00:24:41,679 Speaker 1: you have an American ecosystem. Now, it's probably obvious in 473 00:24:41,720 --> 00:24:44,000 Speaker 1: the short term that Europe would be part of that system, 474 00:24:44,000 --> 00:24:47,439 Speaker 1: and probably Japan until until it becomes cheap enough, or 475 00:24:47,720 --> 00:24:50,760 Speaker 1: until the growth in Asia reaches a point where the 476 00:24:50,760 --> 00:24:53,679 Speaker 1: world sits there And says, who cares about three seventy 477 00:24:53,720 --> 00:24:56,520 Speaker 1: million rich Americans who are now over leverage. Let's go 478 00:24:56,600 --> 00:24:58,679 Speaker 1: with the five billion people who are still coming up 479 00:24:58,680 --> 00:25:02,240 Speaker 1: the value chain and still off growth opportunities. That's quite fascinating. 480 00:25:02,400 --> 00:25:04,960 Speaker 1: Let me push a little bit back on the whole 481 00:25:05,560 --> 00:25:10,360 Speaker 1: Chinese intellectual property argument, and and there are two questions 482 00:25:10,359 --> 00:25:13,560 Speaker 1: that come up, and really these are two very distinct issues. 483 00:25:13,680 --> 00:25:18,000 Speaker 1: One is it seems that hackers in China managed to 484 00:25:18,240 --> 00:25:22,680 Speaker 1: access lots of corporate America's deepest stark at secrets. We've 485 00:25:22,680 --> 00:25:26,520 Speaker 1: seen how fast after I don't remember which company was hacked, 486 00:25:26,760 --> 00:25:29,280 Speaker 1: but very quickly, the Chinese military had a stealth plane 487 00:25:29,280 --> 00:25:31,840 Speaker 1: that should have taken them decades to develop. It's clear 488 00:25:31,920 --> 00:25:35,320 Speaker 1: that they got access to a lot of military technology 489 00:25:35,359 --> 00:25:38,439 Speaker 1: from the US. But second, and perhaps more important, from 490 00:25:38,440 --> 00:25:41,600 Speaker 1: the corporate sector. If you want to build a plant 491 00:25:41,680 --> 00:25:44,240 Speaker 1: in China. If you want to make semi conductors, well 492 00:25:44,480 --> 00:25:46,879 Speaker 1: you sign it. You don't, you have no obligation to 493 00:25:46,920 --> 00:25:49,399 Speaker 1: do that. But if you do, well, we want you 494 00:25:49,440 --> 00:25:52,760 Speaker 1: to sign this agreement, says China, where you're gonna assign 495 00:25:52,880 --> 00:25:54,840 Speaker 1: us the usage of some of your patents and we're 496 00:25:54,840 --> 00:25:58,160 Speaker 1: gonna share this. We're gonna share that. And the American 497 00:25:58,200 --> 00:26:02,840 Speaker 1: companies willingly ended that over. So when people say Chinese 498 00:26:02,840 --> 00:26:06,040 Speaker 1: are stealing or intellectual property, I understand this is an 499 00:26:06,080 --> 00:26:10,959 Speaker 1: arm length corporate relationship. The American corporate executives willingly signing 500 00:26:11,080 --> 00:26:13,960 Speaker 1: No one was under duress. They said, sure, so, so 501 00:26:14,000 --> 00:26:17,800 Speaker 1: how are they stealing this intellectual property? Are you absolutely right? 502 00:26:17,840 --> 00:26:20,280 Speaker 1: I think that's one of the Chinese responses is that 503 00:26:20,359 --> 00:26:23,160 Speaker 1: we've offered them the prospect of one point three billion 504 00:26:23,200 --> 00:26:26,240 Speaker 1: people to sell to. So bring your staff and let's, 505 00:26:26,320 --> 00:26:29,160 Speaker 1: you know, let's let's make money together. I think the 506 00:26:29,280 --> 00:26:31,840 Speaker 1: interesting thing you mentioned at US corporates. I think the 507 00:26:31,880 --> 00:26:36,000 Speaker 1: interesting thing if you think about the current commercialization of technology, 508 00:26:36,040 --> 00:26:38,120 Speaker 1: and I don't just mean tech in this. You think 509 00:26:38,119 --> 00:26:41,399 Speaker 1: about Boeing, it goes out, it does amazing things with 510 00:26:41,440 --> 00:26:43,760 Speaker 1: the D O D and all this other staff, you know, 511 00:26:44,240 --> 00:26:46,479 Speaker 1: spacecraft around the moon and all the and and some 512 00:26:46,560 --> 00:26:49,040 Speaker 1: of that new equipment ends up in a seven eight seven. 513 00:26:49,760 --> 00:26:52,360 Speaker 1: So what are the Chinese do? They simply to buy one, 514 00:26:52,840 --> 00:26:56,360 Speaker 1: They take it into a warehouse, they drop it. These 515 00:26:56,359 --> 00:26:59,120 Speaker 1: are the clues they're using. These are the new ceramics there, 516 00:26:59,320 --> 00:27:03,000 Speaker 1: you know. So so eventually the commercialization of of of 517 00:27:03,119 --> 00:27:06,800 Speaker 1: you know, innovation, innovation, it's a five year head start 518 00:27:06,840 --> 00:27:09,720 Speaker 1: before someone else reverse engineers. And that comes back to 519 00:27:09,720 --> 00:27:11,600 Speaker 1: the earlier comments that you and I are having about 520 00:27:11,600 --> 00:27:14,159 Speaker 1: share buy backs, because if you're going to have to 521 00:27:14,160 --> 00:27:16,639 Speaker 1: stay ahead of the game, you've got to keep investing 522 00:27:17,320 --> 00:27:19,040 Speaker 1: ahead of the game. You have to be way ahead 523 00:27:19,040 --> 00:27:21,120 Speaker 1: of it, yes, and you have to keep pushing back 524 00:27:21,160 --> 00:27:23,479 Speaker 1: on the certainly know that leading edge. And I'm not 525 00:27:23,520 --> 00:27:26,160 Speaker 1: too sure that we have CEOs now who are sitting 526 00:27:26,160 --> 00:27:27,800 Speaker 1: there going how do I stay where I am for 527 00:27:27,840 --> 00:27:31,679 Speaker 1: the next twenty years? And my mentality, having worked in 528 00:27:31,720 --> 00:27:34,080 Speaker 1: Germany for thirteen years, is if you meet a Volkswagen 529 00:27:34,200 --> 00:27:36,800 Speaker 1: or BMW, they know they have the best car in 530 00:27:36,840 --> 00:27:39,119 Speaker 1: the world of let's call it the Gulf. They know 531 00:27:39,200 --> 00:27:41,480 Speaker 1: that the Koreans and the Japanese are coming, and the 532 00:27:41,560 --> 00:27:44,720 Speaker 1: Chinese are coming, so they know the next golf seven 533 00:27:44,760 --> 00:27:48,200 Speaker 1: years down the line has to be like more efficient, 534 00:27:48,320 --> 00:27:51,119 Speaker 1: half half as heavy and twice as fast. And you know, 535 00:27:51,119 --> 00:27:53,760 Speaker 1: whatever the improvement is, and they simply design it to 536 00:27:53,840 --> 00:27:56,399 Speaker 1: be there in seven years time. Then when they launch it, 537 00:27:56,480 --> 00:27:59,320 Speaker 1: they are still better than the competition. And what are 538 00:27:59,359 --> 00:28:01,160 Speaker 1: they doing the next For the next seven years, They're 539 00:28:01,160 --> 00:28:04,600 Speaker 1: getting doing the exact same thing again. They're always engineering 540 00:28:04,640 --> 00:28:07,320 Speaker 1: the excellence into the next one. I would argue with 541 00:28:07,359 --> 00:28:09,359 Speaker 1: you that the Gulf is the best part of the world, 542 00:28:10,200 --> 00:28:13,560 Speaker 1: but but the concept is fascinating. So I want to 543 00:28:13,600 --> 00:28:17,919 Speaker 1: ask you about what you had written recently about central banks. 544 00:28:18,480 --> 00:28:23,560 Speaker 1: You had said quantitative tightening might mean less growth for 545 00:28:23,720 --> 00:28:26,960 Speaker 1: the West, for the whole world. Who are you referring to. Clearly, 546 00:28:27,000 --> 00:28:30,040 Speaker 1: we have the US, Japan, and Europe that has been 547 00:28:30,320 --> 00:28:33,760 Speaker 1: going through different phases of quantitative easing. The US has 548 00:28:33,800 --> 00:28:36,560 Speaker 1: moved off that, Japan is behind US, Europe behind that. 549 00:28:37,040 --> 00:28:39,800 Speaker 1: What do you see happening with central banks around the world. Well, 550 00:28:39,800 --> 00:28:42,000 Speaker 1: what the first thing, I say, Barrians, we don't see 551 00:28:42,000 --> 00:28:44,240 Speaker 1: the Bank of Japan or the ECB doing anything to 552 00:28:44,400 --> 00:28:47,800 Speaker 1: rates in two thousand and nineteen, really, so we're still change, 553 00:28:47,840 --> 00:28:51,240 Speaker 1: no change. And obviously in the US as you as 554 00:28:51,240 --> 00:28:54,920 Speaker 1: you know, recently Chairman Powell started to suggest that maybe 555 00:28:54,920 --> 00:28:58,320 Speaker 1: we're closer to neutral than he'd implied in October and 556 00:28:58,360 --> 00:29:00,920 Speaker 1: therefore um and therefore the markets took that as a 557 00:29:00,960 --> 00:29:03,440 Speaker 1: sign that maybe we were reaching peak interest rates in 558 00:29:03,440 --> 00:29:06,680 Speaker 1: the US. So maybe maybe in two thousand nineteen, you 559 00:29:06,720 --> 00:29:08,440 Speaker 1: and I'll be chatting about the fact that we're at 560 00:29:08,440 --> 00:29:11,400 Speaker 1: the peak now whatever that means for the underlying economy. 561 00:29:11,440 --> 00:29:15,120 Speaker 1: If interest rates are already peaking um and you know, 562 00:29:15,200 --> 00:29:17,960 Speaker 1: and and we we fear for the economy. But the 563 00:29:18,000 --> 00:29:21,160 Speaker 1: concertated tightening point that I that you Alston, I think 564 00:29:21,240 --> 00:29:23,440 Speaker 1: is potentially the biggest story of two thousand and nineteen. 565 00:29:24,200 --> 00:29:28,520 Speaker 1: We have been speaking with Neil Dwayne of Alian's Global Investors. 566 00:29:29,000 --> 00:29:31,640 Speaker 1: If you enjoy this conversation, we'll be sure and come 567 00:29:31,640 --> 00:29:34,200 Speaker 1: back for the podcast extras, where we keep the tape 568 00:29:34,280 --> 00:29:39,000 Speaker 1: rolling and continue discussing all things global macro. We love 569 00:29:39,040 --> 00:29:43,760 Speaker 1: your comments, feedback and suggestions right to us at m 570 00:29:43,800 --> 00:29:46,840 Speaker 1: IB podcast at Bloomberg dot net. Be sure and check 571 00:29:46,840 --> 00:29:50,720 Speaker 1: out my daily column. It's at Bloomberg dot com slash Opinion. 572 00:29:51,080 --> 00:29:55,240 Speaker 1: Follow me on Twitter at Ritolts. I'm Barry Ritolts. You're 573 00:29:55,280 --> 00:30:07,480 Speaker 1: listening to Masters in Business on Bloomberg Radio. Welcome to 574 00:30:07,520 --> 00:30:09,520 Speaker 1: the podcast, Neil, thank you so much for doing this. 575 00:30:09,600 --> 00:30:13,000 Speaker 1: I've been looking forward um to having this conversation. We 576 00:30:13,000 --> 00:30:16,040 Speaker 1: were previously scheduled and then got snowed out. I don't 577 00:30:16,080 --> 00:30:18,560 Speaker 1: remember it for was I got stuck at home or 578 00:30:18,600 --> 00:30:20,720 Speaker 1: your flight got canceled. I don't remember which it was, 579 00:30:21,160 --> 00:30:23,720 Speaker 1: but something crazy happened with the weather. I think it 580 00:30:23,840 --> 00:30:25,360 Speaker 1: was just the weather here. I think I was in 581 00:30:25,400 --> 00:30:27,320 Speaker 1: New York, but I only have to walk here, I 582 00:30:27,400 --> 00:30:31,680 Speaker 1: think right, I think I got it's called global warming, though, Barry, 583 00:30:31,680 --> 00:30:34,480 Speaker 1: you've got to get with the program. See. I think 584 00:30:34,520 --> 00:30:37,480 Speaker 1: the big branding mistake that was made many years ago 585 00:30:38,080 --> 00:30:41,560 Speaker 1: if they would have called the global weather volatility, nobody 586 00:30:41,600 --> 00:30:43,600 Speaker 1: can deny that none of us could have spelled it. 587 00:30:44,080 --> 00:30:47,200 Speaker 1: That's true. That's that's the pro global weather volatility doesn't 588 00:30:47,240 --> 00:30:49,240 Speaker 1: sort of ring off the tongue. Really it does not. 589 00:30:50,320 --> 00:30:52,560 Speaker 1: So I the one thing I didn't get to talk 590 00:30:52,600 --> 00:30:55,720 Speaker 1: to you during the broadcast portion that I really wanted 591 00:30:55,720 --> 00:31:01,320 Speaker 1: to discuss was um something you've written about white extensively, 592 00:31:01,960 --> 00:31:06,000 Speaker 1: which is E. S. G. Investing. So let's uh, let's 593 00:31:06,040 --> 00:31:10,760 Speaker 1: discuss that a little bit environmental, social, and governance investing. 594 00:31:11,240 --> 00:31:13,760 Speaker 1: You've written that you think this is in the process 595 00:31:13,880 --> 00:31:17,360 Speaker 1: of being mainstreamed. Is that a fair word. Yeah, definitely. 596 00:31:17,440 --> 00:31:19,160 Speaker 1: I suppose the way I would look at it, particularly 597 00:31:19,240 --> 00:31:22,400 Speaker 1: from an American audiences lens, is I think all investment 598 00:31:22,480 --> 00:31:24,880 Speaker 1: managers have been very conscious of their fight Ucrey duty, 599 00:31:25,720 --> 00:31:27,960 Speaker 1: and I think many of us have had a very 600 00:31:28,000 --> 00:31:30,760 Speaker 1: for the last thirty years, very narrow definition of what 601 00:31:30,800 --> 00:31:32,480 Speaker 1: that means. We turn up and vote, and we check 602 00:31:32,480 --> 00:31:35,680 Speaker 1: how management get paid, we check the audited ordered accounts 603 00:31:35,720 --> 00:31:40,479 Speaker 1: work that. But it's a very minor, superficial group of topics. Well, 604 00:31:40,520 --> 00:31:42,880 Speaker 1: I think it has, it has in the past, whereas 605 00:31:42,920 --> 00:31:45,480 Speaker 1: I think now many main investors around the world, and 606 00:31:45,520 --> 00:31:48,200 Speaker 1: many governments and therefore regulators around that are sitting there 607 00:31:48,200 --> 00:31:51,840 Speaker 1: saying is it possible to it to help allocate capital 608 00:31:51,880 --> 00:31:55,040 Speaker 1: in a nicer way, a greener way, a more friendly way. 609 00:31:55,120 --> 00:31:57,800 Speaker 1: So if you think about the environment, you would remember 610 00:31:57,800 --> 00:31:59,760 Speaker 1: in the mid nineties, Shell announced they were going to 611 00:31:59,840 --> 00:32:02,320 Speaker 1: ding sink one of the new north sea platforms in 612 00:32:02,360 --> 00:32:04,160 Speaker 1: the middle of the Atlantic Ocean, you know, somewhere where 613 00:32:04,200 --> 00:32:07,320 Speaker 1: it was deep, and everyone was horrified that that's what 614 00:32:07,400 --> 00:32:10,320 Speaker 1: the oil industry were up to. And so you and 615 00:32:10,320 --> 00:32:12,080 Speaker 1: I were sitting there going, no, we don't want, you know, 616 00:32:12,200 --> 00:32:14,080 Speaker 1: huge bits of iron just rusting at the bottom of 617 00:32:14,080 --> 00:32:16,600 Speaker 1: the Atlantic Ocean. That's not environmentally how we want to 618 00:32:16,600 --> 00:32:20,360 Speaker 1: behave So well, it might have been cheaper at that time. 619 00:32:20,440 --> 00:32:23,760 Speaker 1: That's a different, different point that pursuit of profit doesn't 620 00:32:23,800 --> 00:32:26,959 Speaker 1: necessarily always I think, get us where we want to go. 621 00:32:27,560 --> 00:32:29,280 Speaker 1: If you think about the use of child labor, I 622 00:32:29,320 --> 00:32:31,280 Speaker 1: think if you were investing in a company that was, 623 00:32:31,800 --> 00:32:36,160 Speaker 1: you know, by design abusing you know, the children around 624 00:32:36,160 --> 00:32:37,520 Speaker 1: the world, you and I would sit there and say, 625 00:32:37,560 --> 00:32:40,400 Speaker 1: that's not how I want to invest I it used 626 00:32:40,440 --> 00:32:44,720 Speaker 1: to be. Half of what I was wearing was was you. 627 00:32:45,520 --> 00:32:47,479 Speaker 1: Wasn't it shocking the first time you learned that your 628 00:32:47,520 --> 00:32:51,040 Speaker 1: sneakers were made by ten year olds in Vietnam? It 629 00:32:51,160 --> 00:32:54,680 Speaker 1: was horrifying. So so I think that So I think therefore, 630 00:32:54,720 --> 00:32:56,560 Speaker 1: and I suppose what we're also seeing is the rival 631 00:32:56,560 --> 00:32:59,719 Speaker 1: of the millennial. The children born after they are much 632 00:32:59,760 --> 00:33:01,840 Speaker 1: more anxious of where their food comes from, where their 633 00:33:01,880 --> 00:33:04,560 Speaker 1: clothes come from. They obviously rely on the bank of 634 00:33:04,600 --> 00:33:07,040 Speaker 1: mom and dad, as you and I know, but they 635 00:33:07,040 --> 00:33:09,920 Speaker 1: are more conscious of the impact they have on on 636 00:33:09,960 --> 00:33:13,280 Speaker 1: the environment and and therefore we can see the confluence 637 00:33:13,280 --> 00:33:16,800 Speaker 1: of the government and regulation against the rising fiducy duties 638 00:33:16,920 --> 00:33:19,200 Speaker 1: is creating this e s G. This is where my 639 00:33:19,240 --> 00:33:21,920 Speaker 1: theme of inequalities come from, because I think more and 640 00:33:21,960 --> 00:33:24,240 Speaker 1: more people now want to be seen to be doing 641 00:33:24,280 --> 00:33:27,320 Speaker 1: what they can to not just make a profit, They 642 00:33:27,320 --> 00:33:29,280 Speaker 1: want to make a good profit. If I can use 643 00:33:29,640 --> 00:33:31,840 Speaker 1: good in that phrase, And you know, you could look 644 00:33:31,880 --> 00:33:34,240 Speaker 1: at this from a different perspective. I've heard a number 645 00:33:34,280 --> 00:33:39,960 Speaker 1: of people posit variations of the theme that e s 646 00:33:40,000 --> 00:33:44,719 Speaker 1: G is becoming mainstreams because E s G is a 647 00:33:44,720 --> 00:33:47,680 Speaker 1: good form of risk management. So, for example, if you 648 00:33:47,720 --> 00:33:51,120 Speaker 1: have good corporate governance, and you have a diverse board 649 00:33:51,120 --> 00:33:52,760 Speaker 1: of directors, and you have a lot of women and 650 00:33:52,800 --> 00:33:56,840 Speaker 1: senior positions, and that there is not a big pay 651 00:33:56,880 --> 00:34:00,160 Speaker 1: gap between the genders, you basically end up of the 652 00:34:00,200 --> 00:34:03,640 Speaker 1: company that's not going to be like Uber with this 653 00:34:03,800 --> 00:34:07,160 Speaker 1: sort of frat boy mentality. It's not going to be 654 00:34:07,840 --> 00:34:10,480 Speaker 1: um like the me. Two companies that are being sued 655 00:34:10,560 --> 00:34:13,640 Speaker 1: left in right because the behavior of executives are so 656 00:34:13,719 --> 00:34:18,640 Speaker 1: egregious you basically end up with responsible adult companies and 657 00:34:18,680 --> 00:34:21,239 Speaker 1: that's good risk risk management. What are your thoughts not? No, 658 00:34:21,520 --> 00:34:23,680 Speaker 1: I definitely think that is that that is the case, 659 00:34:23,719 --> 00:34:26,600 Speaker 1: and I think the risk management can come through in 660 00:34:26,880 --> 00:34:29,200 Speaker 1: many other different areas because I think in a world 661 00:34:29,200 --> 00:34:31,680 Speaker 1: where we're all having to take some risk to earn 662 00:34:31,680 --> 00:34:34,319 Speaker 1: a return, I think we have to then understand how 663 00:34:34,320 --> 00:34:36,640 Speaker 1: we manage some of those risks, and I think the 664 00:34:36,719 --> 00:34:39,960 Speaker 1: E s G lens allows an investor to work out 665 00:34:40,000 --> 00:34:43,359 Speaker 1: what some of those parameters are and whether they want 666 00:34:43,400 --> 00:34:45,919 Speaker 1: to change their stock picking. I think where I sit 667 00:34:45,960 --> 00:34:49,080 Speaker 1: for the American audience, though, is is that you're yet 668 00:34:49,200 --> 00:34:53,600 Speaker 1: to be convinced that E s G doesn't affect your returns. 669 00:34:54,440 --> 00:34:57,520 Speaker 1: So you know, the megawe general pushback is, well, you know, 670 00:34:57,600 --> 00:35:01,600 Speaker 1: if they're free and oil rallies, you're gonna you're gonna 671 00:35:01,600 --> 00:35:04,680 Speaker 1: miss some gains. Yes, but I think there's increasing evidence 672 00:35:04,719 --> 00:35:08,560 Speaker 1: now that you can have a good portfolio of outperforming 673 00:35:08,560 --> 00:35:12,719 Speaker 1: stocks that doesn't underperform a good portfolio of let's say, 674 00:35:13,000 --> 00:35:15,440 Speaker 1: weaker E s G stock. So we think that the 675 00:35:15,480 --> 00:35:17,680 Speaker 1: onus is is moving in that direction. But I think 676 00:35:17,719 --> 00:35:20,920 Speaker 1: the key thing from an institutional perspective. I know there's 677 00:35:20,960 --> 00:35:22,840 Speaker 1: some leading institutions in the US as well as in 678 00:35:22,880 --> 00:35:25,279 Speaker 1: Europe who now believe they have to take the lead 679 00:35:25,280 --> 00:35:28,839 Speaker 1: in this, and I think therefore, to some extent, there's 680 00:35:28,880 --> 00:35:32,040 Speaker 1: an element of the herding mentality, you know, where some 681 00:35:32,040 --> 00:35:34,960 Speaker 1: some of the leaders like a cowper's head, inevitably a 682 00:35:35,000 --> 00:35:38,480 Speaker 1: lot of the state, state pension funds or whatever. We'll 683 00:35:38,520 --> 00:35:40,879 Speaker 1: head in a similar direction. And what we've seen from 684 00:35:40,920 --> 00:35:44,160 Speaker 1: the corporate side, you have the CEO of Black Rock 685 00:35:44,360 --> 00:35:48,560 Speaker 1: writing letters to the executives of the SMP five lamenting 686 00:35:48,640 --> 00:35:52,880 Speaker 1: short termism. You have the chairman of Vanguard talking about 687 00:35:53,360 --> 00:35:57,320 Speaker 1: becoming more active in their proxy voting. Those two companies 688 00:35:57,360 --> 00:36:00,439 Speaker 1: own ten percent of every publicly traded company in the world. 689 00:36:00,480 --> 00:36:02,440 Speaker 1: And what I like about the way we're trying to 690 00:36:02,480 --> 00:36:04,279 Speaker 1: solve it for clients in e s G is we're 691 00:36:04,320 --> 00:36:06,719 Speaker 1: trying we now have fifteen analysts around the world who 692 00:36:06,760 --> 00:36:10,400 Speaker 1: complement our eight five equity and forty five credit analysts. 693 00:36:10,400 --> 00:36:12,480 Speaker 1: So we're trying to build s G into all the 694 00:36:12,560 --> 00:36:16,040 Speaker 1: research we do. And that the key is you, as 695 00:36:16,040 --> 00:36:18,480 Speaker 1: an American may have a slightly different set of values 696 00:36:18,600 --> 00:36:20,520 Speaker 1: from say the client I was with three weeks ago 697 00:36:20,560 --> 00:36:24,080 Speaker 1: and quait now they are they are long oil, so 698 00:36:24,200 --> 00:36:27,400 Speaker 1: they are thinking about sustainability, climate change and E s 699 00:36:27,440 --> 00:36:30,160 Speaker 1: G from a lens that's built on an oil economy. 700 00:36:30,239 --> 00:36:31,600 Speaker 1: Let let's say if we were thinking we were in 701 00:36:31,640 --> 00:36:34,480 Speaker 1: Texas rather than in New York. So the values for 702 00:36:34,520 --> 00:36:37,480 Speaker 1: each client can be different. And the beauty of what 703 00:36:37,520 --> 00:36:39,400 Speaker 1: we're trying to do is have the debate with the 704 00:36:39,440 --> 00:36:41,359 Speaker 1: client about what they mean by E s G because 705 00:36:41,360 --> 00:36:44,800 Speaker 1: obviously some clients are not quite sure what it all means. 706 00:36:45,239 --> 00:36:47,520 Speaker 1: And then when they understand what it means for their portfolio, 707 00:36:47,600 --> 00:36:49,680 Speaker 1: we can then implement it as you know, so that 708 00:36:49,719 --> 00:36:52,120 Speaker 1: they get what they want. And the last fun fact 709 00:36:52,440 --> 00:36:54,200 Speaker 1: I just share with you is if you look at 710 00:36:54,200 --> 00:36:57,160 Speaker 1: say a classic index like the S and P, and 711 00:36:57,200 --> 00:36:59,400 Speaker 1: despite President Trump not agreeing with it, you know, the 712 00:36:59,400 --> 00:37:01,560 Speaker 1: Paris of Core two years ago agreed we needed to 713 00:37:01,600 --> 00:37:04,840 Speaker 1: control the climate change to only two degrees. Well, the 714 00:37:05,040 --> 00:37:07,960 Speaker 1: S and P is currently constituted to deliver you a 715 00:37:08,040 --> 00:37:12,840 Speaker 1: three point eight percent climate change increase. Because we're allocating 716 00:37:12,880 --> 00:37:15,640 Speaker 1: capital to a lot of the bad industries. So the 717 00:37:15,680 --> 00:37:17,719 Speaker 1: first thing we're or one of the easy things we're 718 00:37:17,719 --> 00:37:19,320 Speaker 1: trying to do with our clients is to talk to 719 00:37:19,320 --> 00:37:23,200 Speaker 1: them about if you believe this influence how you allocate 720 00:37:23,200 --> 00:37:26,400 Speaker 1: your capital. Start thinking about being a little more green 721 00:37:26,520 --> 00:37:28,799 Speaker 1: is my favorite sort of phrase to shorthand for this. 722 00:37:29,200 --> 00:37:32,719 Speaker 1: And don't just look at an index, because you can 723 00:37:32,719 --> 00:37:36,280 Speaker 1: then you can allocate your capital, allocate your capital differently, 724 00:37:36,320 --> 00:37:38,360 Speaker 1: And I think that's the key. We can start to 725 00:37:38,400 --> 00:37:41,319 Speaker 1: shape the world by making making the capital move to 726 00:37:41,360 --> 00:37:43,879 Speaker 1: where we want it to as as investors. And let 727 00:37:43,880 --> 00:37:47,400 Speaker 1: me push back against you on on behalf of Texas 728 00:37:47,480 --> 00:37:53,000 Speaker 1: for a moment. Texas, to their credit, has shifted their economy. 729 00:37:53,120 --> 00:37:56,640 Speaker 1: They're a big technology location. They're a big real estate location. Also, 730 00:37:56,680 --> 00:38:00,399 Speaker 1: you look at Dallas, Houston, Austin, go down the list 731 00:38:00,440 --> 00:38:04,520 Speaker 1: of of San Antonio. They have become a very tech 732 00:38:04,600 --> 00:38:08,640 Speaker 1: friendly area. And the rise and fall of oil doesn't 733 00:38:08,680 --> 00:38:11,200 Speaker 1: slaughter Texas the way it did in the eighties. The 734 00:38:11,239 --> 00:38:14,440 Speaker 1: eighties they lived and died on that. But it's quite fascinating, 735 00:38:14,719 --> 00:38:16,840 Speaker 1: all right. I know I only have you for a 736 00:38:17,080 --> 00:38:20,080 Speaker 1: finite amount of time, and I have a million other questions, 737 00:38:20,080 --> 00:38:23,040 Speaker 1: but I want to get to my favorite questions I 738 00:38:23,120 --> 00:38:26,880 Speaker 1: asked all of my guests. So let's let's jump right 739 00:38:26,920 --> 00:38:30,719 Speaker 1: into this and feel free to uh make references to 740 00:38:30,840 --> 00:38:33,719 Speaker 1: things in the UK that American audiences may not be 741 00:38:34,480 --> 00:38:38,240 Speaker 1: understand or be familiar with. UM, So tell us what's 742 00:38:38,280 --> 00:38:43,319 Speaker 1: the most important thing people don't know about your background? UM? 743 00:38:43,360 --> 00:38:47,239 Speaker 1: I would probably say, I'm as of last month November, 744 00:38:48,000 --> 00:38:51,680 Speaker 1: thirty years married with four fantastic kids, and I am 745 00:38:52,280 --> 00:38:54,360 Speaker 1: you know, I work to live, I don't live to work. 746 00:38:54,600 --> 00:38:58,520 Speaker 1: That's that's great. Who are some of your early mentors? Well, 747 00:38:58,560 --> 00:39:01,120 Speaker 1: it's very interesting. I would actually saying my father in 748 00:39:01,200 --> 00:39:04,400 Speaker 1: law and my father. My father was a self employed 749 00:39:04,440 --> 00:39:08,080 Speaker 1: businessman who went bust, and he taught me everything you 750 00:39:08,120 --> 00:39:10,480 Speaker 1: don't want to do in the real world. So as 751 00:39:10,520 --> 00:39:14,560 Speaker 1: I've managed my career, I have thought about not making 752 00:39:14,560 --> 00:39:16,960 Speaker 1: the mistakes that he did. I know sometimes we want 753 00:39:16,960 --> 00:39:20,319 Speaker 1: to be as fathers, be remembered positively. I remember my 754 00:39:20,400 --> 00:39:23,840 Speaker 1: father's mistakes rather than his successes. They're still good lessons, 755 00:39:24,360 --> 00:39:26,880 Speaker 1: for sure. But my father in law actually inspired me 756 00:39:26,920 --> 00:39:29,200 Speaker 1: to become an investor, because otherwise I'm afraid you would 757 00:39:29,200 --> 00:39:32,600 Speaker 1: have been interviewing the world's most boring chartered accountant. So 758 00:39:32,719 --> 00:39:35,279 Speaker 1: I he was one of my mentors because as I 759 00:39:35,320 --> 00:39:38,719 Speaker 1: moved into investment management, he was already an investor. We 760 00:39:38,840 --> 00:39:42,000 Speaker 1: chatted over the Sunday you know, dinner table about life, 761 00:39:42,000 --> 00:39:44,439 Speaker 1: the universe, and markets. So he really helped kick off 762 00:39:44,480 --> 00:39:49,439 Speaker 1: my my career. Quite interesting. You mentioned investors one investors 763 00:39:49,560 --> 00:39:55,160 Speaker 1: influenced your approach to looking at the world of of capital. Well, 764 00:39:55,239 --> 00:39:57,120 Speaker 1: I I think although I've read a lot of books 765 00:39:57,160 --> 00:39:59,680 Speaker 1: are from you know, many of the famous investors m 766 00:40:00,000 --> 00:40:03,160 Speaker 1: after my early UM, I would say quite UK specific 767 00:40:04,000 --> 00:40:08,480 Speaker 1: expertise or experiences at Flemings and at and at Climb Benson. 768 00:40:08,760 --> 00:40:11,399 Speaker 1: I joined JPMorgan in the mid nineties and I really 769 00:40:11,480 --> 00:40:15,680 Speaker 1: learned about fundamental research, about teamwork, about the global network 770 00:40:15,760 --> 00:40:18,239 Speaker 1: that you you could access. So I feel a lot 771 00:40:18,239 --> 00:40:20,680 Speaker 1: of my colleagues in in the in what I call 772 00:40:20,719 --> 00:40:23,600 Speaker 1: the great JPMorgan before it was bought by Chase. I 773 00:40:23,640 --> 00:40:26,600 Speaker 1: think JP Morgan, by the way, is still probably great, UM, 774 00:40:26,640 --> 00:40:28,799 Speaker 1: but that was really you know a lot of a 775 00:40:28,800 --> 00:40:31,160 Speaker 1: lot of my colleagues at the time really helped me 776 00:40:31,200 --> 00:40:32,759 Speaker 1: to step up my game in terms of how I 777 00:40:32,760 --> 00:40:35,719 Speaker 1: think about investing. You mentioned books. Tell us about some 778 00:40:35,800 --> 00:40:39,400 Speaker 1: of your favorite books, finance, non finance, fishing, no fishing, 779 00:40:39,440 --> 00:40:41,480 Speaker 1: whatever you like. Well, let me tell you a funny anecdote. 780 00:40:41,480 --> 00:40:43,560 Speaker 1: My my favorite books of all time are still The 781 00:40:43,600 --> 00:40:45,960 Speaker 1: Lord of the Rings. I used to read that every summer, 782 00:40:46,960 --> 00:40:49,880 Speaker 1: and the reason for me was back in nineteen seventy 783 00:40:49,920 --> 00:40:52,840 Speaker 1: three we had the blackouts because of the minor strike 784 00:40:53,520 --> 00:40:56,640 Speaker 1: and at the school I was at every evening under candlelight. 785 00:40:56,760 --> 00:40:59,600 Speaker 1: Our teacher used to read us The Lord of the Rings. 786 00:41:00,239 --> 00:41:01,960 Speaker 1: And so for me, the first, you know, two and 787 00:41:01,960 --> 00:41:05,000 Speaker 1: a half books until you know that the strike was over. 788 00:41:05,560 --> 00:41:08,000 Speaker 1: If you can imagine sitting in your classroom, it's dark outside, 789 00:41:08,040 --> 00:41:10,600 Speaker 1: it's windy, and and you've got a candle and someone's 790 00:41:10,640 --> 00:41:12,319 Speaker 1: reading you about you know, The Lord of the Ring. 791 00:41:12,400 --> 00:41:14,799 Speaker 1: That was just the most memorable. I nearly didn't go 792 00:41:14,800 --> 00:41:16,520 Speaker 1: and see the movies because I didn't want it to 793 00:41:16,560 --> 00:41:19,760 Speaker 1: destroy what I thought of the world that we created 794 00:41:19,800 --> 00:41:23,440 Speaker 1: in that period. And and to give Peter Jackson credit, 795 00:41:23,800 --> 00:41:27,560 Speaker 1: the movies were really, yes, they were so. So what 796 00:41:27,560 --> 00:41:31,200 Speaker 1: I would say is I read a lot of books. Um, 797 00:41:31,239 --> 00:41:33,759 Speaker 1: I am actually funny enough celebrating my thirties where they're 798 00:41:33,760 --> 00:41:36,719 Speaker 1: going with my wife by going to the Antarctic next year, 799 00:41:37,480 --> 00:41:40,160 Speaker 1: and so I'm reading books about Shackleton and Scott. So 800 00:41:40,200 --> 00:41:43,239 Speaker 1: have you read Endurance? I have. That's an unbelievable book. 801 00:41:43,280 --> 00:41:44,800 Speaker 1: Has it not been made into a film? That's what 802 00:41:44,920 --> 00:41:47,279 Speaker 1: I think it. I think it has to be. It 803 00:41:47,360 --> 00:41:49,759 Speaker 1: may have recently been. By the way, the story of 804 00:41:49,800 --> 00:41:53,040 Speaker 1: the book is quite fascinating. The book was originally published 805 00:41:54,040 --> 00:41:57,200 Speaker 1: way early and did nothing, and then twenty years later 806 00:41:57,239 --> 00:41:59,600 Speaker 1: someone buys the rights of the book, reissues it and 807 00:41:59,640 --> 00:42:02,160 Speaker 1: it becomes is a big Yes, I agree with you. 808 00:42:02,200 --> 00:42:04,200 Speaker 1: I can't believe that has him in a moment because 809 00:42:04,600 --> 00:42:07,480 Speaker 1: I'm because I'm not a millennial. The book I always 810 00:42:07,520 --> 00:42:08,759 Speaker 1: go to. I think it can be a bit of 811 00:42:08,760 --> 00:42:11,080 Speaker 1: a hard read. And I'm sure you've probably interviewed him 812 00:42:11,080 --> 00:42:13,399 Speaker 1: and read the book as well. But the book, when 813 00:42:13,440 --> 00:42:16,000 Speaker 1: I think about where technology may lead us is the 814 00:42:16,040 --> 00:42:19,719 Speaker 1: Singularity is nearby. Ray Kutzwile, who works at alphabet I 815 00:42:19,800 --> 00:42:23,440 Speaker 1: have not interviewed him, but feel free to make an introduction. 816 00:42:23,480 --> 00:42:25,759 Speaker 1: I would. I would love to that. That isn't an 817 00:42:25,760 --> 00:42:27,680 Speaker 1: easy read, is it? It isn't. But the thing is, 818 00:42:27,719 --> 00:42:30,839 Speaker 1: it tells me where the people who understand technology think 819 00:42:30,880 --> 00:42:33,239 Speaker 1: we can go. Now what is scary. At the end 820 00:42:33,239 --> 00:42:35,200 Speaker 1: of the book, he actually thinks that we could be 821 00:42:35,239 --> 00:42:39,719 Speaker 1: immortal if you place yourself into a you know, place 822 00:42:39,840 --> 00:42:43,080 Speaker 1: some version of your, for lack of a better word, 823 00:42:43,160 --> 00:42:48,040 Speaker 1: soul into a computer. But really it's your your personhood 824 00:42:48,560 --> 00:42:52,040 Speaker 1: into a piece of technology. Whether or not that's actually you, 825 00:42:52,120 --> 00:42:56,160 Speaker 1: whether or not that is really immortality is debatable, But 826 00:42:56,280 --> 00:42:58,759 Speaker 1: I guess it's just a function of how advanced that 827 00:42:58,840 --> 00:43:01,200 Speaker 1: And the reason I find that is my prior life. 828 00:43:01,280 --> 00:43:03,799 Speaker 1: I was a classicist. So when I when I think 829 00:43:03,840 --> 00:43:06,920 Speaker 1: about the books I like rereading there all the great 830 00:43:07,000 --> 00:43:10,040 Speaker 1: myths and legends of Roman. Give us an example, well, 831 00:43:10,080 --> 00:43:12,800 Speaker 1: just even going back to see you know, Homer's Iliad. 832 00:43:12,840 --> 00:43:14,360 Speaker 1: I mean I can read it in Greek, still I 833 00:43:14,360 --> 00:43:16,759 Speaker 1: can read it in English. Um, I just love it 834 00:43:16,840 --> 00:43:19,880 Speaker 1: because it's a it's a time of myth, it's a 835 00:43:19,920 --> 00:43:23,719 Speaker 1: time of legend, and it just inspires inspired me as 836 00:43:23,719 --> 00:43:26,600 Speaker 1: a youngster. But even now I love the stories because 837 00:43:26,640 --> 00:43:28,840 Speaker 1: you just think, you know, this is how mankind was 838 00:43:28,840 --> 00:43:31,160 Speaker 1: thinking three or four thousand years ago. It's not all 839 00:43:31,160 --> 00:43:34,480 Speaker 1: that different from you know, the Odyssey, the Iliad and 840 00:43:34,600 --> 00:43:38,439 Speaker 1: um trying to remember who recently recommended Joseph Campbell's Men 841 00:43:38,440 --> 00:43:42,359 Speaker 1: of a Thousand Faces, all those original Greek stories, they're 842 00:43:42,360 --> 00:43:45,040 Speaker 1: no different than Marvel comics, or any of the superheroes 843 00:43:45,680 --> 00:43:49,680 Speaker 1: superhero movies from today. It's the same narrative art. Great 844 00:43:49,719 --> 00:43:52,399 Speaker 1: Dahia was the one who recommended Okay, okay, that's kind 845 00:43:52,400 --> 00:43:56,120 Speaker 1: of a fascinating So that's a nice list of books 846 00:43:56,120 --> 00:44:00,200 Speaker 1: from them, from from Lord of the Ring this to 847 00:44:00,320 --> 00:44:03,759 Speaker 1: something little challenging. That's the classics. I like it. So 848 00:44:03,800 --> 00:44:06,560 Speaker 1: what has changed since you've joined the industry? What do 849 00:44:06,560 --> 00:44:10,360 Speaker 1: you think is the single biggest shift we've been seeing personally? 850 00:44:10,360 --> 00:44:12,600 Speaker 1: As I alluded to earlier, I think it's the pressure 851 00:44:12,640 --> 00:44:17,400 Speaker 1: for performance. I think clients tolerance for loss in the 852 00:44:17,400 --> 00:44:21,640 Speaker 1: short term has become very, very acute, and I feel 853 00:44:21,680 --> 00:44:23,640 Speaker 1: that The other thing that concerns me is can you 854 00:44:23,680 --> 00:44:25,600 Speaker 1: imagine you've been in the game as long as I have. 855 00:44:25,760 --> 00:44:27,439 Speaker 1: Can you imagine what bond investor is going to feel 856 00:44:27,480 --> 00:44:29,920 Speaker 1: like at the end of this thirty seven bomble market 857 00:44:30,120 --> 00:44:32,560 Speaker 1: when they end up with a thirty seven year bear market? 858 00:44:32,719 --> 00:44:35,280 Speaker 1: And and here we are in a year that looks 859 00:44:35,320 --> 00:44:39,960 Speaker 1: like market's going to be flat to marginally up or down, 860 00:44:40,520 --> 00:44:44,680 Speaker 1: with Barnes also down. Yes, nothing, nothing really has worked 861 00:44:45,120 --> 00:44:48,719 Speaker 1: is working out well. Although the day before we recorded this, 862 00:44:49,400 --> 00:44:52,640 Speaker 1: with dividends, the SMP was up about six percent by 863 00:44:52,640 --> 00:44:55,440 Speaker 1: the time this broadcast. That number is not likely to 864 00:44:55,480 --> 00:44:59,520 Speaker 1: be spot on whether it's high or lower, as anybody's guess. Um, 865 00:45:00,120 --> 00:45:03,200 Speaker 1: so what are you excited most about? You mentioned China earlier. 866 00:45:03,440 --> 00:45:06,360 Speaker 1: What do you think is the most exciting thing that 867 00:45:06,360 --> 00:45:09,080 Speaker 1: that you get to see? Well, I think on a 868 00:45:09,160 --> 00:45:11,200 Speaker 1: twenty or thirty of you, it's about Asia, the rise 869 00:45:11,239 --> 00:45:13,719 Speaker 1: of Asia. I'm very excited the companies you meet there. 870 00:45:13,760 --> 00:45:16,640 Speaker 1: They're just getting started in terms of how the markets 871 00:45:16,640 --> 00:45:19,600 Speaker 1: are going to develop. Um, I would say right at 872 00:45:19,600 --> 00:45:21,920 Speaker 1: this moment in time, because I feel like I want 873 00:45:21,960 --> 00:45:24,120 Speaker 1: to be slightly edgy fewer people. I love the UK. 874 00:45:24,880 --> 00:45:26,719 Speaker 1: I look at the valuations of the UK. I look 875 00:45:26,719 --> 00:45:29,719 Speaker 1: at the valuation of Sterling. I think everyone has given 876 00:45:29,800 --> 00:45:33,120 Speaker 1: up on Brexit, including the British, and therefore it's priced 877 00:45:33,200 --> 00:45:35,200 Speaker 1: for a disaster, which I don't think is going to happen. 878 00:45:35,200 --> 00:45:39,319 Speaker 1: I think it's sold too too long. Quite quite interesting. Um, 879 00:45:39,440 --> 00:45:41,719 Speaker 1: tell us about a time you failed and what you 880 00:45:41,800 --> 00:45:44,800 Speaker 1: learned from the experience. Well, you know I I actually 881 00:45:45,040 --> 00:45:47,560 Speaker 1: UM was gonna when you when I saw the question 882 00:45:47,640 --> 00:45:51,279 Speaker 1: thinking about this two ways. When I failed in Germany, 883 00:45:51,400 --> 00:45:54,040 Speaker 1: it was because I thought as a brit and I 884 00:45:54,080 --> 00:45:57,279 Speaker 1: didn't think as a German. So although I was there 885 00:45:57,320 --> 00:46:00,040 Speaker 1: as an agent of change, I didn't sit on the 886 00:46:00,040 --> 00:46:02,120 Speaker 1: the side of the table and think, how do I sound? 887 00:46:02,160 --> 00:46:04,840 Speaker 1: How do I get them to think in a slightly 888 00:46:04,840 --> 00:46:08,560 Speaker 1: different way. So so for me, I have learned I 889 00:46:08,600 --> 00:46:10,839 Speaker 1: think in my management style, and I'm funny if I'm 890 00:46:10,840 --> 00:46:12,640 Speaker 1: now trying to do this with my wife and my children, 891 00:46:12,800 --> 00:46:15,040 Speaker 1: to put myself in their shoes so that I see 892 00:46:15,080 --> 00:46:17,880 Speaker 1: how they see me. And so that's the key that 893 00:46:17,920 --> 00:46:19,759 Speaker 1: I think is I've got older, I've got better at 894 00:46:19,800 --> 00:46:22,839 Speaker 1: thinking or anticipating what the person on the other side 895 00:46:22,840 --> 00:46:24,680 Speaker 1: of the table is. You know where they're coming from, 896 00:46:24,719 --> 00:46:27,000 Speaker 1: what their issues are. So whether it's a Frenchman or 897 00:46:27,000 --> 00:46:29,160 Speaker 1: a Japanese or an American, I sit there trying to 898 00:46:29,200 --> 00:46:32,120 Speaker 1: work out some empathy with that person, so I can 899 00:46:32,480 --> 00:46:35,120 Speaker 1: I can learn to be more impactful. I think when 900 00:46:35,160 --> 00:46:38,680 Speaker 1: it comes to investing, I've always looked at and by 901 00:46:38,680 --> 00:46:40,920 Speaker 1: the way, you know, one of your other questions is 902 00:46:40,960 --> 00:46:42,920 Speaker 1: you know what advice would you give people. My advice is, 903 00:46:42,960 --> 00:46:45,560 Speaker 1: you're always going to make mistakes. You're always going to 904 00:46:45,640 --> 00:46:47,640 Speaker 1: have to learn from your mistakes because you, and I 905 00:46:47,680 --> 00:46:50,239 Speaker 1: know you never learned from your winning. You just sit 906 00:46:50,280 --> 00:46:52,360 Speaker 1: there say hey, I'm great, and you move on to 907 00:46:52,440 --> 00:46:54,359 Speaker 1: the next win. In fact, when you win, you don't 908 00:46:54,360 --> 00:46:57,239 Speaker 1: even starting as yourself. Am I good? Or did I 909 00:46:57,280 --> 00:46:59,359 Speaker 1: just get? And so when I look at where I've 910 00:46:59,520 --> 00:47:02,480 Speaker 1: when as a portfolio manager, when I've when I've failed, 911 00:47:02,560 --> 00:47:06,439 Speaker 1: it's because actually I have completely over appreciated the edge 912 00:47:06,480 --> 00:47:10,520 Speaker 1: I thought I had. I've therefore underappreciated maybe things that 913 00:47:10,560 --> 00:47:13,760 Speaker 1: are not inside the company's control or inside the market's control. 914 00:47:13,960 --> 00:47:16,279 Speaker 1: But more importantly, I've then built the wrong portfolio because 915 00:47:16,320 --> 00:47:18,240 Speaker 1: I've had too much of it. I had then haven't 916 00:47:18,320 --> 00:47:21,480 Speaker 1: right sized the position. So another book I'd recommend, fun 917 00:47:21,560 --> 00:47:24,799 Speaker 1: enough is a poker players book called by Annie Duke 918 00:47:24,880 --> 00:47:27,919 Speaker 1: called Thinking in Bets, because what she says about poker 919 00:47:27,960 --> 00:47:30,600 Speaker 1: players is you get dealt your hand. You know it's 920 00:47:30,600 --> 00:47:32,719 Speaker 1: a If it's a losing hand, you just fold. If 921 00:47:32,760 --> 00:47:34,959 Speaker 1: it's a potentially a winning hand or a winning hand, 922 00:47:35,000 --> 00:47:38,480 Speaker 1: you then play. But as you play, you're watching the 923 00:47:38,560 --> 00:47:40,560 Speaker 1: dynamic of the cards in front of you. In the 924 00:47:40,560 --> 00:47:43,959 Speaker 1: moment the dynamics change, you stop playing, unless, of course, 925 00:47:44,000 --> 00:47:45,719 Speaker 1: the dynamics don't change, and you know you've got the 926 00:47:45,719 --> 00:47:47,759 Speaker 1: winning hand. And I think that's what you and I 927 00:47:47,719 --> 00:47:49,200 Speaker 1: are doing every day in the markets. You have to 928 00:47:49,239 --> 00:47:51,240 Speaker 1: sit there and what is the market telling you? Because 929 00:47:51,239 --> 00:47:54,839 Speaker 1: the markets every day always telling you something about your portfolio, 930 00:47:55,280 --> 00:47:57,960 Speaker 1: and you've got to filter out all the noise and 931 00:47:58,040 --> 00:48:00,440 Speaker 1: you've then got to sit there and say, have I 932 00:48:00,480 --> 00:48:02,040 Speaker 1: got a winning hand? And if you haven't got a 933 00:48:02,040 --> 00:48:04,040 Speaker 1: winning hand, you and I know the first cuts always 934 00:48:04,040 --> 00:48:07,560 Speaker 1: the cheapest. Interesting point. By the way, today as we're 935 00:48:07,800 --> 00:48:10,719 Speaker 1: we're recording this, the market is telling us we don't 936 00:48:10,719 --> 00:48:13,319 Speaker 1: really believe that there's much of a trade deal. That's 937 00:48:13,400 --> 00:48:17,480 Speaker 1: that's what's going on. That's what's happening today. Um with 938 00:48:17,480 --> 00:48:19,680 Speaker 1: with a lot of red on the screen. Um, what 939 00:48:19,760 --> 00:48:21,200 Speaker 1: do you do for fun? What do you do outside 940 00:48:21,200 --> 00:48:24,880 Speaker 1: of the office for giggles? Um? Being a family guy, 941 00:48:24,920 --> 00:48:26,719 Speaker 1: I love to spend time with my with my wife 942 00:48:26,719 --> 00:48:29,000 Speaker 1: and family. But I'm a golfer and a skier. That's 943 00:48:29,000 --> 00:48:31,560 Speaker 1: what I've You know that, that's what I've been. I've 944 00:48:31,600 --> 00:48:36,040 Speaker 1: resorted to. Okay, And I'll ask two questions. If a 945 00:48:36,120 --> 00:48:39,200 Speaker 1: millennial came to you and said, we're thinking about going 946 00:48:39,239 --> 00:48:42,560 Speaker 1: into finance as a career, what sort of advice would 947 00:48:42,560 --> 00:48:45,120 Speaker 1: you give them. Well, I'm I'm fairly clear about this 948 00:48:45,160 --> 00:48:47,440 Speaker 1: because having got four millennials as a father, I've had 949 00:48:47,480 --> 00:48:49,560 Speaker 1: to think about how to get them into the real 950 00:48:49,600 --> 00:48:51,840 Speaker 1: world as quickly as possible and off the bank of 951 00:48:51,880 --> 00:48:54,839 Speaker 1: mom and dad. Um. But I suppose I I look 952 00:48:54,880 --> 00:48:57,839 Speaker 1: back on it, and I enjoy what I do, and 953 00:48:57,920 --> 00:49:00,760 Speaker 1: so I when I meet a lot of friends children 954 00:49:00,760 --> 00:49:02,600 Speaker 1: and they come from you know, spend a day with 955 00:49:02,600 --> 00:49:04,640 Speaker 1: me or a week with me, I have a sense 956 00:49:04,640 --> 00:49:07,480 Speaker 1: of whether they love the markets. Now. I think it's 957 00:49:07,480 --> 00:49:10,480 Speaker 1: a phenomenal privilege to manage other people's money. And the 958 00:49:10,560 --> 00:49:12,560 Speaker 1: thing I love about the markets is as it's as 959 00:49:12,560 --> 00:49:15,279 Speaker 1: close to being a professional golfer as I will ever be, 960 00:49:15,280 --> 00:49:17,560 Speaker 1: because every day the golf course is different. Every day, 961 00:49:17,560 --> 00:49:19,640 Speaker 1: the competition is different, every day, the weather is different, 962 00:49:20,160 --> 00:49:22,720 Speaker 1: and there's always something fascinating going on in the markets. 963 00:49:22,719 --> 00:49:24,520 Speaker 1: And I think to have a job that is just 964 00:49:24,640 --> 00:49:29,879 Speaker 1: so refreshing is a remarkable privilege. Um. So I would 965 00:49:29,920 --> 00:49:33,520 Speaker 1: want to know that, you know, my millennial was interested 966 00:49:33,560 --> 00:49:35,680 Speaker 1: in the markets rather than thinking this is how I 967 00:49:35,719 --> 00:49:38,040 Speaker 1: get paid because you won't be any good at it. 968 00:49:38,560 --> 00:49:40,799 Speaker 1: And our final question, what is it that you know 969 00:49:40,840 --> 00:49:43,879 Speaker 1: about the world of investing today, you wish you knew 970 00:49:44,239 --> 00:49:47,719 Speaker 1: thirty years ago, do you know? I I think, um, 971 00:49:47,719 --> 00:49:50,360 Speaker 1: although there's not a lot I would want to change 972 00:49:50,400 --> 00:49:52,400 Speaker 1: about because I do think you have to learn but 973 00:49:52,560 --> 00:49:56,040 Speaker 1: by your mistakes. UM. I do sometimes feel that I 974 00:49:56,160 --> 00:49:59,600 Speaker 1: have been quite stubborn in the type of industries or 975 00:49:59,680 --> 00:50:02,840 Speaker 1: name that I want to own. That has often left 976 00:50:02,880 --> 00:50:07,040 Speaker 1: me maybe being a classic European not understanding the opportunities 977 00:50:07,080 --> 00:50:09,680 Speaker 1: of an Amazon or you know, or you know, some 978 00:50:09,719 --> 00:50:13,080 Speaker 1: of the new technologies because I don't I'm not interested 979 00:50:13,120 --> 00:50:15,480 Speaker 1: in some of that. And I recognize that that's probably 980 00:50:16,280 --> 00:50:20,440 Speaker 1: forced me to not anticipate how the world can change. 981 00:50:20,480 --> 00:50:22,120 Speaker 1: And so it's ironic that I now talk to our 982 00:50:22,160 --> 00:50:24,600 Speaker 1: clients about how the world is being disrupted by you know, 983 00:50:24,719 --> 00:50:27,799 Speaker 1: the mobile phone, the millennial and the Internet. And yet 984 00:50:27,840 --> 00:50:29,719 Speaker 1: I was sitting there for the last twenty years going, 985 00:50:29,880 --> 00:50:32,120 Speaker 1: you know that, how does that change the stocks I own? 986 00:50:32,560 --> 00:50:35,440 Speaker 1: And yet it's changing them every day. And that's maybe 987 00:50:35,440 --> 00:50:37,799 Speaker 1: where where i've I've I've when I look back and 988 00:50:37,840 --> 00:50:40,360 Speaker 1: think the power of disruption, if I had nailed that 989 00:50:40,440 --> 00:50:42,719 Speaker 1: thirty years ago, would have helped me think about the 990 00:50:42,760 --> 00:50:46,520 Speaker 1: type of companies I want to own, very differently, quite fascinating. 991 00:50:47,000 --> 00:50:51,560 Speaker 1: We have been speaking to Neil Dwayne of Alian's Global Investors. 992 00:50:51,920 --> 00:50:54,279 Speaker 1: If you enjoy this conversation, we'll be sure to look 993 00:50:54,360 --> 00:50:57,000 Speaker 1: up an inch or down an inch on Apple iTunes 994 00:50:57,040 --> 00:51:00,440 Speaker 1: and you can see any of the other two forty 995 00:51:00,520 --> 00:51:05,640 Speaker 1: or so such conversations we've had previously. We love your comments, 996 00:51:05,880 --> 00:51:10,080 Speaker 1: feedback and suggestions right to us at m IB podcast 997 00:51:10,160 --> 00:51:13,160 Speaker 1: at Bloomberg dot net. You could find any of these 998 00:51:13,200 --> 00:51:19,360 Speaker 1: podcasts at Overcast, Stitcher, Apple iTunes, Bloomberg dot com, wherever 999 00:51:19,920 --> 00:51:23,040 Speaker 1: finer podcasts are sold. I would be remiss if I 1000 00:51:23,080 --> 00:51:26,240 Speaker 1: did not think our crack staff that helps put together 1001 00:51:26,640 --> 00:51:30,759 Speaker 1: these conversations each week. Medina Parwana is our producer and 1002 00:51:31,320 --> 00:51:36,400 Speaker 1: Karlin O'Brien is our recording engineer. Taylor Riggs is our booker, 1003 00:51:36,640 --> 00:51:41,160 Speaker 1: slash producer, uh Atka val Broun is our project manager, 1004 00:51:41,600 --> 00:51:45,680 Speaker 1: and Michael Batnick is our head of research. I'm Barry Ridholtz. 1005 00:51:46,000 --> 00:51:49,400 Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.