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Speaker 2: Now we want to get to two key interviews. They
Speaker 2: have to do with earnings. Both shares are higher. Let's
Speaker 2: get to the first one. We're talking about Chipotle Mexican
Speaker 2: grill soaring to a record high. Right now, it's up
Speaker 2: about nine percent, so pretty much at its best levels
Speaker 2: of the session. Fourth quarter sales from profit feed expectations
Speaker 2: as both transactions and check sizes rose, really defining some
Speaker 2: of the fears of waning consumer sentiment. Same store sales growth, folks,
Speaker 2: you know it. This is so key. A gauge that
Speaker 2: tracks restaurants that are open for more than a year.
Speaker 2: That was eight point four percent, surpassing the analyst expectations
Speaker 2: of seven point one percent. Revenue two point fifty two
Speaker 2: billion timp that also topped the two point forty nine
Speaker 2: billion average estimate.
Speaker 3: Well, with more in the business, we welcome back Brian Nicol,
Speaker 3: chairman and CEO of Chipotle. He joins us on Zoom
Speaker 3: from Newport Beach, California. Brian, good to see you again.
Speaker 3: Good to have you with us. Investors are happy with
Speaker 3: this year or they're happy with the quarter. Analyst community
Speaker 3: is too. My question for you is who do you
Speaker 3: think you're taking share from right now?
Speaker 4: You know, look, I think what we believe is happening
Speaker 4: is our operation is executing better than we ever have
Speaker 4: and frankly, we've just been on a journey to get back.
Speaker 5: To executing this business to Chipotle standard.
Speaker 4: So you know, we feel great about our staffing, we
Speaker 4: feel great about our culinary, we feel great about our speed,
Speaker 4: and I think that's why we're being rewarded with customers
Speaker 4: coming in. And you saw the comp that we delivered
Speaker 4: that was driven by transaction growth, right, That eight percent
Speaker 4: plus comp was driven by seven point four percent transaction growth.
Speaker 4: And I think that's a testament to what our teams
Speaker 4: are doing in our restaurants on all those areas that
Speaker 4: I just mentioned.
Speaker 2: Brian, great to be talking with you and dig a
Speaker 2: little bit deeper for us. First of all, that same
Speaker 2: story of sales growth really blown away analyst expectations. Is
Speaker 2: that sustainable? You think in the current quarter and maybe
Speaker 2: throughout the year to see that kind of growth.
Speaker 4: You know, what we've guided is mid single digits for
Speaker 4: the year in twenty twenty four. And you know, the
Speaker 4: way we take this approach is we want to make
Speaker 4: sure we've got a strong value proposition, which based on
Speaker 4: all our data, we continue get feedback that the value
Speaker 4: proposition is really strong. And then we want to make
Speaker 4: sure that when customers come in, they get the experience
Speaker 4: that they want. And so what we've seen over the
Speaker 4: fourth quarter and as we walked into the first quarter
Speaker 4: is people are telling us they like what they see.
Speaker 4: You know, our teams are in position, our food is
Speaker 4: ready to go. The culinaries dial in. It tastes delicious,
Speaker 4: and we're working really hard on the speed aspect so
Speaker 4: that people don't have to stand in line too long
Speaker 4: so they can get down the line get to the
Speaker 4: business of enjoying their breed over bowl. I think we
Speaker 4: stay focused on that, we'll continue to deliver really good results.
Speaker 2: You know, I'm curious. You know, so others in the space,
Speaker 2: something like a McDonald's, they've talked about low income consumers
Speaker 2: pulling back on their spending. You guys, your consumer base
Speaker 2: what do you expect in terms of us consumer behavior
Speaker 2: this year? What can you tell us about how the
Speaker 2: consumer is doing and how they are spending Because you
Speaker 2: do talk about transactions up check size is rising, but
Speaker 2: what more can you give us in terms of how
Speaker 2: the consumer is Yeah, you know.
Speaker 5: So we look at this very closely as well.
Speaker 4: And first we start with what are people's perceptions of
Speaker 4: our brand? And the perceptions are really strong right now.
Speaker 4: You know, people are getting the idea that we're all
Speaker 4: about fresh food, we're all about food with integrity. They're
Speaker 4: getting the idea that, hey, this is a great value
Speaker 4: when I think about what I pay for what I get,
Speaker 4: the customization, the speed.
Speaker 5: Okay.
Speaker 4: And so when we look at this among different income cohorts,
Speaker 4: so less than forty thousand, between forty thousand, one hundred thousand,
Speaker 4: over one hundred thousand, we're seeing we're making progress in
Speaker 4: every income coport. So we've seen sales gains with every
Speaker 4: income group. Thing that I think is happening is especially
Speaker 4: the lowering consumer. You know, they are saying, hey, we're
Speaker 4: going to be really choosy with the money that we
Speaker 4: choose to spend.
Speaker 5: You've got to give us what we want on our terms.
Speaker 4: And one of the things that's really great is Chipotle's
Speaker 4: able to do that right. We can get you the
Speaker 4: exact food experience that you want, hopefully at a speed
Speaker 4: that delights you, and then when you walk away, you
Speaker 4: feel like you know, that was money well spent and
Speaker 4: I'm going to come do it again.
Speaker 2: Well, let me go back to comp sales in terms
Speaker 2: of your outlook that you guys put Brian, why do
Speaker 2: you think you see growth though continuing but at a
Speaker 2: slower slightly slower space I mean pace.
Speaker 5: Excuse you, I yeah, yeah, I look.
Speaker 4: The way we think about this is we want to
Speaker 4: continue to focus on executing the basics. Obviously January we
Speaker 4: had to deal with some bad weather across the country.
Speaker 4: The good news is the days where we haven't seen
Speaker 4: bad weather, the businesses strengthened right back up, and so
Speaker 4: we're optimistic about where we can get to. You know,
Speaker 4: we've switched back to to what our pre pandemic practice was,
Speaker 4: was just guiding for the full year. You know, Hopefully
Speaker 4: what happens is we're able to beat those expectations. That's
Speaker 4: always our goal, and we'll see how it all unfolds
Speaker 4: over the course of the year. But we're set up
Speaker 4: very well to open a lot of restaurants deliver I
Speaker 4: think really strong in store experiences and digital experiences, which
Speaker 4: hopefully we'll build on the momentum that we've achieved thus far.
Speaker 3: Hey, Brian, let's talk more when it comes to labor.
Speaker 3: Fifteen percent of your restaurants are in California. You're joining
Speaker 3: us from Newport Beach right now. We saw California minimum
Speaker 3: wage raised this year to sixteen dollars per hour. It's
Speaker 3: going to continue to rise this year and over the
Speaker 3: next few years. How else, apart from raising prices, is
Speaker 3: Chipotle going to cope with California's new minimum wage law.
Speaker 6: Yeah.
Speaker 4: Look, I mean we're always working hard on what can
Speaker 4: we do to be more efficient so that we don't
Speaker 4: have to pull the pricing lever.
Speaker 5: You know, you've heard us talk about things.
Speaker 4: Like autocato, where we're automating how we cut core and
Speaker 4: screw avocados. We're working on some things automating our digital
Speaker 4: make line. We're also exploring things on how we could
Speaker 4: potentially cut our onions peppers in the restaurants in a
Speaker 4: more efficient fashion. So we're going to invest in those
Speaker 4: things The unfortunate fact is the wage increases moving much
Speaker 4: faster than these efficiencies that we're going to be able
Speaker 4: to find. So price will be part of the puzzle
Speaker 4: in order to handle the inflation that's looming. But we're
Speaker 4: going to do everything we can to avoid having to
Speaker 4: pull that pricing lever. And you know, you'll continue to
Speaker 4: see us innovate on what we're calling cobotics so that
Speaker 4: hopefully we can make the job more efficient, more effective.
Speaker 4: Team members like it and it gives the great culinary
Speaker 4: output that our customers have come to expect.
Speaker 2: Totally get it. Other costs, other input costs, coren avocados,
Speaker 2: the cost of ingredients. What are we seeing on that front?
Speaker 2: Are you seeing prices actually going down or increases not
Speaker 2: as significant as they were before? What can you tell
Speaker 2: us there?
Speaker 5: Yeah, yeah, that's right.
Speaker 4: Right, We're not seeing any deflation, but we've definitely seen
Speaker 4: a slowdown in the inflation.
Speaker 5: You know, it's more in the load to mid single digits.
Speaker 4: There's a couple of pockets where we're still watching things
Speaker 4: like on beef. We're always careful with where the avocado
Speaker 4: market might be moving. But for the most part, that's
Speaker 4: I would say started to normalize, with exception of a
Speaker 4: few pockets of inflation that we're still dealing with.
Speaker 3: Brian, do you see yourself raising prices this year?
Speaker 4: You know, we always try to wait till we get
Speaker 4: to about the end of the year to assess what
Speaker 4: we think we need to do. You know, obviously, this
Speaker 4: California minimum wage movement, we'll have to assess how that
Speaker 4: it really impacts the business and we'll take action accordingly.
Speaker 5: But for the bulk of the business, we usually wait
Speaker 5: till around the end of the year.
Speaker 4: See where all the inflation lands, see where our growth lands,
Speaker 4: see where our productivity lands, and then if we need to,
Speaker 4: we take pricing, usually in that one two to three
Speaker 4: percent range.
Speaker 7: Hey.
Speaker 2: One thing I'm thinking about also, and we saw it
Speaker 2: play out with some others about the impact of the
Speaker 2: Middle East East conflict. You guys last year talked about
Speaker 2: entering Kuwait and the UAE. This year, has the conflict
Speaker 2: in the Middle East, Brian impacted that timeline at all.
Speaker 6: Yeah, not yet.
Speaker 4: Our partner over there is the Alshinty Group, and they're
Speaker 4: a terrific operator. They have a lot of brands and
Speaker 4: a lot of experience of operating over there. So as
Speaker 4: of right now, we're still on schedule to open this year. Obviously,
Speaker 4: they will be the first.
Speaker 5: Ones to tell us that if we need to change
Speaker 5: that timeline.
Speaker 4: The good news is we think they're a great partner,
Speaker 4: we think they're a great operator, and I think the
Speaker 4: folks are going to love Chipotle when we're able to
Speaker 4: finally open our restaurant in that part of the world.
Speaker 2: Hey, just got about a minute or so left. Speaking
Speaker 2: of timelines, I've got two quick questions for you. You
Speaker 2: have been at the company for almost I think you're
Speaker 2: coming up on your six year anniversary. How are you
Speaker 2: thinking about that timeline? I mean, investors are happy stock
Speaker 2: is up almost one thousand percent in that time, So
Speaker 2: how are you thinking about kind of the next leg
Speaker 2: of that timeline for you? Because I've got to imagine
Speaker 2: there are people knocking at your door saying, can you
Speaker 2: do what you did for Jiboutle for us? And I'm
Speaker 2: also curious if there's any timeline for stocksplit because it's
Speaker 2: an expensive stock.
Speaker 3: I got about a minute, Yeah, yeah, sure.
Speaker 4: Look, what I hope is the next fix years are
Speaker 4: like what these last six years were from a total
Speaker 4: performance standpoint. I could do without some of the macro shocks.
Speaker 4: But you know, it's been a tremendous honor leading this brand.
Speaker 4: We've got wonderful people, We've got a terrific purpose and
Speaker 4: product that we provide, and I couldn't be happier to
Speaker 4: be leading this company.
Speaker 5: And I'm really excited about all the growth that's in
Speaker 5: front of us.
Speaker 4: You know, we're going to go from thirty five hundred
Speaker 4: restaurants to seven thousand restaurants. We're going after four million
Speaker 4: average unit volumes, so there's just tremendous growth in front
Speaker 4: of us, which I'm super excited about.
Speaker 5: Yeah, you know, everybody asked us about the stock split.
Speaker 5: We'll have to wait and see what city raised.
Speaker 2: It's now like a street high over three pet for
Speaker 2: you to yeah, briefly, is there a level real quickly?
Speaker 4: You know what, We never have a defined level, but
Speaker 4: it's something we talk about and if it makes.
Speaker 5: Sense, you will do all right.
Speaker 2: Listen, you are always so generous with your time. We
Speaker 2: really appreciate it. Be well, and thank you so much.
Speaker 2: Brian Nickel, of course, he's the chairman and chief executive
Speaker 2: officer Chapotle Mexican Grill. The stock on a taire, as
Speaker 2: we said, hitting a record.
Speaker 3: Twenty seven twenty seven to twenty five right now, up
Speaker 3: nine point five percent today.
Speaker 2: All right, we really appreciate. We're going to check in
Speaker 2: with another CEO. We've got the CEO of CBS Health, Carolyn.
Speaker 2: She's coming our way in just a moment. You're listening
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Speaker 2: Now to another stock on the move, and it's related
Speaker 2: again to earning shares of CBS Health. They're up nearly
Speaker 2: five percent out their high today right now again of
Speaker 2: about two point four percent. CVS Health reported better fourth
Speaker 2: quot results than Wall Street expected, and it really did
Speaker 2: relieve some investor concerns about the impact of rising care expenses,
Speaker 2: particularly in the companies at an insurance.
Speaker 3: Well, let's get to the outlook. Because the drugstore chain
Speaker 3: now expects annual adjusted earnings of at least eight dollars
Speaker 3: and thirty a share, down from at least eight to
Speaker 3: fifty a share. Cash flow from operations will be at
Speaker 3: least twelve billion dollars carrol, down from an earlier outlook
Speaker 3: of at least twelve point five billion dollar.
Speaker 2: All right, delighted to have with us Karen Lynch. She's
Speaker 2: president CEFCVS Health, joining us on Zoom from the company's
Speaker 2: CVS headquarters in Wonsocket, Rhode Island. Hey, Karen, so nice
Speaker 2: to have you here with us. Let's start big broad
Speaker 2: if we may your business mide of three large revenue drivers.
Speaker 2: First of all, how would you describe the last quarter
Speaker 2: and where, you know, were the areas that made managing
Speaker 2: it a little bit more difficult, which were upbeat and
Speaker 2: our upside surprises if you will.
Speaker 8: Yeah, Hi Carol, It's a pleasure to be here and
Speaker 8: thanks for having me. You know, in the fourth quarter,
Speaker 8: you know, we had strong results in our pharmacy Benefit
Speaker 8: management company. We had very strong results in our pharmacy
Speaker 8: and consumer Wellness segment, which essentially is our stores. And
Speaker 8: you know, we continue to demonstrate growth in our ATA
Speaker 8: health and business. Where we had challenges in the quarter
Speaker 8: is really at the end of the year, we saw
Speaker 8: elevated trends in our medicare advantage business where we saw
Speaker 8: you know, trends in outpatient services you know, think hips
Speaker 8: and knees. We also saw an increase in utilization and
Speaker 8: dental and vision. But overall, as you said, you know,
Speaker 8: we ended the year strong. We delivered on our financial commitments.
Speaker 8: We grew revenues of eleven and a half percent, and
Speaker 8: you know, we delivered EPs of eight point eight seventy four,
Speaker 8: which was a really strong result.
Speaker 2: Yeah, investors, kudos because they have set your stock hired today.
Speaker 2: The results really do suggest that your insurance unit, you
Speaker 2: were able to manage those costs and drive the quarterly results.
Speaker 2: Can you continue to do so? Talk to us about
Speaker 2: kind of the stress and strain from doing that.
Speaker 8: You know, obviously, you know, we have programs in place,
Speaker 8: whether it's the benefit designs that we put in place,
Speaker 8: whether it's our you know, care coordination programs that we
Speaker 8: have in place, you know, whether how we contract with
Speaker 8: our network and our physicians.
Speaker 9: So you know, you know, we we feel very confident.
Speaker 8: That we can continue to navigate this environment as we
Speaker 8: move into twenty twenty four. We haven't seen anything unusual
Speaker 8: in the early part of twenty twenty four, but things
Speaker 8: are you know, still emerging and will monitor it throughout
Speaker 8: the year.
Speaker 3: What was unusual about last quarter? You said, hips and
Speaker 3: knees really dragged on the quarter at the end of
Speaker 3: the year. What was unusual about that and why why
Speaker 3: can't you really model for that moving forward?
Speaker 8: Yeah, Well, we just what we saw was just an
Speaker 8: elevated utilization and you know, we you know, I think
Speaker 8: part of it is, you know, there is there's been
Speaker 8: some pent up demand over a period of time. What
Speaker 8: we've also seen is more capacity in the healthcare system,
Speaker 8: so you know, more outpatients. Clinics are staffed now, so
Speaker 8: they can have more you know, they have more.
Speaker 9: Scheduling available to them. So there's a number of.
Speaker 8: Factors that you know that we wouldn't have seen that
Speaker 8: you know, uh, started that elevated trend in the latter
Speaker 8: half of December.
Speaker 2: Actually, hey, Karen, some other health insurers Humanity United Health
Speaker 2: for instance, who obviously are in this field as well,
Speaker 2: they have warned that these rising costs will mean raising
Speaker 2: prices to increase profit margins. Will you have to do
Speaker 2: the same.
Speaker 8: Well, I think it all depends on the business that
Speaker 8: we're in. So for medicare, uh, you know, CMS essentially
Speaker 8: sets the rates, and so we received our first rate
Speaker 8: notice this past week, and so what we've said is,
Speaker 8: you know, we it was in line with the expectations,
Speaker 8: relatively flat flat, but it didn't cover the overall rising
Speaker 8: medical trends. So we have the opportunity to go back
Speaker 8: to CMS and you know, give them comments, which we'll
Speaker 8: be doing in the upcoming week so that that price
Speaker 8: is really set, and then we design the benefits around
Speaker 8: the price that's set by CMS. So we'll be you know,
Speaker 8: modifying the benefits as we go, as we learn more
Speaker 8: about the final rate notice that comes out in April.
Speaker 8: And then in our commercial business, we obviously have the
Speaker 8: ability to adjust prices to rising trends and we've been
Speaker 8: doing that all along through twenty three and into twenty four.
Speaker 2: So this takes into account because I know you guys
Speaker 2: had had warned I think it was at the JP
Speaker 2: Morgan Healthcare Conference that your medical benefit ratio could be
Speaker 2: higher than expected in the fourth quarter. So I'm just wondering,
Speaker 2: so you're feeling like that you'll be able to manage
Speaker 2: that in the in the rest of the year or
Speaker 2: this year specifically.
Speaker 9: Yeah, So yeah, So Carol.
Speaker 8: In the fourth quarter, you know, we saw some of
Speaker 8: this emerging trend with medical benefit ratio. So as you saw,
Speaker 8: we were we expected. Our original guidance it was eighty
Speaker 8: six percent at the end of the year, which we've
Speaker 8: just reported today was eighty six point two percent, So
Speaker 8: it was a little bit higher, but we had anticipated
Speaker 8: it and talked about it at JP Morgan as we
Speaker 8: turned the corner into twenty twenty four. We're watching these
Speaker 8: trends and we'll, you know, we'll we have lots of
Speaker 8: tools and techniques that we use to help people get
Speaker 8: the care they need when they need it, at the
Speaker 8: right at the right levels, at the appropriate sites of care,
Speaker 8: and you know, we help people navigate, you know, and
Speaker 8: coordinate their care.
Speaker 3: Hey, Karen, I want to talk about a different part
Speaker 3: of the business, the second biggest part of the business,
Speaker 3: that's the pharmacy and consumer wellness segment. Talk to us
Speaker 3: a little bit about how the retail environment is right now.
Speaker 3: What you're seeing out there from the consumer, is the
Speaker 3: consumer healthy? You have a great view on the American consumer,
Speaker 3: so share with us those thoughts.
Speaker 9: Yeah.
Speaker 8: So, well, first of all, you know, stepping back, those
Speaker 8: stores are really another avenue for healthcare delivery. So when
Speaker 8: consumers are coming into CBS, more likely than not, they're
Speaker 8: coming in to fill a prescription. So we have seen
Speaker 8: an increase in you know, our script volume over the
Speaker 8: course of twenty three and starting in twenty twenty four,
Speaker 8: we built an immunization franchise, so people are coming to
Speaker 8: our stores for their RSPE vaccine, for their COVID vaccines,
Speaker 8: for their flu vaccines, for their shingle vaccines. That's really
Speaker 8: creating you know, additional revenue streams for us, an additional
Speaker 8: value to the consumer because it offers a convenient place
Speaker 8: for people to get their immunizations. It's right usually right
Speaker 8: around the corner from your home. We've built digital assets
Speaker 8: so that you have the ability to schedule online, so
Speaker 8: we've made it very convenient for those individuals. And what
Speaker 8: we're seeing in the front of the store, you know,
Speaker 8: we're obviously seeing consumer behavior. People are making choices for
Speaker 8: lower prices. We're seeing more of the CBS brand where
Speaker 8: so people are cost you know, just cost comparison, and
Speaker 8: we are starting to see people kind of leveraging the
Speaker 8: CBS brand products.
Speaker 3: Okay, so going to generics a little bit, It sounds like, hey,
Speaker 3: let's talk about shrinkage. It's a huge, a huge problem
Speaker 3: over the last couple of years.
Speaker 2: We all want products to be taken out of jail
Speaker 2: because it's so frustrating the retail jo.
Speaker 3: Is it getting any better? Is it still a huge issue?
Speaker 3: Is there any improvement?
Speaker 8: Yeah, I would say it's a concern for ours and
Speaker 8: first and foremost, we're very concerned about the safety of
Speaker 8: our colleagues, and we put a number of measures in
Speaker 8: place to make sure that our colleagues are safe.
Speaker 9: And as you pointed.
Speaker 8: Out, we lock things up so that we can deter
Speaker 8: some of the thieves from coming into our stores and
Speaker 8: stealing our products. And you know, we've seen it somewhat moderate,
Speaker 8: but we're working very closely with attorney generals with local
Speaker 8: law enforcement to really have people prosecuted when they are
Speaker 8: are stealing from our stores. And this is not just
Speaker 8: a CVS health problem, this is a retail problem. And
Speaker 8: you know, we all are coordinated to really work with
Speaker 8: law enforcement so that you know, we can deter the theft.
Speaker 8: It is very costly to us, and my you know,
Speaker 8: my big concern is making sure that our colleagues are
Speaker 8: safe in our stores.
Speaker 2: Totally get it, and I'm just curious. It sounds like
Speaker 2: you've answered it, but I want to ask you about
Speaker 2: pharmacist specifically walking out. How are you addressing those concerns
Speaker 2: and also just concerned about not having enough staff those
Speaker 2: pharmacists that have you know, talked about overlap and or
Speaker 2: not having enough overlap or just talking about burnout. How
Speaker 2: do you address that specifically because that's gonna be a
Speaker 2: big issue.
Speaker 8: Yeah. You know what I say is, you know, there's
Speaker 8: a lot of media coverage on the pharmacy walkouts. We
Speaker 8: actually didn't really have pharmacy walkouts. We didn't close any stores.
Speaker 8: We were able to.
Speaker 9: Staff all the stores.
Speaker 8: But what, you know, what we have been doing is
Speaker 8: making sure that you know, we and the pharmacists you
Speaker 8: have one common goal, and that's to make sure that
Speaker 8: we are caring for our patients and they're getting the
Speaker 8: prescriptions that they need. We have been investing, you know,
Speaker 8: a fair amount of wage investment for our pharmacies. We
Speaker 8: have also improved our technology, so we're making it more
Speaker 8: efficient and the operations more efficient, so the pharmacy pharmacists
Speaker 8: can actually do what they do best, and that's caring
Speaker 8: for the patients. We've been investing in recruiting and skill
Speaker 8: upskilling and skill development, and we've actually seen a reduction
Speaker 8: in overall you know, attrition for our pharmacists. So I think,
Speaker 8: you know, we've been making really good progress over the
Speaker 8: course of the latter half of last year.
Speaker 2: Karen, I feel like I'd be remiss if I didn't ask.
Speaker 2: You talked about script volume being up earlier. Is some
Speaker 2: of that because of the new weight loss the new
Speaker 2: class of weight loss drugs. I mean, what impact are
Speaker 2: you seeing kind of the activity are people paying for itself?
Speaker 2: Is it mostly be covered by insurers? And just unfortunately
Speaker 2: got about forty seconds forgive me.
Speaker 8: Yeah, the weight loss drugs, you know, we have seen
Speaker 8: a lot of volume, and the weight loss drugs we
Speaker 8: know that they are effective for diabetes.
Speaker 9: And for weight management.
Speaker 8: There is a shortage and we're managing through through those shortages,
Speaker 8: but they are you know, we are seeing, you know,
Speaker 8: some of the volume coming from the weight loss drugs
Speaker 8: across our entire business.
Speaker 2: Karen, A great snapshot of so much that is important
Speaker 2: to the economy. So thank you so much for carving
Speaker 2: some time out for us. Really really appreciated. Karen, Lynch, President,
Speaker 2: chief executive Officer CVS Health, joining us from company headquarters
Speaker 2: in Rhode Island. The stock still up about two point
Speaker 2: three percent.
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Speaker 3: Well, history can teach us a lot. Forty years ago,
Speaker 3: another incumbent president was wrestling with lousy poll ratings, a
Speaker 3: recent recession in serious doubts about his age and electoral viability.
Speaker 2: Yeah. This story featured in the new issue of Bloomberg
Speaker 2: BusinessWeek magazine. It's available on newsstands, It's on the Bloomberg
Speaker 2: already and at Bloomberg dot com, slash BusinessWeek.
Speaker 3: Bloomberg Business National correspondent Josh Green wrote it. He's the
Speaker 3: author of The Rebels Elizabeth Warren, Bernie Sanders, AOC and
Speaker 3: The Rise of the New Left. He's also the author
Speaker 3: of the number one New York Times bestseller Devil's Bargain.
Speaker 3: Josh joins us on zoom Josh, good to see you,
Speaker 3: have you on the program this afternoon. So it's hard
Speaker 3: to imagine it being mourning for America for President Biden
Speaker 3: just a few months out from the November election. Why
Speaker 3: draw the parallels here now.
Speaker 7: Well, because you know more and more when you look
Speaker 7: at at the direction of the economy and the timing
Speaker 7: of what's happening in the economy during this election cycle,
Speaker 7: the more it resembles Ronald Reagan's run free election back
Speaker 7: in nineteen eighty four. I should hasten to say that
Speaker 7: this column is not a prediction. It's really just kind
Speaker 7: of looking at at the similarities, and they really really
Speaker 7: are striking. You know, over the last couple of weeks,
Speaker 7: we've all seen the economic numbers turn around. Jerdan Powell
Speaker 7: came out last week said the economy is in very
Speaker 7: good shape. It looks like Biden is going to be
Speaker 7: running for re election with an accommodative fed that most
Speaker 7: people expect to cut interest rates. Meanwhile, you know, as
Speaker 7: we've been reporting, stock market is hitting a record high.
Speaker 7: If you go back to nineteen eighty three, Oddly enough,
Speaker 7: Reagan was in the similar situation to Joe Biden. The
Speaker 7: economy was then just coming off a deep, deep recession
Speaker 7: with a lot of inflation, Reagan was very unpopular. But
Speaker 7: in nineteen eighty three, in the beginning of nineteen eighty four,
Speaker 7: the economy started turning around. The Fed started cutting interest rates,
Speaker 7: all the economic numbers, consumer sentiments started pointing upward, and
Speaker 7: eventually Reagan rocketed to a land slide re election. A
Speaker 7: big hope among the Biden people is that this economic
Speaker 7: turnaround that we see in the numbers is eventually pretty
Speaker 7: soon going to have a positive effect for Biden that
Speaker 7: will lead him much as it did Reagan in eighty four,
Speaker 7: when Reagan was an unpopular aging president who everybody thought
Speaker 7: for a brief moment was going to be a one termer.
Speaker 7: Biden is hoping that he'll be able to run that
Speaker 7: same playbook again in November.
Speaker 2: And yet, as you say rightly you put in your story, Josh,
Speaker 2: you know, enter political polarization like we've never seen before,
Speaker 2: it feels like in this country. And then also just
Speaker 2: this idea, it's a different era in terms of how
Speaker 2: people kind of connect their political feelings with how they
Speaker 2: feel about the economy.
Speaker 7: Yeah, that's totally right. As you said, that's a big
Speaker 7: and yet if you look at I mean, I think
Speaker 7: the neatest chart in the story, if you look at
Speaker 7: consumer sentiment in eighty three eighty four and what happened
Speaker 7: to it, and you look at it now with our
Speaker 7: economy at Biden is almost identical. But there is one
Speaker 7: big deal diference, and that is that back in nineteen
Speaker 7: eighty four, the American electorate wasn't as fiercely polarized as
Speaker 7: it is today. Reagan ended up winning thirty three percent
Speaker 7: of Democratic voters in nineteen eighty four, and there isn't
Speaker 7: any chance that Biden is going to win thirty three
Speaker 7: percent of Republicans. And partly that's because people's political views
Speaker 7: have become what political scientists called calcified. Republicans continue to
Speaker 7: think that the economy is bad shape because there's a
Speaker 7: democratic president, the same way that Democrats did when Trump
Speaker 7: was the Republican president. We're beginning to see democratic sentiment
Speaker 7: turn around strongly and that's helped Joe Biden recover a
Speaker 7: little bit in the polls. And if you really squint
Speaker 7: at the latest Gallop numbers, you can see a little
Speaker 7: bit of an upward trend from independent voters and Republican voters.
Speaker 7: But in speaking to pollsters and political scientists, it's going
Speaker 7: to take a lot in order for Biden to get
Speaker 7: the kind of wined in his sales going into the
Speaker 7: election that Reagan had in nineteen eighty four. But it's
Speaker 7: not possible, and it's probably the best hope that Biden
Speaker 7: has going for him.
Speaker 3: So for this story, you spoke to Mark Sandy over
Speaker 3: at Moody's Analytics, who they have a really interesting poll
Speaker 3: that came out recently that you include in the piece.
Speaker 3: What does it say about President Biden's electoral prospects, because
Speaker 3: we've done a lot of polling too here at Bloomberg,
Speaker 3: especially in swing states, and Trump is ahead of Biden
Speaker 3: in many of the issues.
Speaker 7: Yeah, so, Xandy and Moody's did and it's actually an
Speaker 7: entire election model that they do every year, and what
Speaker 7: it showed, you know, it looks at a lot of
Speaker 7: historical markers, and basically what it said is that, you know,
Speaker 7: putting aside all the political factors, the economy looks to
Speaker 7: be in such a strong shape that their model predicts
Speaker 7: that Biden will win in November narrowly, based largely on
Speaker 7: the strength of the economy, And I think it's a
Speaker 7: good reminder that for all that the political press corps
Speaker 7: focuses on polls and who's up this and who's down
Speaker 7: and whatever the scandal of ajuur is in Congress, economic
Speaker 7: fundamentals still matter a lot to people's electoral choices. And
Speaker 7: the fact is that if you look at history, the economy,
Speaker 7: in the direction of the economy, really does matter a
Speaker 7: lot when an incumbent president is running for reelection. So
Speaker 7: that's the best thing Biden has going for. I called
Speaker 7: up Zandia said, do you really think that that Biden
Speaker 7: is going to win? And you know, he cautioned to say, Look,
Speaker 7: this is by no means a guaranteed prediction. This is
Speaker 7: just our model. Model turned out to be wrong in
Speaker 7: twenty twenty. But what it does show is the importance
Speaker 7: of having an accommodative fed in an election year. Sentiment
Speaker 7: turning around, inflation turning around, gas prices coming down. That
Speaker 7: was important for Reagan in nineteen eighty four, it's important
Speaker 7: for Biden in twenty twenty four. So you know, right
Speaker 7: now things are trending in a positive direction for Biden
Speaker 7: in terms of the economy. What he needs to happen
Speaker 7: is for the politics to follow that direction.
Speaker 2: Well, I'm so glad you left it on that now politics,
Speaker 2: because what's interesting in your story, Josh. You say, at
Speaker 2: the time many didn't regard Ronald Reagan is the heroic
Speaker 2: figure in the recovery. They ranked Paul Volker, head of
Speaker 2: the FED right, much more highly than they did Reagan. Well,
Speaker 2: here you have, though, a former president, Donald Trump, who's
Speaker 2: saying he wouldn't re elect Powell, questioning the current FED share.
Speaker 2: So I wonder how that dynamic potentially also might you know,
Speaker 2: throw a wrench into the outcome here and play again.
Speaker 7: It's a great question. I mean, I found a Gallup
Speaker 7: poll from when Reagan was running for reelection that surveyed
Speaker 7: corporate leaders business leaders, and by like a two to
Speaker 7: one margin, they said that Volker was the hero at
Speaker 7: the turnaround. I think if you polled corporate leaders today,
Speaker 7: a lot of them would say that Jay Powell is
Speaker 7: the hero of this turnaround, not Joe Biden. Whether that
Speaker 7: has a broader effect on let's say, you know, voters
Speaker 7: in Michigan, Wisconsin, Pennsylvania, the swing states that are going
Speaker 7: to decide the election. I don't know. My hunch is
Speaker 7: that Powell just isn't a well enough and known figure
Speaker 7: for that to make a difference. But look on the
Speaker 7: margins and a close election, everything matters. So maybe there's
Speaker 7: a block of j. Powell voters out there that pollsters
Speaker 7: haven't measured yet, and I want to get out and
Speaker 7: do so that could be decisive in the election. We'll
Speaker 7: see in November.
Speaker 3: And Josh, look how quickly the economy, or at least
Speaker 3: the market has turned around in recent months. Look how
Speaker 3: quickly we're starting to see inflation come down in recent months.
Speaker 3: It's a reminder that there is a long way to
Speaker 3: go between now and the election. And even though gas
Speaker 3: prices have come down now, there is a lot of
Speaker 3: time between now and November.
Speaker 7: Yeah, there is time for good and time for bad.
Speaker 7: I mean I went back, just out of curiosity and
Speaker 7: looked at inflation adjusted gas prices now versus November nineteen
Speaker 7: eighty four when Reagan ran. Right now, I think Triple
Speaker 7: A has them at three dollars and fifteen cents a gallon.
Speaker 7: In November nineteen eighty four, they were at three dollars
Speaker 7: and fourteen cents a gallon. So everything's lined up for
Speaker 7: Joe Biden right now. But look, we could have an
Speaker 7: oil crisis, we could have, you know, some kind of
Speaker 7: a geopolitical event in the Middle East that could send
Speaker 7: those soaring. That would certainly cut against Reagan's chances, both
Speaker 7: in the Bootie's model and probably anybody else's. But on
Speaker 7: the other hand, if you look directionally, especially given the
Speaker 7: expectation of multiple FED cuts, which you know Goldman Sachs
Speaker 7: predicts or forecast floor between now and the November election,
Speaker 7: that really is a tailwind that I think is going
Speaker 7: to help Joe Biden's chances. The big question is how
Speaker 7: entrenched is that artisanship among voters. There is some reason
Speaker 7: to believe that it still does affect even Republicans and independents.
Speaker 2: Really, it's just something to think about. Josh Green, thank
Speaker 2: you so much. He is Bloomberg Business Week national correspondent,
Speaker 2: joining us on zoom On this Wednesday. You're listening and
Speaker 2: watching Bloomberg Business Week, and this is Bloomberg Radio.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from two to five pm Eastern Listen
Speaker 1: on Apple Cardplay and and brout Auto with a Bloomberg
Speaker 1: Business Act or watch us live on YouTube.
Speaker 3: Okay, Carol, remember that Biden deep fake robocall a few
Speaker 3: weeks ago. Yeah, the call attempted to dissuade registered Dems
Speaker 3: from voting in the New Hampshire primary election. The call
Speaker 3: has actually been traced to a Texas company and its owner.
Speaker 2: Yeah, I remember that. We talked about it so much. Well,
Speaker 2: the people responsible for that fake audio call could face
Speaker 2: criminal and civil charges. New Hampshire Attorney General John for
Speaker 2: Mela said, citing laws that prohibit voter suppression and displaying
Speaker 2: an accurate caller ID with the intent to cause harm.
Speaker 2: Great that these rules are in place, but it just
Speaker 2: reminds me that folks can get around them.
Speaker 3: Still, Okay, So he described the episode as a real
Speaker 3: life example of using AI in an attempt to interfere
Speaker 3: with an election, and I guess you could say. The
Speaker 3: good news is that they were able to trace it
Speaker 3: and figure out where it came from. The not so
Speaker 3: good news is that this is just the beginning of
Speaker 3: deep fakes and politics, at least according to our next guest.
Speaker 2: Get ready everybody, Wendy Thomas back with US President and
Speaker 2: chief Executive Officer of the publicly held cybersecurity and risk
Speaker 2: management firm Secure Works. He joins us on zoom from Atlanta. Hey, Wendy,
Speaker 2: so great to have you back with us. Yeah, walk
Speaker 2: to us, Walk us through kind of your expectations about
Speaker 2: deep fakes in politics, what you guys are seeing and anticipating.
Speaker 10: Sure, thanks for having me back. And you know, when
Speaker 10: we spoke in December, this was the use of deep
Speaker 10: fakes was definitely my top of top concern because frankly,
Speaker 10: our lack of awareness, let alone preparedness, and so whether
Speaker 10: it's used in misinformation in an election campaigns.
Speaker 11: Clearly we've got not just the US coming up with.
Speaker 10: A presidential election in the fall, but nearly half the
Speaker 10: world's governments have elections this year. So the prevalence of
Speaker 10: the ability to use very low cost, low barrier to
Speaker 10: entry AI applications for nefarious purposes to misinform or to
Speaker 10: dissuade voters in some way is something that's top of
Speaker 10: mind for Secure Works.
Speaker 3: What can Secure Works do to prevent this from actually happening?
Speaker 3: What can anyone do, Wendy, to prevent this from happening.
Speaker 3: It seems like there's nothing convince me that I'm wrong.
Speaker 10: Well, I will commit to that you're wrong, and I
Speaker 10: will say importantly, I think it's got to be understood
Speaker 10: that AI is still absolutely primarily used for the good,
Speaker 10: for defenders, for great business purposes, for scaling organizations. But
Speaker 10: as we talked about before, there's always a power and
Speaker 10: a pail. And so what we see that companies can do,
Speaker 10: what organizations can do, what we as individuals can do
Speaker 10: are a few things. I'm always going to say that
Speaker 10: awareness is the first line of defense, and so incorporating
Speaker 10: this awareness into training for folks, for individuals, for employees
Speaker 10: on your team is important. But there's also some simple
Speaker 10: tools to enable verification.
Speaker 11: And these have been true for some time.
Speaker 10: But what you're talking about now is social engineering that's
Speaker 10: been around for some time, whether it's emails or voice calls,
Speaker 10: just taken to the next level by compromising someone's identity.
Speaker 10: And so think about simple ways to ensure verification. Look
Speaker 10: for a for a small organization or even a family,
Speaker 10: kind of a nonsensical passphrase that just a few of
Speaker 10: you know, CEO, the CFO, you and your spouse that
Speaker 10: it truly is you is a great way to have
Speaker 10: a low tech version right away.
Speaker 3: I don't know, Darrel, I'm not. I'm not you're asking
Speaker 3: You're asking us to be the last lines of defense, Okay,
Speaker 3: and like I'm not, I'm sorry, I'm I'm just not
Speaker 3: optimistic anyway, Caroll, I know you were going to ask someone.
Speaker 2: You guys are publicly out this is your business. So
Speaker 2: how much demand are you seeing? Talk to us a
Speaker 2: little bit about, you know, the business side of the equation,
Speaker 2: how that translates these concerns translate into more business for you.
Speaker 2: Talk to us about growth, talk to us to about demand.
Speaker 3: Sure.
Speaker 10: So, so we just finished out our fiscal year in
Speaker 10: the last Friday, So I'm going to be careful about
Speaker 10: our quiet period here.
Speaker 11: But we do.
Speaker 10: See, both from our existing insights into incident responses that
Speaker 10: we're pulled into as well as conversations behind the scenes
Speaker 10: with law enforcement, that this type of next level, next
Speaker 10: generation of social engineering is real for companies and they
Speaker 10: aren't ready. And so if you think about the business
Speaker 10: that we're in in terms of the ability to detect
Speaker 10: anomalist activity that in this case is also malicious and
Speaker 10: to respond quickly to both prevent this in the future,
Speaker 10: but to prevent any damage in the midst of a
Speaker 10: situation where maybe that first line of defense has failed
Speaker 10: and you've got two and three behind it. Right, that's
Speaker 10: what secure Works does. Our ability to help customers both
Speaker 10: prevent this and not sustained damage from it is that
Speaker 10: is what secure Works does.
Speaker 2: Hey, Wendy, what I do wonder too? The bulk of
Speaker 2: your business? Right, I think revenue in the United States largely,
Speaker 2: no doubt about it, But you also do a lot
Speaker 2: of business oversees. I am curious, you know, where is
Speaker 2: the growth market for you? I'm just curious about you know,
Speaker 2: I feel like a lot of US companies and folks
Speaker 2: have a lot of systems in place, and maybe that's
Speaker 2: not the case outside the US, but certainly if you're
Speaker 2: dealing with kind of the emerging areas. But make me smarter,
Speaker 2: help me understand kind of where your demand is and
Speaker 2: who's really seeing an increase in problems.
Speaker 10: Sure, we definitely still see demand in the US, particularly
Speaker 10: for more small and medium sized organizations who haven't necessarily
Speaker 10: invested at the levels that large companies have, simply because
Speaker 10: those companies were the first areas that were attacked. And
Speaker 10: as we've talked about with with the emergence of ransomware. Really,
Speaker 10: anyone is vulnerable, a municipality, a small business, even a
Speaker 10: school or a hospital, and so the need relative to
Speaker 10: the risk has definitely increased in those those non traditional
Speaker 10: organizations that that are being attacked. We do see more
Speaker 10: growth outside of the US, simply because of the security
Speaker 10: maturity cycle in different organ in different in different regions
Speaker 10: and frankly different regulatory regimes. But we see great growth
Speaker 10: in Europe and in Asia in particular Middle East as well,
Speaker 10: where the pipeline manufacturing sectors and frankly global cyber warfare
Speaker 10: along with kinetic warfare is causing other countries to really take.
Speaker 11: Up their game in terms of security defenses.
Speaker 3: I'm still stuck on this idea of this world that
Speaker 3: we're living in as being one where we're the like
Speaker 3: kind of the last lines of defense. I mean, it
Speaker 3: makes sense when it comes to fishing and stuff like that. Like,
Speaker 3: you know, we know not to click links anymore, but
Speaker 3: it still happens. Wendy, what's the way that we can
Speaker 3: spot deep fakes? As we enter election season and you know,
Speaker 3: we get robo calls? What we what are we what
Speaker 3: should we be on the lookout for?
Speaker 10: Well, you should always be on the lookout for things
Speaker 10: that you didn't go to the source the call came
Speaker 10: to you versus you calling your bank or Amazon what
Speaker 10: have you. So always always be careful to never take
Speaker 10: an incoming caller email as who it is.
Speaker 11: Go to the source.
Speaker 10: And the big thing is trust your gut, right if
Speaker 10: something is off. What we see in these early deep
Speaker 10: fakes is that there is more pausing, like in an
Speaker 10: interactive video or voice call that's not pre recorded. It's
Speaker 10: just a little bit of a hesitation before the machine responds,
Speaker 10: if you will, or the pace at which they're speaking
Speaker 10: is not the same. So it's just absolutely being thoughtful
Speaker 10: about pausing and being thoughtful about accepting something as real.
Speaker 10: And when you're talking about particularly where there's an inequality psychology, right,
Speaker 10: someone is.
Speaker 11: Trying to rush you, to push you.
Speaker 10: It's a title difference side of an organization, you absolutely
Speaker 10: can't fall into that psychology. And for leaders of organizations,
Speaker 10: you have to create a culture of challenge.
Speaker 7: Right.
Speaker 10: This is no longer the trust but verify, It is
Speaker 10: the do not trust and verify in multiple ways.
Speaker 2: Yeah, I feel like we have to be constantly on guard. Wendy,
Speaker 2: thank you so much. Good to check in with you again.
Speaker 2: Wendy Tomas. She's president and chief executive officer of the
Speaker 2: publicly held cybersecurity and risk management firm Secure Works. Joining
Speaker 2: us on zero from Atlanta. This is Bloomberg.
Speaker 1: I'm brothering Mac.
Speaker 9: The journal. Now about you. Let me drive?
Speaker 10: No, no, no, no, honey, please, I'll do the riding gravels.
Speaker 1: Let's wat I want to try it.
Speaker 11: It's a good question.
Speaker 1: This is the drive to the globe.
Speaker 5: Don coms me think well?
Speaker 1: By around on Bloomberg Radio.
Speaker 2: All right, everybody, we got just about seventeen minutes left,
Speaker 2: actually eighteen, let me do my math correctly. Eighteen it's left.
Speaker 1: That's right, Carol.
Speaker 2: We have the trading session. We got stocks pretty much
Speaker 2: neither high. You heard Charlie breaking it down. It's kind
Speaker 2: of interesting. Some enthusiasm back, certainly on the equity side
Speaker 2: of things. Once again. It's those those tech names. But
Speaker 2: the S and P five hundred of eight tenths of
Speaker 2: a percent. Now's a up almost one percent here, and
Speaker 2: we're looking we hit five thousand. I don't bring up
Speaker 2: my numbers yet. I don't think we did either. Let
Speaker 2: me just pull it up on the Bloomberg noep for
Speaker 2: ninety nine point eighty nine.
Speaker 3: Oh, you can't do it around those sush it over all? Right,
Speaker 3: it doesn't matter.
Speaker 2: Come on, technicians, just do your part.
Speaker 11: It's just a round number.
Speaker 9: Okay.
Speaker 3: Well, let's see what Larry Pokowski has to say. It's
Speaker 3: managing partner and portfolio manager at good Haven Capitol Nation.
Speaker 3: He joins us on Zoom from Millbourne, New Jersey. Larry,
Speaker 3: does it matter? Does five thousand matter to you?
Speaker 5: Hi?
Speaker 6: Everybody? Hi, Carol, hid Tim.
Speaker 12: That kind of thing does not matter to us here
Speaker 12: at good Haven. We do, of course pay attention to
Speaker 12: the overall level of the market in relation to future earnings,
Speaker 12: just as a guidepost for how overvalued or undervalued things
Speaker 12: might be in a big picture sense. But then we
Speaker 12: just go back to looking for a handful of things
Speaker 12: that we think we can understand, try and dig really
Speaker 12: deep to try and understand them, worry all the time
Speaker 12: about what could go wrong, and be opportunistic when there
Speaker 12: is trouble out there in the world to try and
Speaker 12: take advantage of it for us and our fellow shareholders.
Speaker 2: Well, so, just going back to some numbers here on
Speaker 2: the market, you've got what an S and p five hundred,
Speaker 2: that's up almost five percent. Here a NASDAC that's up
Speaker 2: five and a half percent. And then you've got a
Speaker 2: tenure that's going to pay you four point one percent.
Speaker 2: So I'm just trying to figure out. I know it's
Speaker 2: not all apples to apples, but I'm just curious, when
Speaker 2: you look at the markets overall, is it the equity
Speaker 2: side of the universe or investing universe that you still
Speaker 2: find interesting?
Speaker 12: You know, we are fortunate, Carol, that we've been able
Speaker 12: to construct a polio with the Good Haven fun We
Speaker 12: just published our annual reported We threw in some statistics
Speaker 12: about the multiples and the growth rates for our portfolio,
Speaker 12: which to us look a whole lot better than the
Speaker 12: overall market. Cheaper valuations, better growth rates. So there are
Speaker 12: still things to look at and do, even in a
Speaker 12: market that you know might be, you know, somewhere around
Speaker 12: fully valued. So we are fortunate to be able to
Speaker 12: have been able to do that so far. And I
Speaker 12: think if one is not moving around one hundred billion dollars,
Speaker 12: there should still be some occasional pockets of opportunity.
Speaker 3: Hey, we should note that the five year performance of
Speaker 3: the Good Haven Fund puts it in the ninety eighth percentile.
Speaker 3: Versus peers about two hundred and thirty million dollars in assets,
Speaker 3: average annual return of fourteen percent over that period of time.
Speaker 2: Congratulations, really, thank you, great you both.
Speaker 6: We are working.
Speaker 12: We are working hard here at Good Haven for all
Speaker 12: fellow shareholders.
Speaker 6: But thank you.
Speaker 3: How do you get the AUM high?
Speaker 8: I don't know.
Speaker 12: We are making some efforts to raise awareness, but we
Speaker 12: figure if you build it, they will come to a
Speaker 12: great extent. We're less focused on that and more focused
Speaker 12: on just driving returns for us and our fellow shareholders.
Speaker 12: And we figure if we continue to do a good job,
Speaker 12: and Tim and Carroll continue to mention it.
Speaker 2: On your show, well you're welcome. You're welcome.
Speaker 12: Thank you that more new and like minded shareholders will
Speaker 12: gradually find us.
Speaker 6: But I'm getting younger, so I'm not really that word.
Speaker 2: All right, Well you have the secrets, then if you're
Speaker 2: getting out certain like as a metric, I feel like, right,
Speaker 2: you know, if we're going to have somebody on, we
Speaker 2: do have a viewer listener writing in and they say,
Speaker 2: what would you recommend to an investor considering investing a
Speaker 2: lumpsum into a mutual fund at this time, whether to
Speaker 2: break up the amount, do it over time, or do
Speaker 2: it all at once. The concern being whether valuations as
Speaker 2: you address at this time are high and if a
Speaker 2: recession or other or it comes, it will bring down
Speaker 2: all our most stock prices. It's a really smart question.
Speaker 6: It is a smart question. I have a very smart answer.
Speaker 6: I mean, the ability to time. It'd be great to
Speaker 6: have the ability to time the market. It woudn't have
Speaker 6: to work so hard. But I don't think I can
Speaker 6: do it.
Speaker 12: I'm suspect if you know, many people can do it,
Speaker 12: and so you know we will just always, you know,
Speaker 12: try and leave some room when we're buying things in
Speaker 12: case the securities we're buying go lower and the fundamentals
Speaker 12: remain intact. But you know, we don't believe we have
Speaker 12: the ability to time the market that I wish we would.
Speaker 3: Well, would you say to somebody who's looking to invest
Speaker 3: a lump sum right now, should they dollar cost average?
Speaker 3: Should they do it all at once?
Speaker 12: Oh, we're not in the financial planning business, But I
Speaker 12: would always say there's nothing wrong with you know, investing
Speaker 12: you know gradually, but you know, you also you know
Speaker 12: there's wonderful studies about you know, if you've missed certain
Speaker 12: big days in the market over you know, a year
Speaker 12: or two, you really miss a lot of the So
Speaker 12: it's very hard to do. But so I really don't
Speaker 12: have a great answer, but you know, try and be gradual,
Speaker 12: but just don't really try and time.
Speaker 6: It is as good of an answer as I've got.
Speaker 2: Agreed, don't try and time the market, all right, Having
Speaker 2: said that, yes, I did.
Speaker 7: I know.
Speaker 2: I feel like my whole business career, everybody's always been like,
Speaker 2: don't time the market. Although I do think you can
Speaker 2: be smart.
Speaker 3: It's easy to do it when you look back. But
Speaker 3: I also think October twenty twenty two would have been
Speaker 3: a great time to throw some money.
Speaker 12: Well, one thing Carroll tim is is when there is
Speaker 12: you know, we try and potentially when we see smoke,
Speaker 12: we try and run towards it and see maybe there's
Speaker 12: really not a fire. So when there is more pain
Speaker 12: and suffering in a sector or in the market overall,
Speaker 12: and if you have some reserves, it is the potential
Speaker 12: time to get more aggressive, not less aggressive. And if
Speaker 12: there's complete and utter, you know, crazy euphoria, you know,
Speaker 12: you may want to consider becoming a bit less aggressive.
Speaker 12: So I think that's a useful thing for people to
Speaker 12: think through as a mindset.
Speaker 2: Well, having said that, then something like regional banks, would
Speaker 2: you run towards regional banks right now some of the
Speaker 2: names that are getting beat up or just the sector
Speaker 2: brought down because of concerns about New York community.
Speaker 12: Well, it's a very good question, you know. In the
Speaker 12: fun shareholder letter which we just released, we said that
Speaker 12: the biggest addition to capital in twenty twenty three, which
Speaker 12: was mostly in the second half of twenty twenty three,
Speaker 12: was Bank of America, which was done on the back
Speaker 12: of the crisis that happened last spring with Silicon Valley
Speaker 12: Bank and Signature Bank and then later First Republic.
Speaker 6: So we looked.
Speaker 12: Around during that period and in the aftermath of it,
Speaker 12: we decided to dramatically increase our exposure to Bank of America.
Speaker 6: And Bank of America is not a regional bank.
Speaker 12: But you know, sometimes there are sectors where you know,
Speaker 12: the baby gets thrown out with the bathwater, so to speak.
Speaker 12: And we found what we think is a good opportunity
Speaker 12: and still looks Bank of America to us to be
Speaker 12: a good opportunity on the aftermath of what was the
Speaker 12: Spring of twenty twenty three crisis. So you know it's
Speaker 12: a good place always to be looking, you know, where
Speaker 12: there are headlines negativity and you know some dramatic potential declines.
Speaker 3: Hey, just thirty seconds on Berkshire Hathaway. It's the biggest
Speaker 3: holding in the good Haven Fund. Up eleven percent year
Speaker 3: to year to date, fifty two week high today. What
Speaker 3: do you love about Berkshire.
Speaker 12: We made Berkshire our biggest holding during the COVID, you know,
Speaker 12: the middle of twenty twenty. What's not to like about Berkshire, except,
Speaker 12: of course it's very big.
Speaker 6: We still think it's undervalued.
Speaker 12: We followed and own the company for many decades, and
Speaker 12: in that period middle of twenty twenty we thought the
Speaker 12: price was very attractive and we still think the price
Speaker 12: is undervalued. And we think they have laid out a
Speaker 12: forward thinking succession plan which makes sense to us.
Speaker 2: Lari Pitcawski, thank you so much. Really appreciate siate it.
Speaker 2: This is Bloomberg.
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