Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. I'm Jason
Speaker 1: Kelly and I'm Carol Master. Welcome to the Bloomberg Business
Speaker 1: Week Extra. It's a weekly podcast bring you an in
Speaker 1: depth interview you will not hear anywhere else. This week
Speaker 1: it's Kathy Would, CEO and ce IO of Arc Investments.
Speaker 1: So from fintech to biotech, to Tesla and more. She
Speaker 1: breaks down by what's going in the markets. Yep, it's
Speaker 1: a troublesome thing and it's worrisome and it certainly has
Speaker 1: a human toll. But there's also when you see financial disruption,
Speaker 1: there's innovation and that means opportunities for investors well and
Speaker 1: her investors have made out very well with her calls
Speaker 1: over the past year. Is one of the top performing
Speaker 1: managers out there. Also incredibly thoughtful. She gave us a
Speaker 1: sense of the secret sauce. Check it out, so we
Speaker 1: are delighted to have back with us. Kathy Would. She's
Speaker 1: CEO at Ark Investment. They've got about eleven billion dollars
Speaker 1: in assets under manager. She's also Chief Investment Officer. She's
Speaker 1: back in our Bloomberg Interactive Broker Studio and I have
Speaker 1: to say first of all, welcome back. I know it's
Speaker 1: I know it's a busy time and I was looking
Speaker 1: at a bunch of your funds and they're still up
Speaker 1: this year. And what's been a really tough obviously as
Speaker 1: you know already market environment and where we've seen a
Speaker 1: broad based selling um Before we talk specifics, what do
Speaker 1: you how do you assess this market environment right now? Well,
Speaker 1: I think there clearly is a lot of fear. The
Speaker 1: VIX got up to sixty two, that's higher than it
Speaker 1: has for a number of years, So there is a
Speaker 1: lot of fear in the market. It has been stirred
Speaker 1: by the coronavirus. UH and UH. I think that a
Speaker 1: lot of whether it's hedge funds, are just managers within
Speaker 1: a negative bias having to do with debt and debt deflation,
Speaker 1: feel like this is the moment we capitulation or what
Speaker 1: well they feel like. And you can start with the
Speaker 1: energy sector. The energy sector, much of it is highly leveraged,
Speaker 1: right and UH, and we're seeing an in plosion of
Speaker 1: oil prices now shale, the shale gas and oil movement
Speaker 1: is going to stop. And what are they going to do?
Speaker 1: How are they going to service their debts? So we're
Speaker 1: getting you know, real to rest in that in that sector.
Speaker 1: This doesn't surprise us at ARC because we've seen a
Speaker 1: lot of companies, not just an energy but in many sectors.
Speaker 1: Even Apple has done this. They've leveraged up to buy
Speaker 1: back their shares over many years. Now. Apple is nowhere
Speaker 1: near any trouble. But the companies that were in cyclical,
Speaker 1: very cyclical areas of the market, they're going to be
Speaker 1: in trouble. So from that point of view, we agreed
Speaker 1: with the bears out there. Uh, but we're not participating
Speaker 1: in those spaces in the market. That's maybe one reason that.
Speaker 1: And I'll say until today most of our funds were up.
Speaker 1: Today may have taken them below below positive And so Cathy,
Speaker 1: when when you come into a moment in the market
Speaker 1: like this, everybody you know likes to say, well, it's
Speaker 1: like this, And then there are other people, you know,
Speaker 1: like this other time, or it's like the financial crisis,
Speaker 1: or it's like the dot com bust or whatever. There
Speaker 1: are some people who subscribe to the this time it's
Speaker 1: different sort of narrative. What narrative do you like? What
Speaker 1: narrative do you bring to this? Yes, well, I wrote
Speaker 1: a piece for our website, and I only write usually
Speaker 1: when the markets down and under duress, so it's on
Speaker 1: our website. And basically, as I said there, you know,
Speaker 1: I have only seen three times during my career where
Speaker 1: all the policymakers throughout the world, both monetary and fiscal
Speaker 1: are have been all on the same page. Uh. The
Speaker 1: first was in the mid eighties. The dollar had gone
Speaker 1: up fifty and we were in a deflationary at the
Speaker 1: risk of deflation globally, especially in the emerging markets. The
Speaker 1: the Plaza A Corps is where the finance ministers came
Speaker 1: together and the monetary authorities cooperated as well. The second
Speaker 1: was oh eight o nine, and I remember after Lehman
Speaker 1: went under. I remember saying to my team, look, every
Speaker 1: policymaker in the world is focused on this problem, and
Speaker 1: they all want the same thing to happen. It's probably
Speaker 1: going to happen. And actually we started out performing in
Speaker 1: November of that year. And then uh, this is the
Speaker 1: third time. And of course the coronavirus is what has
Speaker 1: united everyone. We we uh, we want to control that
Speaker 1: and uh, and we've got the monetary and fiscal policy
Speaker 1: makers again all on the same page. So are we
Speaker 1: going to better get them against them. I'm not. I'm not.
Speaker 1: I guess what people are saying, Well, they can't control
Speaker 1: the coronavirus. And I do think there's a lot of
Speaker 1: hysteria out there around the coronavir virus. We're in much
Speaker 1: more of a social media, viral, networking world, and I
Speaker 1: think that's causing a lot of the hysteria. You know,
Speaker 1: as more and more people are doing their homework, they
Speaker 1: learn thirty to forty people a year in the United
Speaker 1: States die of the flu. Thirty to forty million, get it.
Speaker 1: I don't think we're going to see anything like those
Speaker 1: numbers from the coronavirus. So then, how quickly do you
Speaker 1: think Since there, it does look like we're moving towards
Speaker 1: a much more coordinated move among global policymakers, Cathy, So
Speaker 1: when we get to that point and what we have,
Speaker 1: I keep sit talking about parameters on this virus. When
Speaker 1: we know it's contained and we understand that there will
Speaker 1: be an end to this, how quickly does everything bounce back?
Speaker 1: In your view? Well, the way we're looking at this,
Speaker 1: this started in China. China is the leading indicator, and
Speaker 1: we know that the number of deaths now is below
Speaker 1: the number of recoveries, so that is that's the early
Speaker 1: sign of a turn. Now the fatality rate now in
Speaker 1: China is higher than we think it will be in
Speaker 1: the rest of the world. And the reason I've been
Speaker 1: in Wuhan Province. Uh, it's a chimney anyone anyone going there,
Speaker 1: whether it's smog or smoking both. Uh, it's like a chimney.
Speaker 1: So because this coronavirus, which by the way, we have
Speaker 1: two or three other coronavirus is making the rounds annually here.
Speaker 1: Because this coronavirus is focused primarily on those with compromised
Speaker 1: lungs for whatever reason, whether it's asthma or you know,
Speaker 1: elderly lung issues, smoking caused by smoking, or i'll say
Speaker 1: vaping as well. Uh. You know, those people have to
Speaker 1: be very careful. What's so interesting is this is not
Speaker 1: hitting the young. Now, maybe they have it and maybe
Speaker 1: they're spreading it, but they're a what doctors would call asymptomatic.
Speaker 1: So that's very interesting because that's another vulnerable part of
Speaker 1: the population. So at least we can isolate it to
Speaker 1: you know, those who are compromised when it comes to
Speaker 1: the lungs, right, I mean One of the arguments that's
Speaker 1: out there. One of the discussion points is that one
Speaker 1: of the reasons that we're seeinging this relatively quick reversal
Speaker 1: in China is because it's an authoritarian government. You know,
Speaker 1: they're able to sort of lock it down in a
Speaker 1: way that other countries, certainly not this country that we're
Speaker 1: sitting in, can do. How much do you worry about that,
Speaker 1: understanding the world as you do. Yeah, obviously they they
Speaker 1: did all they could and and then some in terms
Speaker 1: of because when says stay home, people stay home. Yes, yes,
Speaker 1: I think, you know, I think that all of us
Speaker 1: are taking precautions. I think one thing that I think
Speaker 1: will happen is that the traditional flu is probably not
Speaker 1: going to be as deadly or contagious because we've suddenly
Speaker 1: found all of these good hygiene habits. I mean, I'm
Speaker 1: seeing people talking about scrubbing their hands and doing the
Speaker 1: alphabet while they do it, you know, So I think
Speaker 1: I think that is also going viral, which is very good. Yeah.
Speaker 1: My favorite thing, sorry, just asn't aside, since we have
Speaker 1: a little time. My favorite thing that I found today
Speaker 1: is there's a website. I'll tweet it out and send
Speaker 1: it to Dave Wilson already that you can put in
Speaker 1: your favorite song and it will do it. It will
Speaker 1: put the lyrics against all the different steps of watching
Speaker 1: your hands. So whether it's Stairway to Heaven or Sweet Nome, Alabama,
Speaker 1: or whatever it is, you know all the different steps
Speaker 1: that it's useful baby shark for you, very shark for me, Kathy.
Speaker 1: What I do wonder and the conversation we keep having
Speaker 1: is what changes long term as a result of this.
Speaker 1: We've had such a I feel like a conversation of
Speaker 1: around supply chains coming off the US China trade war.
Speaker 1: You know, tech is your you know you look at disruption,
Speaker 1: you look at technology. Um you've been to like you
Speaker 1: understand this global supply chain? Does that change going forward? Well?
Speaker 1: What now you have to consider the source. But what
Speaker 1: I'm about to say, but what is true that during
Speaker 1: times of turbulence, innovation actually gains traction and market share.
Speaker 1: And I can give you two tangible examples from O
Speaker 1: eight oh nine, we thought the world was falling apart.
Speaker 1: Tech budgets were cut by right Salesforce. Dot COM's worst
Speaker 1: quarter from a revenue growth point of view, worst was
Speaker 1: up Amazon. Amazon's worst quarter was up four. So and
Speaker 1: in this particular crisis, we saw this sequencing of that virus,
Speaker 1: of the coronavirus COVID nineteen in two days. For Stars
Speaker 1: in two thousand three, it took I think it took
Speaker 1: five months before they could even figure out what it was. Right,
Speaker 1: we had two days and uh. And now, of course
Speaker 1: we're accelerating the timeline to trials for vaccines and then
Speaker 1: and then the scaling of vaccines. That's going to take
Speaker 1: time for sure, but I think we'll have a vaccine
Speaker 1: for the next flu season. How do you invest in
Speaker 1: a time like this. We concentrate our portfolios toward our
Speaker 1: highest conviction names and so and towards these names generally
Speaker 1: are going to be a part of the solution. So
Speaker 1: you talk about supply chain. Three D printing has taken
Speaker 1: a long time to take off. It's been, if you
Speaker 1: look at some other stocks, for six years. Okay. Now,
Speaker 1: remember we've talked about Tesla a lot in the past,
Speaker 1: and I always used to say, uh, you know, I
Speaker 1: look at a base like that, and that effectively is
Speaker 1: the bulls and their bears fighting each other. There's a
Speaker 1: big controversy, right, Uh, And bases either break out or
Speaker 1: they break down. In the case of Tesla, we're saying,
Speaker 1: watch out, there's a big base, this is going to
Speaker 1: be a big breakout. I would maintain the same for
Speaker 1: three D printing stocks. Now it's a little different because
Speaker 1: the industrial sector isn't as uh, it's more methodical. It
Speaker 1: isn't as quick as break things uh in the tech world. Right.
Speaker 1: Uh So, but we do know the aerospace world, which
Speaker 1: is is going to be in a world of trouble here.
Speaker 1: They've got to cut their costs. They got to cut
Speaker 1: their costs. And with three D printing, not only can
Speaker 1: you cut costs and they're they're printing engine parts now
Speaker 1: by you can cut cost by plus, but you're also
Speaker 1: shrinking the form factors, are lightening the weight of the
Speaker 1: planes as well, so bringing many more efficiencies. All right,
Speaker 1: just want to bring you a headline just crossing the
Speaker 1: Bloomberg Brazil stocks having their worst day in twenty one
Speaker 1: years and entering into a bear market. It's something that
Speaker 1: we're talking about a lot. We're talking with Dave Wilson.
Speaker 1: Are stocks that are earlier about what a bear market,
Speaker 1: what that number is? Uh? Here in the United States,
Speaker 1: we're not there yet but getting close, and as Day
Speaker 1: pointed out, if we have another day like today, we
Speaker 1: will get there. Also want to bring you some headlines
Speaker 1: from stitch fix. It's a name well known to our audience.
Speaker 1: A lot of stitch fixers out there disappointing with their forecast.
Speaker 1: UH the stock following about the after I was this
Speaker 1: third quarter revenue, Uh, their view trailing its lowest estimate.
Speaker 1: The estimate had been for five six point three million.
Speaker 1: They said it will be in the range of four sixty.
Speaker 1: That's pretty big mess. So you asked what might turn
Speaker 1: this and uh, you know, Warren Buffett uh said, just
Speaker 1: a few weeks ago, or maybe it was last week,
Speaker 1: he said, when bond yields were at two percent, He said,
Speaker 1: do you know that's the that bonds are selling for
Speaker 1: fifty times earnings and their earnings are not going to increase. Well,
Speaker 1: think about what fifty basis points is, right, that's two
Speaker 1: hundred times earnings. Stocks are selling at seventeen times earnings,
Speaker 1: and the end on average, there's there's probably close to
Speaker 1: a two percent yield in stocks. Now, so you go
Speaker 1: back to that comparison, right, I mean, from the allocation
Speaker 1: point of view, Uh, stocks are becoming, um, you know,
Speaker 1: very attractive. You do have to aim away from heavily
Speaker 1: leveraged companies that have not been investing in their future.
Speaker 1: They've just been buying back their own stock. You are
Speaker 1: listening to Bloomberg this week Jason Kelly Carroll Masser streaming
Speaker 1: live on YouTube as well. Still with us, Kathy would
Speaker 1: We've captured her for the better part of an hour.
Speaker 1: CEO and chief investment officer of our invest looking after
Speaker 1: more than eleven billion dollars. So, Kathy, we just heard
Speaker 1: very much that first part of what would be a
Speaker 1: V or a you the downward part? Are we headed
Speaker 1: for a V shaped recovery here? Well, we think that
Speaker 1: that could be the biggest head fake coming out of this. Uh.
Speaker 1: And one of the reasons is if you look at
Speaker 1: consumer sentiment in spending both in the United States and
Speaker 1: China until perhaps mid February, we haven't gotten all those
Speaker 1: numbers yet. Uh. They those numbers were very strong, very firm,
Speaker 1: and consumer confidence was very high. In the United States especially,
Speaker 1: the consumer confidence was very high. Uh. And so consumer
Speaker 1: we're spending was was it was carrying on while businesses
Speaker 1: we're cutting back. They were they were worried about the
Speaker 1: China trade conflict, they were worried about the inverted deal curve.
Speaker 1: Last year they were there, they were negative from a
Speaker 1: sentiment point of view, they were turning quite negative, and
Speaker 1: so you had to disconnect consumption up and purchasing managers
Speaker 1: indexes around the world plunging. So we had been saying, well, okay,
Speaker 1: if the consumer keeps spending, businesses are going to have
Speaker 1: to have to start investing again, both in inventories and
Speaker 1: capital spending, uh to meet that demand. Right, otherwise they'll
Speaker 1: just lose business and they'll lose out competitively. Now we've
Speaker 1: had this crisis, and I believe that the reaction of
Speaker 1: businesses is even more dire than it is for consumers.
Speaker 1: If you think about consumers, they're hoarding, right. So so
Speaker 1: maybe consumers spending in some respects has gotten a booster
Speaker 1: here and we'll give way a little bit. But the
Speaker 1: inventories have to be depleting rapidly, and we know capital
Speaker 1: spending has gone nowhere in the last years except perhaps down. UH.
Speaker 1: So you know, you've had the largest part of the
Speaker 1: US economy moving forward and the business sector not playing ball. Uh.
Speaker 1: This will cause an interruption but I think if we're
Speaker 1: right and this is going to pass, We've got spring coming,
Speaker 1: and viruses don't like spring. Uh. If this is going
Speaker 1: to pass, and the and the fatality rate is nowhere
Speaker 1: near China's. In other words, we do start comparing this
Speaker 1: more not completely to the traditional flu. Uh, then I
Speaker 1: think the turn could be a very sharp v as
Speaker 1: businesses scramble to catch up. Pretty dramatic. Yes, all right,
Speaker 1: So I am curious then, because I know you know
Speaker 1: you you invest in these various disruptive spaces, and I
Speaker 1: do wonder, um, one of your funds is the genomic revolution?
Speaker 1: Is is there a healthcare? Is there a genomic play
Speaker 1: here for you? Because of the virus? Sure sequencing? So illumina? Uh?
Speaker 1: Do you have owned for a long time? We've owned
Speaker 1: it for a long time. It's been flagging recently. We
Speaker 1: understand why it has um there. They've launched a new
Speaker 1: product cycle and we think that's going to get it
Speaker 1: going again. But hearing news about the virus being sequenced
Speaker 1: in just two days, uh, and then we have to
Speaker 1: keep sequencing it because we need to know if it's
Speaker 1: mutating our right, So sequencing is critical. There have been
Speaker 1: a number of vaccine we did own, or we do
Speaker 1: own an Ovo, which has tripled, quadrupled now today it
Speaker 1: had a hit because Citron went after it. But you know,
Speaker 1: some of the vaccine UH makers are are benefiting nicely.
Speaker 1: Our Tourists is another one that has benefited. That is
Speaker 1: benefiting for the same reason, and pugen is UH is
Speaker 1: benefiting from for a different reason. It has not sold
Speaker 1: off at all, and that's because it has identified more
Speaker 1: targets from an immunotherapy point of view cancer immunotherapy than
Speaker 1: almost any other company. And it's just a very small
Speaker 1: company out of Israel. So it's held in very nicely,
Speaker 1: I have to say, and I looked at these numbers.
Speaker 1: I think it was either around noon or one that
Speaker 1: fund is up twelve point four percent this year, so
Speaker 1: in a market back gave back a lot today. But
Speaker 1: I'm just saying, in a market environment where you can't
Speaker 1: really find any cover, you're still holding out of some game. Again,
Speaker 1: this is innovation gaining traction during difficult times because businesses
Speaker 1: and consumers are willing to think about doing things differently
Speaker 1: when they're afraid. Cathy Woods, CEO CIO of archivest here
Speaker 1: with us in our new York studio. So what's the
Speaker 1: mood like in your shop right now? Okay, Well, we
Speaker 1: have been through these ups and downs, risk on, risk
Speaker 1: off since we started in two thousand and fourteen, more
Speaker 1: than I ever have experienced in my career. And uh,
Speaker 1: the mantra in our at ARC is innovation gains traction
Speaker 1: during tumultuous times. So let's let's let's pick concentrate our
Speaker 1: portfolios towards those companies that are going to help solve
Speaker 1: these problems. And that's what we do. So it's I
Speaker 1: won't say it's exciting because we never like to see
Speaker 1: the market going down. But you know, the other thing
Speaker 1: that we do is sometimes we lose confidence in some
Speaker 1: stocks relative to others. This is a nice time to
Speaker 1: do some house cleaning, and what we do is generate
Speaker 1: losses that we can take games against in the future.
Speaker 1: So so you are cleaning out some names at this point. Yeah,
Speaker 1: we we have taken down some names. Yes, we have.
Speaker 1: We've sold names. Like you know, I always forget the
Speaker 1: ones we're so but out of sight, but by do
Speaker 1: is is one of them, mostly in in our Autonomous
Speaker 1: Technology and Robotics fund. We just don't we see a
Speaker 1: lot of disarray in the electric vehicle and autonomous vehicle
Speaker 1: space in China, and that's why, primarily why we owned
Speaker 1: that one, and so uh yeah, we we bought more
Speaker 1: more Tesla, of course, uh Tesla. Tesla one might think
Speaker 1: might be hurt by lower oil prices because of course
Speaker 1: internal commission. But we think that even with oil prices
Speaker 1: coming down, that the total cost of ownership of an
Speaker 1: electric vehicle today is lower than that of a gas
Speaker 1: powered car, and it's only going to get lower still
Speaker 1: with us Kathy Wood, CEO, and see io at our
Speaker 1: investment in our Bloomberg Interactive Broker studio, they have over
Speaker 1: eleven billion dollars in assets under management. So I'm gonna
Speaker 1: go through some names with you. We didn't. We did
Speaker 1: cheat a little bit about Tesla. You and I, Jason,
Speaker 1: we've all talked with you a lot about your position
Speaker 1: in Tesla. You're still very much a ball on it. Yeah,
Speaker 1: And we got some new information last week from g M.
Speaker 1: It had its Electric Vehicle Day and we took some
Speaker 1: of the specs they threw out there. They weren't too generous,
Speaker 1: but what with what we got, we were able to
Speaker 1: confirm that Tesla is three years ahead of GM on
Speaker 1: certainly battery technology. Uh. They also we're talking a lot
Speaker 1: about cobalt reducing that in the battery. Tesla's already there.
Speaker 1: So you know, it was very interesting illuminating. Yes, it's
Speaker 1: a big gap, and Tesla's good. Three years from now
Speaker 1: will be in a completely different place. Did that did
Speaker 1: three years surprise you? Did you think they have been
Speaker 1: We had no, no, no, no, we we had been
Speaker 1: saying three to four years when it comes to autonomous
Speaker 1: vehicles and artificial intelligence chips than most automakers are four
Speaker 1: years behind Tesla. We believe Kathy is GM the one
Speaker 1: though to fault, Like I wonder is it more like
Speaker 1: Mercedes or one of the years? Like who is the
Speaker 1: automaker that's maybe potentially closer to nipping at Tesla's heel
Speaker 1: in interesting uh. Elon Musk has said he he would
Speaker 1: not take any manufacturer seriously until they vertically integrated and
Speaker 1: build out their own battery plant. Volkswagen's doing that, interestingly.
Speaker 1: Now they're having a heap of trouble with their software though,
Speaker 1: and so so you know, this is a completely different
Speaker 1: dynamic from traditional auto manufacturing. So they have mountains to
Speaker 1: climb right, and uh, we think it's going to be
Speaker 1: a very tough lift for them. Way Mo is the
Speaker 1: one most people would point to. Very interesting Google now
Speaker 1: is using outside funding for Waymo. They don't want to
Speaker 1: put all, you know, their investment dollars into these moon shots,
Speaker 1: and we're wondering if they're getting ready to spin it.
Speaker 1: We have no idea, but they've certainly distanced themselves to
Speaker 1: some extent. They don't want to, uh to take all
Speaker 1: the risk, uh when it comes to the autonomous vehicle fronds.
Speaker 1: So talk to us about the last year eighteen months,
Speaker 1: especially when it comes to Tesla. Not always easy to
Speaker 1: be to be a bull, certainly amid all of the
Speaker 1: you know, we talked a lot about narratives today, amid
Speaker 1: all the loud narratives, especially from the Bears, that obviously
Speaker 1: is quite a down a lot over the past six months.
Speaker 1: Because but do you ever have any moments of doubt
Speaker 1: on that one? So I'm probably the most trolled portfolio
Speaker 1: manager on Twitter because of Twitter and bitcoin and uh no, actually, um,
Speaker 1: a Wall Street Journal reporter on Twitter, I didn't even
Speaker 1: know it was a reporter said, so, Cathy, would how
Speaker 1: do you feel losing all your your clients all this
Speaker 1: money in Tesla. This was April May of last year
Speaker 1: when it was in the one nineties one eighties, and
Speaker 1: I didn't know who, And I rarely respond to those things.
Speaker 1: I said, I don't feel any regret or doubt in
Speaker 1: the least. In fact, our conviction has gone up during
Speaker 1: down times for stocks. We double down on our soul searching.
Speaker 1: Of course, that's when some of our most interesting insights
Speaker 1: occur again because we're digging deeper and deeper. Uh so
Speaker 1: we we actually our conviction in Tesla increase during that downturn.
Speaker 1: Do you sell the like at all? When like it?
Speaker 1: Because I thought I looked at as at the end
Speaker 1: of last year that you guys had paired back a
Speaker 1: little bit. Well, if you look at the page on
Speaker 1: Bloomberg you would see that, but we have it has
Speaker 1: stayed our top position in the flagship funds. So it
Speaker 1: would have been a twenty five percent position. We've kept
Speaker 1: it at ten percent. So we did sell a lot,
Speaker 1: But that's what a portfolio manager does when a stock quadruples,
Speaker 1: quintuples and other stocks are down thirt you know that's
Speaker 1: what we do. So take us inside the room. What
Speaker 1: does that soul searching look like at ARC? I mean,
Speaker 1: are you sitting around the table like what? What? What
Speaker 1: is it? So we have morning meetings every morning and
Speaker 1: so we will be getting news from At that time,
Speaker 1: it was all the bears and you know, so then
Speaker 1: we kept looking at the bond market, and the bond
Speaker 1: market actually got this right before the stock title did. Uh,
Speaker 1: so that became, uh, you know, a daily conversation. We
Speaker 1: have brainstorms every Friday from ten thirty to twelve thirty.
Speaker 1: If you'd ever like to join, you'd be more than welcome.
Speaker 1: It's open. People can video in and they do. And uh,
Speaker 1: we are as hard on ourselves as you you could
Speaker 1: imagine because it's all analysts coming at this from different directions.
Speaker 1: So James Wang is our artificial intelligence analysts who has
Speaker 1: been instrumental to our understanding of how far ahead Tesla
Speaker 1: is with its AI chip. But we've got our genomics team. Uh,
Speaker 1: they know the brain, that's what neural networks are modeled after,
Speaker 1: and so they will they will join in the conversation
Speaker 1: and it's it's no, it's very respectful, it's very methodical.
Speaker 1: It's not in emotional, it's uh, it's we're seeking the truth,
Speaker 1: you know. And and the motto I always use is
Speaker 1: truth wins out. It always does. So okay, So a
Speaker 1: couple of minutes left. Is there a new investment idea
Speaker 1: that you guys have been looking at, or new disruptive
Speaker 1: technology that's not on everybody's radar that you think it
Speaker 1: should be. Well, we do think that the digital wallet
Speaker 1: space is underappreciated for what it is. We think it's
Speaker 1: going to be very disruptive to banks. So Venmore, you know,
Speaker 1: Venmo Paypals, Venmo Squares, cash app, which we think is
Speaker 1: actually growing much faster than Venmo now because of some
Speaker 1: really brilliant marketing strategies. Uh, they're the number of digital
Speaker 1: users at each of those companies is higher than at
Speaker 1: JP Morgan and JP Morgan as a digital strategy and
Speaker 1: they're going and there. And the reason is the cost
Speaker 1: of customer acquisition for these viral networking services is about
Speaker 1: twenty dollars for a bank to get a new checking
Speaker 1: account or credit card card customer. That's anywhere from dollars
Speaker 1: to two thousand dollars because of all the overhead and safes.
Speaker 1: This is bricks and mortar and so forth. So that's
Speaker 1: one thing, and you know the other differences. You know,
Speaker 1: the the the amount of data that Square and Venmo
Speaker 1: have on their user base is unlike anything a bank
Speaker 1: could hope to have. And it's real time. It's real time.
Speaker 1: They know exactly how much they can loan these merchants,
Speaker 1: uh and ultimately consumers. You know how much working capital
Speaker 1: they might need. Oh, maybe you need to payroll service.
Speaker 1: They're gonna they're gonna be full service and the banks
Speaker 1: aren't going to know what hit them. They aren't. And
Speaker 1: that was Kathy Wood, the CEO and ce IO of
Speaker 1: ARC Investment, A great conversation. You've been listening to Bloomberg
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