WEBVTT - Single Best Idea with Tom Keene: Wei Li

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Single best idea and a theme that just came to me.

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<v Speaker 2>Trust me. We wanted to go out to McKinsey or

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<v Speaker 2>Bain to consult on what the theme should be to

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<v Speaker 2>the end of the year. We didn't do that. I

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<v Speaker 2>just came into my little puny head here somewhere between

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<v Speaker 2>from the food court. Should I have the almonds or

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<v Speaker 2>the dried apricots and the answers I went with both

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<v Speaker 2>this morning, and with that I came up with a theme,

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<v Speaker 2>this great bullmarket. Now I'm not predicting a continued bullmarket,

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<v Speaker 2>but the humbling sense from December of twenty eighteen with

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<v Speaker 2>Ben Ladler's great call at HSBC get on board, buy equities,

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<v Speaker 2>and I'll bring it out to another crystal clear moment.

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<v Speaker 2>Autumn of two thousand twenty two were separately and for

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<v Speaker 2>different reasons, ed Yard Denny and ralph An Kompora the

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<v Speaker 2>legend of technical analysis. Denny and ankorpor are said, for

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<v Speaker 2>different reasons, get on board. Remember that after the pandemic

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<v Speaker 2>that in October twenty twenty two. So here we are.

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<v Speaker 2>I don't want to appine in the market, but the

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<v Speaker 2>basic idea is talk to people informed. Waylee, is it

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<v Speaker 2>Blackrock Global strategists there with prodigious mathematics skills look for

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<v Speaker 2>her on LinkedIn. It's a reason just you know, get

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<v Speaker 2>organized on LinkedIn to look for way Lee w E

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<v Speaker 2>I l I waylea of black Rock on the View Forward.

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<v Speaker 2>I asked her about David Conston's report at Golden Sachs

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<v Speaker 2>modeling out a regression to the mean bringing single digit

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<v Speaker 2>returns forward from this great bull market down to an

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<v Speaker 2>annualized three ish low single digit percentage point. Waylee disagrees.

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<v Speaker 1>We actually took an inspiration from that analysis to try

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<v Speaker 1>to understand if the measure of concentration, which is to

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<v Speaker 1>look at the market cup of the biggest company versus

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<v Speaker 1>the seventy fifth personel and look at that racial right

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<v Speaker 1>by that measure, us a credit market is close to

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<v Speaker 1>the most concentrated in almost one hundred years, and we

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<v Speaker 1>try to understand, okay, that concentration does it have significant

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<v Speaker 1>varying on subsequent market return over twelve months, over ten years.

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<v Speaker 1>The verdict of that analysis, inspired by the research, a

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<v Speaker 1>piece of research that you're referring to, is that over

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<v Speaker 1>the very near term horizon, let's say, investing for twenty

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<v Speaker 1>twenty five, concentration doesn't have significant bearing and over the

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<v Speaker 1>longer term in a mean revert environment then it has

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<v Speaker 1>significant varying. But we're not in the mean revert environment.

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<v Speaker 1>So we continue to think that erniest can come through.

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<v Speaker 1>For next year, we're looking at high single digit return expectation,

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<v Speaker 1>and there is reason in the context of US exceptionalism

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<v Speaker 1>for US to lean more into US equities, which is

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<v Speaker 1>what we're doing for this outlook.

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<v Speaker 2>I can't say enough, folks, that idea of not mean

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<v Speaker 2>reversion sets up the arch debate forward for those of

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<v Speaker 2>you in the bull market or those of you seeing

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<v Speaker 2>this great bull market from a distance, the idea that

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<v Speaker 2>we're not going to mean revert to some lower frame

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<v Speaker 2>and that we're going to come in higher and then

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<v Speaker 2>you know what the pro say is high single digits,

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<v Speaker 2>low single digits, but those are huge percentage changes to

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<v Speaker 2>participate over two years, three years, five years, and ten years.

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<v Speaker 2>Way Lee of black Rock, and we continue where they're

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<v Speaker 2>here very quickly, wayly on what you don't own enough

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<v Speaker 2>of mag seven.

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<v Speaker 1>Meg seven multiple is thirty times and at the beginning

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<v Speaker 1>of twenty twenty two it was thirty five times. At

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<v Speaker 1>the inception of chat GBT late twenty twenty three two

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<v Speaker 1>it was twenty five times. So it is expensive, but

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<v Speaker 1>it's not extremely expensive. There are good reasons earn is

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<v Speaker 1>momentum that supports those valuations, you know, like MI revert.

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<v Speaker 1>If we're talking about an index that has become more

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<v Speaker 1>growthy in nature over time, then the meme needs to

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<v Speaker 1>reflect the more growthy nature of the benchmark. So we

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<v Speaker 1>continue to like MAXI seven, but we have broughten out

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<v Speaker 1>how we play the AI theme.

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<v Speaker 2>Wayly of black Rock and again a greater dandem to this.

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<v Speaker 2>The one I think of that's equally engaged in LinkedIn

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<v Speaker 2>is Urine timor over at fidelity. The value of reading

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<v Speaker 2>not glancing at but reading Urine timor t I M

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<v Speaker 2>M E r Urine timor Fidelity and wayly of black

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<v Speaker 2>Rock out on LinkedIn. Folks, you'd have to pay a

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<v Speaker 2>ten thousand dollars fee just to have a cup of

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<v Speaker 2>senca with either of them. Within the reality of Global

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<v Speaker 2>Wall Street. I can't say enough about Whaley's value add

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<v Speaker 2>on black Rock out on LinkedIn. All I can say

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<v Speaker 2>is this podcast is building. Frankly, it's been off my radar,

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<v Speaker 2>but we're going to promote it very much so in

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<v Speaker 2>the new year, we say thank you to all of

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<v Speaker 2>you on your commute across the nation on Applecarplay, Android

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<v Speaker 2>Auto Serious XM Channel one twenty one. Had no idea

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<v Speaker 2>how big that audience was. Good morning in the quarter

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<v Speaker 2>of ninety ninety one Washington, Bloomberg eleven three to zero

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<v Speaker 2>in New York at ninety two nine in Boston. Please

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<v Speaker 2>subscribe to Bloomberg podcasts on YouTube. This is single best

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<v Speaker 2>idea