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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the All Thoughts podcast.

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Speaker 2: I'm Tracy Alloway.

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Speaker 3: And I'm joll Wisenthal.

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Speaker 2: Joe, I have a headline for you, go on THEO.

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Speaker 3: Is a good day for headlines you brought this June sixteenth.

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Speaker 3: You have a lot of headlines you could That's right,

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Speaker 3: you could choose from.

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Speaker 2: But one in particular. I'm sure you saw this already.

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Speaker 2: SpaceX extends gained to seventeen percent, set to overtake Microsoft

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Speaker 2: in value.

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Speaker 3: I had a feeling I think at some point did

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Speaker 3: they also overtake Amazon like all of those Yes, I

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Speaker 3: think in the last week. I mean we're traveling the

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Speaker 3: week of the SPACEXIPO. They just captivated everyone and day

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Speaker 3: after day, and there are there any number of superlt

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Speaker 3: you know what Bloomberg would really like super relatives. It's

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Speaker 3: like the largest gain.

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Speaker 2: Since x, the biggest and more stats than superlatives, right.

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Speaker 3: Well, I suppose, but there was also one I saw,

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Speaker 3: I guess yesterday. So June fifteenth was the world's five

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Speaker 3: hundred richest people collectively added three hundred and sixty six

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Speaker 3: billion dollars to their wealth. There is the single biggest.

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Speaker 3: The numbers get bigger over time. There are some it's

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Speaker 3: some big times for the market, a.

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Speaker 2: Nice day for them. But the crazy thing about SpaceX is, Okay,

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Speaker 2: you have this company. It's now worth two point seven

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Speaker 2: trillion dollars or something on twenty billion dollars of revenue

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Speaker 2: from twenty twenty five, and I can't even do you know,

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Speaker 2: if we're talking about valuations, you can't even do a

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Speaker 2: traditional price earnings ratio because there's no earnings, there's just sales,

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Speaker 2: and the price to sales ratio is more than one

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Speaker 2: hundred something like that.

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Speaker 3: You know, look like, I don't even know where to

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Speaker 3: big game. I mean, you've seen this.

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Speaker 2: Because its superlative.

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Speaker 3: Yeah, true, super I mean the argument that's being made

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Speaker 3: is that there's a lot of arguments being made and

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Speaker 3: people it's like, oh, it's actually an AI company because

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Speaker 3: of all the GPUs and data centers that they've built.

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Speaker 3: They really do have, and we've done an episode on this,

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Speaker 3: an extraordinarily commanding lead in space and satellites and starlink,

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Speaker 3: et cetera. The revenue is what it is, I don't know.

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Speaker 2: But also I think it's fair to say things feel

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Speaker 2: a little bit speculative. Yeah at the moment, right, you

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Speaker 2: see a headline like that, seventeen percent, that's overtaking a

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Speaker 2: stallwart of the tech industry in the space of it's

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Speaker 2: been less than a week, right.

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Speaker 3: Yeah, I mean look, I mean the other thing is,

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Speaker 3: look these companies and we're going to get these other

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Speaker 3: big IPOs later in the year with open AI and

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Speaker 3: Anthropic presumably. I mean, Space has been around for a

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Speaker 3: long time. The historically companies came public much earlier, et cetera.

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Speaker 3: So obviously it does have twenty two thousand employees. It's

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Speaker 3: a big company, but the revenue is what it is,

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Speaker 3: and if you're looking at it from a sort of

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Speaker 3: like valuation based metric, you would have to say, at

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Speaker 3: a very minimum, investors are are you have to be

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Speaker 3: banking on very rapid growth in the very short term

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Speaker 3: in the coming years to expect good returns here.

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Speaker 2: Right, So obviously one of the big talking points.

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Speaker 3: Do you know I'm looking at the d S page

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Speaker 3: for Space, do you know where it's headquartered? No, actually,

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Speaker 3: Star based Texas, So they so they have their own

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Speaker 3: town in Texas that they got to name. But that

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Speaker 3: is their corporate info. On the des page Star based Texas, Well.

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Speaker 2: That's definitely worth two point seven true. Yeah, So all right,

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Speaker 2: the big talking point in markets is obviously valuations. All

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Speaker 2: of this AI frenzy, is it a bubble? Is it not?

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Speaker 2: But even if you think that a lot of this

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Speaker 2: is speculative, yeah, my big question is what do you

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Speaker 2: actually do at this point?

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Speaker 4: Right?

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Speaker 2: Because so much of the market has been momentum driven recently,

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Speaker 2: AI enthusiasm is pretty much everywhere. So we talk a

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Speaker 2: lot about waitings in the indices, the benchmark inducees of

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Speaker 2: big tech, but also, as we discussed recently with Torsten

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Speaker 2: Slock in his great presentation at our live show, the

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Speaker 2: AI factor is basically embedded in pretty much every stock

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Speaker 2: at this point in time.

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Speaker 3: Look, I'm the way I look at it for my

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Speaker 3: own investing in my retirement. Did I very have like

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Speaker 3: sort of very boring, normal index based investing. It's like, look,

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Speaker 3: I may be missing out, but these are great returns, etcetera.

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Speaker 3: I'm not managing other people's money, you know, other people

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Speaker 3: like this is luxury, you know what I'm saying. It's

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Speaker 3: like I have the luxury of being able to say

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Speaker 3: these are fine returns. I'm just getting from the S

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Speaker 3: and P or whatever roughly, and that's fine. It's a

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Speaker 3: great year. And if like, you know, I'm not all

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Speaker 3: in on two X levered Korean memory stocks, but I'm

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Speaker 3: still like, these are great returns. Had I been, had

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Speaker 3: someone been paying me to manage their money, I don't

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Speaker 3: know if they'd be happy to get market returns right now.

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Speaker 2: Yeah, that's right. So this poses a bunch of interesting

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Speaker 2: questions obviously, Yeah, the big one being are we in

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Speaker 2: a bubble or not? And then I guess the next

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Speaker 2: biggest one being well, what do you actually do?

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Speaker 1: Yeah?

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Speaker 3: How do you stay saying that's right?

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Speaker 2: How do you stay safe in a giant market bubble?

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Speaker 2: And we do, in fact have the perfect guests, someone

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Speaker 2: who has managed to do that over the years. More

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Speaker 2: or less, I think we're gonna be speaking with Jeremy Grantham.

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Speaker 2: He is the co founder and long term strategist at GMO,

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Speaker 2: as well as the author of the new memoir The

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Speaker 2: Making of a Perma Bear, The Perils of Long Term

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Speaker 2: Investing in a Short term World, and famously the Caller

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Speaker 2: the accurate caller of many previous yes, including dot com,

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Speaker 2: which is the parallel that everyone keeps using. So Jeremy,

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Speaker 2: thank you so much for coming on odd lots.

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Speaker 4: It's a pleasure. Thank you for having me.

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Speaker 2: So what do you recommend investors too at this point

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Speaker 2: in time, because it seems like there's no escape from

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Speaker 2: AI enthusiasm.

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Speaker 4: To put it mildly, well, my simple advice is usually

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Speaker 4: try and avoid the high. Check the numbers and one

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Speaker 4: hundred times sales. Pretty well, that's the job for you.

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Speaker 4: It's easy for kind of market historians to be having

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Speaker 4: a good time. These are extraordinary times. It's seldom been

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Speaker 4: more interesting. I'm thrilled to be alive when all the

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Speaker 4: major issues that I have spent my life studying and

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Speaker 4: particularly the last fifteen years are coming to a head

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Speaker 4: basically at the same time. And to find that being

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Speaker 4: met by the highest priced market in history, give or take,

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Speaker 4: is extraordinary. And I think in fifty years market historians

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Speaker 4: will look back and talk in awe of SpaceX and

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Speaker 4: read as a kind of novel slash joke its perspectives,

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Speaker 4: and compare it with the stories they tell about the

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Speaker 4: south Sea Bubble. You know, an undertaking of such enormous

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Speaker 4: value that it cannot cannot be at this time revealed

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Speaker 4: it scoped up a lot of money and ran off

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Speaker 4: with it, and they deserved it.

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Speaker 3: The naming of your book the making of a Perma Bear?

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Speaker 3: What is like when I read that title? Should I

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Speaker 3: have perma bear in air quotes? As in like people

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Speaker 3: perceive you to be a perma bear?

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Speaker 4: Or do you voted quotes?

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Speaker 3: And it interesting? Yeah, because because a I don't you know,

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Speaker 3: I associate you with like warning about the markets can

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Speaker 3: get over their skis and understanding market history, et cetera.

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Speaker 3: On the other hand, I look at GMO's holdings and

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Speaker 3: positioning and I see, you know, I do not see

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Speaker 3: funds that are just overwhelmingly in treasuries, in gold and

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Speaker 3: safe haven assets. I see ownership of Meta and Microsoft.

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Speaker 3: This does not look like the portfolio of someone who

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Speaker 3: I would think of as a quote perma bear unquote.

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Speaker 4: When I was seventy, I figured it was time to

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Speaker 4: leave my colleagues in charge of all the day to

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Speaker 4: day decisions. I have nothing to do with the portfolio today.

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Speaker 4: My only job is to study long term existential threats

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Speaker 4: to the market and society, and that includes the making

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Speaker 4: and breaking of the great bubbles. Which is fine because

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Speaker 4: I have always, for fifty years at least, considered the

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Speaker 4: making and breaking of the great bubbles to be the

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Speaker 4: only thing that really matters. The rest of the time,

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Speaker 4: show up for work, keep your nose clean. You're doing fine.

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Speaker 4: But the forming of these spectacular bubbles and their breaking

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Speaker 4: really separates the men from the boys.

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Speaker 2: So you touch on this in the book. But when

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Speaker 2: we're in the midst of a major bubble and people

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Speaker 2: are seeing crazy returns like seventeen percent on SpaceX, what

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Speaker 2: do you tell clients they're missing out on these huge gains.

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Speaker 2: I assume you're encouraging them to be patient, to wait

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Speaker 2: for that mean reversion. But how do you actually handle

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Speaker 2: the pressure of having a customer, a client who is

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Speaker 2: under pressure to at a minimum meet their benchmark with

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Speaker 2: great difficulty.

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Speaker 4: It's always been difficult dealing with clients in a major

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Speaker 4: ball market. Luckily, we've had quite a bit of experience

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Speaker 4: because since Greenspan, we've gone from one overpriced market to

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Speaker 4: the next, starting with the tech bubble and then the

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Speaker 4: housing bubble, and then in the sense the end of

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Speaker 4: twenty one was a spectacular overpriced market and now this

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Speaker 4: So we've had a lot of experience and we were

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Speaker 4: more careful at handling the clients now than I think

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Speaker 4: we were in the Tech Book, where we famously lost

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Speaker 4: half our book of business in two and a quarter years.

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Speaker 3: Actually, what does that look like in practice? And I

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Speaker 3: understand that you're not active day to day in the

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Speaker 3: security selection, but obviously people who work for you are,

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Speaker 3: and they're very active, and obviously in the client handling.

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Speaker 3: What does that actually look like in practice? Good client

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Speaker 3: management at any firm.

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Speaker 4: In our case, being as honest as you can be,

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Speaker 4: lay the facts on the table, make them as clear

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Speaker 4: as you possibly can, try and take out one hundred

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Speaker 4: percent of the hype, and kind of engage with your

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Speaker 4: client so that they understand exactly how you see the

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Speaker 4: market working, why it does this, why it does that,

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Speaker 4: how it's in general price. And that's a long, continuous job,

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Speaker 4: and it keeps going in the bull markets and the

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Speaker 4: band markets. What changes really is the client's level of excitement.

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Speaker 4: They become careful and miserable for a while, and they're

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Speaker 4: excited and jumping up and down for a while. But

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Speaker 4: our process of trying to deliver the facts as we

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Speaker 4: see them doesn't really change much.

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Speaker 2: So I think a lot of people would probably agree

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Speaker 2: that markets feel a little frothy at the moment, But

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Speaker 2: I think there's also a mentality. Again, it goes back

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Speaker 2: to this momentum factor that's dominated in recent years. But

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Speaker 2: I think there's a mentality that everyone just assumes they're

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Speaker 2: going to be able to get out before everyone else.

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Speaker 2: Everyone's going to head for the exits at the same time,

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Speaker 2: so you enjoy the gains and then hopefully you're slightly

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Speaker 2: smarter than everyone else and you manage to save yourself

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Speaker 2: before the bubble actually bursts. How do you go about

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Speaker 2: thinking about timing of the bursting of bubbles? What are

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Speaker 2: the signs that you actually watch out for in terms

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Speaker 2: of when everyone is heading for the exits all at once.

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Speaker 1: Wow.

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Speaker 4: I have a few rules that have worked more often

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Speaker 4: than not. The one that's most interesting to me has

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Speaker 4: only flashed four times since nineteen twenty five, and that

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Speaker 4: is in the early phases of the bubble. That is,

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Speaker 4: we define a bubble as a rare two sigma event

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Speaker 4: and based on the price only and when it breaks

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Speaker 4: through that. Let's assume nineteen twenty eight, you have a

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Speaker 4: huge move and the stocks that lead it for going

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Speaker 4: up sixty eighty percent for the year, and then in

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Speaker 4: nineteen twenty nine, the junkie flyers start to go down.

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Speaker 4: It's not that they underperform a rising market. The market

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Speaker 4: goes up thirty five percent to the peak in twenty

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Speaker 4: in October, they can't even get the sign right. The

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Speaker 4: previous year's leaders, the spectacular movers, start to decline and

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Speaker 4: they spent the whole of twenty nine going down. And

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Speaker 4: by the time the market broke, the S and P

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Speaker 4: Low Priced Index, which regrettably was discontinued years ago, was

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Speaker 4: down almost forty percent. Priced Index were a bunch of

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Speaker 4: fallen angels with enormous volatility, very highbatis and they had

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Speaker 4: had his spectacle in nineteen twenty eight, and they started

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Speaker 4: to decline. Why is that? I have a theory that

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Speaker 4: this is relates to mister Prince's unusually honest answer, why

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Speaker 4: is he still in the bull market? As long as

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Speaker 4: the music's playing, I had to keep done, and that,

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Speaker 4: of course is the name of that game. But he

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Speaker 4: doesn't have to dance with Puma Tech. Puma Tech was

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Speaker 4: the most advanced spec in ninety nine, which was a

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Speaker 4: hell of a good year to be the most advanced

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Speaker 4: dock and you don't have to go off the cliff

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Speaker 4: in Puma Tech. You go off the cliff in Coca Cola.

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Speaker 4: That's the ideal, and that's exactly what happened in nineteen

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Speaker 4: twenty nine. People in that case actually Coca Cola. They

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Speaker 4: gravitated to the Coca Colas and the radios and away

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Speaker 4: from the junk, and the junk started to decline. That's

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Speaker 4: an incredible signal, the greatest prime primal scream from the

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Speaker 4: stock market ever. And nothing like that happens again. You

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Speaker 4: have underperformance of high flyers, but you never have them

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Speaker 4: go down in the decently rising market until drum roll

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Speaker 4: nineteen seventy two. The top of the nifty to fifty,

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Speaker 4: the SMP goes up seventeen, the average SMP stock goes

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Speaker 4: down seventeen, so I can remember the numbers forever. And

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Speaker 4: then we have the biggest bear market since the Great Depression.

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Speaker 4: That was a truly miserable bear market seventy three seventy four,

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Speaker 4: whether you had small cap, large cap, quality, junk, everything

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Speaker 4: went down fifty percent, and then when adjusted for inflation

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Speaker 4: closer to sixty five. An absolute monster. And nothing like

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Speaker 4: it happens again until two thousand. In the year two thousand,

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Speaker 4: you may remember, the growth stocks peaked horrific in February,

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Speaker 4: the rest of the SMP did not. The rest of

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Speaker 4: the SMP rose about fifteen percent, so you had a

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Speaker 4: coequal high in October, but the growth stocks for down

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Speaker 4: forty percent, having been as low as fifty percent by then,

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Speaker 4: they rallied a little, and back in September you had

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Speaker 4: the SMP as high as it was in March of

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Speaker 4: two thousand. Just amazing deviation between the growth stocks who'd

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Speaker 4: been making spectacular running in ninety eight, ninety nine and

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Speaker 4: early two thousand and the rest of the market that

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Speaker 4: continued up, and then you had very sharp break the

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Speaker 4: end of two thousand, a steady break in two thousand

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Speaker 4: and one, and then to rub it in a miserable

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Speaker 4: minus twenty two percent in two thousand and two, and

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Speaker 4: nothing like that happens again until twenty twenty one. In

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Speaker 4: twenty twenty one, you may remember the mean stocks peeled

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Speaker 4: off by the middle of the year. Kathy Wood and

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Speaker 4: her portfolio were going down. By the end of the year,

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Speaker 4: they were off thirty five forty percent from their peak.

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Speaker 4: And yet during that same six months, the s and

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Speaker 4: p powered ahead. It's really quite remarkable when they get

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Speaker 4: the sign wrong. And unfortunately that I had an adventure

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Speaker 4: with quantum Scape. Quantum Scape turned out to be a

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Speaker 4: meme start without my knowing it, because I had a

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Speaker 4: huge position personally. And the reason I had a huge

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Speaker 4: position is that I was offered an opportunity to invest

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Speaker 4: several years earlier on an all or nothing basis. I

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Speaker 4: took this big position or I had nothing. So I

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Speaker 4: took a deep breath, and it was much too big

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Speaker 4: for our foundation, which we have for the protection of

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Speaker 4: the environment, the Grantham family, and so I had to

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Speaker 4: own it personally. So it was the only stock that

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Speaker 4: I It was a very big chunk and it came

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Speaker 4: as a spac at four times my investment, better than

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Speaker 4: a kick in the pants ten dollars a share, up

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Speaker 4: from two and a half, and within three months it

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Speaker 4: was one hundred and thirty one and let me should

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Speaker 4: talk about one hundred and thirty one at the end

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Speaker 4: of twenty twenty. That was the very first start to

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Speaker 4: peek out at over one hundred and thirty was bigger

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Speaker 4: than General Motives, and it was a battery research lab.

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Speaker 4: They were going to design with any luck a solid

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Speaker 4: state battery, and they still may, but they still have

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Speaker 4: not got a battery on the market. So this wasn't

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Speaker 4: like SpaceX. This had no sales forget no profits, and

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Speaker 4: were selling for more than general motives. Actually, I think

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Speaker 4: that is more speculative SpaceX, which I think is a

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Speaker 4: very very high hurdle.

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Speaker 3: I'm glad you brought back twenty twenty one because that

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Speaker 3: was a weird year, wild time in a way that

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Speaker 3: really was See. I would argue the twenty twenty one

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Speaker 3: was actually much more wild than right now because of

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Speaker 3: the proliferation of quantum scapes, which was one of many

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Speaker 3: stories that you could tell. You could go back to

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Speaker 3: the Rivian valuation at its peak or numerous others escape

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Speaker 3: it is much okay, okay, all right, all right, fine,

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Speaker 3: but let's talk about AI for a second, because obviously

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Speaker 3: we reached back towards memories of the dot com bubble

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Speaker 3: or twenty twenty one. But I'm looking at a chart

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Speaker 3: on my terminal right now of Nvidia revenue. So in

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Speaker 3: twenty nineteen, in Vidia had revenue of eleven point seven billion,

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Speaker 3: and in twenty twenty five it had revenue of one

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Speaker 3: hundred and thirty billion, so the revenue has gone up therefore,

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Speaker 3: I think by over ten x in six years. We

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Speaker 3: talked about and everyone said, oh, market, the very high valuations.

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Speaker 3: Can't we say that the investor in Video in twenty

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Speaker 3: nineteen was getting the mother of all deep value investing,

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Speaker 3: given what we now know in retrospect about what its

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Speaker 3: earnings were about to do well.

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Speaker 4: Obviously, if you're clad, Voyant was the sure sure a

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Speaker 4: deep value opportunity. And Video obviously a brilliant company, and AI,

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Speaker 4: by the way, is a spectacular important development. But and

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Speaker 4: Video the biggest piece of luck I think I can

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Speaker 4: think of in the last thirty years. You have all

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Speaker 4: your money and chips made for playing games, and suddenly

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Speaker 4: it turns out that that is absolutely the right design

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Speaker 4: for AI, and you have such running start that it

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Speaker 4: may take you tell me five years, ten years. It

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Speaker 4: doesn't seem like the ultimate mode. It seems like the

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Speaker 4: ultimate head start in a game where a head start

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Speaker 4: is worth a ton of dough. It is worth a

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Speaker 4: tent tuple in your sales, but it's only a head start.

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Speaker 4: Other people Google gearing up to be competitors in the

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Speaker 4: next decade of course, there will be plenty of competition,

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Speaker 4: maybe even technologies that end run the current type of chip.

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Speaker 4: These things happen, History is full of them.

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Speaker 3: Can let me just push on that again. So I

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Speaker 3: take your point about in video having this incredible mode

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Speaker 3: from maybe arguably stumbled into the technology backwards because they

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Speaker 3: were obviously in video games before. But like I'm looking at,

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Speaker 3: say even a Microsoft twenty twenty annual revenue of one

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Speaker 3: hundred and forty three billion twenty twenty five annual revenue

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Speaker 3: of two hundred and eighty billion. So we see the

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Speaker 3: biggest companies in the world doubling real business in the

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Speaker 3: span of five years, which does not feel to me

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Speaker 3: anything like what we were seeing. And I have fond

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Speaker 3: memories of nineteen ninety nine myself. That's when I got

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Speaker 3: personally interested in markets. These are gigantic businesses still putting

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Speaker 3: up huge growth numbers that lap Wall Street forecast year

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Speaker 3: after year.

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Speaker 4: Yeah. And for the record, when Microsoft first appeared in

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Speaker 4: a tradable portfolio, yeah, for GMO, it was in our

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Speaker 4: value stream. We had a value stream and a momentum stream,

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Speaker 4: and we only bought the most attractive ten percent, and

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Speaker 4: we did that each month for twelve months, so we

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Speaker 4: had twelve little portfolios, each one the best ten percent

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Speaker 4: for each month of the year, and Microsoft entered the

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Speaker 4: cheapest value decile and stayed there until July of ninety nine.

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Speaker 4: And that's because our value model looked to add long

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Speaker 4: term future earnings and dividends projected as best we could,

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Speaker 4: and we did that through projecting return on equity, and

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Speaker 4: we did that by looking at how return on equity

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Speaker 4: regressed to the mean and which factors affected the rate.

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Speaker 4: Certain factors slowed it down. Market domination, price setting that

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Speaker 4: you could prove slowed it down, way way down, and

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Speaker 4: Microsoft was the perfect example of this. It had very,

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Speaker 4: very low volatility. It was clearly overwhelmingly the price setter,

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Speaker 4: and consequently our model said it was worth nine times book,

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Speaker 4: not seven times book, but it was selling it. So

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Speaker 4: if you have a good value model, you can buy

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Speaker 4: these things. You can see them on occasions coming along.

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Speaker 4: And yes, it's done spectacularly well and has had then

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Speaker 4: particularly a much better mode to me than Nvidia has today.

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Speaker 4: But if you will allow me a minute here, if

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Speaker 4: you look at the NAG seven, you look backwards in

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Speaker 4: history and you can say with a pretty clear conscience.

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Speaker 4: Each one dominates their seven different niches. They have near

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Speaker 4: monopolies on a global basis. Even Tesla has a jump start,

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Speaker 4: the biggest and the best for a long time in evs.

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Speaker 4: And you have Amazon beginning to dominate retail, Google Research, etcetera, etcetera.

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Speaker 4: Seven decent monopolies dominating the world Justice Department, et cetera.

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Speaker 4: Perfectly sound asleep. No one is interested in pulling a

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Speaker 4: Teddy Roosevelt. They're not going to jump in and slash

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Speaker 4: and burn and divide eggs on into seven different pieces.

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Speaker 4: They're letting these things grow and fix and set their

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Speaker 4: pricing and make tons and tons of money. And then

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Speaker 4: you look forward starting from today, does it look anything

396
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Speaker 4: like that? Doesn't it look like seven companies deciding they're

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Speaker 4: all in the same market AI that moving the most

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Speaker 4: powerfully with the greatest investment is dominant. Are they not

399
00:24:36,520 --> 00:24:39,920
Speaker 4: seen here beating their chests and saying, my two hundred

400
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Speaker 4: billion in investment in a single year is bigger than

401
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Speaker 4: you're one hundred and twenty seven yard boo? They know

402
00:24:47,560 --> 00:24:51,720
Speaker 4: how much gets paid off to the first mover who

403
00:24:51,760 --> 00:24:55,960
Speaker 4: grabs the market. They all want to be the first.

404
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Speaker 4: There can only be one, as they say in the movie,

405
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Speaker 4: and there's seven of them fighting it out, it could

406
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Speaker 4: be a very messy, blood curdling game. I suggested that

407
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Speaker 4: they have it outside the White House. What a comparison.

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Speaker 4: Just imagine ten years from now looking back and saying

409
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Speaker 4: you couldn't see the difference between seven easy monopolies and

410
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Speaker 4: a dog fight of seven dishes, rich companies, huge cash flow,

411
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Speaker 4: huge understanding of the virtues of being dominant, all deciding

412
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Speaker 4: at the same time to fight out in one market.

413
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Speaker 4: And you could say, yes, there was the cloud, what

414
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Speaker 4: about that? And the cloud was a nice, well behaved oligopoly,

415
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Speaker 4: Three of them genteellly deciding to compete in genteel ways,

416
00:25:53,880 --> 00:25:56,360
Speaker 4: exactly the right thing to do if you find yourself

417
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Speaker 4: in that position, and clearly not the approach that is

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Speaker 4: being adopted this time. We have seen huge investment. You

419
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Speaker 4: look back that idea heavy, capital light. You look Forward's

420
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Speaker 4: hope they're idea heavy, but they are capital heavy this time.

421
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Speaker 4: It's like a watershed in almost everything that matters between

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Speaker 4: the past and the future, and nobody seems to be

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Speaker 4: talking about it in that way. And I don't get it.

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Speaker 2: Well, can I just ask related to this point, the

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Speaker 2: dot com bubble has come up a number of times

426
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Speaker 2: in this conversation. Do you actually have a preferred historical

427
00:26:35,320 --> 00:26:39,120
Speaker 2: analogy for the situation that we're facing now, because we've

428
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Speaker 2: been through technological revolutions associated with speculative manias before, ranging

429
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Speaker 2: from I guess what I would say are pretty real

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Speaker 2: ones like the railroad bubble and the Internet, to kind

431
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Speaker 2: of crazier ones like we're all going to go deep

432
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Speaker 2: sea diving. Yeah, totally and get rich that way. You

433
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Speaker 2: are a car I'm a sir, of historical financial market bubbles,

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Speaker 2: which one is most similar to the current period that

435
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Speaker 2: we're in.

436
00:27:09,040 --> 00:27:13,520
Speaker 4: Ah, So people tend to think a bubble, Oh, it

437
00:27:13,560 --> 00:27:16,719
Speaker 4: has to be somehow a con job, and it's exactly

438
00:27:16,760 --> 00:27:22,879
Speaker 4: the opposite. The great bubbles are the biggest ideas for decades.

439
00:27:23,440 --> 00:27:26,240
Speaker 4: So the only one as big as AI is possibly

440
00:27:26,280 --> 00:27:31,080
Speaker 4: the railroads. Of course, everybody could see that the railroads

441
00:27:31,080 --> 00:27:33,720
Speaker 4: were going to change the world. You arrived at the

442
00:27:33,840 --> 00:27:36,480
Speaker 4: railway station in a horse and buggy, for heaven's sake,

443
00:27:37,440 --> 00:27:42,119
Speaker 4: and you went seven miles an hour, And then you

444
00:27:42,200 --> 00:27:44,640
Speaker 4: got on a train traveling at sixty miles an hour

445
00:27:44,720 --> 00:27:46,840
Speaker 4: and went a couple of thousand miles. I mean, it

446
00:27:46,920 --> 00:27:54,520
Speaker 4: was utterly revolutionary. So what happened. Everybody could see that

447
00:27:54,600 --> 00:27:57,000
Speaker 4: the railroads were going to change the world, which they did.

448
00:27:57,880 --> 00:28:00,879
Speaker 4: Everybody wanted to have a piece of it, and they could.

449
00:28:01,440 --> 00:28:03,720
Speaker 4: Everybody put their money in it, and you had the

450
00:28:03,760 --> 00:28:07,359
Speaker 4: biggest bust on both sides of the Atlantic that you

451
00:28:07,359 --> 00:28:11,360
Speaker 4: could imagine, and everybody lost their money in railroads and

452
00:28:11,400 --> 00:28:15,239
Speaker 4: out of the ashes, the tracks were still there, the

453
00:28:15,280 --> 00:28:19,440
Speaker 4: locomotives were still there, the demand was still there, and

454
00:28:19,760 --> 00:28:23,639
Speaker 4: it changed the world. And then you fast forward to

455
00:28:23,720 --> 00:28:29,600
Speaker 4: the internet. Powerful idea, clearly, by the way, accompanied by

456
00:28:29,640 --> 00:28:33,919
Speaker 4: a lot of silly stuff as well, but underneath it

457
00:28:34,040 --> 00:28:37,840
Speaker 4: a very powerful idea. So you had Amazon go up

458
00:28:37,880 --> 00:28:41,840
Speaker 4: six or seven times in ninety nine, and when the

459
00:28:41,920 --> 00:28:47,000
Speaker 4: market broke, it went down famously, infamously ninety two percent,

460
00:28:47,440 --> 00:28:50,880
Speaker 4: check it ninety two percent, And then it rose from

461
00:28:50,920 --> 00:28:54,520
Speaker 4: the ashes, just like the railroads, and inherited the retail

462
00:28:54,560 --> 00:28:57,800
Speaker 4: market more or less. To have a great bubble, you

463
00:28:57,920 --> 00:29:02,719
Speaker 4: have to have decent economic times. The better off, the

464
00:29:02,720 --> 00:29:05,720
Speaker 4: better the bubble. You have to have easy money, The

465
00:29:05,800 --> 00:29:10,239
Speaker 4: better and easier, et cetera, the better the bubble. And

466
00:29:10,280 --> 00:29:13,960
Speaker 4: you have to have a fabulous idea, and you have

467
00:29:14,000 --> 00:29:17,680
Speaker 4: to have it so obviously be important that everybody can

468
00:29:17,720 --> 00:29:21,960
Speaker 4: see it. Now, they're very very rare events, aren't they.

469
00:29:22,760 --> 00:29:25,600
Speaker 4: This one is as big as anything but the railroads.

470
00:29:26,200 --> 00:29:29,040
Speaker 4: I am not even prepared to say it isn't bigger

471
00:29:29,080 --> 00:29:31,720
Speaker 4: than the railroads. It may be, but they're the two

472
00:29:32,040 --> 00:29:36,560
Speaker 4: super champs. Besides them, I think the Internet is a

473
00:29:36,560 --> 00:29:39,640
Speaker 4: bit of a piker, but they're the two colossal ones.

474
00:29:40,400 --> 00:29:43,360
Speaker 4: If ever, there was a massive idea that will change

475
00:29:43,520 --> 00:29:47,400
Speaker 4: is already changing the world, it's AI. Does anyone not

476
00:29:47,560 --> 00:29:52,280
Speaker 4: know that? I think everybody knows it. Does anyone want

477
00:29:52,320 --> 00:29:55,200
Speaker 4: to put their money in it? I think SpaceX et

478
00:29:55,280 --> 00:29:58,200
Speaker 4: cetera gives us a pretty good idea. Ninety percent of

479
00:29:58,280 --> 00:30:02,400
Speaker 4: the value if you read the prospect prospectus is based

480
00:30:02,440 --> 00:30:06,640
Speaker 4: on AI, even though that particular AI seems to be

481
00:30:06,840 --> 00:30:09,720
Speaker 4: having its bottom cacked by two or three others as

482
00:30:09,760 --> 00:30:12,520
Speaker 4: we sat. But wouldn't let facts get in the way

483
00:30:12,520 --> 00:30:16,600
Speaker 4: of a really good story. And this is an absolute classic.

484
00:30:17,160 --> 00:30:21,760
Speaker 4: It checks everything off one after another which haven't been

485
00:30:21,840 --> 00:30:26,120
Speaker 4: checked off many times in history. So this is it.

486
00:30:26,240 --> 00:30:28,600
Speaker 4: If you think this is not a bubble, you are

487
00:30:28,640 --> 00:30:30,640
Speaker 4: going to be in for a bitter disappointment.

488
00:30:31,520 --> 00:30:34,960
Speaker 3: In your book, you talk about how competitive you are

489
00:30:35,440 --> 00:30:38,320
Speaker 3: and growing up and wanting to play all different types

490
00:30:38,320 --> 00:30:42,520
Speaker 3: of games. How do you channel competitiveness in a productive

491
00:30:42,600 --> 00:30:45,920
Speaker 3: manner career wise so that it doesn't hinder you, or

492
00:30:46,000 --> 00:30:48,920
Speaker 3: it doesn't make you chase performance, or doesn't make you

493
00:30:48,960 --> 00:30:54,120
Speaker 3: worry about one year's performance versus another competitors, like, how

494
00:30:54,160 --> 00:30:57,240
Speaker 3: do you make the competitiveness instinct be a good thing?

495
00:30:59,280 --> 00:31:01,920
Speaker 4: I think, try and bring it to bear on a

496
00:31:01,960 --> 00:31:06,280
Speaker 4: few areas that matter to you, starting with obviously the

497
00:31:06,360 --> 00:31:10,960
Speaker 4: most important, playing a decent game of doubles in tennis,

498
00:31:11,840 --> 00:31:15,040
Speaker 4: and every point has to be played as if your

499
00:31:15,080 --> 00:31:19,680
Speaker 4: life depends on it, and you pick partners and opposition

500
00:31:19,800 --> 00:31:23,320
Speaker 4: who do the same, and you have a wonderfully good time,

501
00:31:24,320 --> 00:31:26,400
Speaker 4: and then you look around for other things. And for

502
00:31:26,560 --> 00:31:30,280
Speaker 4: me it was ideas. And I could have made a

503
00:31:30,280 --> 00:31:34,160
Speaker 4: lot more money if I'd focused on profit maximizing, but

504
00:31:34,240 --> 00:31:40,239
Speaker 4: for me, the idea was the dominant principle, and the

505
00:31:40,280 --> 00:31:45,800
Speaker 4: idea of being competitive was everything hinges on trying to

506
00:31:46,880 --> 00:31:52,040
Speaker 4: outthink the enemy. The easiest way for me, it always

507
00:31:52,080 --> 00:31:56,160
Speaker 4: seemed was to be longer and wider and more comprehensive

508
00:31:56,320 --> 00:31:59,480
Speaker 4: and stand further back than the other guy. And what

509
00:31:59,560 --> 00:32:02,320
Speaker 4: you quickly realize when you do that, so no one

510
00:32:02,320 --> 00:32:05,720
Speaker 4: else is even trying, So this is not a fair fight.

511
00:32:06,360 --> 00:32:08,520
Speaker 4: Everybody is focused on the near term and if you

512
00:32:08,520 --> 00:32:12,360
Speaker 4: want a profit, maximize that's not a bad idea. And

513
00:32:12,640 --> 00:32:15,680
Speaker 4: very few people are attempting to be in the market

514
00:32:15,800 --> 00:32:19,720
Speaker 4: and simultaneously asking questions that are several years out and

515
00:32:19,760 --> 00:32:24,440
Speaker 4: even to some extent a decade or two. So it's

516
00:32:24,480 --> 00:32:27,480
Speaker 4: been very easy for me to be both competitive and

517
00:32:27,600 --> 00:32:28,960
Speaker 4: cheerful and often wrong.

518
00:32:30,080 --> 00:32:33,960
Speaker 2: Since we're talking about career development now, I suppose is

519
00:32:34,000 --> 00:32:37,720
Speaker 2: it important when you're a perma bear, or more accurately,

520
00:32:37,880 --> 00:32:41,280
Speaker 2: when you're perceived to be a perma bear, to distinguish

521
00:32:41,320 --> 00:32:45,960
Speaker 2: yourself in some way from other bears who are out there,

522
00:32:46,000 --> 00:32:48,920
Speaker 2: Because again, at this particular moment in time, there are

523
00:32:49,240 --> 00:32:52,280
Speaker 2: a number of high profile commentators who would say that

524
00:32:52,400 --> 00:32:56,720
Speaker 2: AI is a bubble So how do you actually stand

525
00:32:56,880 --> 00:33:00,160
Speaker 2: out from I guess the bubble calling crowd.

526
00:33:01,280 --> 00:33:05,600
Speaker 4: Yeah, I have no idea. I have only made two

527
00:33:05,960 --> 00:33:10,600
Speaker 4: unmitigated bullish calls. The market has a really hard time

528
00:33:10,720 --> 00:33:15,040
Speaker 4: telling the difference between hey, this is overpriced this is

529
00:33:15,080 --> 00:33:17,360
Speaker 4: going to make you less money over the next twenty

530
00:33:17,440 --> 00:33:19,440
Speaker 4: years than it would do if it was half priced.

531
00:33:19,800 --> 00:33:24,360
Speaker 4: They're just kind of mathematical realities. And because you say that,

532
00:33:24,440 --> 00:33:28,120
Speaker 4: they oh, you said the market was going to collapse,

533
00:33:28,200 --> 00:33:30,680
Speaker 4: you have been burished forever. Now when I want to

534
00:33:30,720 --> 00:33:33,480
Speaker 4: be really bearished and recommend you get out of the market,

535
00:33:33,880 --> 00:33:37,120
Speaker 4: I say so. And I've only done that twice. On

536
00:33:37,200 --> 00:33:41,120
Speaker 4: July the fifteenth, two thousand and eight, I wrote a

537
00:33:41,200 --> 00:33:46,040
Speaker 4: quarterly letter which basically which actually said abandonship, soave keeper

538
00:33:46,360 --> 00:33:50,520
Speaker 4: the French equivalent, and actually quoted the nursery rhyme, don't

539
00:33:50,560 --> 00:33:55,160
Speaker 4: be brave, run away, lift to fight another day. Do

540
00:33:55,320 --> 00:33:57,920
Speaker 4: not take any risk you don't have to take. We

541
00:33:58,000 --> 00:34:00,720
Speaker 4: all have restrictions on how much we can get out

542
00:34:00,720 --> 00:34:04,000
Speaker 4: of the risk taking business. But do not take anything

543
00:34:04,040 --> 00:34:08,279
Speaker 4: you don't have to. Okay, that's pretty clear. And the

544
00:34:08,400 --> 00:34:11,360
Speaker 4: last thing that we had been bullish about was emerging markets,

545
00:34:11,360 --> 00:34:14,680
Speaker 4: and I said, I've changed changed our mind. We think

546
00:34:14,719 --> 00:34:18,360
Speaker 4: this is the end of the line. Sell any emerging

547
00:34:18,400 --> 00:34:22,279
Speaker 4: that you can. And we did the biggest trade that

548
00:34:22,360 --> 00:34:24,640
Speaker 4: we had ever done, getting rid of the last of

549
00:34:24,640 --> 00:34:29,320
Speaker 4: our emerging I must say shortly before we published the letter.

550
00:34:30,080 --> 00:34:34,560
Speaker 3: Well, ye, sorry, which year was the emergency? Oh? Okay,

551
00:34:34,560 --> 00:34:34,920
Speaker 3: god yes?

552
00:34:35,360 --> 00:34:38,240
Speaker 4: And may I say that following that in four months,

553
00:34:38,280 --> 00:34:41,520
Speaker 4: emerging market half. I think it was the biggest sharpest

554
00:34:41,520 --> 00:34:44,560
Speaker 4: decline in the history of any major indates from July

555
00:34:44,800 --> 00:34:49,480
Speaker 4: fifteenth to November fifteenth, and actually slightly before that the

556
00:34:49,520 --> 00:34:55,279
Speaker 4: whole indix halved. And the other bearish one was at

557
00:34:55,320 --> 00:34:59,800
Speaker 4: the end of twenty twenty one, where the quarterly letter

558
00:35:00,800 --> 00:35:07,000
Speaker 4: was called let the wild rumpus begin, right. That meant,

559
00:35:07,120 --> 00:35:11,520
Speaker 4: now get your tail out a boid. The market, I'm

560
00:35:11,560 --> 00:35:13,719
Speaker 4: happy to say, S and P went down like a

561
00:35:13,840 --> 00:35:17,120
Speaker 4: rocket ship minus twenty five, growth stocks down thirty five,

562
00:35:17,680 --> 00:35:20,279
Speaker 4: mag seven down forty and the bond market had the

563
00:35:20,320 --> 00:35:23,279
Speaker 4: worst year in the history of the bond market. And then,

564
00:35:23,560 --> 00:35:26,880
Speaker 4: as I also like to say, my nice spare market

565
00:35:27,040 --> 00:35:33,080
Speaker 4: was rudely interrupted by JATGBT, and the economy that was

566
00:35:34,000 --> 00:35:37,520
Speaker 4: doing its usual thing of gracefully moving into a mild

567
00:35:37,560 --> 00:35:41,920
Speaker 4: recession because animal spirits were going down, was also changed

568
00:35:42,040 --> 00:35:48,520
Speaker 4: by massive and increasing capex spending on AI which dragged

569
00:35:48,640 --> 00:35:51,040
Speaker 4: kicking and screaming the animal spirits of the rest of

570
00:35:51,040 --> 00:35:53,719
Speaker 4: the economy. They didn't change easily, by the way, the

571
00:35:53,840 --> 00:35:55,640
Speaker 4: S and P the rest of it went down for

572
00:35:55,680 --> 00:35:59,319
Speaker 4: another ten months, but they kept going so powerfully in

573
00:35:59,360 --> 00:36:02,799
Speaker 4: the market, so powerfully in the Kampex business that they

574
00:36:02,880 --> 00:36:06,239
Speaker 4: changed the game. That's only happened once in history. And

575
00:36:06,400 --> 00:36:08,880
Speaker 4: I don't know how to predict things like that anymore

576
00:36:09,320 --> 00:36:13,800
Speaker 4: than COVID and new things are a pain. There aren't

577
00:36:14,120 --> 00:36:17,760
Speaker 4: happily many of them, but they're the two most interesting

578
00:36:17,800 --> 00:36:22,239
Speaker 4: ones in my career. COVID was novel. How do you

579
00:36:22,280 --> 00:36:25,400
Speaker 4: treat novelty if you're a historian, you don't. You have

580
00:36:25,480 --> 00:36:28,560
Speaker 4: to work it out on other principles. And this AI

581
00:36:28,840 --> 00:36:33,320
Speaker 4: interruption of what was a perfectly ordinary and I thought

582
00:36:33,880 --> 00:36:39,160
Speaker 4: predictable their market because it flagged my great discrepancy between

583
00:36:39,719 --> 00:36:43,399
Speaker 4: the market leaders going down as the blue chips continued up.

584
00:36:44,080 --> 00:36:45,440
Speaker 4: How do you do that? I don't know.

585
00:36:47,160 --> 00:36:50,319
Speaker 3: Yeah, this is really striking. You know, we recently we

586
00:36:50,360 --> 00:36:52,480
Speaker 3: had toursed and Slock at one of our events talking

587
00:36:52,520 --> 00:36:55,719
Speaker 3: about this sort of imperviousness of the AI trade to

588
00:36:55,880 --> 00:36:58,920
Speaker 3: what traditionally we'd call macro. So what you described, You're like, Okay,

589
00:36:59,160 --> 00:37:03,239
Speaker 3: here comes the expected, as you said, probably would have

590
00:37:03,280 --> 00:37:06,759
Speaker 3: been a shallow recession, and now we see this investment,

591
00:37:06,760 --> 00:37:10,759
Speaker 3: this capital expenditure. There's completely they could It does not

592
00:37:10,880 --> 00:37:13,560
Speaker 3: seem like the companies care all about the fact that

593
00:37:13,600 --> 00:37:16,600
Speaker 3: the Fed hasn't cut rates, has expected, et cetera. These

594
00:37:16,680 --> 00:37:21,040
Speaker 3: classically macro indicators that we did recession, business cycle, et cetera.

595
00:37:21,320 --> 00:37:23,439
Speaker 3: Had just seemed to be blown out of the water. Yeah,

596
00:37:23,480 --> 00:37:25,880
Speaker 3: blown out of the water by the AI trade.

597
00:37:27,000 --> 00:37:31,680
Speaker 4: Yeah. And I must say that overwhelming interest in interest

598
00:37:31,760 --> 00:37:36,280
Speaker 4: rate and the interest rate predictions has left me totally

599
00:37:36,280 --> 00:37:40,359
Speaker 4: cold for the last fifty years. I leave that to

600
00:37:40,440 --> 00:37:46,719
Speaker 4: other people. I think it's in general wildly exaggerated. I've

601
00:37:46,719 --> 00:37:49,160
Speaker 4: lived in a world where for fifty years, the increasing

602
00:37:50,360 --> 00:37:53,760
Speaker 4: data GDP ratio of the US economy, the Japanese economy,

603
00:37:53,760 --> 00:37:58,080
Speaker 4: and every other economy has been predicting imminent collapse, and

604
00:37:58,120 --> 00:38:00,160
Speaker 4: the ratio has gotten higher and higher, and then is

605
00:38:00,200 --> 00:38:05,000
Speaker 4: predicted double collapse, and it still keeps rising. The only

606
00:38:05,080 --> 00:38:09,760
Speaker 4: function of interest rates is that it makes debt easier

607
00:38:09,760 --> 00:38:14,200
Speaker 4: to acquire, and the function of easy acquire debt is

608
00:38:14,239 --> 00:38:17,319
Speaker 4: that it helps the economy. One little problem. If you

609
00:38:17,360 --> 00:38:21,160
Speaker 4: go back to Alan Greenspan, you find that before he

610
00:38:21,239 --> 00:38:24,000
Speaker 4: gets there, there is a very very slow increase in

611
00:38:24,040 --> 00:38:28,560
Speaker 4: debt to GDP ratio, just because the financial business is

612
00:38:28,600 --> 00:38:32,440
Speaker 4: becoming more complicated. And then after him it rises at

613
00:38:32,440 --> 00:38:35,880
Speaker 4: forty five degrees and it goes from a small fraction

614
00:38:35,960 --> 00:38:40,640
Speaker 4: of GDP. If you throw in all debt, it triples

615
00:38:40,640 --> 00:38:44,520
Speaker 4: and quadruples, and it does it over thirty years. You

616
00:38:44,560 --> 00:38:48,239
Speaker 4: have biggest economy in the world thirty years to test.

617
00:38:48,280 --> 00:38:53,400
Speaker 4: What happens quadrupling of the debt to GDP and the

618
00:38:53,440 --> 00:38:58,640
Speaker 4: growth rate goes down. So how can debt be a

619
00:38:58,719 --> 00:39:03,759
Speaker 4: real mover of growth rate when you've had that wonderful

620
00:39:03,920 --> 00:39:09,400
Speaker 4: macro test seen from looking back over forty years, huge

621
00:39:09,480 --> 00:39:15,600
Speaker 4: increase in debt, decrease in GDP growth rate, very strange.

622
00:39:15,680 --> 00:39:19,000
Speaker 4: So I leave all that stuff way alone, if you

623
00:39:19,000 --> 00:39:23,400
Speaker 4: will let me back up. I was saying too clear,

624
00:39:23,560 --> 00:39:28,239
Speaker 4: get out of the market. Calls plenty of the market's overpriced.

625
00:39:28,480 --> 00:39:32,640
Speaker 4: The market has been overpriced since two thousand. I admit it.

626
00:39:32,640 --> 00:39:36,200
Speaker 4: It's been overpriced, and we have said so the whole time,

627
00:39:36,280 --> 00:39:40,280
Speaker 4: because looking back at the twentieth century, the twenty first

628
00:39:40,280 --> 00:39:45,920
Speaker 4: century has been overpriced. They used to sell at fifteen

629
00:39:45,960 --> 00:39:49,920
Speaker 4: times earnings. We have been selling at twenty three times earnings.

630
00:39:49,960 --> 00:39:53,239
Speaker 4: That is not a small fraction of an increase. It

631
00:39:53,280 --> 00:39:57,040
Speaker 4: has been a different world the twenty first century, but

632
00:39:57,160 --> 00:40:01,960
Speaker 4: based on history, it's been overpriced, and of course it

633
00:40:02,080 --> 00:40:06,160
Speaker 4: still ist. But I have made two bull calls in

634
00:40:06,200 --> 00:40:10,440
Speaker 4: my life. The only time for the first ten years

635
00:40:10,840 --> 00:40:14,640
Speaker 4: we got quoted was in something called the Wall Street

636
00:40:14,719 --> 00:40:18,680
Speaker 4: Letter long deceased. I think it was attached to the

637
00:40:18,680 --> 00:40:21,319
Speaker 4: Wall Street Journal, and it was a weekly kind of

638
00:40:21,360 --> 00:40:26,920
Speaker 4: gossip thing about the industry. And they're hidden in the

639
00:40:26,960 --> 00:40:30,520
Speaker 4: tail end actually of that letter is my first opportunity

640
00:40:30,560 --> 00:40:34,440
Speaker 4: to quote. And it's July eighty two, and the pe

641
00:40:34,640 --> 00:40:38,600
Speaker 4: of the S and P is seven times, and I say,

642
00:40:39,040 --> 00:40:42,520
Speaker 4: I think we're close to an unprecedented rally in both

643
00:40:42,560 --> 00:40:45,879
Speaker 4: the stock and the bond market. And I've always been

644
00:40:45,960 --> 00:40:49,640
Speaker 4: thrilled to give people copies of this this near letter.

645
00:40:50,200 --> 00:40:53,399
Speaker 4: And then the market shoots up and we become more

646
00:40:53,440 --> 00:40:56,440
Speaker 4: careful for a long long time, and then finally the

647
00:40:56,480 --> 00:41:00,719
Speaker 4: market comes down in on nine and by miracle that

648
00:41:00,840 --> 00:41:05,480
Speaker 4: only occurs once every two lifetimes, we published a letter,

649
00:41:06,200 --> 00:41:10,279
Speaker 4: one pager. Only two of those were done in my

650
00:41:10,400 --> 00:41:14,520
Speaker 4: career of thirty years letter writing. It's called reinvesting. When terrified,

651
00:41:14,600 --> 00:41:18,120
Speaker 4: and I think is the best thing I wrote, mainly

652
00:41:18,120 --> 00:41:21,600
Speaker 4: because it was short and it just said, you won't

653
00:41:21,640 --> 00:41:24,880
Speaker 4: call the bottom of the market. Don't bother with that,

654
00:41:25,000 --> 00:41:29,600
Speaker 4: don't even try it. Just concentrate on the fact that

655
00:41:29,640 --> 00:41:32,440
Speaker 4: the market is cheaper than it's been for twenty two years.

656
00:41:33,080 --> 00:41:37,320
Speaker 4: Even on our seven year forecast, you're dealing with twelve

657
00:41:37,400 --> 00:41:39,840
Speaker 4: percent a year compounded returns in the S and P

658
00:41:40,480 --> 00:41:43,880
Speaker 4: equivalent to a higher numbers in emerging and foreign equity.

659
00:41:44,239 --> 00:41:48,439
Speaker 4: Get together a plan, take it to your committee. Any

660
00:41:48,480 --> 00:41:50,640
Speaker 4: plan is better than no plan. You have got to

661
00:41:50,680 --> 00:41:54,799
Speaker 4: start recycling your money back into the market. And the

662
00:41:54,840 --> 00:41:58,759
Speaker 4: good news is, as far as I'm concerned, it only

663
00:41:58,800 --> 00:42:04,200
Speaker 4: counts if you wrote it saying it is too peripheral.

664
00:42:04,200 --> 00:42:07,839
Speaker 4: I guess washed away into the ether. But I wrote it,

665
00:42:08,440 --> 00:42:11,359
Speaker 4: and we sent it to the Wall Street Journal, who

666
00:42:12,080 --> 00:42:16,240
Speaker 4: didn't get back, and day by day, four days passed

667
00:42:16,920 --> 00:42:21,480
Speaker 4: until my advisor on propaganda and I decided to hello

668
00:42:21,560 --> 00:42:25,400
Speaker 4: with this. Let's post it ourselves, And because of that delay,

669
00:42:25,680 --> 00:42:28,600
Speaker 4: we posted it the day the market hit It's slow

670
00:42:29,000 --> 00:42:31,680
Speaker 4: six hundred and sixty six on the S and P

671
00:42:31,840 --> 00:42:35,480
Speaker 4: five hundred, less than one tenth of where it is today.

672
00:42:35,719 --> 00:42:37,480
Speaker 4: My god, this has been a bullmarker.

673
00:42:38,280 --> 00:42:41,200
Speaker 2: Oh thank you for reminding two podcasters that it only

674
00:42:41,239 --> 00:42:44,160
Speaker 2: counts it. No, it's good, should be fair. We do

675
00:42:44,239 --> 00:42:46,279
Speaker 2: write some stuff, so there is that.

676
00:42:46,440 --> 00:42:49,920
Speaker 4: Can I just talking I sympathize, but.

677
00:42:51,440 --> 00:42:53,720
Speaker 2: Can I just go back to you were talking about

678
00:42:53,719 --> 00:42:56,960
Speaker 2: how investors seem to have, to some extent become more

679
00:42:56,960 --> 00:43:01,920
Speaker 2: comfortable with higher price to earnings ratios versus say for

680
00:43:02,080 --> 00:43:06,280
Speaker 2: much of the last century when it comes to value investing,

681
00:43:06,360 --> 00:43:11,120
Speaker 2: we all know that value has been losing recently to momentum.

682
00:43:11,560 --> 00:43:14,080
Speaker 2: Does it feel at all to you that something has

683
00:43:14,200 --> 00:43:19,160
Speaker 2: structurally broken in the sense that investors are much more

684
00:43:19,200 --> 00:43:23,440
Speaker 2: focused on price nowadays, they're much more focused on short

685
00:43:23,560 --> 00:43:27,640
Speaker 2: term gains rather than longer returns. And at the same time,

686
00:43:28,320 --> 00:43:31,400
Speaker 2: you've had a lot of retail money flow into the

687
00:43:31,440 --> 00:43:36,000
Speaker 2: market courtesy of new platforms Robin Hood, and whenever I

688
00:43:36,040 --> 00:43:38,600
Speaker 2: think about Robinhood, I think about clicking buttons, and remember

689
00:43:38,640 --> 00:43:41,040
Speaker 2: they used to have the animation where it would like

690
00:43:41,239 --> 00:43:45,480
Speaker 2: celebrate if you're chased to trade. That's a lot of

691
00:43:45,520 --> 00:43:49,759
Speaker 2: new money coming into the market that potentially thinks differently

692
00:43:50,000 --> 00:43:53,440
Speaker 2: to the way investors for much of the nineteen hundreds.

693
00:43:53,520 --> 00:43:59,480
Speaker 4: Actually thought, I think in every bubble it gets very

694
00:43:59,560 --> 00:44:04,160
Speaker 4: much like this. And you said, much more focused on price,

695
00:44:04,680 --> 00:44:07,319
Speaker 4: not in the sense that they're looking for bargains, much

696
00:44:07,320 --> 00:44:09,120
Speaker 4: more focused on momentum.

697
00:44:09,440 --> 00:44:10,279
Speaker 2: Right, That's what I mean.

698
00:44:10,360 --> 00:44:13,960
Speaker 4: Yes, rice rises rapidly and they like it, and the

699
00:44:14,080 --> 00:44:16,799
Speaker 4: value is irrelevant. You know, this is what happened in

700
00:44:16,840 --> 00:44:19,080
Speaker 4: the South Sea bubble, and this is what happened in Tulips,

701
00:44:19,120 --> 00:44:23,279
Speaker 4: and what happened in the railroads, and that's what happens

702
00:44:23,320 --> 00:44:26,120
Speaker 4: in the nifty to fifty and the tech bubble. It's

703
00:44:26,120 --> 00:44:28,520
Speaker 4: what always happens. This is not remarkable, by the way,

704
00:44:28,960 --> 00:44:34,520
Speaker 4: this isn't even spectacularly overpriced compared to Japan. Japan is

705
00:44:34,520 --> 00:44:38,160
Speaker 4: the mother and father of all bubbles. In nineteen eighty nine,

706
00:44:38,200 --> 00:44:41,080
Speaker 4: it's sold for sixty five times earnings. And if that

707
00:44:41,200 --> 00:44:44,560
Speaker 4: doesn't make a value manager wake up in the middle

708
00:44:44,560 --> 00:44:46,759
Speaker 4: of the night screaming once in a while, nothing will.

709
00:44:47,600 --> 00:44:50,720
Speaker 4: Because we went up finally to thirty five times earnings

710
00:44:50,719 --> 00:44:53,480
Speaker 4: in the tech bubble, never having been over twenty one.

711
00:44:54,520 --> 00:44:58,080
Speaker 4: That's pretty spectacular jump. But Japan had never sold over

712
00:44:58,120 --> 00:45:00,919
Speaker 4: twenty five times earnings, and when up to sixty five

713
00:45:02,320 --> 00:45:04,640
Speaker 4: and I'm happy to say we survived that quite well

714
00:45:04,760 --> 00:45:08,640
Speaker 4: through good luck. And the good luck was that international

715
00:45:08,680 --> 00:45:11,560
Speaker 4: investing had only just come in and we were selling

716
00:45:11,560 --> 00:45:15,640
Speaker 4: people their first international portfolios that they had ever had,

717
00:45:15,680 --> 00:45:19,640
Speaker 4: including Havid Yell. And that is quite remarkable, by the way,

718
00:45:19,719 --> 00:45:22,719
Speaker 4: how slow the US was. Scotland and so on had

719
00:45:22,800 --> 00:45:26,560
Speaker 4: been doing this foreign investing for a long long time,

720
00:45:26,680 --> 00:45:29,680
Speaker 4: but not It was not fashionable in the US. Because

721
00:45:29,680 --> 00:45:34,280
Speaker 4: of that, no one was comparing international with an international index.

722
00:45:34,640 --> 00:45:36,680
Speaker 4: It was only two or three years or two or

723
00:45:36,680 --> 00:45:39,440
Speaker 4: three months that they had had in international portfolio. They

724
00:45:39,480 --> 00:45:41,960
Speaker 4: were comparing it with the S and P because all

725
00:45:42,000 --> 00:45:45,359
Speaker 4: their competitors were still in the S and P. And

726
00:45:45,400 --> 00:45:49,040
Speaker 4: the novelty there was betting International against the S and P.

727
00:45:49,719 --> 00:45:53,600
Speaker 4: It was winning. The international was so far ahead that

728
00:45:53,680 --> 00:45:57,400
Speaker 4: we could underperform because of Japan, and we underperformed by

729
00:45:57,440 --> 00:46:00,319
Speaker 4: ten points a year for three years, and we lost

730
00:46:00,320 --> 00:46:03,760
Speaker 4: no business at all, and we had a decent market share,

731
00:46:04,280 --> 00:46:07,800
Speaker 4: and then of course Japan broke. The lesson from Japan

732
00:46:09,320 --> 00:46:13,040
Speaker 4: is pretty clear. The biggest bubble in the history of

733
00:46:13,080 --> 00:46:16,840
Speaker 4: the stock market of an important stock market, second only

734
00:46:16,960 --> 00:46:20,840
Speaker 4: to the land bubble in Japan of coincident more or

735
00:46:20,920 --> 00:46:25,440
Speaker 4: less coincident timing? And what was the price you paid

736
00:46:25,760 --> 00:46:28,440
Speaker 4: for having it go from twenty five to thirty to

737
00:46:28,440 --> 00:46:31,200
Speaker 4: forty to fifty to sixty sixty five? And the Solomon

738
00:46:31,239 --> 00:46:34,880
Speaker 4: Brothers team went around at sixty to sixty five explaining

739
00:46:35,080 --> 00:46:37,600
Speaker 4: that the bond raid in Japan was so low it

740
00:46:37,640 --> 00:46:40,160
Speaker 4: should be one hundred times. I am not kidding you.

741
00:46:40,320 --> 00:46:44,080
Speaker 4: I'm not getting it. What is the price you paid

742
00:46:44,560 --> 00:46:48,439
Speaker 4: the last twenty years? Really not ten years? Thirty five

743
00:46:48,520 --> 00:46:51,120
Speaker 4: years have to go by before you get back to

744
00:46:51,200 --> 00:46:54,080
Speaker 4: a high. And I don't think even that is adjusted

745
00:46:54,120 --> 00:46:57,440
Speaker 4: for the modest inflation that they had. I mean, you

746
00:46:57,520 --> 00:46:59,840
Speaker 4: want to have a bigger bubble and a better bubble,

747
00:47:00,400 --> 00:47:04,360
Speaker 4: go ahead, just be advised that the correlation with a

748
00:47:04,520 --> 00:47:07,839
Speaker 4: longer and worse decline is pretty well wong.

749
00:47:24,120 --> 00:47:26,239
Speaker 3: You know, we could talk for another hour just on

750
00:47:26,320 --> 00:47:28,800
Speaker 3: international all these things, but I have one last question.

751
00:47:28,840 --> 00:47:31,319
Speaker 3: You're known for having a lot of personal sort of

752
00:47:31,360 --> 00:47:34,560
Speaker 3: like other interests besides investing in particularly related to the environment,

753
00:47:35,520 --> 00:47:38,600
Speaker 3: climate change you talk about You wrote a letter I

754
00:47:38,600 --> 00:47:42,000
Speaker 3: believe last year about plastics and other forms of like

755
00:47:42,080 --> 00:47:44,879
Speaker 3: dangerous to the environment. Do you have any optimism at

756
00:47:44,880 --> 00:47:49,560
Speaker 3: all that AI in particular will be of service to

757
00:47:49,800 --> 00:47:53,919
Speaker 3: humanity in tackling some of these concerns that you have

758
00:47:54,000 --> 00:47:56,840
Speaker 3: about sort of ecology and so forth.

759
00:47:57,920 --> 00:48:02,480
Speaker 4: God, I wish I knew. The spectacular thing about AI

760
00:48:03,120 --> 00:48:06,360
Speaker 4: is the degree of difference of opinion. You know, often

761
00:48:06,400 --> 00:48:08,879
Speaker 4: you find that the rank and file have one view

762
00:48:09,040 --> 00:48:11,719
Speaker 4: and the hot shots who know the most have a

763
00:48:11,719 --> 00:48:14,759
Speaker 4: different view. But this is not like that. This is

764
00:48:14,920 --> 00:48:18,360
Speaker 4: you have no Belt prize winners who disagree violently. You

765
00:48:18,440 --> 00:48:21,040
Speaker 4: have real experts who studied it for thirty years who

766
00:48:21,080 --> 00:48:24,440
Speaker 4: disagree violently. You have the rank and file with as

767
00:48:24,520 --> 00:48:28,920
Speaker 4: much experience as they could have, who disagree violently. There

768
00:48:28,960 --> 00:48:33,279
Speaker 4: is simply no agreement on the future of AI. It

769
00:48:33,360 --> 00:48:37,799
Speaker 4: will either make us all incredibly rich. We'll sit on

770
00:48:37,840 --> 00:48:41,200
Speaker 4: the beach and be served by robots, or the robots

771
00:48:41,480 --> 00:48:44,080
Speaker 4: will go one step further and get rid of us

772
00:48:44,160 --> 00:48:49,719
Speaker 4: inadvertently or deliberately. This is not bad. This is the

773
00:48:49,960 --> 00:48:54,799
Speaker 4: ultimate complexity that one has ever heard, and you cannot

774
00:48:54,840 --> 00:48:58,280
Speaker 4: possibly know what is going to happen. You can only

775
00:48:58,920 --> 00:49:03,319
Speaker 4: plan for a while range of outcomes. But we know

776
00:49:03,480 --> 00:49:07,440
Speaker 4: for a fact that it chews up enormous amounts of electricity.

777
00:49:08,320 --> 00:49:11,319
Speaker 4: We know for a fact that that is associated with

778
00:49:11,440 --> 00:49:15,520
Speaker 4: an awful lot of carbon dioxide production and real pressure

779
00:49:15,800 --> 00:49:19,160
Speaker 4: on the environment, So we start knowing that it will

780
00:49:19,200 --> 00:49:22,279
Speaker 4: be tough. And by the way, you make robots, every

781
00:49:22,360 --> 00:49:26,319
Speaker 4: twenty minutes, these humanoid robots have to go off, take

782
00:49:26,320 --> 00:49:29,680
Speaker 4: a coffee break and plug themselves in. They will run

783
00:49:29,719 --> 00:49:33,080
Speaker 4: through energy like we have no idea. We can hardly

784
00:49:33,120 --> 00:49:38,359
Speaker 4: support the energy demands of current AI confined to your laptops.

785
00:49:38,960 --> 00:49:43,720
Speaker 4: The energy demand of having machines running around will dwarf

786
00:49:43,800 --> 00:49:47,840
Speaker 4: that beyond recognition. We will have to have multiples of

787
00:49:47,880 --> 00:49:50,960
Speaker 4: the global energy production that we have now. We are

788
00:49:51,040 --> 00:49:55,480
Speaker 4: simply living beyond our means. The real experts who studied

789
00:49:55,520 --> 00:49:58,600
Speaker 4: for thirty years say we need one point seven planets

790
00:49:58,640 --> 00:50:02,439
Speaker 4: to maintain the current level of income in a sustainable way,

791
00:50:03,480 --> 00:50:05,799
Speaker 4: and if we want to live like Americans, we need

792
00:50:05,840 --> 00:50:12,200
Speaker 4: five planets. And AI in the best of all possible

793
00:50:12,239 --> 00:50:18,080
Speaker 4: worlds might help address this, But it's hard to imagine

794
00:50:18,320 --> 00:50:23,919
Speaker 4: AI becoming self aware and being better at everything than

795
00:50:23,960 --> 00:50:28,160
Speaker 4: we are. It's hard to think of an example, as

796
00:50:28,200 --> 00:50:32,920
Speaker 4: Jeffrey Hinton would say, where a smarter civilization, a smarter

797
00:50:33,480 --> 00:50:41,440
Speaker 4: species has been dominated by a comparatively stupid species, we

798
00:50:41,560 --> 00:50:47,400
Speaker 4: somehow implicitly rely on their benevolence. We are not spending

799
00:50:47,440 --> 00:50:51,520
Speaker 4: that much time and money trying to design a benevolent AI.

800
00:50:52,040 --> 00:50:55,280
Speaker 4: We are spending money trying to design a more powerful

801
00:50:55,400 --> 00:51:01,560
Speaker 4: competitive devil. Take the hindmost type of AI. It's inherited

802
00:51:01,719 --> 00:51:06,759
Speaker 4: our style. You know, humans have been the survival of

803
00:51:06,800 --> 00:51:10,720
Speaker 4: the fittest. Grab what you can, why you can, don't

804
00:51:10,760 --> 00:51:14,879
Speaker 4: worry too much about three or four years from now.

805
00:51:14,960 --> 00:51:18,960
Speaker 4: I find that exactly the same in corporate America and capitalism.

806
00:51:18,960 --> 00:51:21,880
Speaker 4: By the way, we don't act as if we value

807
00:51:21,920 --> 00:51:24,920
Speaker 4: our grandchildren. We play soccer with them at the weekend,

808
00:51:24,960 --> 00:51:26,840
Speaker 4: as I'd like to say, and we help pay the

809
00:51:26,880 --> 00:51:29,520
Speaker 4: school fees. But then we go back to work for

810
00:51:29,560 --> 00:51:32,759
Speaker 4: a chemical company or fossil fuel company and act as

811
00:51:32,760 --> 00:51:38,120
Speaker 4: if we mean to kill them more. It's a strange nature,

812
00:51:38,560 --> 00:51:41,720
Speaker 4: except it's the same as every other species on the planet.

813
00:51:42,120 --> 00:51:45,640
Speaker 4: Grab what you can live for today, and here we

814
00:51:45,680 --> 00:51:50,640
Speaker 4: are doing the same. Something we all recognize is a

815
00:51:50,680 --> 00:51:54,319
Speaker 4: bigger danger than anything we've ever met before, living with

816
00:51:54,440 --> 00:52:01,000
Speaker 4: a with another intelligence that is going to be inevitably

817
00:52:01,960 --> 00:52:05,320
Speaker 4: much more than we are. And we are left worrying

818
00:52:05,400 --> 00:52:10,760
Speaker 4: about pees when the survival of our species is at stake,

819
00:52:11,320 --> 00:52:16,160
Speaker 4: When are strangely, our climate is going to hell, not

820
00:52:16,480 --> 00:52:19,320
Speaker 4: as we used to think in twenty thirty, forty years,

821
00:52:19,360 --> 00:52:23,440
Speaker 4: but now our baby production is going to hell, not

822
00:52:23,560 --> 00:52:26,120
Speaker 4: as we used to think in fifty years or one

823
00:52:26,160 --> 00:52:30,880
Speaker 4: hundred years, but now China is producing futility or eate

824
00:52:30,960 --> 00:52:35,279
Speaker 4: of one A baby production that every thirty years has

825
00:52:35,960 --> 00:52:40,200
Speaker 4: that in ninety years is an eighth and career is

826
00:52:40,239 --> 00:52:44,600
Speaker 4: a third of its baby production each thirty years, a

827
00:52:44,760 --> 00:52:49,719
Speaker 4: ninth in sixty years, a twenty seventh, i e. They're

828
00:52:49,719 --> 00:52:53,480
Speaker 4: out of business in a single lifetime unless it changes,

829
00:52:54,000 --> 00:52:57,040
Speaker 4: and it has been changing, but it's been changing steadily

830
00:52:57,320 --> 00:53:01,319
Speaker 4: for the worst. Sixty five percent of all countries are

831
00:53:01,320 --> 00:53:06,480
Speaker 4: below replacement, and quite a few, like China, are way

832
00:53:06,560 --> 00:53:11,480
Speaker 4: way down towards one, and nobody cares. We are not

833
00:53:11,600 --> 00:53:14,920
Speaker 4: programmed to worry about long term slow burning problems, and

834
00:53:14,960 --> 00:53:18,479
Speaker 4: they're all coming to bear together, and they're compounded by

835
00:53:18,920 --> 00:53:23,600
Speaker 4: our ignorance or lack of concern about the risks of AI.

836
00:53:24,440 --> 00:53:27,040
Speaker 4: This was going to be a very exciting.

837
00:53:26,560 --> 00:53:30,160
Speaker 2: Time exciting slash terrifying.

838
00:53:30,920 --> 00:53:33,000
Speaker 3: Also, if we need five planets. I think you just

839
00:53:33,080 --> 00:53:34,560
Speaker 3: made the ball case for space ax.

840
00:53:34,680 --> 00:53:37,680
Speaker 2: I was just gonna make the same joke. Oh my god,

841
00:53:38,200 --> 00:53:40,239
Speaker 2: I shouldn't have let you. I shouldn't have let you

842
00:53:40,280 --> 00:53:40,680
Speaker 2: go first.

843
00:53:40,760 --> 00:53:44,400
Speaker 4: There's another way to resolve that, though, and that is

844
00:53:44,440 --> 00:53:47,439
Speaker 4: to have a billion people and not eight or ten

845
00:53:47,600 --> 00:53:50,920
Speaker 4: or twelve. And the interesting thing is, if you asked

846
00:53:51,520 --> 00:53:55,720
Speaker 4: a society to please have fewer children when they wanted more,

847
00:53:56,160 --> 00:54:00,400
Speaker 4: you wouldn't have a prayer unless you used force. But

848
00:54:00,520 --> 00:54:04,400
Speaker 4: we are going to have a dramatic, sustained drop in

849
00:54:04,440 --> 00:54:08,440
Speaker 4: our population by sheer luck. We are the first generation

850
00:54:08,800 --> 00:54:13,360
Speaker 4: in history who are deciding to have for perfectly good reasons,

851
00:54:13,520 --> 00:54:16,960
Speaker 4: one hundred good reasons, we've decided to have fewer children.

852
00:54:18,000 --> 00:54:20,480
Speaker 4: And if we keep doing this, we go out of business.

853
00:54:20,480 --> 00:54:24,000
Speaker 4: It's quite simple. If you don't have two point one healthy,

854
00:54:24,000 --> 00:54:27,960
Speaker 4: well educated children, you're on your way out. And almost

855
00:54:28,000 --> 00:54:31,080
Speaker 4: nobody does. In the developed world, and even in Sub

856
00:54:31,080 --> 00:54:35,160
Speaker 4: Saharan Africa, baby production is falling like a stone. It's

857
00:54:35,200 --> 00:54:37,960
Speaker 4: just falling from a very high level, falling from seven

858
00:54:38,040 --> 00:54:42,239
Speaker 4: babies per mother to four. They have lost more babies

859
00:54:43,120 --> 00:54:46,920
Speaker 4: over the last fifty years than Europe has. It's just

860
00:54:46,960 --> 00:54:48,879
Speaker 4: that they've lost them from a much higher level.

861
00:54:50,280 --> 00:54:51,960
Speaker 2: All Right, we're going to have to leave it there,

862
00:54:52,080 --> 00:54:54,960
Speaker 2: but Jeremy Grantham, thank you so much for coming on

863
00:54:55,000 --> 00:54:55,480
Speaker 2: off Ards.

864
00:54:56,880 --> 00:54:59,040
Speaker 4: Well, thank you for allowing me at least two minutes

865
00:54:59,040 --> 00:55:00,400
Speaker 4: to talk about serious.

866
00:55:00,880 --> 00:55:02,920
Speaker 2: Of course, something other than pe ratios.

867
00:55:03,120 --> 00:55:06,360
Speaker 3: Yeah, anytime, and you're always welcome back. Thank you so

868
00:55:06,440 --> 00:55:07,560
Speaker 3: much for coming on the podcast.

869
00:55:07,760 --> 00:55:22,480
Speaker 4: Thank you, Joe.

870
00:55:22,560 --> 00:55:24,680
Speaker 2: I'd love talking about historical bubble.

871
00:55:24,719 --> 00:55:25,239
Speaker 4: Yeah, me too.

872
00:55:25,800 --> 00:55:28,279
Speaker 2: And I guess I should like shout out some of

873
00:55:28,280 --> 00:55:33,000
Speaker 2: our really old episodes at this point on very esoteric

874
00:55:33,120 --> 00:55:37,319
Speaker 2: bubbles like the Florida l the Catfish bubble. I did

875
00:55:37,360 --> 00:55:41,080
Speaker 2: think the point about the change in the mag seven stocks, Yeah,

876
00:55:41,120 --> 00:55:44,040
Speaker 2: this sort of watershed moment, this idea of a cage

877
00:55:44,080 --> 00:55:46,680
Speaker 2: fight on the White House lawn. And I guess a

878
00:55:46,800 --> 00:55:50,200
Speaker 2: change in corporate strategy where everyone is really tackling the

879
00:55:50,239 --> 00:55:53,840
Speaker 2: same area of business. Yeah, that was interesting.

880
00:55:53,880 --> 00:55:56,960
Speaker 3: No, it's super interesting. Like ten years ago, you could

881
00:55:57,040 --> 00:55:59,640
Speaker 3: draw a very clear line between what Google's business was

882
00:56:00,160 --> 00:56:03,320
Speaker 3: Meta's business, Right, you can't do that the same degree

883
00:56:03,320 --> 00:56:06,479
Speaker 3: when both of them Meta they're not right at the edge,

884
00:56:06,480 --> 00:56:08,120
Speaker 3: but they're trying to they want to be in the

885
00:56:08,160 --> 00:56:11,520
Speaker 3: game as like a model maker. They're also spending both

886
00:56:11,520 --> 00:56:15,000
Speaker 3: spending enormous amounts of money on kepitle expenditures and so

887
00:56:15,080 --> 00:56:17,920
Speaker 3: where like they really are like no longer the sort

888
00:56:17,960 --> 00:56:20,120
Speaker 3: of dominance of their verticals. But I have to say,

889
00:56:20,120 --> 00:56:23,680
Speaker 3: like his conversation there at the end, and he's like, well,

890
00:56:23,800 --> 00:56:27,080
Speaker 3: will the robots be our butler's on the beach or

891
00:56:27,120 --> 00:56:30,359
Speaker 3: will they accidentally kill us? Or will they purposely kill us?

892
00:56:30,600 --> 00:56:34,400
Speaker 3: Or will humanity extinct ourselves because we're stop having babies?

893
00:56:34,560 --> 00:56:37,200
Speaker 3: Like yes, it sort of does make you like, why

894
00:56:37,200 --> 00:56:40,040
Speaker 3: are we wasting time talking about PE ratios? Like when

895
00:56:40,080 --> 00:56:42,160
Speaker 3: these are like the big questions that were like right

896
00:56:42,239 --> 00:56:45,880
Speaker 3: up against yeah, like why are we talking about PE ratios?

897
00:56:45,880 --> 00:56:46,120
Speaker 4: Ever?

898
00:56:46,400 --> 00:56:49,520
Speaker 2: How do I prep my portfolio for? You know, it's

899
00:56:50,400 --> 00:56:50,880
Speaker 2: very important?

900
00:56:51,200 --> 00:56:53,279
Speaker 3: It was like the is Kevin worsh gonna cut at

901
00:56:53,280 --> 00:56:56,879
Speaker 3: his first interest rate? Like that will not very likely

902
00:56:56,960 --> 00:57:02,120
Speaker 3: be a particularly important question or moment ten years from now,

903
00:57:02,600 --> 00:57:05,799
Speaker 3: Like that's probably not what's anything will hinge on that

904
00:57:05,840 --> 00:57:07,200
Speaker 3: in the grand scheme of fing That's.

905
00:57:07,160 --> 00:57:10,279
Speaker 2: True, But again this sort of goes back to the

906
00:57:10,280 --> 00:57:13,720
Speaker 2: big tech argument. But if you couch everything in existential terms,

907
00:57:13,760 --> 00:57:17,120
Speaker 2: then you can justify anything, right, which is what we're

908
00:57:17,120 --> 00:57:19,800
Speaker 2: seeing right now in big tech. I realize I just

909
00:57:19,960 --> 00:57:23,200
Speaker 2: naturally went from talking about the extinction of humanity back

910
00:57:23,240 --> 00:57:27,000
Speaker 2: to big tech valuations. So yeah, I apologize for that.

911
00:57:27,200 --> 00:57:29,000
Speaker 3: You know, it's interesting. You know, we did that episode

912
00:57:29,080 --> 00:57:33,440
Speaker 3: about the history of rope recently, and you know, in

913
00:57:33,480 --> 00:57:36,320
Speaker 3: that book, and he made the point on the podcast

914
00:57:36,440 --> 00:57:39,360
Speaker 3: that you know, we went for about a million years

915
00:57:39,720 --> 00:57:41,880
Speaker 3: maybe not I don't know if it's humans, but maybe

916
00:57:42,000 --> 00:57:45,440
Speaker 3: right before humans. Well there was literally one invention and

917
00:57:45,440 --> 00:57:48,800
Speaker 3: that was the hand axe. And then you think about

918
00:57:48,840 --> 00:57:52,480
Speaker 3: like in the last few years alone between CHGBT and

919
00:57:52,520 --> 00:57:56,040
Speaker 3: GLP ones and evs, et cetera. And Jeremy is making

920
00:57:56,040 --> 00:57:58,280
Speaker 3: that point like history was a little bit boring, you know,

921
00:57:58,320 --> 00:58:00,840
Speaker 3: the nineteen fifties like oh co copen new factory. That

922
00:58:01,000 --> 00:58:03,600
Speaker 3: was news and what that means is literally and other

923
00:58:03,600 --> 00:58:05,520
Speaker 3: people have said this like time is speeding up, like

924
00:58:05,560 --> 00:58:07,680
Speaker 3: there are just more events per day happening.

925
00:58:07,800 --> 00:58:08,280
Speaker 2: Hired Joe.

926
00:58:08,440 --> 00:58:09,080
Speaker 1: I'm tired.

927
00:58:09,240 --> 00:58:11,760
Speaker 3: I'm tired. But that it's good for the news business.

928
00:58:11,920 --> 00:58:13,360
Speaker 3: It's not so good for our producers.

929
00:58:13,600 --> 00:58:14,080
Speaker 4: All right.

930
00:58:14,520 --> 00:58:16,360
Speaker 2: On that note, shall we leave it there, Let's leave

931
00:58:16,360 --> 00:58:18,520
Speaker 2: it there. All right, this has been another episode of

932
00:58:18,520 --> 00:58:21,200
Speaker 2: the Authoughts podcast. I'm Tracy Alloway. You can follow me

933
00:58:21,280 --> 00:58:22,760
Speaker 2: at Tracy Alloway and.

934
00:58:22,760 --> 00:58:25,200
Speaker 3: I'm joll Wisenthal. You can follow me at the Stalwart.

935
00:58:25,360 --> 00:58:28,920
Speaker 3: You can follow our producers, our tireless producers, Carmen Rodriguez

936
00:58:29,200 --> 00:58:32,160
Speaker 3: at Carmen Arman, Dash will been At at Dashbod Kilbrooks

937
00:58:32,160 --> 00:58:35,920
Speaker 3: at Kilbrooks, and Kevin Lozano at Kevin Lloyd Lozano. And

938
00:58:35,960 --> 00:58:38,280
Speaker 3: for more odd Laws content, go to Bloomberg dot com

939
00:58:38,280 --> 00:58:40,520
Speaker 3: slash odd Laws for the daily newsletter and all of

940
00:58:40,560 --> 00:58:42,640
Speaker 3: our episodes. And you can chet about all of these

941
00:58:42,640 --> 00:58:45,840
Speaker 3: topics twenty four to seven in our discord Discord dot

942
00:58:45,880 --> 00:58:47,240
Speaker 3: gg slash odd Lots.

943
00:58:47,560 --> 00:58:49,520
Speaker 2: And if you enjoy odd Thoughts, if you like it

944
00:58:49,560 --> 00:58:53,240
Speaker 2: when we talk about pe ratios alongside the extinction of humanity,

945
00:58:53,280 --> 00:58:55,840
Speaker 2: then please leave us a positive review on your favorite

946
00:58:55,840 --> 00:58:59,320
Speaker 2: podcast platform. And remember, if you are a Bloomberg subscriber,

947
00:58:59,360 --> 00:59:02,600
Speaker 2: you can listen to all of our episodes absolutely add free.

948
00:59:02,720 --> 00:59:04,800
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949
00:59:04,840 --> 00:59:08,360
Speaker 2: for Apple podcasts and follow the instructions there. Thanks for

950
00:59:08,440 --> 00:59:08,840
Speaker 2: listening