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

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Speaker 2: Good morning, I'm Nathan Hager and I'm Karen Moscow. Here

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Speaker 2: are the stories we're following today.

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Speaker 3: Karen, we begin with some key primary results across the country.

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Speaker 3: First stop is New York, with results from the most

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Speaker 3: expensive congressional primary in US history. Let's get the latest

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Speaker 3: with Bloomberg's John Tucker.

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Speaker 4: In New York, John Nathan, Westchester County's top elected official,

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Speaker 4: Pro Israel centrist George Latimer defeated incumbent Jamal Bowman, a

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Speaker 4: member of the so called squad at Progressive Democrats on

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Speaker 4: Capitol Hill. Latimer's win is a boost of more moderate Democrats.

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Speaker 4: His victory speech was an appeal for unity.

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Speaker 5: We have to look at the arguments of the far

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Speaker 5: right and the far left and say you cannot destroy

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Speaker 5: this country with your rhetoric and your arguments.

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Speaker 4: One of the top issues was the war in Gaza.

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Speaker 4: Bowman hammered it home and his session speech, we.

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Speaker 5: Will never stand for the bombing and killing of babies

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Speaker 5: in Gaza.

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Speaker 4: The closely watched campaign devolved into bittery infighting, but symbolized

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Speaker 4: larger divisions within the party nationally, a riff that some

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Speaker 4: Democrats Worr he could damage President Biden's reelection and spending

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Speaker 4: in the race clocked in in and eye popping twenty

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Speaker 4: three million dollars. With seventy one percent of the votes counted,

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Speaker 4: Latimer was ahead fifty five point eight percent to forty

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Speaker 4: four point three percent. His victory in the heavily democratic

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Speaker 4: sixteenth District all but insures will win the general election

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Speaker 4: in New York. I'm John Tucker, Bloomberg.

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Speaker 2: Radio, All right, John, Thanks well. Besides New York, three

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Speaker 2: other states held congressional primaries, and Republican candidates back by

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Speaker 2: Donald Trump came up short in two of them. In

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Speaker 2: South Carolina's third and district, Sherry Biggs defeated Mark Burns

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Speaker 2: in a runoff election fifty one percent to forty nine percent.

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Speaker 1: Biggs is a political.

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Speaker 2: Newcomer who was backed by South Carolina's governor, Henry McMaster.

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Speaker 2: Burns is a black pastor who supported Trump for nearly

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Speaker 2: a decade, though the former president did not campaign for him.

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Speaker 3: In Utah, hearen the race for Mitt Romney's open Senate

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Speaker 3: seat goes to Congressman John Curtis. He won with fifty

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Speaker 3: point seven percent, defeating a Trump endorsed Mayor Trent Staggs

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Speaker 3: and two other Trump supporting candidates. And in Colorado, Congresswoman

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Speaker 3: Lauren Bobert won her bid for reelection after switching districts

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Speaker 3: to run for retiring Ken Buck's open house seat. Bobert

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Speaker 3: defeated several lesser known candidates with forty three point three

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Speaker 3: percent of the vote.

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Speaker 2: Well, Nathan, as we continue to assess the primary results,

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Speaker 2: we are now just one day away from the first

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Speaker 2: presidential debate between Joe Biden and Donald Trump. The ninety

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Speaker 2: minute debate will include no audience and the candidate's microphones

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Speaker 2: will be turned off when it's not their turn to speak.

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Speaker 1: Bloomberry. David Gurra is covering debate for US in Atlanta.

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Speaker 6: It'll be strange it hearkens back to the debate in

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Speaker 6: nineteen sixty and Mark Thompson, who runs CNN now, has

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Speaker 6: been very clear about that he wants to return to

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Speaker 6: the sort of Kennedy Nixon style intimate debate on a

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Speaker 6: stage without the presence of an audience. And we're going

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Speaker 6: to have the moderators of the debate, Dana Bash and

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Speaker 6: Jake Tapper, with the ability to mute the candidates while

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Speaker 6: each other is speaking. It'll be very interesting to see

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Speaker 6: how each feeds off that lack of audience, if that

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Speaker 6: makes sense. We know of Donald Trump, the former president,

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Speaker 6: and how he loves to speak to big crowds, how

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Speaker 6: that animates him. This will be an entirely different thing

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Speaker 6: to be in this studio, in a room with just

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Speaker 6: the moderators and his opponent, with the President, Joe Biden.

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Speaker 2: Bloomberg's David Gerrol will be part of our special coverage

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Speaker 2: of the CNN presidential debate. It all begins tomorrow night

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Speaker 2: at eight pm Wall Street Time with this special edition

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Speaker 2: of Balance of Power with Joe, Matthew and Kayley Lines

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Speaker 2: in Washington. Listen to the debate on Bloomberg Radio or

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Speaker 2: watch it on Bloomberg Television.

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Speaker 3: Now Karen to the latest on the war in the

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Speaker 3: Middle East. Defense Secretary Lloyd Austin is warning that a

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Speaker 3: clash between Israel and Hesbelah could set off a new war.

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Speaker 3: Bloomberg Zed Baxter has the story.

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Speaker 7: Austin, standing beside Israeli Foreign Minister Jov Golan sent out

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Speaker 7: the message to the globe generally and Israel specifically. This

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Speaker 7: is Israeli Prime Minister Benjamin that Yahoo pulls troops to

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Speaker 7: the north near has Bela.

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Speaker 8: Another war between Israel and Hisbela could easily become a

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Speaker 8: regional war with terrible consequences for the Middle East.

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Speaker 7: Austin's message to has belaws that has provocations threatened to

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Speaker 7: drag the Israeli and Lebanese people into a war they

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Speaker 7: do not want. Ad Baxter, Bloomberg Radio.

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Speaker 1: Right and thanks.

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Speaker 2: We turned to the markets now in nearly seven percent

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Speaker 2: rally and Nvidia shares HOWP tech stocks bounce back yesterday.

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Speaker 2: The Nasdaq rose one point two percent and NASDAK futures

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Speaker 2: are higher once again this morning. So Rebecca Patterson, former

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Speaker 2: chief investment officer at Bridgewater Associate, says there could be

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Speaker 2: some headwinds for investors.

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Speaker 9: I do think as we get closer to the election,

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Speaker 9: as we're higher for longer on fed funds for longer,

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Speaker 9: that equity gains could be more limited. From here. We've

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Speaker 9: had a huge run up already, notwithstanding the couple days

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Speaker 9: pullback we got, so I'm not looking to reduce equities

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Speaker 9: or get out of equities in the short term.

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Speaker 2: And former Bridgewater CIO or Rebecca Patterson notes the S

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Speaker 2: and P five hundred is up almost fifteen percent this year.

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Speaker 3: And helping give a boost to the markets this morning

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Speaker 3: is FedEx Karen. Those shares are higher by nearly thirteen percent.

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Speaker 3: In early trading, the company delivered a profit forecast above

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Speaker 3: Wall Street's expectations. More from Bloomberg's Doug Prisner.

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Speaker 10: It comes after a slew of cost cutting measures aimed

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Speaker 10: at increasing margins and coping with sluggish demand. FedEx is

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Speaker 10: expecting two point two billion dollars of permanent cost savings

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Speaker 10: in the fiscal year. The company also hinted at a

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Speaker 10: possible divestiture of its freight business FedEx it's assessing the

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Speaker 10: unit's place in the company's portfolio, and on top of that,

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Speaker 10: FedEx is expecting to buy back two and a half

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Speaker 10: billion dollars worth of common stock in fiscal twenty twenty five.

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Speaker 10: The company is also forecasting capital spending of five point

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Speaker 10: two billion. This will include fleet and facility modernization and automation.

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Speaker 10: In New York, I'm Doug Prisner, Bloomberg Radio.

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Speaker 2: All Right, Doug banks Well. Fedech's shares are not the

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Speaker 2: only ones on the move this morning. Rivian a surging

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Speaker 2: more than thirty seven percent. The ev maker is getting

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Speaker 2: a much needed cash in fusion through a new partnership

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Speaker 2: with Volkswagen. BW will make an initial billion dollar investment

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Speaker 2: in Rivian and up to four billion dollars more over time.

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Speaker 2: The Surprise TIAT provides Rivian with a financial lifeline after

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Speaker 2: it has struggled to ramp up production and deliveries of

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Speaker 2: its electric pickup and sub models.

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Speaker 3: And Karen Disney maybe giving an even faster pass to

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Speaker 3: visitors at Walt Disney World. Disney's Florida theme parks will

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Speaker 3: now let park goers reserve a space in shorter lines

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Speaker 3: for rides up to a week in advance. Right now,

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Speaker 3: visitors can only book a day ahead on the Genie

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Speaker 3: Plus reservation system. The new system will be called Lightning

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Speaker 3: Lane Multipass. Guests at Disney hotels will be able to

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Speaker 3: make seven day reservations fro up to three rides. Other

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Speaker 3: guests will get to book three days ahead. Price is

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Speaker 3: very depending on the park and time of day. The

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Speaker 3: three day multi pass will start at fifteen dollars. The

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Speaker 3: most popular rides can start at ten bucks. The changes

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Speaker 3: take effect July twenty.

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Speaker 2: Fourth, and my another note here, Nathan Bloomberg Business Week

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Speaker 2: is out with a new monthly magazine that's redesigned from

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Speaker 2: the ground up. Check out the cover story on Bloomberg

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Speaker 2: dot com and the Bloomberg Terminal, featuring an interview with

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Speaker 2: Bernard Arnault, the head of LVMH and.

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Speaker 1: One of the richest people on Earth.

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Speaker 2: The new magazine puts an emphasis on original photography and

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Speaker 2: includes new story formats to give you context, analysis and

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Speaker 2: perspectives that provide new ways.

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Speaker 1: To think about the world. Check it all out the.

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Speaker 2: New Bloomberg BusinessWeek at Bloomberg dot com. And it's time

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Speaker 2: now for a look at some of the other stories

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Speaker 2: making news in New York and around the world. From that,

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Speaker 2: we're joined by Bloomberg So Michael Barr, Michael, good Morning, Good.

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Speaker 11: Morning, Karen wall Street journal reporter Evan Gerskovich went on

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Speaker 11: trial behind closed doors in the Russian EuroCity of Caterinberg,

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Speaker 11: fifteen months after his arrest on espionage charges that he

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Speaker 11: his employer and the US government vehemently denied. The thirty

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Speaker 11: two year old journalist appeared in the court in a

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Speaker 11: glass defendant's cage with his head shaved. Griskevich is the

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Speaker 11: first Western journalist arrested on espionage charges in the post's

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Speaker 11: Soviet Russia. The State Department has declared him wrongfully detained.

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Speaker 11: Wiki Leak's founder, Julian Assage, is on a plane heading

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Speaker 11: to his home country of Australia. Massage was sentenced time

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Speaker 11: served all in Britain as part of a plea agreement

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Speaker 11: with the US Justice Department that secures his freedom. The

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Speaker 11: plea was entered in the US court in Saipan. The

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Speaker 11: judge pronounced him a freeman after imposing the sentence. Lawyer

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Speaker 11: Jennifer Robinson has been representing as Sage in Australia and

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Speaker 11: the UK.

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Speaker 12: Julane has suffered for more than fourteen years because of

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Speaker 12: the risk of extradition to the United States. It's one

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Speaker 12: hundred and seventy five years in prison for publishing evidence

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Speaker 12: of war crimes, human rights abuse, and US wrongdoing around

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Speaker 12: the world.

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Speaker 11: In a no holds Barred report, the National Transportation Safety

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Speaker 11: Board called out a rail giant, Norfolk Southern, and the

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Speaker 11: handling of last year's train to railmen in East Palestine, Ohio.

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Speaker 11: Norfolk Southern was criticized on everything from the faulty wheel

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Speaker 11: that led to the trains going off the tracks to

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Speaker 11: the company's lack of cooperation during the investigation. NTSB chair Jennifer.

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Speaker 13: Hammedy Norfolk Southern tried to submit their investigation their own

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Speaker 13: investigation under the guise of a party submission, not once,

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Speaker 13: not twice, not three times, but four times.

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Speaker 11: The NTSB's Jennifer Hammedy also pointed out it was unnecessary

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Speaker 11: for Norfolk Southern to recommend firefighters perform a vent and burn,

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Speaker 11: which potentially cause further health hazards. President Joe Biden will

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Speaker 11: issue a proclamation giving back clemency the US service members

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Speaker 11: convicted of charges under a Cold War era purge of

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Speaker 11: gay and lesbian people, reversing a decades long policy of

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Speaker 11: discrimination that forced and estimated one hundred thousand people from

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Speaker 11: the military. Global News twenty four hours a day and

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Speaker 11: whenever you want it with Bloomberg News Now. I'm Michael

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Speaker 11: barn This is Bloomberg.

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Speaker 2: Cart Jerry, Michael, thank you time for the Bloomberg Sports

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Speaker 2: Update with John stash Hour.

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Speaker 5: John, Good morning, Good morning Caroon. On the eve of

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Speaker 5: the NBA Draft, It begins tonight in Brooklyn. A big trade.

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Speaker 5: It was between the Knicks and the Nets. The Knicks

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Speaker 5: had accumulated a boatload of draft picks, and most of

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Speaker 5: those picks are now moving burrows Is. The Nets get

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Speaker 5: the Knicks first rounder tonight and future first rounders in

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Speaker 5: twenty twenty seven, twenty nine, and thirty one in exchange.

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Speaker 5: The Nets traded to the Knicks. They're best player at

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Speaker 5: Michael Bridges, so the Knicks have now yet another former

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Speaker 5: Villanova stars. Bridges will be reunited with his college teammates

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Speaker 5: Jalen Brunson, Josh Hart, and Dante Devencenzo. Atlanta has the

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Speaker 5: first pick tonight, then Washington and both may take French

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Speaker 5: teenager Zachary Reezushia and seven footer Alex Starr a top

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Speaker 5: most mock draft boards. Another French teenager, Victor Wembinyama, was

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Speaker 5: taken first a year ago. While the Knicks and Nets

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Speaker 5: made the trade. The Mets played the Yankees and Mark

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Speaker 5: Biento's came up fourth inning, heaving already homered.

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Speaker 14: Once is cracked in the air on a line toward

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Speaker 14: right center, it is.

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Speaker 1: Off the top of the loaf.

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Speaker 15: Thank god.

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Speaker 14: Fientos hits an absolute laser to right center and hit

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Speaker 14: the top of the wall and pumped into the Yankee bullpen,

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Speaker 14: his second home run of the night on WCBS.

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Speaker 5: Both Viento's homers came up Garrett Cole, who also served

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Speaker 5: up homers by Harrison Vader and Brandon Nimo. The Mets

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Speaker 5: built up a big lead and then held on after

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Speaker 5: an Aaron Judge grand slam in the eighth inning. They

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Speaker 5: beat the Yankees nine to seven. The Mets have won

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Speaker 5: ten of their last twelve, and half those wins they've

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Speaker 5: scored nine or more runs. Yanks have lost seven of nine.

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Speaker 5: In six of the seven they've given up at least

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Speaker 5: seven run series In tonight at City Field, seventh raight

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Speaker 5: win for Cleveland ten six in Baltimore. Guardians of the

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Speaker 5: best record in Baseball. John Stashedwer, Bloomberg Sports, Karen.

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Speaker 8: Eathan Coast to Coast on Bloomberg Radio, nationwide on Sirius XM,

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Speaker 8: and around the world on Bloomberg dot Com and the

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Speaker 8: Bloomberg Business app.

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Speaker 3: This is Bloomberg Daybreak. Good morning on Nathan Hager. We

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Speaker 3: want to turn down to a conversation from the Bloomberg

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Speaker 3: invest Conference in New York. Cliff Astez, founder managing principal

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Speaker 3: and chief investment officer at AQR Capital Management, spoke to

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Speaker 3: Bloomberg Shanali Bassek in a wide ranging conversation touching on

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Speaker 3: active and passive investing and the rise of meme stocks.

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Speaker 3: They began by talking about the efficiency of the market today.

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Speaker 3: Let's listen.

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Speaker 16: In efficient is this idea that prices are accurately reflecting fundamentals.

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Speaker 16: This can get really geeky on how to define that,

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Speaker 16: but let's just be colloquial. I do have a view.

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Speaker 16: It's not a short term view. It's not a market

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Speaker 16: call that again, markets are never perfectly efficient. But over

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Speaker 16: my career, which is annoyingly about thirty two years now,

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Speaker 16: I guess the opposite would be even more annoying, but

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Speaker 16: it's a long time. I'm a little obsessed these days

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Speaker 16: with those internet memes of when they show you like

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Speaker 16: an actor like Ed Asner in Mary Tyler Moore was

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Speaker 16: ten years younger than me when he did the World's

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Speaker 16: Very Upsetting. But over my career, I actually think markets

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Speaker 16: have gotten somewhat less efficient, meaning prices are a little

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Speaker 16: bit more disconnected from reality.

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Speaker 15: It ebbs and.

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Speaker 16: Flows, It's never the same at each point in time.

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Speaker 16: But I find that an odd view because one tends

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Speaker 16: to think as technology in particular advances that things should

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Speaker 16: march towards better, with better I think being efficiency in

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Speaker 16: this case, and I actually, I actually think maybe I'm

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Speaker 16: biased by having a front row seat, but I think

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Speaker 16: over the last thirty so years, i'd say the market

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Speaker 16: is somewhat less efficient than when I started.

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Speaker 17: So why do you say that is what is causing

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Speaker 17: it to be that way?

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Speaker 16: It's well, first I start out by just observing a

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Speaker 16: few facts, and I do, and I am of course

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Speaker 16: biased by what I've lived through, but I love the

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Speaker 16: genus presentation. The dot com bubble stuff was bringing, you know,

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Speaker 16: PTSD like memories for me. We try to very formally

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Speaker 16: measure how disconnected from reality or not, or how or

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Speaker 16: how reasonable our stock prices, in particular, not the price

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Speaker 16: of the whole market, but within the stock market, are

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Speaker 16: you know, cheap versus expensive stocks? You could define that

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Speaker 16: very narrowly in a quant sense, in terms of just multiples.

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Speaker 16: You could define it more broadly in terms of a

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Speaker 16: gram and DoD sense.

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Speaker 15: Yeah you want to pay.

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Speaker 16: A little multiple, but what's the quality of the stock,

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Speaker 16: what's the risk of the stock. But either way, measured

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Speaker 16: very formally, the dot com bubble saw by far the

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Speaker 16: largest disparity between cheap and expensive we had ever seen

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Speaker 16: in about fifty years of data.

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Speaker 15: We survived that. It was a little ugly for a while,

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Speaker 15: but we actually thrive through it.

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Speaker 16: If you take the whole round trip, But when you

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Speaker 16: almost die in the first half, you tend to remember that.

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Speaker 16: If you had asked me in say two thousand and two,

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Speaker 16: when all of that excess was pretty much worked off,

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Speaker 16: are you going to see something more extreme than that

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Speaker 16: in your career. I think I'm smart enough even back

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Speaker 16: then to never say never. We don't live in a

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Speaker 16: business where any of us should say never. It's a

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Speaker 16: dangerous word, but I think I would have said, it's

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Speaker 16: highly unlikely.

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Speaker 15: That was the craziest thing we had seen in fifty years.

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Speaker 16: I would have said, well, in twenty years, people like

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Speaker 16: me will still be around. I hope who with some memory.

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Speaker 16: It's not one hundred years where everyone is forgotten. And

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Speaker 16: then pre COVID it was close. And then after COVID hitting,

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Speaker 16: we saw things measured very similarly price price multiples or

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Speaker 16: even price multiple scale by.

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Speaker 15: Quality to go to level well beyond the.

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Speaker 16: Tech bubble and lasting about doubly as long as the

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Speaker 16: tech bubble if you ever have the misfortune to have

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Speaker 16: an investment that ever goes down for any amount of time,

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Speaker 16: you will learn something that they don't teach you in

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Speaker 16: a PhD program. Severity is bad, but duration is underrated

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Speaker 16: when it comes to pain. Three years of pain, even

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Speaker 16: if it's cumulatively not worse than a year and a

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Speaker 16: half of pain, is a ton worse. The first year,

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Speaker 16: you go back to your clients and go, we think

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Speaker 16: we're right, look what's going on here.

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Speaker 15: They go, okay, okay.

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Speaker 16: The second year they're like, that's the same thing you

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Speaker 16: said a year ago, and you go, yeah, but it's

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Speaker 16: still going on and we're still going to be right.

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Speaker 16: The third year, I mean, your mom's still invested, but

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Speaker 16: it's getting tougher.

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Speaker 15: So duration counts. So we've seen both the severity and

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Speaker 15: the duration of those.

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Speaker 16: So I start out just observing facts and then trying

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Speaker 16: to feel and why. Admittedly, this is a lot of

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Speaker 16: op ed. This is very hard to prove. And I

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Speaker 16: love to you know, I'm a card carrying quant I

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Speaker 16: love to, you know, produce tables. I can show you

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Speaker 16: these spreads, But why, and I tend to have I

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Speaker 16: think it's a multitude of things. I think the number

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Speaker 16: one thing is probably the thing we all love to blame,

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Speaker 16: the Internet and social media. I think a lot of

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Speaker 16: people naturally assume such a thing would bring us information

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Speaker 16: so quickly and so ubiquitously knowing everything that prices would

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Speaker 16: be very efficient. But that's never been the hard part.

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Speaker 16: When I started in this industry, we got earnings and

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Speaker 16: within twenty minutes they're missing twenty minutes, and a nanosecond

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Speaker 16: matters to an HFT, it doesn't matter to almost every

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Speaker 16: other investor. We didn't really materially get more. And I

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Speaker 16: do think that level of information overload gives people a

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Speaker 16: lot of illusion of control. You know, I don't want

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Speaker 16: to go into this deeply because I know you'd like

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Speaker 16: to get me going on this, but I think the

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Speaker 16: Meme stock examples, I don't think they're a norm by

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Speaker 16: any means, but I think they're the ultimate example of

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Speaker 16: a little bit of information making you think you really

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Speaker 16: know something very deeply, and I think that gets into

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Speaker 16: market prices.

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Speaker 17: I'll be careful to keep this a little rained in,

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Speaker 17: but on the meme stock.

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Speaker 15: Issue, I knew i'd get that started.

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Speaker 17: How much are the retail traders that are bidding up

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Speaker 17: prices of stocks like game stock, contributing to this idea

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Speaker 17: that markets are less efficient.

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Speaker 16: To you, I think they are very small part in dollars.

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Speaker 16: They maybe post their children in some sense for the

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Speaker 16: effect the whole idea that this disconnect in prices can

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Speaker 16: come in a world where we have all the information

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Speaker 16: at our fingertips. I think we're all raised at some

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Speaker 16: point we've all read about the quote wisdom of crowds.

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Speaker 16: The way you know, if you take a crowd that

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Speaker 16: on average people have fifty one percent information, but you

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Speaker 16: poll them. You hope many of us here are old

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Speaker 16: enough to remember Regis Philbin and you know who wants

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Speaker 16: to be a millionaire. The absolute best lifeline was always

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Speaker 16: pull the crowd right, because because if they asked the question,

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Speaker 16: you know, what does it say in the back of

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Speaker 16: a quarter, eighty five percent of the people don't know,

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Speaker 16: but they're evenly split, and the fifteen percent.

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Speaker 15: Of do not all go one way.

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Speaker 16: But there was always a little unspoken footnote to the

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Speaker 16: wisdom of crowds. To have a wise crowd, it's got

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Speaker 16: to be fairly independent. If everyone got to talk about

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Speaker 16: the quarter, not look at a quarter, that's cheating, but

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Speaker 16: talk about it. The people who are wrong convinced the

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Speaker 16: people who are right, and whatnot. A crowd where everyone

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Speaker 16: is coordinated and not independent has the risk of becoming

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Speaker 16: a dangerous mob.

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Speaker 15: And I don't know about you, guys, but.

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Speaker 16: I can't think of anything better at turning a wise,

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Speaker 16: independent crowd into a dangerous mob than the Internet and

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Speaker 16: social media. So I do think they're kind of the

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Speaker 16: poster child. I don't think economically they are they are that.

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Speaker 15: Important they you know.

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Speaker 16: I don't want to disparage either side of it, but

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Speaker 16: it's nine dollars in terms of you know, in video

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Speaker 16: laughs at that on a daily basis. The entire memestock

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Speaker 16: phenomenon is like a little part of the day of Nvidia.

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Speaker 16: But I think it is a poster child for the

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Speaker 16: concept I'm talking about. There are other candidates. People talk

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Speaker 16: about the role of passive. That's really complicated. I'm not

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Speaker 16: one who just looks at passive and goes that that's

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Speaker 16: causing all kinds of havoc.

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Speaker 15: What is causing? Okay, I'll disappoint you here, people.

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Speaker 16: I don't think we really quite know yet. First of all,

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Speaker 16: here are the things we know about passive. Not everyone

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Speaker 16: can be passive. The whole world breaks down. Even back

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Speaker 16: when I was a PhD student, So this is the

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Speaker 16: early nineties, a kind of stant This is what happens

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Speaker 16: when PhD students in finance get drunk late at night.

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Speaker 15: They sit around going, what if everybody tried to be passed?

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Speaker 16: And that's a black hole, that's a singularity in finance.

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Speaker 16: Nobody's looking at individual stocks, and that just can't work.

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Speaker 15: Passive as a free rider is a free rider.

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Speaker 16: On active managers making sure prices are somewhat reasonable. But

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Speaker 16: the question of how many people can be passive, nobody

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Speaker 16: really knows.

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Speaker 17: You think it's contributing to an efficiency, and is efficiency,

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Speaker 17: frankly another way of saying wild swings in markets.

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Speaker 16: I think I would guess yes, but I think it's

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Speaker 16: pretty small versus the social media, the illusion of control

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Speaker 16: of the data overload things I'm talking about.

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Speaker 15: It's not clear theoretically. If you imagine you had.

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Speaker 16: A world we had a certain amount of passive and active,

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Speaker 16: and suddenly a lot of active move to passive.

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Speaker 15: Whether active is now easier.

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Speaker 16: Or harder, whether it's more or less efficient, depends on

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Speaker 16: who moved. Let me be really obnoxious and go. There

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Speaker 16: were sharks and minnows. There were people who were good

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Speaker 16: at it and people who were bad. If all the

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Speaker 16: men move, markets get really efficient. Because sharks are trading

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Speaker 16: with sharks, they all are pretty good at valuing these things,

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Speaker 16: and the sharks don't.

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Speaker 15: Make a lot of money. We don't really know who moved.

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Speaker 16: I tend my reasoning here is really just correlation, not causation.

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Speaker 16: This has occurred at the same time that massive price disparities.

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Speaker 15: Have grown and lasted longer.

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Speaker 16: So as a pure guess, I would have to go,

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Speaker 16: it's probably contributed something.

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Speaker 15: It's very hard to assign.

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Speaker 16: Another one is you know, I'm probably the billions person

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Speaker 16: to mention this, but over the same period, we've had

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Speaker 16: ten years prior to a couple of years ago of

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Speaker 16: ultra low nominal and real interest rates. I am not

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Speaker 16: a person who thinks that means growth stocks should go

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Speaker 16: to the moon. I've written papers on the math of

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Speaker 16: that's kind of wrong. They're not actually that much longer duration.

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Speaker 16: But the market disagrees with me. The market things with

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Speaker 16: interest rates fall, growth stocks should go to the moon,

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Speaker 16: and so ultra low interest rates have probably contributed to

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Speaker 16: a fair amount of that also, so I think it's

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Speaker 16: a witch's brew. But if I had to put the three,

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Speaker 16: I think maybe I'm just an old man ranting at TikTok.

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Speaker 16: But I think the feeling that you own all the

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00:23:17,200 --> 00:23:20,280
Speaker 16: information and are on a level playing field, and therefore

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00:23:20,320 --> 00:23:22,960
Speaker 16: you can own two stocks and be very confident about

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00:23:22,960 --> 00:23:24,880
Speaker 16: it is probably.

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Speaker 15: My number one thing to point at.

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Speaker 17: So let's step back for a minute. Because you were

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00:23:30,280 --> 00:23:34,520
Speaker 17: concerned about the efficiency of markets here and reasked, has

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00:23:34,560 --> 00:23:38,240
Speaker 17: the market gone awry? Has something about the market broken?

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00:23:38,440 --> 00:23:38,679
Speaker 15: To you?

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00:23:39,640 --> 00:23:43,840
Speaker 16: Broken such an ugly word. These are points on a spectrum.

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00:23:44,520 --> 00:23:47,560
Speaker 16: For me, broken is very I'm going to define that

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00:23:47,640 --> 00:23:50,720
Speaker 16: as are we in a bubble or the opposite of

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00:23:50,760 --> 00:23:55,840
Speaker 16: a bubble and irrational depression where people won't pay any

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00:23:55,880 --> 00:23:59,600
Speaker 16: fair amount for stronger companies or whatnot. A bubble is

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00:23:59,600 --> 00:24:01,800
Speaker 16: when wet the companies people like and they're willing to

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00:24:01,840 --> 00:24:06,639
Speaker 16: pay giantly excessive amounts. So let's say bubble and broken

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00:24:06,720 --> 00:24:10,639
Speaker 16: are equivalent. I use the word bubble.

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Speaker 15: I think less than a lot in the industry.

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Speaker 16: I once wrote a sarcastic piece really doesn't narrow it

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00:24:17,119 --> 00:24:22,000
Speaker 16: down amongst the pieces I've written but making fun of

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00:24:22,000 --> 00:24:25,520
Speaker 16: the term bubble that on the extended use of the

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00:24:25,560 --> 00:24:29,080
Speaker 16: word Wall Street people who a lot of people will

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00:24:29,080 --> 00:24:32,400
Speaker 16: see bubbles everywhere, and they translated a little too weakly

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00:24:32,840 --> 00:24:36,600
Speaker 16: as a bubble means a stock. I kind of don't like. No,

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00:24:36,760 --> 00:24:41,159
Speaker 16: that's not a bubble. A bubble, to me is a

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00:24:41,400 --> 00:24:46,520
Speaker 16: vastly diversified set of things that I cannot come up

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00:24:46,520 --> 00:24:51,640
Speaker 16: with any reasonable assumptions that could possibly make these valuations work.

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00:24:52,560 --> 00:24:56,000
Speaker 16: I have seen two in my career that I think

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00:24:56,119 --> 00:24:59,240
Speaker 16: we identified before the fact, and one I was a

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00:24:59,320 --> 00:25:04,159
Speaker 16: passive watcher of the dot com bubble, which again the

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Speaker 16: PTSD from the earlier presentation.

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Speaker 15: And then really nineteen and twenty when stocks surpassed, I

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Speaker 15: would use the word bubble for that.

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