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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.

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Speaker 1: Along with my co host Lisa Bramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. We

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Speaker 1: are broadcasting live from the New York Bloomberg invest Summit,

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Speaker 1: and I'm very pleased to say joining us next is

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Speaker 1: a renowned short seller, well known for his correct calls.

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Speaker 1: Carson Block, chief investment officer of Muddy Waters Capital here

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Speaker 1: in our eleven three oh studios and in New York City. So, Carson, Um,

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Speaker 1: you've been uh, sort of looking at possible store opportunities

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Speaker 1: in China for a while, but your thesis is sort

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Speaker 1: of sifting as time goes on, and as m s

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Speaker 1: c I includes Chinese shares in one of its major

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Speaker 1: emerging markets indexes tell us that can you explain how

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Speaker 1: it's changing? Sure? Well, I mean we pay attention to

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Speaker 1: stocks from China because we like to short frauds where

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Speaker 1: active as short sellers. So I'm fond of saying that

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Speaker 1: China is to stock fraud as Silicon Valley is to technology.

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Speaker 1: So we will always be looking at especially you know,

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Speaker 1: especially US companies are Chinese China companies listed in the US.

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Speaker 1: But um, I think there's a bigger point, and part

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Speaker 1: of it has to do with the fraud, and part

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Speaker 1: of it has to do with other geopolitical or strategic reasons.

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Speaker 1: But I'm arguing that US investors should start to look

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Speaker 1: at China companies like sin stocks, you know, where there's

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Speaker 1: a moral dimension. Um, you know, you're making a moral

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Speaker 1: choice that you know it's not necessarily in accordance with

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Speaker 1: the best interests of us and your kids and grandkids

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Speaker 1: if you're going along the stocks and you know, on

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Speaker 1: one hand, you've got the fraud problem. So you know,

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Speaker 1: there's a movie that came out, a documentary came out

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Speaker 1: a few months ago called The China Hustle, and that

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Speaker 1: profiled how they were literally last decade, about four hundred

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Speaker 1: companies from China listed on the US exchanges that were frauds,

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Speaker 1: and so investors lost you know, who knows how many

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Speaker 1: billions when those things blew up. But no, hardly anybody

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Speaker 1: has been punished for that basically, you know, I think

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Speaker 1: only one Chinese company chairman ever did prison time in

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Speaker 1: the US. The auditors, the Big Four affiliates from China,

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Speaker 1: we're going to have their practice licenses suspended for six months.

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Speaker 1: But the administration capitulated and find each auditor, each Big

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Speaker 1: Four affiliate only five hundred thousand dollars, which is basically

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Speaker 1: you know, when you're audit fee of a medium sized client.

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Speaker 1: And so you know, it's like Charlie Munger says, show

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Speaker 1: me the incentive and I'll show you the outcome. Well,

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Speaker 1: defrauding US investors from China is a you know, heads,

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Speaker 1: I win, tails, you lose proposition um. And you know,

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Speaker 1: it's like we saw the financial crisis. I mean, in

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Speaker 1: that situation where somebody else bears all of the risk,

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Speaker 1: you know you're going to get bad outcomes. So we

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Speaker 1: have that situation, but we also have this issue that

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Speaker 1: at the end of the day, in China, there's no

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Speaker 1: such thing as a private company. They can all be

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Speaker 1: made to do the bidding of the Chinese government. So

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Speaker 1: you know, since the technological edge devolved from the government

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Speaker 1: to the private sector, you know, probably ten fifteen years ago,

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Speaker 1: we're struggling in the West to to adjust to that

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Speaker 1: because we have these private companies that control our strategic technologies.

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Speaker 1: They're running around taking investment from you know, companies from

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Speaker 1: China um that I think in you know, some cases,

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Speaker 1: if not many cases, are making those investments not because

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Speaker 1: they think it's just commercially a great move, but because

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Speaker 1: they're being directed to do so by you know, say

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Speaker 1: the Ministry of State Security or the PRC government. And

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Speaker 1: you know, if you think like that's kind of crazy,

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Speaker 1: well how could they do that? You know, private companies

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Speaker 1: don't forget the banking system in China is state run.

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Speaker 1: It's state owned, you know, in financing. I mean, look there.

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Speaker 1: I used to live in China and do business there.

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Speaker 1: And so they took in foreign you know, strategic investors,

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Speaker 1: and that's actually kind of an old thing that happened

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Speaker 1: in the early two thousands, and the idea, you know

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Speaker 1: a lot of these foreign banks bought in. It's like, oh,

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Speaker 1: you know, we're gonna help them, you know, with their

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Speaker 1: risk management. And I talked to a few people who

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Speaker 1: were the you know, foreign representatives brought in to try

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Speaker 1: to make sure these banks were operating properly, and it

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Speaker 1: sounded like it was one of the most frustrating jobs

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Speaker 1: on the planet, Like they don't know what's going on. Um.

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Speaker 1: So look, I you know, at the end of the day,

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Speaker 1: I think when you look at a Bai Do and

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Speaker 1: Ali Baba, you know, I think a lot of their

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Speaker 1: interest in making investments in the US, it's not driven

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Speaker 1: by you know, ge this is gonna you know, make

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Speaker 1: our platform, make our search engine. You know that much better. Um,

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Speaker 1: it's just real, you know, case and point um. Every

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Speaker 1: year there's a Joint Congressional Committee report on the US

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Speaker 1: China Economic relationship, and the last report that was published

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Speaker 1: this past November. I mean it was I mean, I

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Speaker 1: think it was very realistic about you know, number of

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Speaker 1: the challenges and you know, the cheat, the IP, theft

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Speaker 1: that's rampant, and the dumping. But they also talked about

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Speaker 1: AI and this was a surprise to me, but they

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Speaker 1: said that China's AI is on par with out of

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Speaker 1: the US. And interestingly then they said that the entity

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Speaker 1: in China that has the single most advanced AI. So

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Speaker 1: in other words, our main strategic competitor is by Do,

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Speaker 1: and we give that company liquid markets for for security.

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Speaker 1: So are we financing our own demise here. Well, come on, secondly,

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Speaker 1: you just have like a minute left, But I want

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Speaker 1: to get your sense of do you think that they're

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Speaker 1: going to be imminent collapses of Chinese companies coming up

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Speaker 1: or do you think that this is going to be

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Speaker 1: played out over over a number of years. I think

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Speaker 1: there's still a lot of frauds listed from China and

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Speaker 1: the US. Now these are not companies where the red

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Speaker 1: news fake. They're real businesses. But I think a lot

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Speaker 1: of the profits are fake. You know, whether those collapse

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Speaker 1: or not, I don't know, But I am trying to

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Speaker 1: start a conversation and I think there's some other people

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Speaker 1: who would like to do that as well, where allocators

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Speaker 1: really should be thinking twice about whether they should be

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Speaker 1: putting this money into into China stocks. So to the

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Speaker 1: extent that we get some traction that has implications for valuations,

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Speaker 1: you know, we'll see. All right, Well, we got to

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Speaker 1: leave it there. Unfortunately, we'd love to have you back

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Speaker 1: and spend more time, because you know, the world of

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Speaker 1: misinformation is not just confined to the to China, right,

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Speaker 1: I mean there are companies all over the world that

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Speaker 1: you think are straight players, And I mean I'm thinking of,

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Speaker 1: for example, one company particular in France that you've had

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Speaker 1: something to do with, uh, And that's a story that

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Speaker 1: I think could probably be made into a Netflix series.

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Speaker 1: How Arada. But so thanks very much for being with us,

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Speaker 1: and we look forward to having you more in the future.

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Speaker 1: Carson Block is the chief investment officer for money Waters Capital,

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Speaker 1: speaking about investments in the Chinese companies. They might not

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Speaker 1: be exactly what they've seen. We are broadcasting live from

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Speaker 1: the Bloomberg invest Summit from our world headquarters in New York,

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Speaker 1: and it's my pleasure to bring in our next guest,

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Speaker 1: you Send Hung, the chief executive of New York Life

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Speaker 1: Investment Management, joining us here in our beautiful world headquarters.

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Speaker 1: Thank you very much for being I'm so delighted to

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Speaker 1: be here. Thank you. What are the things We'll get

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Speaker 1: to a couple of things, like you know, alternative assets

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Speaker 1: and and so on, But I want to first understand

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Speaker 1: a little bit, UH, the specific challenges that you face

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Speaker 1: because you work for people who don't even know that

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Speaker 1: you work for them, because they're gonna be people who

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Speaker 1: in the future, the big future, like ten twenty thirty

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Speaker 1: years down the line, they are depending on decisions that

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Speaker 1: you make now in order for them to be able

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Speaker 1: to plan for their retirement and a variety of their

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Speaker 1: financial goals. I'm wondering if you could explain a little

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Speaker 1: bit about how you take on that responsibility. So the

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Speaker 1: right way and the way that I think about New

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Speaker 1: York Life Investments is that we are the best of

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Speaker 1: both worlds. So we have independent investment boutiques together with

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Speaker 1: a heritage and long term perspective of New York Life,

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Speaker 1: and we come at this business really from an investment perspective.

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Speaker 1: You know, New York Life is a hundred and seventy

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Speaker 1: three years old. We've been through the Civil War, two

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Speaker 1: World Wars, the Great Recession, and today it's as strong

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Speaker 1: as we've ever been as only one of a handful

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Speaker 1: of tripoy rated financial institutions around the world. And so

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Speaker 1: we really think about this business and our clients the

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Speaker 1: same way as we work in terms of what we're

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Speaker 1: trying to accomplish. You take the time to understand the

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Speaker 1: problems are trying to solve the challenges they face, and

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Speaker 1: that's really helped me as CEO of this business to

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Speaker 1: really think about expansion. So we've moved significantly outside the

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Speaker 1: US into Europe and Asia through editions of boutiques. We

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Speaker 1: really lean very heavily into alternatives, an area that I

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Speaker 1: know quite well. Well, let's talk about alternatives, actually, I

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Speaker 1: want to go there because when you talk about the

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Speaker 1: needs of your clients, what need is for yield, especially

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Speaker 1: in this financial oppression era, what alternatives are you going into?

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Speaker 1: And how concerned are you about the glut of cash

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Speaker 1: sitting on the sidelines and pouring into things that people

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Speaker 1: aren't as familiar with. You know, as a general rule,

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Speaker 1: I believe alternatives have a role in every portfolio. What

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Speaker 1: we've been seeing is equity markets are fairly elevated, interest

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Speaker 1: razor climbing, greater volatility, and so in this market environment,

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Speaker 1: our advice to clients is really to think about what

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Speaker 1: exposures they can introduce to dampen volatility, maybe introduced a

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Speaker 1: little bit of inflation since activity, but in general diversify

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Speaker 1: and so what we like. We have a platform called

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Speaker 1: index i Q that has really developed some interesting e

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Speaker 1: t s. There are the Pioneer and Alternative et s

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Speaker 1: and so things like ROOF which is for real estate

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Speaker 1: or m and A for merger arbitrage strategies, or even QAI,

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Speaker 1: which is a diversified multi strat And so our view

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Speaker 1: is there are many ways for investors to add these

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Speaker 1: elements to their portfolios. Structure at e T F that

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Speaker 1: has alternative assets that aren't as liquid, you know, those

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Speaker 1: are actually liquid. They're just like the e T s

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Speaker 1: that we all know right daily, liquid, transparent, low cost.

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Speaker 1: And that's why they offer such an interesting value proposition

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Speaker 1: because today, if you're an individual investor, you can buy

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Speaker 1: one of hundreds of e T s, one of thousands

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Speaker 1: of mutual funds. But if you want alternative exposure, you

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Speaker 1: don't have a lot of choice like institutions do today.

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Speaker 1: They want to go into real estate or private equity. Now,

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Speaker 1: just to give people little detail, some of the subsidiaries

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Speaker 1: that come under your umbrella, I believe mackay Shields, the

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Speaker 1: mutual fund company, also Cornerstone, right os Bille, the investment

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Speaker 1: management firm. How do you decide who fits with the

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Speaker 1: New York Life investment management sort of zeitgeist. You know,

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Speaker 1: we really are carefully slagged the boutiques that we bring

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Speaker 1: under our umbrella. Clearly, what's important to us is really

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Speaker 1: investment excellence and UH strategies that we think really makes

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Speaker 1: sense for UH investors portfolios. But just as important to

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Speaker 1: us is cultural fit. We're an institution at New York

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Speaker 1: Life that really believes and putting our clients first, solving

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Speaker 1: their problems. And so what's important to us is that

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Speaker 1: we have a set of capabilities specialists by boutique and

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Speaker 1: then out forwards us the opportunity to have the building

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Speaker 1: blocks so that if we're having that conversation with clients,

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Speaker 1: you know, how to put together good portfolios. So we

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Speaker 1: just have about a minute left, and I'm wondering. You know,

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Speaker 1: a lot of people are worried that perhaps we are

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Speaker 1: a seeing two elevated evaluations we could crash. Other people

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Speaker 1: worrying that they're gonna pull out too soon, which is

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Speaker 1: the biggest worry for you. You know, all of these

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Speaker 1: are legitimate worries. It's very interesting that last year we

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Speaker 1: had a lot of worries, but the market seemed pretty confident.

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Speaker 1: This year we have a lot of worries and there's

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Speaker 1: a lot of anxiety. My view is one of a

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Speaker 1: long term view. Look, clients really have not only return expectations,

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Speaker 1: but they have obligations and needs to meet, and that's

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Speaker 1: really our focus because we have all the pieces to

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Speaker 1: help them achieve their goals. Thank you so much for

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Speaker 1: being with us, and thank you for participating in it

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Speaker 1: this day where a lot of really interesting ideas are

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Speaker 1: being thrown out there and discussed. Uh Eahan Hung is

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Speaker 1: chief executive officer of New York Life Investment Management. She

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Speaker 1: has helped to expand the company and UH and and

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Speaker 1: plow further into alternatives, which has been one of the

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Speaker 1: hottest areas over the past few years as people try

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Speaker 1: to diversify and frankly, as they see a lot of

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Speaker 1: the equity markets as being somewhat overvalued, as well as

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Speaker 1: bond markets, which have been UH certainly affected dramatically by

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Speaker 1: central banks around the world. We are broadcasting live from

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Speaker 1: the Bloomberg Invests Summit in New York. Our next guest,

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Speaker 1: manages more than a trillion dollars, is chief executive of

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Speaker 1: p G. I am David Hunt, President, chief executive joining

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Speaker 1: us now. Thank you so much for being with us. Um.

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Speaker 1: You said on the panel that you're just on that

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Speaker 1: you are worried about the US equity market, that it

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Speaker 1: is not in good shape because fewer companies are opting

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Speaker 1: to go public and stay public, and this reduces opportunity

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Speaker 1: das for retail investors. Can you talk about what the

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Speaker 1: consequences are of this in your view? Sure, here's the

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Speaker 1: parlor trick question for you. How many stocks are in

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Speaker 1: the will share five thousand? Well, answer three thousand, six hundred.

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Speaker 1: In fact, we used to have over seven thousand, five

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Speaker 1: hundred stocks in the US. If you go back fifteen years, um,

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Speaker 1: we've had a huge drop in the number of publicly

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Speaker 1: traded companies. At the same time, the level of I

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Speaker 1: p o s are literally at half of the level

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Speaker 1: that they were a decade ago. So what's happening. What's

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Speaker 1: happening is that a lot of the higher growth companies,

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Speaker 1: some of them are technology, but health sciences and others

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Speaker 1: are choosing to stay private. And so whereas ten years

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Speaker 1: ago everyone's dream was to ring the bell and and

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Speaker 1: really come out in the public way, now they're very

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Speaker 1: happy to take another slug or a second round of

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Speaker 1: private financing from the private equity realm um and stay private.

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Speaker 1: And uh that it really does us have important implications.

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Speaker 1: So we've got fewer stocks, we've got fewer growth stocks

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Speaker 1: coming in, and we've got a private equity industry that

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Speaker 1: has a trillion dollars of dry powder. Now leverage that

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Speaker 1: a few times and you're talking about real money. So

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Speaker 1: you've got a lot. Even more of these companies are

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Speaker 1: likely to choose to stay private. And here's a prediction.

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Speaker 1: I think that some public companies UM will choose to

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Speaker 1: go private. We saw that, we saw that in in

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Speaker 1: in spades last year for the first time dramatically, and

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Speaker 1: I think we'll see it some more. So what does

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Speaker 1: that mean then for for the markets? It obviously means

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Speaker 1: there's less choice, uh for for investors, but it more

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Speaker 1: fundamentally means that these growth stocks that were available to

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Speaker 1: retail investors through the public markets now are actually having

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Speaker 1: their returns come up through private equity and into the

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Speaker 1: institutional market. And UM. I think that that goes against

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Speaker 1: a little bit of the democratization of the capital markets

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Speaker 1: that we've enjoyed in the United States for a long time,

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Speaker 1: and I don't think people have really taken on the

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Speaker 1: overall kind of implications and consequences of that. Uh And

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Speaker 1: and the weakness in our public equity markets is that

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Speaker 1: because the amount of money that is available in private

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Speaker 1: equity investments is so great and growing that in a sense,

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Speaker 1: it doesn't matter whether you take money from the public

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Speaker 1: or the private sector in terms of the actual amount

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Speaker 1: of money. And yet the public sector comes with a

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Speaker 1: lot of rules, regulations and quarterly reports. Yeah. I think

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Speaker 1: that there's a multitude of reasons, um and you've you've

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Speaker 1: hit on many of them. I think there's been the

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Speaker 1: burdens of being a public company. Uh. And I think

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Speaker 1: that the Sarbanes Oxley was a bit of a flashpoint

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Speaker 1: for that. I think also to to to give private

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Speaker 1: equity is due. They have become a lot better owners

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Speaker 1: over the course of the last fifteen years. In the

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Speaker 1: early days, this was a bit of a financial engineering move,

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Speaker 1: and now they actually have turned out to be good

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Speaker 1: long term investors investing in businesses. I have to I

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Speaker 1: have to inter interject there, because there's been a lot

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Speaker 1: of publicity around the retail apocalypse and a lot of

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Speaker 1: fingers pointing at private equity companies that added quite a

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Speaker 1: bit of leverage to some of these retailers that seems

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Speaker 1: unsustainable in retrospect. I'm thinking toys, r us Vonton, you know,

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Speaker 1: pick your company. I'm just wondering, do you think that

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Speaker 1: that is an inadequate sort of representation or sort of

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Speaker 1: an unjust representation of what private equity has done broadly,

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Speaker 1: I would say it is. I think that the the

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Speaker 1: overall returns of the private equity business have been quite attractive,

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Speaker 1: and if you're certainly in one of the better funds,

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Speaker 1: you've done extremely well. And you've done it in a

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Speaker 1: way that is, to some extent non corelate because they

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Speaker 1: can time when they want to get out of their

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Speaker 1: investments to the underlying investment equity businesses. So I actually

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Speaker 1: think that they've done broadly quite a good job. Would

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Speaker 1: the public markets have made those decisions sooner or better?

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Speaker 1: I'm not really sure. Does this then beg the question

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Speaker 1: about passive investing versus active investing, particularly with the explosion

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Speaker 1: in exchange traded funds, where you don't actually buy a

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Speaker 1: specific company, and therefore you have no allegiance to their

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Speaker 1: long term plan or strategy or even to their management.

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Speaker 1: That's partly true, um. On the other hand, the irony

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Speaker 1: is that if you're a passive manager, you actually are

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Speaker 1: a long term investor, because as long as that company

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Speaker 1: is in the index, UH, the e t F is

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Speaker 1: going to also remain an investor in that, but what

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Speaker 1: you do lose is having analysts who are following that

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Speaker 1: particular stock, and so we have many fewer people who

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Speaker 1: are actually understanding the fundamentals of a business um and

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Speaker 1: I do think that that is a back to another

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Speaker 1: reason why you have many fewer companies going public, because

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Speaker 1: you have many fewer analysts who are covering midsize companies.

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Speaker 1: From the cell side, there's been a dramatic fall in, uh,

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Speaker 1: the amount of money and people on the cell side

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Speaker 1: who were doing the kind of high quality research that's

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Speaker 1: required for these One thing that strikes me though, is

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Speaker 1: that as people worry about overvaluation and the equity markets

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Speaker 1: and a lack of diversification, they're going increasingly to alternatives

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Speaker 1: and investing more money in private equity companies which do

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Speaker 1: have that a trillion dollars of dry powder sitting on

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Speaker 1: their books. How worried are you that valuations in private

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Speaker 1: markets have gotten way far ahead of themselves and are

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Speaker 1: poised for some sort of correction, you know. It's it's

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Speaker 1: interesting how different the allocations are by investor group. And

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Speaker 1: I think you really have to make these comments about

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Speaker 1: individual client types. For most of my professional life. If

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Speaker 1: you were to just guess the asset allocation of a

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Speaker 1: pension fund whether the public were private, and said sixty,

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Speaker 1: you would be within five percentage points of being right. Um.

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Speaker 1: And they really went down a very balanced investment approach

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Speaker 1: that is absolutely not true today. If you go into

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Speaker 1: a corporate plan today, for the most part, they have

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Speaker 1: a de risking plan in place. They have moved significantly

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Speaker 1: to take risk off the table. They are much more

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Speaker 1: into fixed income, and their holdings actually of alternatives and

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Speaker 1: even equities overall is at some of its lowest levels.

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Speaker 1: And yet almost in complete contrast, if you walk down

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Speaker 1: the street and you visit the public plan, UH, you

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Speaker 1: find that they've gone in the other direction. Uh. They

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Speaker 1: have actually decided to re risk. They've moved significant money

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Speaker 1: into real estate, into privates UH, private equity UH, and

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Speaker 1: into hedge funds. And they are trying very hard to

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Speaker 1: work their way out of their underfunded situation through investment returns.

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Speaker 1: And so you have these two groups that have diametricly

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Speaker 1: different approaches to what's essentially the same problem, which is

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Speaker 1: how do you meet the very important promises that they've

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Speaker 1: made to their workers. Thank you very much for being

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Speaker 1: with us. David Hunt is the president and the chief

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Speaker 1: executive of p gimp G I m a R, the

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Speaker 1: investment management business of Prudential Financial, helping to manage more

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Speaker 1: than one point to trillion dollars of assets. Much appreciated

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Speaker 1: and thank you, thank you for having me here at

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Speaker 1: our Bloomberg constating the idea of public and private pensions

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Speaker 1: having the exact opposite aims. You have to wonder who's

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Speaker 1: got it right well, Pam. The one trillion dollar Apple

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Speaker 1: valuations stories have started to be plastered all over media

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Speaker 1: across the board. Everyone's getting ready as Apple's market capitalization

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Speaker 1: reaches nifty billion dollars. So has it gone too far

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Speaker 1: too fast? Are the FAMOD stocks uh is a little

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Speaker 1: bit over valued at this point or is this just

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Speaker 1: the beginning of a massive bull run? Here to sort

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Speaker 1: of lay out the arguments on either side. A Shara Ovida.

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Speaker 1: She's technology columnist for Bloomberg Opinion and contribute to contributor

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Speaker 1: to Bloomberg Markets. Am Um, Sara, thank you so much

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Speaker 1: for being with us. So um, let's just start with

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Speaker 1: the people who say that this is something that can

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Speaker 1: keep going, that even though the biggest six US tech

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Speaker 1: companies account for more than four trillion dollars of market capitalization.

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Speaker 1: This is just the beginning. I mean, if you look

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Speaker 1: at the story of those tech giants, and you could

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Speaker 1: include Ali Baba Intencent in that mix too, from China eats,

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Speaker 1: a story of revenue growth, earnings, power pricing, power global businesses,

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Speaker 1: and the ability to kind of invest money. All of

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Speaker 1: those companies are investing near record amounts in research and

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Speaker 1: development and capital spending. So they're looking to the future

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Speaker 1: and it's hard to imagine at this point that anything

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Speaker 1: is going to slow them down, right, So that's the

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Speaker 1: kind of bull market for the tech giants of the

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Speaker 1: future and the and the current well that it does.

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Speaker 1: Let's look at some of the kind of valuations, because

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Speaker 1: that's why I always like to kind of understand this. Um.

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Speaker 1: Let's say you had a business that did I don't know,

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Speaker 1: two hundred and forty six uh dollars in sales a year,

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Speaker 1: but out of that two hundred forty six, you got

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Speaker 1: to put more than fifty of that in your pocket

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Speaker 1: after you paid for everything, lollipops, water, whatever it is.

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Speaker 1: And someone said, you know, I want to buy that

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Speaker 1: whole business, and I'll give you a thousand bucks for it.

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Speaker 1: That's Apple. That's basically what Apple is, at least that's

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Speaker 1: what the numbers tell you. Yeah, and and depending on

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Speaker 1: how you look at it, some of these tech companies

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Speaker 1: are not really richly valued. So Apple, as you mentioned,

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Speaker 1: is trading at something like fifteen times forward earnings. That's

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Speaker 1: on the high side for Apple historically. But Apple has

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Speaker 1: always been this company that is that is relatively inexpensive

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Speaker 1: if you look at the growth rates. Now, Apple's growth

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Speaker 1: rates coming down, um. And You've got companies on the

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Speaker 1: other side of the spectrum like Amazon, who is expensive

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Speaker 1: by conventional price to earnings metrics. But if you believe

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Speaker 1: that these companies can continue to grow earnings and continue

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Speaker 1: to have pricing power and have an ability to kind

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Speaker 1: of control the future of technology spending, then those big

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Speaker 1: tech company shares don't necessarily look overvalued. UM. I will

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Speaker 1: say though, that it's hard to kind of make an

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Speaker 1: argument for technology stocks as value plays because of the

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Speaker 1: extreme binary outcomes and technology that when technology shifts, when

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Speaker 1: you have this kind of wholesale shift and technology as

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Speaker 1: we did, um, you know ten years ago when smartphones

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Speaker 1: started to become popular and prevalent. It can create winners

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Speaker 1: and losers nearly overnight to the you know, no, Kia

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Speaker 1: doesn't exist anymore, Um, Microsoft does. Microsoft and Microsoft Microsoft

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Speaker 1: is an exception I think where it was prevalent in

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Speaker 1: previous eras of technology and has managed to find it's

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Speaker 1: footing again. But they're the exception that proves the rule,

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Speaker 1: I think. So then let's talk about the bear case here.

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Speaker 1: Is there something that people are concerned about as they

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Speaker 1: watch valuations climb? Look, I think the concern for me

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Speaker 1: is this fam era to use the terrible acronym, has

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Speaker 1: been a phenomenon of the last decade when we've basically

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00:25:19,400 --> 00:25:25,600
Speaker 1: had um steadily strong growth in both global GDP and

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Speaker 1: stock markets. And I don't know whether the story of

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Speaker 1: earnings growth and and revenue growth can continue for those

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Speaker 1: tech companies in a slow and a much slower global

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Speaker 1: economic growth scenario. I don't think we've proven, we've seen

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Speaker 1: the ability to prove that kese out. I guess that

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Speaker 1: one question would be with these stocks, with these companies

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Speaker 1: suffer disproportionately in a downturn or would they go down

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00:25:49,560 --> 00:25:51,880
Speaker 1: along with everything else? And at this point, are they

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00:25:51,960 --> 00:25:54,840
Speaker 1: like the proxy for everything anyway because they're just such

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Speaker 1: a dominant It's true, and I don't know that I

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Speaker 1: haven't answered that. My broader point is that it's just

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Speaker 1: not tested, right that you know, Facebook didn't exist. There

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Speaker 1: was not a public company at least in two thousand eight, right,

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Speaker 1: um Ali Baba was not a public company in two

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Speaker 1: thousand eight. So we haven't really seen these companies get

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Speaker 1: tested when global economic growth goes down the tube, so

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00:26:16,440 --> 00:26:18,399
Speaker 1: that'll be interesting. And then regulation, to me is a

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00:26:18,440 --> 00:26:21,280
Speaker 1: big wild card that it's hard to quantify it. But

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Speaker 1: as these companies get bigger, you know, success in a

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Speaker 1: way becomes a problem for them. It puts a target

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Speaker 1: on their back with global regulators and politicians. So we'll

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Speaker 1: just have to wait and see. I guess that's the point.

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Speaker 1: But I mean, you can make the argument that they're

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Speaker 1: going to fall. Listen, if the stock market falls, they'll

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Speaker 1: fall well, and it's not going to be excepted. And

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Speaker 1: as as Leasa said, it's a little bit of a

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Speaker 1: circular logic since there's such a large part of the

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Speaker 1: stock market, right that if they fall, the stock market

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Speaker 1: falls almost by definition. But I will say, and we

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Speaker 1: just we have less than a minute left pit raised

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Speaker 1: a good point before this segment. He was talking about

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Speaker 1: how Apple is trying to create technology to reduce people's

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Speaker 1: usage of smartphones. You do have to wonder how how

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Speaker 1: much people are gonna vilify smartphone addictions and how that

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00:27:03,400 --> 00:27:07,320
Speaker 1: will play into this entire cycle going forward. I agree,

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00:27:07,280 --> 00:27:09,200
Speaker 1: and that's I think again, it's an issue for tech

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00:27:09,280 --> 00:27:12,520
Speaker 1: that's hard to quantify, but also important to pay attention

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Speaker 1: to this kind of backlash against technology in general. All right,

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Speaker 1: well done, Thank you very much, Shira oi Day. As always,

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Speaker 1: we enjoy having to be with us and giving us

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Speaker 1: your perspective, our technology columnist for Bloomberg Opinion. Be sure

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00:27:24,640 --> 00:27:29,720
Speaker 1: to follow Shira online on Twitter at Shira ov Day.

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Speaker 1: Thanks for listening to the Bloomberg P and L podcast.

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Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud,

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00:27:39,400 --> 00:27:42,880
Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm

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00:27:42,920 --> 00:27:46,439
Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa

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00:27:46,480 --> 00:27:49,639
Speaker 1: abramoids one. Before the podcast, you can always catch us

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00:27:49,680 --> 00:27:51,240
Speaker 1: worldwide on Bloomberg Radio