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Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg Radio.

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Speaker 1: This week on the podcast, I have an extra special guest.

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Speaker 1: His name is Philo Zulov. What can I tell you?

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Speaker 1: He is a legendary investor whose career spans back to

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Speaker 1: the late sixties. He has had numerous spectacular calls, very

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Speaker 1: often contrarian and against the grain. They have the unique

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Speaker 1: advantage of not only being um against the popular voice,

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Speaker 1: but being correct. His long term track record has been wonderful.

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Speaker 1: He's created an immense amount of wealth for his clients.

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Speaker 1: UH in fact essentially retired from running other people's money

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Speaker 1: to set up a family office to manage his own money.

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Speaker 1: He currently is operating a consulting firm out of Zurich

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Speaker 1: where he's advising all sorts of institute utians, governments, high

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Speaker 1: net worth families about the economy, what they're what the

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Speaker 1: global intervention by central banks and governments means for future growth,

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Speaker 1: Why we need to be aware of the role of

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Speaker 1: China going forward. UM. I have a UM really long

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Speaker 1: term set of gratitude for to Felix. When I first

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Speaker 1: began playing with the idea of UH. These longer form

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Speaker 1: interviews He was one of the very first people I

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Speaker 1: reached out to a mutual friend. UH introduced us and

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Speaker 1: we did a conversation in two thousand and ten that

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Speaker 1: really was UH the predecessor to Masters in business. So

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Speaker 1: if if you enjoy these conversations, really you have Felix

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Speaker 1: to think, he's the one who who sent me on

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Speaker 1: the path for this. I could talk about his track

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Speaker 1: record and all the other things he's done over his

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Speaker 1: career endlessly, but rather than listen to me continuing to

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Speaker 1: babble with no further ado my conversation with Felix Zulof.

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Speaker 1: My special guest today is Felix Zulov. He is a

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Speaker 1: legend in the asset management business. He began his career

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Speaker 1: as a trader for Swiss Bank, moved up to research

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Speaker 1: and portfolio management in New York, Zurich, and Paris. In

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Speaker 1: nineteen seventy seven, he joined the Union Bank of Switzerland

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Speaker 1: and Zurich managing global mutual funds, eventually heading the institutional

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Speaker 1: portfolio management unit and becoming the global strategist for UBS.

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Speaker 1: He founded his own hedge fund, zulof Asset Management, in

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Speaker 1: which allowed him to independently practice his own investment philosophy.

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Speaker 1: Felix also runs Zulof Consulting out of Zurich, Switzerland. I

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Speaker 1: don't even know how much more of your your background

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Speaker 1: I could read. You've a member of the Baron's round

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Speaker 1: Table for thirty years, have developed just a legendary reputation,

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Speaker 1: and you are also one of the people who inspired

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Speaker 1: the idea for Masters in business. When we had an

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Speaker 1: interview way back in two thousand and ten, Felix Zulof,

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Speaker 1: Welcome to Bloomberg. Thank you very much, Berry. Great to

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Speaker 1: to be get your guest here. And I I like

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Speaker 1: to hear that I inspired you. You definitely did so.

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Speaker 1: So I I gave that background of the early career

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Speaker 1: of yours. Um, what motivated you into the investment business?

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Speaker 1: What what drove you in that direction? You know, I

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Speaker 1: was a college dropout actually, and my parents requested that

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Speaker 1: I lawrened solid profession and that was the profession of

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Speaker 1: a bank at that time. At that time, it was

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Speaker 1: still a solid profession and and you didn't need a

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Speaker 1: college degree for that. I didn't need a college degree

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Speaker 1: for at and I went to a bank and worked

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Speaker 1: for a bank as an intern. They educated me. It

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Speaker 1: was very boring. Banking was very boring at that time,

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Speaker 1: and once I went to the investment department, it became lively.

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Speaker 1: You know, something started to move, and I was interested

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Speaker 1: to see what made things move. And I asked the

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Speaker 1: people there and I got so many answers, and I

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Speaker 1: figured out very quickly that they had no clue. So

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Speaker 1: I wanted to learn what made those things move. And

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Speaker 1: there were no opinion leaders in Europe at that time.

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Speaker 1: That was in the late sixties, early seventies. So I

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Speaker 1: looked for the US because there were some opinion leaders

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Speaker 1: and I read them and I made the decision that

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Speaker 1: I wanted to be able to make those decisions like

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Speaker 1: they and found my opinion on solid research. So this

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Speaker 1: is how it happen. So so give us some of

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Speaker 1: the names of the U s opinion leaders that attracted

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Speaker 1: you in the late sixties and early you know, the

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Speaker 1: one that inspired me the most was Bob Farrell. So,

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Speaker 1: the legendary Bob Farrell, uh first technician at Merrill Lynch

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Speaker 1: ran the research department. Am I am I getting his

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Speaker 1: CV correct. He ran a market analysis department. It was

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Speaker 1: a technical analysis department at that time, and I think

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Speaker 1: he is the dean of technical analysis and had a

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Speaker 1: department of about twenty people at that time. By the way,

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Speaker 1: you're not the only person who have referenced Bob Farrell

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Speaker 1: as a huge influence. I could give you a list

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Speaker 1: of of a dozen people. What was it like working

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Speaker 1: with Bob Farrell. Well, I spent a few weeks as

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Speaker 1: an intern at Bob Farrell's department. He sent me right

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Speaker 1: next to Bob practor at the desk. Really uh, and

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Speaker 1: I heard about one, two, three, four, fives and and

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Speaker 1: a b c s and things like that, and I

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Speaker 1: wave and you don't strike me as an Elliott wave

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Speaker 1: of technician. I I looked at it, and I learned it,

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Speaker 1: and I read the books. And Bobby is still a

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Speaker 1: colleague of mine. I visited him a few times at

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Speaker 1: his home in Gainesville, Georgia. UM. But I figured out

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Speaker 1: after some years that all of a sudden, you see

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Speaker 1: threes and fives and abc s everywhere, and it pollutes

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Speaker 1: your mind, you know, And it is there is a

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Speaker 1: subjectivity to the to the theory. It can be very

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Speaker 1: helpful at times, but it is one of many tools

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Speaker 1: to say, to say the least, what did you learn

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Speaker 1: from working with Bob foul Bob Farrell. Um, he's a

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Speaker 1: modest man, a true gentleman, and a very good friend.

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Speaker 1: And I learned from him not only the modesty. I

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Speaker 1: learned from him house sentiment changes over time. He gave

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Speaker 1: me a booklet very early, uh, the One Way Pocket.

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Speaker 1: That's a classic and very small, little, very small little

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Speaker 1: booklet was written one hundred years ago in nineteen nineteen seventeen,

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Speaker 1: and it describes what happened in the Wall Street brokerage

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Speaker 1: firm by the action activity of the clients. And he

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Speaker 1: chose how sentiment changes over a full cycle in the

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Speaker 1: stock market, from the lows, the bottom to the peak

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Speaker 1: and and and that really made a big impression on me.

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Speaker 1: So I started to learn that. So around shortly after

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Speaker 1: that time, nineteen seventy three, you identified markets as having

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Speaker 1: been very toppy, and you short of the market broadly,

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Speaker 1: pretty much right before the seventy three seventy four bear market,

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Speaker 1: which was a fifty seven percent collapse in US equities.

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Speaker 1: What led to that decision and what did you? Um,

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Speaker 1: what was your thinking like back then? That was before

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Speaker 1: I met Bob Farrell. Uh, And yes, I met an

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Speaker 1: English gentleman, a good friend of mine when I worked

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Speaker 1: at a brokerage firm in Paris, and he showed me

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Speaker 1: technical analysis, pointed figures and cycles and all that stuff.

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Speaker 1: And I did my analysis and I came to the

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Speaker 1: conclusion that the market is due to top and to

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Speaker 1: go into a bare market. That was before the first

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Speaker 1: hike in oil prices and the first oil crisis hit,

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Speaker 1: and I speculated my The owner of the shop asked

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Speaker 1: me to to become a salesman at in Paris. I

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Speaker 1: was an intern at that time. I was twenty three

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Speaker 1: years old, and he said I should play with my

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Speaker 1: own money, and I said I do, but I don't

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Speaker 1: have enough. So he asked how much do you need

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Speaker 1: and I said, UH, have a million. At that time

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Speaker 1: that was a lot of money. And he gave me

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Speaker 1: the half million and I started to build a short

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Speaker 1: position on credit. Marchin UH and I wrote, I wrote

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Speaker 1: the whole market down, and I was almost killed in

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Speaker 1: the bear market really in UH in fall of nineteen

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Speaker 1: seventy three. It was brutal from someone to fall. So

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Speaker 1: I learned. I learned the business the hard way with

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Speaker 1: my own money, right hardly hard way, and and painfully.

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Speaker 1: Let's talk a little bit about the early days at

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Speaker 1: at UBS. You started in the mutual fund and research department,

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Speaker 1: you worked your way up to global strategists over the

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Speaker 1: course of five years, and then you ran the institutional

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Speaker 1: portfolio department a few years after that. That's a pretty

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Speaker 1: quick rise to the top of a major bank. What

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Speaker 1: what were you doing that had you stand out so

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Speaker 1: much from your peers. Well, I think it was a

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Speaker 1: different time than it is now, and I was ahead

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Speaker 1: of my peers because I didn't go to university. I

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Speaker 1: worked it up the hard way. I was a speculator

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Speaker 1: and a practitioner, and I read probably more books than

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Speaker 1: those guys who went to university teaching business and learning

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Speaker 1: business and economics. So I was way ahead of that

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Speaker 1: in terms of knowledge and practice experience. When I was

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Speaker 1: in my upper twenties and I ran, I ran mutual

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Speaker 1: fund at UBS, US equity mutual fund by the way,

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Speaker 1: and I I outperformed. I did very well. I was

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Speaker 1: an aggressive young man at that time. Then they merged

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Speaker 1: research and mutual funds and I had to be on

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Speaker 1: top of being a mutual fund manager, I had to

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Speaker 1: be a research analyist, which I which I hated. Really,

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Speaker 1: I I didn't like it because I'm not the stock

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Speaker 1: picker and company analyst, although I I did produce research,

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Speaker 1: research reports and things like that, but I I was

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Speaker 1: in love with macro and that is my field of

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Speaker 1: expertise and that's where I feel home. And so I

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Speaker 1: was given the position of the global strategist at an

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Speaker 1: age of thirty virtually, and I was the global strategies

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Speaker 1: for the whole group worldwide when I was thirty, and

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Speaker 1: that was way ahead of my peers at that time.

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Speaker 1: And you sort of described this as being unburdened by

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Speaker 1: a classical education as an advantage. Absolutely, I think I

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Speaker 1: learned the business from the practical side and not from

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Speaker 1: the theoretical side. I read and started the theory near

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Speaker 1: next to it, but it was not the driving force.

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Speaker 1: I was a practitioner, and I wanted to learn the

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Speaker 1: theories behind what makes the world moving and what makes

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Speaker 1: markets moving. But it was not that the theories that

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Speaker 1: the world is moving like this and therefore stocks or

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Speaker 1: bond prices have to do this or that. You know it.

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Speaker 1: I started from the other way around, so you you

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Speaker 1: didn't have any bad ideas to unlearn, That's right, you know,

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Speaker 1: I have the best stock picker I know in in

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Speaker 1: Europe with an outstanding track record. He's a dentist by education,

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Speaker 1: and he then went into consulting business consulting and learned

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Speaker 1: all that, but he was never biased by learning the

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Speaker 1: theories early on in his career. And so I think

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Speaker 1: this is an advantage, or it can be an advantage.

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Speaker 1: In my case, it was you've been doing the Baron's

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Speaker 1: round Table for thirty years and you announced this year

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Speaker 1: is going to be your last. Tell us the thinking

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Speaker 1: behind that, what what led them to invite you, and

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Speaker 1: what did you decide? Okay, three decades is plenty. I

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Speaker 1: visited Barons in early nineteen six, and I did so

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Speaker 1: because I was asked to do so from the bank.

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Speaker 1: The bank wanted to have a better saying and the

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Speaker 1: better world in the world of investments, and so they

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Speaker 1: sent me on a mission to see the media, etcetera.

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Speaker 1: And I you in New York at the time. I

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Speaker 1: was in Switzerland at the time, and I visited Barns

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Speaker 1: and I gave an interview and the title of the

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Speaker 1: interview was Investors Hell and Traders Paradise, and that's what

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Speaker 1: I said. It was in early eighty six and I

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Speaker 1: said the market would move sideways, up and down and

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Speaker 1: up and down. Great for traders, but horrible for investors.

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Speaker 1: And I said in that interview that the Soviet Union

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Speaker 1: was bankrupt and would decay, and as a result of that,

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Speaker 1: interest rates would decline, inflation would decline, interest rates would

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Speaker 1: decline for many years to come. And Ellen Abels and

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Speaker 1: then wrote me a letter and invitational letter to join

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Speaker 1: the Baron's round Table. And that's how it happened. And

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Speaker 1: then thereafter was eighty seven when I was running the

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Speaker 1: institutional portfolio management at UBS and Zurich, and I did

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Speaker 1: something that probably nobody ever did before or after. I

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Speaker 1: went to zero equities and we were unloading equities for

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Speaker 1: weeks and weeks and weeks. And I was criticized by

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Speaker 1: general management for doing that, but it was because in

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Speaker 1: the early eighties eighty two, I increased or I pushed

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Speaker 1: the bank to increase equity to sixty, which at that

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Speaker 1: time was unheard aggressive for a continental European to be

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Speaker 1: a fifty fifty. Absolutely, absolutely, and then I wanted to

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Speaker 1: cut back in in summer of eighty seven. By the way,

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Speaker 1: in the summer of eighty seven, the S and P

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Speaker 1: five hundred was up about thirty five percent year to date.

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Speaker 1: That that was up a is that a fair number.

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Speaker 1: I think it was not from the bottom or from

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Speaker 1: the year from year date before the crash, it was

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Speaker 1: mid thirties and maybe even not tell you. I cannot

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Speaker 1: tell you the exact number, but it was way up.

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Speaker 1: It was huge way. It was way up. And I

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Speaker 1: wanted to cut back, and the investment committee followed, and

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Speaker 1: we decided to cut back, and then general management intervened

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Speaker 1: and uh, and I thought they should care about their business,

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Speaker 1: and we did the investment side. And I that's why

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Speaker 1: I made an extreme example a statement that we go

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Speaker 1: to zero, and I ordered all my portfolio managers to

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Speaker 1: go to zero equities. But I explained them why. I

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Speaker 1: explained them the reason. I didn't know that the crash

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Speaker 1: was coming. I expected declined for the next six months

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Speaker 1: or so, as opposed to in a day and picked

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Speaker 1: the trough almost four almost The market went just about

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Speaker 1: flat on the year after the crash. Is that about right?

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Speaker 1: I really do not know. I'm gonna I'm gonna say

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Speaker 1: that's ballpark that maybe that maybe, but we did very well.

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Speaker 1: We we were up a lot markets down a lot,

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Speaker 1: and unlike the US market, the European markets kept going

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Speaker 1: down for another month after the crash. And interestingly, in

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Speaker 1: in Switzerland, where you had registered chairs and barrel shares,

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Speaker 1: registered chairs could not be bought by foreigners. So a

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Speaker 1: clever smart investment bank or he created warrants on registered chairs,

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Speaker 1: and those warrants all had a premium of up to

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Speaker 1: running for another year to two years. And I, for myself,

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Speaker 1: I shorted all those warrants because at that time you

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Speaker 1: could shorten on in the future on margin. So all

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Speaker 1: those warrants were down about or so I had a

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Speaker 1: good year, to say the least. Let's talk a little

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Speaker 1: bit about the Great Financial Crisis, because you said some

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Speaker 1: really interesting things both before and after, and I wanna

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Speaker 1: discuss that a little bit. Heading into the crisis, you

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Speaker 1: were fairly bearished. Tell us, Uh, tell us what the

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Speaker 1: thought process was in the early two thousand's before the

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Speaker 1: financial crisis, well before we had the Asian crisis in

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Speaker 1: the nineteen late nineteen nineties, and we had Ellen Greenspan

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Speaker 1: running the FED. And I knew Alan Greenspan before he

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Speaker 1: became FED chairman. Uh. He was an advisor to UBS

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Speaker 1: at that time, and we met Davis were months to

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Speaker 1: discuss the world affairs, and his focus will not that appropriate,

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Speaker 1: but he is a great historian. And I detected because

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Speaker 1: it was the time of the late seventies early eighties

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Speaker 1: when we went from rising inflation to declining inflation, and

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Speaker 1: I asked some lots of questions about deflationary processes, and

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Speaker 1: he was very concerned about another traumatic nineteen thirties and

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Speaker 1: from then on, and you can really go back into

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Speaker 1: statistics from nineteen eight seven on, that trauma sort of

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Speaker 1: guided monetary policy. It was always too easy for way

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Speaker 1: too long, and this led to the excesses that we

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Speaker 1: have seen before. First the Asian crisis, then we had

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Speaker 1: Night with a big decline in the market, and then

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Speaker 1: we have we have LTCM and and all that and recovery.

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Speaker 1: And due to his fear, he flooded the markets, you know,

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Speaker 1: he flooded the system and and that created the excesses thereafter.

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Speaker 1: And the excesses was monumental. You had a simple telephone

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Speaker 1: stocks trading at hunter times earnings and things like that.

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Speaker 1: I very specifically remember because of the White two K fears,

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Speaker 1: the FED flooded the system with liquidity in October and

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Speaker 1: over the next six months the NASDAC doubled gain in

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Speaker 1: six months. All that traces back to easy al Yeah,

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Speaker 1: that and and so you had excessive valuations, and then

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Speaker 1: you had rising inflation and rising interest rates, and that

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Speaker 1: broke the market, no doubt. The early two thousands, everything

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Speaker 1: priced in dollars or credit spiraled out of control, that's right.

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Speaker 1: And then we had that crisis, and that crisis again

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Speaker 1: triggered the next stimulation, you know, support of the system,

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Speaker 1: the next stimulation. And then you had also the economic

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Speaker 1: policy of making housing available for every American even if

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Speaker 1: they cannot afford them, and and all that, and that

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Speaker 1: created the next big excess, which was the land cycle.

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Speaker 1: And in the center of that cycle was housing, primarily

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Speaker 1: US housing, but also housing in Spain or wherever in

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Speaker 1: the world around the world. Global boom and uh. And

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Speaker 1: it's always important to see what's the driving factor and

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Speaker 1: the driving theme in the cycle ease. So in the

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Speaker 1: last cycle it was housing, really state, and in the

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Speaker 1: current cycle it's China. That's that's fascinating. Now you have

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Speaker 1: a reputation as a perma bear. But in March of

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Speaker 1: two thousand and nine you came out and said, hey,

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Speaker 1: we're overdue for a substantial rally. Thirty I believe is

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Speaker 1: what you had said. And you were pretty much within

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Speaker 1: days of the low, weren't you. I think it was

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Speaker 1: one day away from the low. Uh. And it is

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Speaker 1: in print in Barrens. I said, now the next six months,

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Speaker 1: we'll see twenty five to rally, and then we'll see

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Speaker 1: he could fall back once again. But I'm not sure.

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Speaker 1: We have to assess it as as as we see it.

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Speaker 1: It's happened. So that raises the question in my mind,

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Speaker 1: from whence does this reputation as a perma bear come from.

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Speaker 1: That's not a very bearish statement from yeah, and I'm not.

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Speaker 1: I'm not the perma bear. But the label was given

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Speaker 1: to me after the eight seven crash because I called

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Speaker 1: that downturn, and I made very statements, and unlike most

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Speaker 1: others in the industry who are reluctant to make very statements,

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Speaker 1: I call them as I see him. So whenever everybody

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Speaker 1: else who might be bearish is reluctant to speak up,

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Speaker 1: I do. And and that gave me that label, which

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Speaker 1: is absolutely wrong. In the early nineteen eighties, you know,

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Speaker 1: I was going around as a raging bull. It was

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Speaker 1: a time when you could buy a blue cheap type

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Speaker 1: of stocks, like a union level. You could buy at

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Speaker 1: the that was lower than the dividend yield, and nobody

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Speaker 1: wanted to turn bullish because everybody was sitting in money

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Speaker 1: market that was so high returns at their time, and

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Speaker 1: I was pounding the table and nobody was listening. So

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Speaker 1: I do not get the reputation of a raging bull.

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Speaker 1: I got the reputation of a bear because of the

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Speaker 1: eight seven experience. I believe. Let's talk a little bit

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Speaker 1: about the current environment, which seems to be giving a

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Speaker 1: lot of people, especially on the hedge fund side fits.

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Speaker 1: What makes today such a different era than than what preceded,

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Speaker 1: And I'm not saying it's different today, I'm saying what

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Speaker 1: is what is the you mentioned earlier? Every cycle has

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Speaker 1: a different driving force. What's the driving force in this cycle? Well,

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Speaker 1: the driving force in this cycle is China. But the

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Speaker 1: cycle is somewhat different from previous cycles because we have

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Speaker 1: after Night, after two thousand and nine, we have really

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Speaker 1: entered central planning in a way, because the central banks

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Speaker 1: have taken over to manipulate financial markets to the degree

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Speaker 1: that they move prices where they want to have them,

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Speaker 1: and that is a new element, and that is distorting

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Speaker 1: a lot of things that used to work well in

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Speaker 1: previous cycles and do not work as well in the

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Speaker 1: current cycle. So that's a distortion. And the question is

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Speaker 1: whether this is a permanent distortion that will be with

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Speaker 1: us forever in the future, or whether this is a

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Speaker 1: temporary distortion. My my understanding is that it is probably

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Speaker 1: a permanent distortion. So so here's the pushback to that,

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Speaker 1: because we've heard variations of that argument from from many quarters.

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Speaker 1: And the other side of the argument is, hey, we've

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Speaker 1: always had the government sticking its fingers into markets. Following

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Speaker 1: the Great Depression, well it wasn't the central Bank. We

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Speaker 1: rolled out FDIC insurance for depositors, and the new SEC

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Speaker 1: was introduced. You had a huge set of policies after

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Speaker 1: World War Two to stimulate the economy, and then in

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Speaker 1: the seventies we went off the gold standard. So arguably

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Speaker 1: the government has always been sticking its fingers where it

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Speaker 1: doesn't belong. That's absolutely right. But it sticks more and

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Speaker 1: more of its fingers into where it doesn't belong, and

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Speaker 1: this is a trend, and the trend is then reflected

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Speaker 1: that the government share of our economies is on the

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Speaker 1: rise as as a trend, and the interference is on

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Speaker 1: the rise, and the free markets are on a decline.

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Speaker 1: And and this is the change. I think it's a

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Speaker 1: structural secular trend change that we have seen. It started

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Speaker 1: very slowly in eighties, after seven with the central banking

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Speaker 1: becoming more biased to asymmetric expansionary policy. And after oh

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Speaker 1: nine it was two more steps forward in that process.

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Speaker 1: And I think central banks cannot go back to where

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Speaker 1: it was because if they tried, they would break the system.

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Speaker 1: You knew Alan greenspand personally, he very famously was an

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Speaker 1: iron rand acolyte. He believed in free markets. How is

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Speaker 1: it that this free market libertarian economist put us on

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Speaker 1: such a track to government management of markets. You know,

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Speaker 1: it's one thing to commentate and in theory what should

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Speaker 1: be done and what's right and what's wrong. It's another

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Speaker 1: thing to be the guy who pulls the trigger, makes

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Speaker 1: the decision, and is responsible for that decision. And as

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Speaker 1: soon as you are responsible, you move more slowly, more cautiously,

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Speaker 1: and you rather air on the side of making it

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Speaker 1: better for the world, not worse or less painful, not

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Speaker 1: more pain And unfortunately that is true for the short term,

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Speaker 1: but in the long run the outcome is exactly the opposite.

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Speaker 1: You make it less painful in the short run, but

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Speaker 1: you make it more painful in the long run. So

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Speaker 1: at the most recent Barrens round table, you said, today

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Speaker 1: seems a lot like late nine. Are you implying that

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Speaker 1: we're in a bubble? Are you implying we're about to

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Speaker 1: enter another ten year period of wandering in the wilderness?

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Speaker 1: What does late in that contact? Late nine means that

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Speaker 1: we are late in a cycle that is going to peak,

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Speaker 1: and then we have a a economic slowdown, recession, crisis,

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Speaker 1: and then renewed stimulus. So we are very late in

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Speaker 1: that economic cycle, and we are very late in the

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Speaker 1: investment market cycle. Uh. The exact timing is very difficult

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Speaker 1: to forecast. I said at the beginning of the year

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Speaker 1: the market should do very well into the summer. I

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00:27:00,160 --> 00:27:03,359
Speaker 1: expect a summer peak, then a correction into fall, and

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Speaker 1: then another attempt on the upside into a peak, most

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00:27:08,040 --> 00:27:11,360
Speaker 1: likely in the first half of two thousand and eighteen.

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Speaker 1: That worked out well in the European markets. We had

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Speaker 1: a correction in Japan which was more sideways than down,

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Speaker 1: and we didn't have any correction in the US market.

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Speaker 1: The U S market just kept going. And there are

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Speaker 1: different ways a top could evolve. A top could be

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Speaker 1: a long procedure of a rounding top, or it could

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Speaker 1: be a procedure where the leading theme stocks go into

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Speaker 1: a buying climax. We do not know the outcome. If

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Speaker 1: the buying climax thing develops, it will probably develop over

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Speaker 1: the next few months. And in a buying climax, thematic

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Speaker 1: leaders usually double in the last six months. Really, so

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Speaker 1: we're watching Amazon go through the roof. I'm not saying

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Speaker 1: it it will be that that will spiked up, but

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Speaker 1: it could happen. It could be very crazy and uh

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Speaker 1: and uh. Of course, the central Bank, I believe, is

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Speaker 1: now very much concerned with rising inflation. As you know,

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Speaker 1: the New York Fed is um is um um gathering

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Speaker 1: its own ways of measuring inflation, and that inflation is

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Speaker 1: close to three. So the New York Fed is the

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Speaker 1: one guiding the Fed to a title policy. So you

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Speaker 1: have you have the excessive building in the market in

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00:28:33,320 --> 00:28:36,520
Speaker 1: the lates stage of the cycle, and at the same

433
00:28:36,600 --> 00:28:40,400
Speaker 1: time you have the central bank moving against it. So

434
00:28:40,480 --> 00:28:44,520
Speaker 1: that is usually late cycle stuff that sounds certainly sounds familiar.

435
00:28:44,640 --> 00:28:48,160
Speaker 1: Here's the pushback, um, i'll you would hear from the balls.

436
00:28:48,560 --> 00:28:52,640
Speaker 1: Global economy is expanding, it's doing much better around the world.

437
00:28:53,200 --> 00:28:58,400
Speaker 1: US is is five percent or less unemployment, Japan is improving,

438
00:28:58,480 --> 00:29:01,480
Speaker 1: Europe seems to be getting off of the trouble we

439
00:29:01,520 --> 00:29:04,640
Speaker 1: saw to three or four years ago. Earnings are doing

440
00:29:04,720 --> 00:29:08,560
Speaker 1: better around the world, and we're still very early stage

441
00:29:08,760 --> 00:29:12,680
Speaker 1: of main street participating in the rally. They've kind of

442
00:29:13,320 --> 00:29:16,360
Speaker 1: been on the sidelines for a while and they're finally

443
00:29:16,960 --> 00:29:21,600
Speaker 1: becoming more aggressive. How do you respond to those arguments, Well,

444
00:29:21,680 --> 00:29:24,760
Speaker 1: it's it's absolutely right that the world economy is doing

445
00:29:25,240 --> 00:29:29,000
Speaker 1: right now. It's sold driven by China. I think the

446
00:29:29,120 --> 00:29:32,840
Speaker 1: US is the least dependent on China. It is um

447
00:29:33,200 --> 00:29:36,800
Speaker 1: it is different from the e M universe, emerging markets

448
00:29:37,040 --> 00:29:41,240
Speaker 1: and Europe. They are primarily driven by China. Trade with

449
00:29:41,440 --> 00:29:46,680
Speaker 1: China is as important as into European trade. Even in Europe.

450
00:29:46,680 --> 00:29:50,880
Speaker 1: That's an this for a long time, but Europe is

451
00:29:51,040 --> 00:29:53,960
Speaker 1: very dependent. The whole revival that you see now in

452
00:29:54,040 --> 00:29:57,880
Speaker 1: Europe is driven by this uh strong economy in China

453
00:29:57,960 --> 00:30:01,640
Speaker 1: and and and China. I be Eve is in a

454
00:30:01,720 --> 00:30:06,440
Speaker 1: interesting position right now. You heard president speech last week,

455
00:30:07,120 --> 00:30:12,560
Speaker 1: and in twenty twenty one, there is the one anniversary

456
00:30:12,640 --> 00:30:15,920
Speaker 1: of the Communist Party, and it's very clear that they

457
00:30:16,000 --> 00:30:19,560
Speaker 1: want to have a strong economy at that time. If

458
00:30:19,640 --> 00:30:22,880
Speaker 1: you want to have a strong economy in t one,

459
00:30:23,040 --> 00:30:27,040
Speaker 1: you stimulate in twenty twenty. And they are central planners, right,

460
00:30:27,080 --> 00:30:31,760
Speaker 1: so they're leading, So that means they have to take

461
00:30:31,880 --> 00:30:37,360
Speaker 1: the pedal off the foot of the pedal in eighteen nineteen,

462
00:30:37,640 --> 00:30:42,520
Speaker 1: and I think eighteen nineteen they will address the imbalances

463
00:30:42,600 --> 00:30:45,520
Speaker 1: in the financial sector and that will slow down the

464
00:30:45,640 --> 00:30:49,320
Speaker 1: Chinese economy in eighteen nineteen, and it will slow down

465
00:30:49,480 --> 00:30:53,760
Speaker 1: also the rest of the world. So we are entering

466
00:30:53,800 --> 00:30:56,920
Speaker 1: a period we are sometimes in eighteen I would say,

467
00:30:57,000 --> 00:30:59,600
Speaker 1: from the peak probably in the market is in the

468
00:30:59,640 --> 00:31:02,560
Speaker 1: first to have the peak in the economy is probably

469
00:31:02,760 --> 00:31:06,840
Speaker 1: from meat eighteen on, and then we slow down into

470
00:31:06,880 --> 00:31:11,360
Speaker 1: twenty okay, if if that is correct, And twenty twenty

471
00:31:11,400 --> 00:31:16,040
Speaker 1: two is the next National Congress and president she is

472
00:31:16,120 --> 00:31:19,880
Speaker 1: probably the first leader who tries to run for a

473
00:31:19,960 --> 00:31:23,400
Speaker 1: third time as president, so he wants to have a

474
00:31:23,560 --> 00:31:27,720
Speaker 1: very good economy in twenty one twenty two that means

475
00:31:27,760 --> 00:31:33,360
Speaker 1: he has to first slow things down, restructure some of

476
00:31:33,400 --> 00:31:36,600
Speaker 1: the imbalances in the system, because if he tries to

477
00:31:36,680 --> 00:31:39,960
Speaker 1: carry through, he could he could backfire to him, it

478
00:31:40,000 --> 00:31:43,360
Speaker 1: could be the worst of all worlds, namely a completely

479
00:31:43,400 --> 00:31:48,040
Speaker 1: overheated situation with high inflation rates, etcetera, etcetera. And that's

480
00:31:48,040 --> 00:31:52,200
Speaker 1: why I think the leader of the cycle, China, is

481
00:31:52,240 --> 00:31:56,200
Speaker 1: going to slow down next year. So the whole global

482
00:31:56,200 --> 00:32:01,040
Speaker 1: economy is dependent on President She's re election desires in

483
00:32:01,040 --> 00:32:05,880
Speaker 1: two As I said before, you always have to figure

484
00:32:05,920 --> 00:32:11,360
Speaker 1: out what east light the leading theme in the market cycle.

485
00:32:11,560 --> 00:32:16,040
Speaker 1: In the last cycle, it was really state in these cyclides, China,

486
00:32:16,120 --> 00:32:18,800
Speaker 1: and that's why China is so important. China is the

487
00:32:18,840 --> 00:32:21,720
Speaker 1: second largest economy and in ten fifteen years it will

488
00:32:21,760 --> 00:32:23,720
Speaker 1: be the largest economy of the world. I don't even

489
00:32:23,720 --> 00:32:26,480
Speaker 1: think it's gonna take fifteen years. We have been speaking

490
00:32:26,480 --> 00:32:30,520
Speaker 1: with Felix Zulov of Zulov Consulting and everywhere else that

491
00:32:30,560 --> 00:32:34,120
Speaker 1: he's worked previous to that. UH. If you enjoy this conversation,

492
00:32:34,240 --> 00:32:37,080
Speaker 1: be sure and stick around for the podcast extras, where

493
00:32:37,120 --> 00:32:41,719
Speaker 1: we continue chatting about all things macro economics, investing, and

494
00:32:41,840 --> 00:32:45,680
Speaker 1: global economy. UH. Be sure and check out my daily

495
00:32:45,720 --> 00:32:48,520
Speaker 1: column on Bloomberg View dot com. You can follow me

496
00:32:48,960 --> 00:32:53,040
Speaker 1: on Twitter at Ridolts. We love your comments, feedback and

497
00:32:53,160 --> 00:32:58,160
Speaker 1: suggestions right to us at m IB podcast at Bloomberg

498
00:32:58,240 --> 00:33:01,320
Speaker 1: dot net. I'm Barry Ritol. So you're listening to Masters

499
00:33:01,320 --> 00:33:17,479
Speaker 1: in Business on Bloomberg Radio. Welcome to the podcast. Felix.

500
00:33:17,520 --> 00:33:21,080
Speaker 1: Thank you so much for doing this. I mentioned earlier

501
00:33:21,840 --> 00:33:24,440
Speaker 1: you and I had a conversation in two thousand and ten.

502
00:33:25,040 --> 00:33:27,400
Speaker 1: I think it was over the phone. You're in Switzerland

503
00:33:27,440 --> 00:33:30,040
Speaker 1: and I was in New York, You're in Zurich, and

504
00:33:30,160 --> 00:33:37,240
Speaker 1: um that conversation where we had a long, in depth

505
00:33:37,280 --> 00:33:42,240
Speaker 1: discussion about macro issues and we spoke for about an hour. Really,

506
00:33:42,920 --> 00:33:46,680
Speaker 1: the response to it and the idea that hey, everything

507
00:33:46,720 --> 00:33:49,160
Speaker 1: doesn't have to be a short SoundBite. We don't need

508
00:33:49,240 --> 00:33:53,280
Speaker 1: to do these five minute segments followed by a commercial,

509
00:33:53,880 --> 00:33:56,560
Speaker 1: and we don't need to ask what's your favorite stock,

510
00:33:56,600 --> 00:33:58,640
Speaker 1: when's the fed goot rays? Where's the DAL going to

511
00:33:58,720 --> 00:34:01,080
Speaker 1: be next year? Instead get to a little more depth,

512
00:34:01,600 --> 00:34:04,440
Speaker 1: really was the genesis of this show. So I have

513
00:34:04,520 --> 00:34:07,160
Speaker 1: you to thank for this. This, this, as I'm fond

514
00:34:07,200 --> 00:34:08,879
Speaker 1: of saying, is the most fun I have all week.

515
00:34:09,200 --> 00:34:12,480
Speaker 1: That's very flattering, thank you very much. So so we

516
00:34:12,480 --> 00:34:15,880
Speaker 1: were talking UM during the break before about UM some

517
00:34:15,920 --> 00:34:20,120
Speaker 1: of the challenges during UM ninety seven and ninety eight.

518
00:34:20,239 --> 00:34:23,279
Speaker 1: Is this year looked like ninety nine is a ninety six?

519
00:34:23,840 --> 00:34:27,520
Speaker 1: You said, this kind of looked like in some ways.

520
00:34:28,040 --> 00:34:32,560
Speaker 1: Explain that. Well, in ninety eight we had. In ninety seven,

521
00:34:32,600 --> 00:34:38,160
Speaker 1: we had the the Asian crisis. UH. China had devalued

522
00:34:38,239 --> 00:34:44,680
Speaker 1: in ninety four. It's currency by fifty percent, not fifteen five.

523
00:34:45,200 --> 00:34:48,279
Speaker 1: That's good for sports, isn't it, and h and that

524
00:34:48,320 --> 00:34:51,160
Speaker 1: got that got the tremendous kicking to China, but it

525
00:34:51,320 --> 00:34:57,239
Speaker 1: hurt all the Asian economies, including Thailand and Malaysia, etcetera.

526
00:34:57,360 --> 00:35:01,000
Speaker 1: And then we had the Asian crisis, and Asian crisis

527
00:35:01,280 --> 00:35:06,040
Speaker 1: was for many a shock, and the central banks opened

528
00:35:06,120 --> 00:35:10,640
Speaker 1: up the floodgates, and then we had markets going higher again.

529
00:35:10,920 --> 00:35:15,279
Speaker 1: And then we had ninety eight we had LTCM and

530
00:35:15,360 --> 00:35:18,600
Speaker 1: that was a big decline UH, and we had a

531
00:35:18,680 --> 00:35:21,360
Speaker 1: huge move in the currency markets. The whole world was

532
00:35:21,440 --> 00:35:25,399
Speaker 1: short the end. I think Julian Robertson at that time

533
00:35:26,280 --> 00:35:28,759
Speaker 1: that that was a big problem for him, and I

534
00:35:28,800 --> 00:35:31,480
Speaker 1: talked to him about two weeks before it happened, because

535
00:35:31,520 --> 00:35:33,080
Speaker 1: I was on the other side of the trade. We

536
00:35:33,160 --> 00:35:36,240
Speaker 1: were long end short. I was long end short dollars

537
00:35:36,280 --> 00:35:40,200
Speaker 1: because I expected another hit and and I did it

538
00:35:40,239 --> 00:35:43,120
Speaker 1: through options. And how did that trade work out? And

539
00:35:43,239 --> 00:35:46,839
Speaker 1: I think I think dollar yen went in in two

540
00:35:46,840 --> 00:35:51,440
Speaker 1: weeks time from one forty five or so to one

541
00:35:51,719 --> 00:35:56,279
Speaker 1: oh eight or something like that, a huge move move

542
00:35:56,560 --> 00:36:00,600
Speaker 1: in currency, and that usually takes years to do. Absolutely,

543
00:36:00,840 --> 00:36:02,920
Speaker 1: so we had a great deal. We had. We were

544
00:36:03,000 --> 00:36:07,319
Speaker 1: up over. Yes, that that was the currency trade that

545
00:36:07,480 --> 00:36:10,920
Speaker 1: made it for us. I always traded currencies, I always

546
00:36:10,960 --> 00:36:15,120
Speaker 1: traded commodities. I always traded fixed income and and stocks

547
00:36:15,120 --> 00:36:17,840
Speaker 1: and equities, so pretty much across the board. I was

548
00:36:17,880 --> 00:36:21,279
Speaker 1: really at home in all the different DIASTA classes. Well,

549
00:36:21,320 --> 00:36:24,440
Speaker 1: that makes sense because you're a top down macro guy.

550
00:36:24,560 --> 00:36:27,360
Speaker 1: One of the things we didn't get to earlier that

551
00:36:27,440 --> 00:36:32,680
Speaker 1: I have to ask you about is the global geopolitical situation.

552
00:36:33,200 --> 00:36:37,839
Speaker 1: We have the rise of popularism around the world. Uh,

553
00:36:38,080 --> 00:36:43,960
Speaker 1: Catalonian independence, I was just in Barcelona, was madness um Brexit,

554
00:36:44,239 --> 00:36:48,480
Speaker 1: and then Trump in the US. Are there similar forces

555
00:36:48,560 --> 00:36:51,520
Speaker 1: driving all these things or are they wholly unrelated? And

556
00:36:51,880 --> 00:36:54,480
Speaker 1: what does it mean to investors. No. I think they

557
00:36:54,520 --> 00:36:57,480
Speaker 1: are all related in to to some degree and in

558
00:36:57,520 --> 00:37:01,680
Speaker 1: some way, and I think it's a backfiring of too

559
00:37:01,719 --> 00:37:06,480
Speaker 1: much globalization or an extreme globalization. Globalization in theory is

560
00:37:06,560 --> 00:37:11,640
Speaker 1: wonderful because everybody who can produce something cheaper or better

561
00:37:11,680 --> 00:37:15,040
Speaker 1: than anybody else does that and focuses on that, and

562
00:37:15,080 --> 00:37:19,360
Speaker 1: then you trade and that is beneficial to all the consumers.

563
00:37:19,400 --> 00:37:22,080
Speaker 1: So in theory that's fine. But they are losers also.

564
00:37:22,600 --> 00:37:26,279
Speaker 1: And when you look at the income statistics, um we

565
00:37:26,360 --> 00:37:30,000
Speaker 1: have built a new middle class in terms of a

566
00:37:30,040 --> 00:37:34,600
Speaker 1: big push higher in real income in Asia and the

567
00:37:34,640 --> 00:37:37,840
Speaker 1: emerging economies over the last thirty years, but at the

568
00:37:37,880 --> 00:37:42,520
Speaker 1: same time where the real income has declined or eroded

569
00:37:42,840 --> 00:37:47,880
Speaker 1: in the industrialized economies middle class, and that has been

570
00:37:48,480 --> 00:37:53,960
Speaker 1: the reason behind the Brexit and the Trump and rising populism.

571
00:37:54,000 --> 00:37:56,799
Speaker 1: They are the losers and they want to change. They

572
00:37:56,840 --> 00:38:00,520
Speaker 1: are losers, or they fear to become losers, and they will.

573
00:38:00,680 --> 00:38:03,360
Speaker 1: So anyone working in a factory in the US that

574
00:38:03,440 --> 00:38:08,280
Speaker 1: have seen those whether it's textiles or electronics or automobiles,

575
00:38:08,320 --> 00:38:11,120
Speaker 1: a lot of those jobs have gone overseas and they

576
00:38:11,160 --> 00:38:13,640
Speaker 1: haven't been able to find something to replace that. Yes,

577
00:38:13,880 --> 00:38:16,480
Speaker 1: there's the same thing in Europe. And you know the

578
00:38:16,520 --> 00:38:21,319
Speaker 1: big beneficiaries world the platform companies, those who have their

579
00:38:22,160 --> 00:38:25,239
Speaker 1: tax is paid in places where the tax rate is

580
00:38:25,360 --> 00:38:28,880
Speaker 1: very low, those who have production where labor costs is

581
00:38:29,000 --> 00:38:32,719
Speaker 1: very low, and they sell their products worldwide. Those have

582
00:38:32,800 --> 00:38:36,200
Speaker 1: the big windows and the shareholders of those companies, and

583
00:38:36,200 --> 00:38:39,719
Speaker 1: and I think that is backfirrowing. It's changing the political

584
00:38:39,800 --> 00:38:46,399
Speaker 1: landscape because people are dissatisfied with their governments because it's

585
00:38:46,480 --> 00:38:50,560
Speaker 1: sort like they are working primarily for themselves and the

586
00:38:50,600 --> 00:38:54,320
Speaker 1: big companies, the establishment, so to speak. So there is

587
00:38:54,320 --> 00:38:57,680
Speaker 1: a big push against the establishment. It's in Europe and

588
00:38:57,800 --> 00:39:00,680
Speaker 1: you see it also in the US. So so let

589
00:39:00,719 --> 00:39:03,479
Speaker 1: me let's drill down on that a little bit. When

590
00:39:03,520 --> 00:39:07,319
Speaker 1: when you look at Brexit, it's hard to see how

591
00:39:07,360 --> 00:39:12,160
Speaker 1: Brexit benefits just about anybody in in the u k.

592
00:39:12,880 --> 00:39:15,920
Speaker 1: Certainly it hurts London. We're seeing lots of jobs. I

593
00:39:15,920 --> 00:39:19,640
Speaker 1: think UBS just announced they're moving a bunch of jobs

594
00:39:19,680 --> 00:39:23,200
Speaker 1: to Switzerland and Germany away from London. But what does

595
00:39:23,280 --> 00:39:26,960
Speaker 1: Brexit do for the rest of the Brits? And I

596
00:39:27,000 --> 00:39:30,960
Speaker 1: guess you could ask the same question, what does trump

597
00:39:31,080 --> 00:39:34,440
Speaker 1: is um do for the people who who either are

598
00:39:34,440 --> 00:39:38,640
Speaker 1: working in in industries like coal or textiles that have

599
00:39:38,760 --> 00:39:42,440
Speaker 1: either left or on the down slide. Are these people

600
00:39:43,800 --> 00:39:46,920
Speaker 1: have any realistic hope that their votes are gonna positively

601
00:39:46,960 --> 00:39:50,759
Speaker 1: affect their lives or they just Hey, the current situation

602
00:39:50,840 --> 00:39:54,280
Speaker 1: isn't working, we want to try something different. In Europe,

603
00:39:54,280 --> 00:39:57,640
Speaker 1: you have that situation where you have the European Union,

604
00:39:57,920 --> 00:40:01,759
Speaker 1: and the European Union is a good idea or was

605
00:40:01,800 --> 00:40:04,560
Speaker 1: a good idea originally, but the introduction of the euro

606
00:40:05,320 --> 00:40:10,600
Speaker 1: made it an idea that moves towards centralization, and move

607
00:40:10,719 --> 00:40:15,680
Speaker 1: towards centralization when you link currencies together of economies that

608
00:40:15,719 --> 00:40:20,920
Speaker 1: are structurally completely different and different in terms of competence,

609
00:40:21,080 --> 00:40:23,799
Speaker 1: it said, are you shouldn't have the Greeks borrowing at

610
00:40:23,800 --> 00:40:29,400
Speaker 1: the same radios you create, you create imbalances, You create imbalances,

611
00:40:29,440 --> 00:40:33,720
Speaker 1: and the imbalances have to be rebalanced by transfer payments,

612
00:40:34,280 --> 00:40:39,200
Speaker 1: and that by definition means more socialism, more redistribution, and

613
00:40:39,280 --> 00:40:43,640
Speaker 1: that makes an economy less competitive in the term and

614
00:40:43,760 --> 00:40:48,040
Speaker 1: the productivity and prosperity goes down. So it's a bad

615
00:40:48,120 --> 00:40:52,880
Speaker 1: idea and one of the cornerstones of the European Union

616
00:40:52,920 --> 00:40:56,880
Speaker 1: and the free market is free movement of people. And

617
00:40:56,960 --> 00:41:00,360
Speaker 1: that free movement of people in a in a area

618
00:41:00,600 --> 00:41:05,480
Speaker 1: where you have completely huge differences in income and huge

619
00:41:05,520 --> 00:41:11,120
Speaker 1: differences in west and huge differences in social security standards

620
00:41:11,160 --> 00:41:17,920
Speaker 1: and social welfare, etcetera, creates migration movements and you get

621
00:41:18,000 --> 00:41:22,120
Speaker 1: people moving from the poor places to the richer places.

622
00:41:22,239 --> 00:41:25,439
Speaker 1: And so the UK got a lot of inflow from

623
00:41:25,440 --> 00:41:30,200
Speaker 1: Eastern Europe and the and the bridge. The people were

624
00:41:30,320 --> 00:41:34,839
Speaker 1: afraid to lose their jobs to those people because they

625
00:41:34,920 --> 00:41:39,000
Speaker 1: were working for less money and uh, and they feared

626
00:41:39,000 --> 00:41:41,400
Speaker 1: they could lose their jobs and that's why they voted

627
00:41:41,440 --> 00:41:45,839
Speaker 1: for Brexit. Actually, the UK leader Cameron was meeting with

628
00:41:45,960 --> 00:41:52,319
Speaker 1: Brussels and Berlin before the Brexit vote and said, give

629
00:41:52,440 --> 00:41:57,719
Speaker 1: us um a good point that we can open up

630
00:41:57,760 --> 00:42:00,960
Speaker 1: a little bit or close the door to some degree,

631
00:42:01,000 --> 00:42:04,960
Speaker 1: that we can have better control on migration. And they

632
00:42:05,000 --> 00:42:08,719
Speaker 1: denied it. Although migration in total in the EU is

633
00:42:08,760 --> 00:42:12,000
Speaker 1: not a big problem and they are very dogmatic. And

634
00:42:12,000 --> 00:42:14,920
Speaker 1: that creative Brexit And can the bridge turn around and

635
00:42:14,960 --> 00:42:17,440
Speaker 1: say you could come here, but you don't qualify for

636
00:42:17,520 --> 00:42:21,120
Speaker 1: social security or healthcare or whatever until after next years.

637
00:42:21,560 --> 00:42:24,160
Speaker 1: That was the idea, but that was not tolerated by

638
00:42:24,200 --> 00:42:27,759
Speaker 1: the EU, and that's why we have this situation. I

639
00:42:27,800 --> 00:42:31,359
Speaker 1: think if the BRIDGE are smart, and right now they

640
00:42:31,400 --> 00:42:35,400
Speaker 1: are in political disarray, uh, but if they were smart,

641
00:42:35,960 --> 00:42:41,880
Speaker 1: they could decide what sort of policy serves their own

642
00:42:41,920 --> 00:42:46,480
Speaker 1: country best and do exactly that and position them to

643
00:42:46,560 --> 00:42:50,680
Speaker 1: attract businesses and uh, and that would be very beneficial.

644
00:42:51,400 --> 00:42:55,799
Speaker 1: At the present time, terrorism may Is has lost her

645
00:42:55,920 --> 00:43:01,400
Speaker 1: compass completely. She will probably be a transition uh figure.

646
00:43:02,080 --> 00:43:05,600
Speaker 1: And you need a new government, a new leader to

647
00:43:05,600 --> 00:43:08,560
Speaker 1: to make break sit work for the UK makes sense.

648
00:43:08,920 --> 00:43:11,200
Speaker 1: Over the past few months, I've been in half a

649
00:43:11,239 --> 00:43:15,920
Speaker 1: dozen European cities, in France and Spain and in Italy,

650
00:43:16,120 --> 00:43:20,000
Speaker 1: and everybody wants to talk about Trump. The Europeans are

651
00:43:20,040 --> 00:43:26,400
Speaker 1: fascinated sort of with a amused, oh U silly Americans

652
00:43:27,000 --> 00:43:30,719
Speaker 1: type of questionings. So, what's happening in the States, what

653
00:43:30,800 --> 00:43:32,880
Speaker 1: do you think of Trump? What do you think of

654
00:43:33,280 --> 00:43:35,719
Speaker 1: what's gonna happen with Trump and China? What's gonna happen

655
00:43:35,719 --> 00:43:40,160
Speaker 1: with Trump and Korea? We get these questions where they're

656
00:43:40,280 --> 00:43:43,319
Speaker 1: they're sort of like amused that this is not the

657
00:43:43,400 --> 00:43:48,719
Speaker 1: usual situation, But there's an undercurrent of this is potentially

658
00:43:48,920 --> 00:43:52,200
Speaker 1: very disruptive and very serious. So let me put the

659
00:43:52,280 --> 00:43:57,240
Speaker 1: question to you, what's the European view of what's happened

660
00:43:57,239 --> 00:44:01,239
Speaker 1: in America and how do you think this plays out? Well?

661
00:44:01,320 --> 00:44:05,200
Speaker 1: I differ from most of the Europeans. You know, they

662
00:44:05,239 --> 00:44:08,919
Speaker 1: look at it and and find it ridiculous what's going

663
00:44:09,000 --> 00:44:12,520
Speaker 1: on in in the US, and say, oh, those silly Americans, etcetera.

664
00:44:12,920 --> 00:44:17,719
Speaker 1: You know that. I I think Trump went through the

665
00:44:17,760 --> 00:44:22,680
Speaker 1: primaries and he beat fifteen members of the Republican establishment,

666
00:44:23,040 --> 00:44:27,040
Speaker 1: and he was the only candidate who read the zeitgeist right,

667
00:44:27,800 --> 00:44:32,600
Speaker 1: you see. And whether he has the character, the character

668
00:44:32,800 --> 00:44:36,080
Speaker 1: and the personality to lead the US as a president

669
00:44:36,239 --> 00:44:41,120
Speaker 1: is another question. But he was elected for reasons to

670
00:44:41,400 --> 00:44:47,160
Speaker 1: change policies, and and I think since Bennon has left,

671
00:44:47,239 --> 00:44:51,080
Speaker 1: which was his ideological compass, in a way, I think

672
00:44:51,440 --> 00:44:54,680
Speaker 1: it looks to me like the establishment has taken over

673
00:44:55,320 --> 00:44:59,239
Speaker 1: at the White House, regained regained control. And I think

674
00:44:59,280 --> 00:45:02,719
Speaker 1: this is not for good because this means Trump will

675
00:45:02,719 --> 00:45:05,680
Speaker 1: not be able to deliver what he promised, and and

676
00:45:05,680 --> 00:45:09,160
Speaker 1: and only a very small fraction, if at all, that

677
00:45:09,280 --> 00:45:14,720
Speaker 1: means all the voters who voted for Trump will get disappointed.

678
00:45:14,960 --> 00:45:19,160
Speaker 1: And I think the next US president will come from

679
00:45:19,440 --> 00:45:25,000
Speaker 1: a political side that is left of Bernie Sanders. Really absolutely,

680
00:45:25,080 --> 00:45:27,279
Speaker 1: I think who's left of Bernie Sander? Yeah, I don't.

681
00:45:27,320 --> 00:45:30,239
Speaker 1: I don't know the name yet, but I think you know,

682
00:45:31,040 --> 00:45:35,320
Speaker 1: a lot of Democrats, the losers of globalization voted for Trump.

683
00:45:35,560 --> 00:45:39,360
Speaker 1: That makes sense, and and I think they will be

684
00:45:39,520 --> 00:45:43,000
Speaker 1: very disappointed, and they will next time go with the

685
00:45:43,120 --> 00:45:48,480
Speaker 1: socialist who promises them a better life and and and

686
00:45:48,560 --> 00:45:53,200
Speaker 1: anti healthcare, guarantee education, and so we have we have

687
00:45:53,960 --> 00:45:57,400
Speaker 1: rising socialism, not just in the US, we have it

688
00:45:57,640 --> 00:46:00,560
Speaker 1: in Europe as well. We have rising socially. We also

689
00:46:00,680 --> 00:46:06,719
Speaker 1: have rising nationalism because of of of globalization that has

690
00:46:06,800 --> 00:46:10,239
Speaker 1: gone too far and created too many losers. We have

691
00:46:10,480 --> 00:46:14,359
Speaker 1: rising nationalism. Isn't it kind of black and white? They're like,

692
00:46:14,400 --> 00:46:16,839
Speaker 1: you can't be a little pregnant, you can't be a

693
00:46:16,880 --> 00:46:20,920
Speaker 1: little globalized. Either there's free trade and globalization or not.

694
00:46:21,520 --> 00:46:25,360
Speaker 1: How do you have less globalization? Either you have tariffs

695
00:46:25,360 --> 00:46:28,480
Speaker 1: and restriction on trade or it's open or am I

696
00:46:28,560 --> 00:46:35,080
Speaker 1: oversimplifying that? You know? Um, China entered the World Trade

697
00:46:35,200 --> 00:46:39,439
Speaker 1: Organization in two thousand two, and they cheated every They

698
00:46:39,680 --> 00:46:47,759
Speaker 1: stole technologies, they copied patterns notorious for that nobody ever intervened,

699
00:46:48,200 --> 00:46:53,520
Speaker 1: nobody ever sanctioned them. If they had played again according

700
00:46:53,560 --> 00:46:56,200
Speaker 1: to the rules, there would have been a different outcome,

701
00:46:56,480 --> 00:46:59,560
Speaker 1: would have been a slower development process in China, and

702
00:46:59,640 --> 00:47:03,440
Speaker 1: the globe realization problems so to speak, would have been

703
00:47:03,560 --> 00:47:07,600
Speaker 1: much smaller. But nobody sanctioned them. And um and I

704
00:47:07,640 --> 00:47:11,240
Speaker 1: think that's the problem. You have a system in China,

705
00:47:11,360 --> 00:47:15,160
Speaker 1: a central planning system that were run in the last

706
00:47:15,239 --> 00:47:21,440
Speaker 1: twenty years for employment, not for profits, whereas in the

707
00:47:21,440 --> 00:47:27,000
Speaker 1: World Trade Organization it really states that an economy should

708
00:47:27,040 --> 00:47:30,680
Speaker 1: be run for corporate profits. You know, those are two

709
00:47:30,800 --> 00:47:35,560
Speaker 1: ideologies that do not fit together in World trade organizations,

710
00:47:35,600 --> 00:47:40,960
Speaker 1: so that creates the problems. But the coming to geopolitics

711
00:47:41,000 --> 00:47:44,920
Speaker 1: on that side, it's very important that if the world

712
00:47:44,960 --> 00:47:48,960
Speaker 1: economy cannot grow enough over the next ten years, and

713
00:47:49,040 --> 00:47:52,560
Speaker 1: I think this is a fair assumption given the demographics

714
00:47:52,640 --> 00:47:56,680
Speaker 1: we have. If you look at the age class of

715
00:47:57,640 --> 00:48:01,880
Speaker 1: up to sixty five years per year in the O

716
00:48:02,000 --> 00:48:05,600
Speaker 1: E C D, China, Brazil and Russia in the in

717
00:48:05,640 --> 00:48:09,480
Speaker 1: that in that area we had since the nineteen fifties

718
00:48:09,520 --> 00:48:15,120
Speaker 1: every year twenty five to thirty million more people tremendous growth.

719
00:48:15,640 --> 00:48:21,800
Speaker 1: In two thousand and eight, we had fourteen people only

720
00:48:22,239 --> 00:48:28,520
Speaker 1: new growth. Today we have one point seven for for

721
00:48:29,080 --> 00:48:34,240
Speaker 1: two thousand and seventeen. Next year it's zero. Thereafter until

722
00:48:34,480 --> 00:48:38,000
Speaker 1: two thousand and thirty five, the number declines to a

723
00:48:38,080 --> 00:48:42,080
Speaker 1: negative twelve million, So you have a negative growth rate.

724
00:48:42,360 --> 00:48:46,759
Speaker 1: Productivity growth has peaked and this declining, and and if

725
00:48:46,800 --> 00:48:50,960
Speaker 1: you combine population growth and productivity growth, you know the

726
00:48:51,040 --> 00:48:56,279
Speaker 1: outcome will be very low economic growth. And that creates

727
00:48:56,640 --> 00:49:00,399
Speaker 1: a fight for a more share of the I that

728
00:49:00,440 --> 00:49:06,080
Speaker 1: doesn't grow enough, and that creates competition, it creates protectionism,

729
00:49:06,480 --> 00:49:11,960
Speaker 1: it creates conflicts, and you have a situation where the hedgemon,

730
00:49:12,080 --> 00:49:16,000
Speaker 1: the world hedgehum on the US, is being challenged by

731
00:49:16,040 --> 00:49:20,360
Speaker 1: a new power, China. And for the first time a

732
00:49:20,480 --> 00:49:24,520
Speaker 1: Chinese president said it very bluntly, we want to be

733
00:49:24,640 --> 00:49:27,000
Speaker 1: number one in ten fifteen years. We want to be

734
00:49:27,120 --> 00:49:30,880
Speaker 1: number one. We want to close the gap of the

735
00:49:30,960 --> 00:49:36,040
Speaker 1: leading corporations to the Western world, UH, and then surpass them.

736
00:49:36,160 --> 00:49:39,600
Speaker 1: We want to be a major military power, and we

737
00:49:39,640 --> 00:49:43,759
Speaker 1: want to make an influence on the world. UH. This

738
00:49:43,920 --> 00:49:46,200
Speaker 1: is quite a challenge. And when you look at history,

739
00:49:46,719 --> 00:49:49,640
Speaker 1: you can go back the last time we had such

740
00:49:49,680 --> 00:49:54,120
Speaker 1: a situation was about a good hundred years ago in

741
00:49:54,160 --> 00:49:58,720
Speaker 1: the late nineteenth century early twentieth century, when the leading

742
00:49:58,719 --> 00:50:03,560
Speaker 1: hedgeman was Great Britat, and to some degree France and

743
00:50:03,719 --> 00:50:07,279
Speaker 1: Germany came up and they challenged them, and that led

744
00:50:07,280 --> 00:50:10,680
Speaker 1: to conflicts. And I think we are in for rising

745
00:50:10,719 --> 00:50:14,240
Speaker 1: conflicts in the world over the next tent to twenty years.

746
00:50:14,280 --> 00:50:20,360
Speaker 1: So that's that's an interesting structural framework for the next question,

747
00:50:20,480 --> 00:50:25,440
Speaker 1: which is the US and China are such big trading partners.

748
00:50:25,520 --> 00:50:30,160
Speaker 1: Were so reliant on them as a manufacturer. They're reliant

749
00:50:30,200 --> 00:50:35,760
Speaker 1: on us as a consumer market, and we're separated unlike Germany,

750
00:50:35,800 --> 00:50:40,440
Speaker 1: France and England were separated by the Pacific Ocean and

751
00:50:40,600 --> 00:50:45,160
Speaker 1: thousands of miles. Can we avoid the problems of the

752
00:50:45,160 --> 00:50:48,880
Speaker 1: twentieth century with the two great powers in the twenty

753
00:50:48,920 --> 00:50:52,400
Speaker 1: one century or is the same old routine going to

754
00:50:52,520 --> 00:50:55,760
Speaker 1: play out and it ultimately leads to a very costly

755
00:50:55,800 --> 00:50:59,799
Speaker 1: and damaging war. The hope is that he does not,

756
00:51:00,560 --> 00:51:03,919
Speaker 1: of course, but the risk is that it does. And

757
00:51:04,400 --> 00:51:08,200
Speaker 1: you know, the time period I described in the late

758
00:51:08,280 --> 00:51:13,280
Speaker 1: nineteenth century and early twentieth century was very similar to today.

759
00:51:13,560 --> 00:51:17,840
Speaker 1: We had globalization, at that time. We had free capital

760
00:51:18,400 --> 00:51:22,040
Speaker 1: movement at that time, so we had no capital controls, nothing,

761
00:51:22,440 --> 00:51:26,600
Speaker 1: which came later during the wars and after the war,

762
00:51:27,080 --> 00:51:32,040
Speaker 1: we had capital controls, rising nationalists. We had rising nationalism.

763
00:51:32,239 --> 00:51:35,719
Speaker 1: We had migration, huge migration waves. There was a big

764
00:51:35,760 --> 00:51:38,880
Speaker 1: wave coming to the US at that time. And you

765
00:51:38,960 --> 00:51:42,960
Speaker 1: had terrorism. And you had terrorism at that time against

766
00:51:43,000 --> 00:51:48,319
Speaker 1: the establishment because the whole situation produced losers, and the

767
00:51:48,400 --> 00:51:52,560
Speaker 1: losers were fighting against the establishment and that's why you

768
00:51:52,600 --> 00:51:54,759
Speaker 1: had terrorisms. So we had I think we just had

769
00:51:54,800 --> 00:51:58,440
Speaker 1: the hundredth anniversary of the bombing down on Wall Street.

770
00:51:58,920 --> 00:52:02,600
Speaker 1: There's still could still see um damage on the buildings

771
00:52:03,040 --> 00:52:06,200
Speaker 1: from where someone brought up a horse drawn carriage and

772
00:52:06,200 --> 00:52:08,479
Speaker 1: and blew it up. You see, that's a century ago,

773
00:52:08,760 --> 00:52:12,720
Speaker 1: right about when you're talking. I think so. So it's

774
00:52:12,760 --> 00:52:15,920
Speaker 1: not the same, but they are similarities, and there is

775
00:52:16,400 --> 00:52:19,240
Speaker 1: you know, in the world, people act as they act

776
00:52:19,680 --> 00:52:25,440
Speaker 1: and and people vote, and uh. To avoid conflict, you

777
00:52:25,600 --> 00:52:30,440
Speaker 1: need to leaders who understand all that and want to

778
00:52:30,600 --> 00:52:34,120
Speaker 1: work it out in a peaceful way. I don't see

779
00:52:34,640 --> 00:52:38,880
Speaker 1: that situation with the current leaders playing out in a

780
00:52:38,880 --> 00:52:42,640
Speaker 1: peaceful way. Huh. It's interesting. So I'm trying to think

781
00:52:42,680 --> 00:52:46,279
Speaker 1: of who is left of Bernie Sanders and yet is

782
00:52:47,160 --> 00:52:52,080
Speaker 1: articulate and rational enough and intelligent enough to negotiate some

783
00:52:52,200 --> 00:52:56,080
Speaker 1: sort of deal with China that everybody can live happily

784
00:52:56,120 --> 00:52:59,680
Speaker 1: ever after. You know, protectionism and nationals is not here

785
00:52:59,760 --> 00:53:04,239
Speaker 1: seeing Trump. It has been there before, but the election

786
00:53:04,320 --> 00:53:08,160
Speaker 1: of Trump made it bring up to the surface. So

787
00:53:08,239 --> 00:53:12,279
Speaker 1: the next president, to wherever he or she will be,

788
00:53:13,160 --> 00:53:19,520
Speaker 1: will continue on that policy line of protectionism and nationalism.

789
00:53:19,560 --> 00:53:24,040
Speaker 1: I'm pretty sure about that. I wanted to ask you about, um,

790
00:53:24,080 --> 00:53:27,320
Speaker 1: what's going on in the world of hedge funds Before

791
00:53:27,360 --> 00:53:31,040
Speaker 1: I get to my favorite question, Let let me let

792
00:53:31,080 --> 00:53:32,799
Speaker 1: me ask you this. So you ran a hedge fund

793
00:53:32,840 --> 00:53:37,160
Speaker 1: for twenty years or so quite successfully, um, and your

794
00:53:37,200 --> 00:53:42,080
Speaker 1: performance numbers speak for themselves. The past ten fifteen years,

795
00:53:42,160 --> 00:53:46,640
Speaker 1: we've seen hedge funds really underperform, and not just a

796
00:53:46,640 --> 00:53:51,759
Speaker 1: little substantially five hundred a thousand basis points on average

797
00:53:52,000 --> 00:53:55,879
Speaker 1: versus the SMP five D. Why is the modern hedge

798
00:53:55,880 --> 00:53:59,520
Speaker 1: fund community having such And there are obvious exceptions, we

799
00:53:59,560 --> 00:54:03,600
Speaker 1: could talk about the shore renaissance technologies or whoever, but

800
00:54:03,880 --> 00:54:08,080
Speaker 1: by and large, the hedge fund community ain't doing so great.

801
00:54:08,440 --> 00:54:11,480
Speaker 1: They're they're about three trillion dollars, so it's a substantial

802
00:54:11,520 --> 00:54:14,600
Speaker 1: amount of money. What do you see in this environment

803
00:54:14,680 --> 00:54:21,120
Speaker 1: that's throwing U such a monkey wrench into into hedge funds. Well,

804
00:54:21,120 --> 00:54:25,400
Speaker 1: the hedge fund by definition hedges part of its bets

805
00:54:25,800 --> 00:54:30,120
Speaker 1: and and usually under performs in the bull market and

806
00:54:30,560 --> 00:54:32,879
Speaker 1: makes money in a bear market. Then that adds up

807
00:54:32,920 --> 00:54:37,480
Speaker 1: to a great long term performance. Uh. This bull market

808
00:54:37,719 --> 00:54:41,560
Speaker 1: has been going on longer than usual, so it's one

809
00:54:41,600 --> 00:54:45,760
Speaker 1: of the longest bull markets in history. And I think

810
00:54:46,280 --> 00:54:50,839
Speaker 1: most of us did not understand to what degree and

811
00:54:50,960 --> 00:54:54,680
Speaker 1: for how long the central banks would intervene to the

812
00:54:54,760 --> 00:54:57,759
Speaker 1: degrees they did, and I think that created a big

813
00:54:57,760 --> 00:55:01,520
Speaker 1: problem for the hedges because us they had hedged bets

814
00:55:01,719 --> 00:55:06,480
Speaker 1: out there when you should have been full leverage long

815
00:55:06,960 --> 00:55:10,320
Speaker 1: you know. I think that's the that's the first problem.

816
00:55:10,400 --> 00:55:15,200
Speaker 1: The second problem is that you have a situation where

817
00:55:15,320 --> 00:55:19,560
Speaker 1: long only investors and not so sophisticated long only investors.

818
00:55:19,560 --> 00:55:22,200
Speaker 1: So the average guy from the street, he buys his

819
00:55:22,280 --> 00:55:26,320
Speaker 1: stocks and he has great performance because it's just very

820
00:55:26,400 --> 00:55:29,600
Speaker 1: it's just doing very, very well. Why do you need

821
00:55:29,760 --> 00:55:32,920
Speaker 1: hedge funds for because you can do it yourself or

822
00:55:32,920 --> 00:55:35,960
Speaker 1: the central bank is doing it for you. Uh and

823
00:55:35,960 --> 00:55:40,920
Speaker 1: and therefore the attractiveness of hedge funds has declined. I

824
00:55:40,960 --> 00:55:45,360
Speaker 1: think if we go back to a more cyclical environment

825
00:55:45,600 --> 00:55:48,000
Speaker 1: where you have a down cycle, then the hedge funds

826
00:55:48,040 --> 00:55:51,000
Speaker 1: will come back. Some will come back and and some

827
00:55:51,080 --> 00:55:53,560
Speaker 1: will not. Because in the last cycle you saw that

828
00:55:53,640 --> 00:55:55,799
Speaker 1: a lot of the hedge funds that used to be

829
00:55:56,280 --> 00:56:00,600
Speaker 1: hedge funds, as the world implies, world long own lee

830
00:56:00,680 --> 00:56:03,680
Speaker 1: and they had a few handchees on just to charge

831
00:56:03,719 --> 00:56:07,840
Speaker 1: the higher feast. But they will leveraged long only basically,

832
00:56:07,880 --> 00:56:10,560
Speaker 1: and they got and they got wiped out, you know. So,

833
00:56:10,560 --> 00:56:12,839
Speaker 1: so you mentioned mom and pop or or the main

834
00:56:12,880 --> 00:56:19,359
Speaker 1: street investor being long only, that they very much gravitated

835
00:56:19,440 --> 00:56:23,200
Speaker 1: towards an indexing approach, be it e. T f s

836
00:56:23,239 --> 00:56:27,080
Speaker 1: at black Rock or mutual funds at at Vanguard um.

837
00:56:27,160 --> 00:56:31,120
Speaker 1: What does indexing due to price discovery? Some people are

838
00:56:31,160 --> 00:56:34,879
Speaker 1: calling it distorative of the market. What do you think

839
00:56:34,920 --> 00:56:37,959
Speaker 1: about the trend? Yeah, I mean it's been forty years

840
00:56:37,960 --> 00:56:40,640
Speaker 1: in the making, but it's really since the financial crisis

841
00:56:41,040 --> 00:56:43,959
Speaker 1: that a lot of people have moved into indexing. What

842
00:56:43,960 --> 00:56:45,920
Speaker 1: what is this stew to price discovery? What? What do

843
00:56:45,920 --> 00:56:49,000
Speaker 1: you think the impact on investing is well, it makes

844
00:56:49,440 --> 00:56:54,280
Speaker 1: it makes actually markets less efficient, and it should create

845
00:56:54,360 --> 00:56:59,400
Speaker 1: opportunities for stock pickers over the long term, but it

846
00:56:59,560 --> 00:57:03,719
Speaker 1: may to much longer until the discrepancies are discovered by

847
00:57:03,760 --> 00:57:07,360
Speaker 1: the market because of indexing that is growing its share

848
00:57:07,680 --> 00:57:10,520
Speaker 1: of the market in general. So as long as this

849
00:57:10,719 --> 00:57:17,000
Speaker 1: trend towards passive investment continues, it's very difficult for talented

850
00:57:17,080 --> 00:57:22,120
Speaker 1: start pickers to create the extra returns because the value

851
00:57:22,600 --> 00:57:25,440
Speaker 1: on their investments is there, but the market does not

852
00:57:25,560 --> 00:57:30,800
Speaker 1: discover it until the passive investment fed is gone or

853
00:57:31,040 --> 00:57:33,720
Speaker 1: is being reduced. Do you think that this is a

854
00:57:33,800 --> 00:57:35,440
Speaker 1: fair that's going to go away or is this a

855
00:57:35,520 --> 00:57:39,520
Speaker 1: secular change. Well, if it's a secular change, then it

856
00:57:39,560 --> 00:57:42,840
Speaker 1: would have to do with a central planning type of

857
00:57:43,200 --> 00:57:47,240
Speaker 1: central banking for the long term. That would lead to

858
00:57:47,480 --> 00:57:53,120
Speaker 1: an environment of ever inflated as surprises. It would lead

859
00:57:53,200 --> 00:57:56,600
Speaker 1: to a much higher inflation over time, and it leads

860
00:57:56,680 --> 00:58:01,760
Speaker 1: to much less efficient economy and um and the less

861
00:58:01,760 --> 00:58:06,320
Speaker 1: productive economy and the less prosperous economy. I hope that

862
00:58:06,400 --> 00:58:10,640
Speaker 1: it does not. My theories that it will. Uh so

863
00:58:10,680 --> 00:58:14,960
Speaker 1: in the next downturn, the next recession, next crisis, you

864
00:58:15,000 --> 00:58:18,200
Speaker 1: will probably see that government's all over the world. We

865
00:58:18,320 --> 00:58:22,880
Speaker 1: launch huge fiscal programs to support the system, fiscal programs,

866
00:58:22,880 --> 00:58:26,560
Speaker 1: fiscal program we at the end, and then the central

867
00:58:26,560 --> 00:58:30,640
Speaker 1: banks on the writing it. So here's the question. With

868
00:58:30,800 --> 00:58:33,720
Speaker 1: rates as low as they are, even though we've had

869
00:58:33,760 --> 00:58:38,240
Speaker 1: a few increases, they're still historically very low, do central

870
00:58:38,280 --> 00:58:42,000
Speaker 1: banks have any room to run monetary policy or is

871
00:58:42,080 --> 00:58:45,240
Speaker 1: the next cycle them just giving the green light to

872
00:58:45,600 --> 00:58:50,600
Speaker 1: two governments on the Keynsiean fiscal side, Go spend more, go,

873
00:58:50,680 --> 00:58:54,000
Speaker 1: do infrastructure, stimulate the economy that way. We've done as

874
00:58:54,080 --> 00:58:58,480
Speaker 1: much as we can with low rates and quee. Before

875
00:58:58,520 --> 00:59:02,080
Speaker 1: the cycle, I thought see was the bottom. Uh, Now

876
00:59:02,200 --> 00:59:05,200
Speaker 1: I know that zero interest rate is not the bottom.

877
00:59:06,000 --> 00:59:08,800
Speaker 1: I think next time it will be huge fiscal spending,

878
00:59:09,160 --> 00:59:14,120
Speaker 1: huge fiscal spending, infrastructure spending to just employ the people

879
00:59:14,840 --> 00:59:18,440
Speaker 1: and keep the system afloat, and it will be underwritten

880
00:59:18,440 --> 00:59:21,560
Speaker 1: by central banks. Who else could do it? Central banks

881
00:59:21,560 --> 00:59:25,600
Speaker 1: will do it. And that leads to a situation that

882
00:59:25,720 --> 00:59:29,200
Speaker 1: I do that I dislike as a as a citizen

883
00:59:29,600 --> 00:59:32,800
Speaker 1: of this world. I dislike because it leads to much

884
00:59:32,840 --> 00:59:38,280
Speaker 1: more central planning, higher government shares in our economies. Less prosperity,

885
00:59:39,040 --> 00:59:43,200
Speaker 1: less freedom for individuals eventually. So so that's a good

886
00:59:43,240 --> 00:59:46,360
Speaker 1: point where we're gonna move on to our standard questions.

887
00:59:46,400 --> 00:59:49,520
Speaker 1: These are, um the favorite questions we ask all of

888
00:59:49,520 --> 00:59:53,680
Speaker 1: our guests. UM, tell me something that most people don't

889
00:59:53,800 --> 00:59:58,680
Speaker 1: know about your background. Well, I just said, I, Uh,

890
00:59:59,000 --> 01:00:03,040
Speaker 1: the only times I went to university was as a speaker,

891
01:00:03,960 --> 01:00:07,720
Speaker 1: never as a student. Um. Uh. The other thing, I'm

892
01:00:07,760 --> 01:00:13,160
Speaker 1: a happy family father, very modest person. Uh. And I'm

893
01:00:13,200 --> 01:00:16,840
Speaker 1: a very happy and optimistic person, which is not your

894
01:00:16,920 --> 01:00:19,600
Speaker 1: public person. As I know, I did not know you

895
01:00:19,640 --> 01:00:22,400
Speaker 1: did not go to university. I certainly never would have

896
01:00:22,440 --> 01:00:24,360
Speaker 1: guessed that. I bet a lot of people are unaware

897
01:00:24,400 --> 01:00:28,040
Speaker 1: of that. Um. You mentioned Bob Farrell as an early mentor.

898
01:00:28,120 --> 01:00:32,320
Speaker 1: Who else was a mentor of yours? Rico Clarici was

899
01:00:32,720 --> 01:00:36,760
Speaker 1: my boss at UBS. I learned a lot from him.

900
01:00:36,800 --> 01:00:41,760
Speaker 1: He's a cycle guy, and he introduced me to deeper

901
01:00:41,800 --> 01:00:44,480
Speaker 1: into the business cycles and the long waves and and

902
01:00:44,520 --> 01:00:49,680
Speaker 1: all that stuff. And he's a good friend nowadays, not

903
01:00:49,800 --> 01:00:53,240
Speaker 1: as close to the markets that as I am, but

904
01:00:54,520 --> 01:00:58,360
Speaker 1: he was a great man in my career. He always

905
01:00:58,400 --> 01:01:02,320
Speaker 1: He also taught me to write, you know, when I

906
01:01:02,360 --> 01:01:06,680
Speaker 1: had to write the investment strategy for the bank. It

907
01:01:06,760 --> 01:01:09,960
Speaker 1: was always very tough for me at that time, younger years,

908
01:01:10,520 --> 01:01:13,640
Speaker 1: and then I handed it into him and he came

909
01:01:13,680 --> 01:01:17,400
Speaker 1: back all read, you know, and it was so frustrating.

910
01:01:17,880 --> 01:01:21,160
Speaker 1: But over time I learned and he was a great teacher.

911
01:01:21,760 --> 01:01:25,200
Speaker 1: So you went to university with him another with many people.

912
01:01:25,800 --> 01:01:28,760
Speaker 1: I always say I went to the University of life.

913
01:01:29,040 --> 01:01:32,480
Speaker 1: Well that's a fair statement. Um. What investors influenced your

914
01:01:32,520 --> 01:01:35,000
Speaker 1: approach to looking at at markets? Who who do you

915
01:01:35,040 --> 01:01:38,720
Speaker 1: think change the way you you view the investing world?

916
01:01:40,320 --> 01:01:43,280
Speaker 1: I really didn't changed. I always have been a macro

917
01:01:43,360 --> 01:01:49,680
Speaker 1: guy in my younger years. George Soros was uh inspirational

918
01:01:50,000 --> 01:01:54,120
Speaker 1: in that sense. I later thought that Stanley Drucon Miller,

919
01:01:54,120 --> 01:01:57,320
Speaker 1: who is a few years younger than I am, probably

920
01:01:57,440 --> 01:02:02,680
Speaker 1: played the macro side the best I know. I think

921
01:02:02,760 --> 01:02:08,400
Speaker 1: he's a great, great guy. So, uh, those were the

922
01:02:08,440 --> 01:02:12,480
Speaker 1: people that were influential that. That's a pretty good list,

923
01:02:13,000 --> 01:02:16,840
Speaker 1: Soros and Drucker Millar, to say the least. Um, your

924
01:02:16,880 --> 01:02:20,440
Speaker 1: favorite books. Tell us some of your favorite books, be

925
01:02:20,600 --> 01:02:28,280
Speaker 1: they fiction or nonfiction, investing or or anything. I like biographies. Um,

926
01:02:28,360 --> 01:02:32,120
Speaker 1: a book that every serious student of the market should

927
01:02:32,120 --> 01:02:37,080
Speaker 1: have read is one way Pockets that we talked about Jolio. Um,

928
01:02:37,280 --> 01:02:41,960
Speaker 1: I loved those market Wizard books. Jack Schwegger, Yeah, absolutely,

929
01:02:42,000 --> 01:02:45,960
Speaker 1: I loved those. Um. I also loved Barton Bags. Um

930
01:02:46,480 --> 01:02:51,560
Speaker 1: Um hedge hedgehogging, Hedgehogging. That was. That was a great

931
01:02:51,600 --> 01:02:55,919
Speaker 1: and entertaining book. You learned a lot. Um. Those were

932
01:02:55,960 --> 01:02:58,200
Speaker 1: the Those are the type of books that I like.

933
01:02:58,520 --> 01:03:04,320
Speaker 1: And then uh history, economic history, loads of finance, things

934
01:03:04,360 --> 01:03:07,520
Speaker 1: like that. Loads of Finance was wonderful. What biographies have

935
01:03:07,600 --> 01:03:11,720
Speaker 1: you read recently? I have a stack of biographies waiting

936
01:03:11,720 --> 01:03:14,479
Speaker 1: for me at home that I'm looking forward to get into.

937
01:03:14,560 --> 01:03:19,200
Speaker 1: The recent book I read biography was the former chairman

938
01:03:19,240 --> 01:03:26,800
Speaker 1: of UBS whom I knew very well, Um Holtzach, Mr Holtzach,

939
01:03:27,600 --> 01:03:32,360
Speaker 1: Robert Holtzach. He was really the brain and driver behind

940
01:03:32,520 --> 01:03:38,040
Speaker 1: making UBS great before the youngsters to coo and running

941
01:03:38,320 --> 01:03:41,800
Speaker 1: running against the wall, you know. And he always he

942
01:03:42,080 --> 01:03:50,240
Speaker 1: always warned against those um fascinating investment bankers who always

943
01:03:50,280 --> 01:03:54,680
Speaker 1: overdo it. He always warned against that. He praised me

944
01:03:54,840 --> 01:04:00,240
Speaker 1: in the UBS Journal Internal Journal after the ash of

945
01:04:00,320 --> 01:04:02,480
Speaker 1: eighty seven. He was the only one who praised me.

946
01:04:02,960 --> 01:04:05,280
Speaker 1: And I created after that because I knew my career

947
01:04:05,360 --> 01:04:09,720
Speaker 1: was over. Um any other biographies, I you know, it's

948
01:04:09,840 --> 01:04:13,080
Speaker 1: it's my one of my favorite nonfiction areas to read.

949
01:04:13,960 --> 01:04:16,960
Speaker 1: Yesterday in the office. The person who wrote the Steve

950
01:04:17,080 --> 01:04:20,840
Speaker 1: Jobs book, I'm forgetting his name, Walter somebody, Walter Isaacson.

951
01:04:21,400 --> 01:04:25,120
Speaker 1: His new biography of Leonardo da Vinci just arrived. Leonardo,

952
01:04:25,240 --> 01:04:27,680
Speaker 1: So that's on my list. Give me one more biography

953
01:04:27,720 --> 01:04:31,520
Speaker 1: that you've enjoyed. It's quite sometime since I read the

954
01:04:31,600 --> 01:04:36,760
Speaker 1: last one's Winston Churchill read and that everybody loves the

955
01:04:36,760 --> 01:04:41,360
Speaker 1: Big Churchill biography. Let's let's talk about what has changed,

956
01:04:42,120 --> 01:04:44,440
Speaker 1: uh in the industry. What do you think is the

957
01:04:44,480 --> 01:04:49,840
Speaker 1: most significant change in finance and investing and how has

958
01:04:49,880 --> 01:04:56,320
Speaker 1: an impacted managing money? The biggest change is the intervention

959
01:04:56,440 --> 01:05:01,920
Speaker 1: by the central banks and the compliance. I recently had

960
01:05:02,000 --> 01:05:04,480
Speaker 1: lunch with a friend of mine who was the founder

961
01:05:04,560 --> 01:05:10,480
Speaker 1: of a listed private bank in Switzerland. They operate internationally,

962
01:05:11,080 --> 01:05:15,160
Speaker 1: and he said to me, look, I'm the only entrepreneurial

963
01:05:15,520 --> 01:05:19,560
Speaker 1: guy at the bank left because everybody else is dreaming

964
01:05:19,600 --> 01:05:24,000
Speaker 1: by compliance, and I think in investing it's the same thing.

965
01:05:24,520 --> 01:05:28,360
Speaker 1: So we have lost in a way the entrepreneurial spirit

966
01:05:28,520 --> 01:05:32,360
Speaker 1: in the field of investment because the central banking intervention

967
01:05:32,480 --> 01:05:36,720
Speaker 1: just kills it. Huh. That's that's that's quite fascinating. Uh.

968
01:05:36,760 --> 01:05:40,760
Speaker 1: What's the next major shift? If central bank intervention and

969
01:05:40,760 --> 01:05:44,440
Speaker 1: and overregulation and compliance is what led us to today,

970
01:05:44,480 --> 01:05:49,480
Speaker 1: where do you think things change in the future. Uh.

971
01:05:49,520 --> 01:05:54,000
Speaker 1: I think that the fixed income market will suffer badly

972
01:05:54,680 --> 01:06:02,040
Speaker 1: because the way we run our economic policies will eventually

973
01:06:02,120 --> 01:06:05,200
Speaker 1: destroy the fixed income markets. So you're not just saying

974
01:06:05,240 --> 01:06:08,840
Speaker 1: this as a market call. You're saying structurally, structually, we're

975
01:06:08,880 --> 01:06:13,000
Speaker 1: creating problems for bonds. Structurally, Yes, is that corporate bonds,

976
01:06:13,040 --> 01:06:16,400
Speaker 1: treasuries or across the board. It's it's basically across the board,

977
01:06:16,480 --> 01:06:20,720
Speaker 1: because eventually those bonds will end up on the government

978
01:06:20,760 --> 01:06:23,160
Speaker 1: bonds will end up on the band sheet of central banks.

979
01:06:24,160 --> 01:06:27,760
Speaker 1: The Bank of Japan already owns more than half of

980
01:06:28,560 --> 01:06:32,080
Speaker 1: the j g B s. They own already about fifteen

981
01:06:32,120 --> 01:06:36,160
Speaker 1: percent of the outstanding equities of the market. Um. The

982
01:06:36,200 --> 01:06:40,160
Speaker 1: Swiss National Bank is probably one of the biggest individual

983
01:06:40,200 --> 01:06:45,120
Speaker 1: shareholders of all all the large US stocks, corporations and

984
01:06:45,200 --> 01:06:49,120
Speaker 1: things like that. That is new. That is new, and

985
01:06:49,200 --> 01:06:51,280
Speaker 1: I think it's here to stay and that is you're

986
01:06:51,320 --> 01:06:54,320
Speaker 1: saying it's not very healthy. No it's not. It's it's

987
01:06:54,880 --> 01:06:59,760
Speaker 1: it's destroying free markets, and it's it's destroying entrepreneurship in

988
01:07:00,040 --> 01:07:02,960
Speaker 1: to some degree. So let me shift gears on you

989
01:07:02,960 --> 01:07:05,960
Speaker 1: a little bit. Tell us about a time you failed

990
01:07:06,240 --> 01:07:11,800
Speaker 1: and what you learned from that experience. UM. I missed

991
01:07:12,200 --> 01:07:16,400
Speaker 1: the rise of the Japanese stock market after the crash

992
01:07:16,400 --> 01:07:19,880
Speaker 1: of eighty seven to new highs. It was the only

993
01:07:19,920 --> 01:07:23,640
Speaker 1: stock market that went to new highs into late eighty nine.

994
01:07:23,920 --> 01:07:25,840
Speaker 1: And that was the pain and the and it was

995
01:07:25,920 --> 01:07:30,120
Speaker 1: painful for me because I was underway Japan and everybody

996
01:07:30,200 --> 01:07:34,080
Speaker 1: was jumping on my back all the time. Was very painful,

997
01:07:34,200 --> 01:07:38,120
Speaker 1: and I refused to join in, which probably was a mistake.

998
01:07:38,600 --> 01:07:45,520
Speaker 1: I suffered badly. I had enough um extra returns before

999
01:07:45,960 --> 01:07:50,560
Speaker 1: from the crash, but it was painful, and I went

1000
01:07:50,640 --> 01:07:53,320
Speaker 1: back to my analysis and UH and I came to

1001
01:07:53,360 --> 01:07:58,600
Speaker 1: the conclusion that Japan would about peek and go down,

1002
01:07:58,840 --> 01:08:02,720
Speaker 1: and virtually on the first day of trading in nineteen

1003
01:08:02,800 --> 01:08:05,800
Speaker 1: ninety January second, I think it was in nineteen nine,

1004
01:08:06,680 --> 01:08:10,840
Speaker 1: I m I put out my big shots in the

1005
01:08:10,920 --> 01:08:15,080
Speaker 1: Japanese stock market, and I wrote it down for I

1006
01:08:15,120 --> 01:08:18,160
Speaker 1: think it was about twelve months or so. It it

1007
01:08:18,200 --> 01:08:24,040
Speaker 1: went forty six thousand, it went down fifty within six months,

1008
01:08:24,439 --> 01:08:27,080
Speaker 1: and uh, and I made a lot of money. And

1009
01:08:27,080 --> 01:08:31,000
Speaker 1: and all my friends who have been japan bulls before

1010
01:08:31,040 --> 01:08:34,720
Speaker 1: always ridiculed me on the way up and on the

1011
01:08:34,720 --> 01:08:37,920
Speaker 1: way down. They were angry because they lost more than

1012
01:08:38,040 --> 01:08:42,040
Speaker 1: I in that year than what they have made before.

1013
01:08:42,439 --> 01:08:46,200
Speaker 1: And I made more than I have not made before.

1014
01:08:46,479 --> 01:08:49,000
Speaker 1: So how bad? How bad of a miss was it

1015
01:08:49,160 --> 01:08:52,360
Speaker 1: missing the last year or two of the Japanese? It

1016
01:08:52,439 --> 01:08:55,560
Speaker 1: was mentally, it was psychologically, it was very bad and

1017
01:08:56,360 --> 01:09:00,240
Speaker 1: it and it really helped me to tighten my risk

1018
01:09:00,280 --> 01:09:04,519
Speaker 1: management procedures, because when you are wrong in the market,

1019
01:09:05,000 --> 01:09:09,320
Speaker 1: you increase the risk of making wrong decisions and mistakes.

1020
01:09:09,400 --> 01:09:12,160
Speaker 1: But you weren't short during that run. I was just

1021
01:09:12,960 --> 01:09:16,880
Speaker 1: but underweight. And that's a mistake and and and it hurts,

1022
01:09:17,120 --> 01:09:21,080
Speaker 1: but it's a relatively mild mistake versus being long into

1023
01:09:21,120 --> 01:09:23,800
Speaker 1: the collapse. Okay, I give you another. I give you

1024
01:09:23,880 --> 01:09:29,080
Speaker 1: another mistake. I made um in night when gold and

1025
01:09:29,120 --> 01:09:33,040
Speaker 1: silver peaked. Silver peaked at fifty at fifty dollars, and

1026
01:09:33,240 --> 01:09:38,519
Speaker 1: um I I was aware that it peaked and I

1027
01:09:38,560 --> 01:09:42,760
Speaker 1: had sold out before or at near the peak, and

1028
01:09:42,800 --> 01:09:46,759
Speaker 1: then it went down to thirty five dollars from fifty

1029
01:09:46,760 --> 01:09:50,160
Speaker 1: to thirty five silver, and then I thought it is

1030
01:09:50,200 --> 01:09:52,880
Speaker 1: now going to bounce to forty five. So I wanted

1031
01:09:52,960 --> 01:09:56,519
Speaker 1: to be smart and I bought silver from for a

1032
01:09:56,640 --> 01:10:00,080
Speaker 1: trade from thirty five to forty five. And instead of

1033
01:10:00,120 --> 01:10:03,040
Speaker 1: going to forty five, he just continued to go down.

1034
01:10:03,760 --> 01:10:08,000
Speaker 1: And I think at eighteen, I sold out with a

1035
01:10:08,040 --> 01:10:11,400
Speaker 1: fifty loss, and I turned the monitors up. I couldn't

1036
01:10:11,400 --> 01:10:15,080
Speaker 1: see it anymore, you know. I felt sick. And then

1037
01:10:15,120 --> 01:10:19,480
Speaker 1: I went back to the drawing board and doing my analysis,

1038
01:10:19,520 --> 01:10:22,400
Speaker 1: and I came to the conclusion, this thing goes down

1039
01:10:22,439 --> 01:10:26,200
Speaker 1: to ten and uh and I wait, and when we

1040
01:10:26,280 --> 01:10:29,639
Speaker 1: are in the range of ten around ten, I buy again,

1041
01:10:29,720 --> 01:10:33,519
Speaker 1: and I buy three times more than what I owned before.

1042
01:10:34,200 --> 01:10:37,479
Speaker 1: And I did that. About six months later. We were

1043
01:10:37,520 --> 01:10:41,439
Speaker 1: there and I bought that much, and I I thought

1044
01:10:41,840 --> 01:10:44,519
Speaker 1: we could have a really for maybe six or nine

1045
01:10:44,520 --> 01:10:49,519
Speaker 1: months back to double basically, and he did double. And

1046
01:10:49,600 --> 01:10:52,639
Speaker 1: I was in San Francisco when silver hit. I saw

1047
01:10:52,680 --> 01:10:55,759
Speaker 1: the headline in the Wall Street Journal Silver hits twenty four,

1048
01:10:56,479 --> 01:10:59,880
Speaker 1: and I stayed up late at night in San Francisco

1049
01:11:00,040 --> 01:11:03,439
Speaker 1: to call my office in Zurich that that that morning,

1050
01:11:03,920 --> 01:11:07,479
Speaker 1: said so I finally came out with the profit. But

1051
01:11:07,680 --> 01:11:12,240
Speaker 1: it was a long suffering, really really painful, really painful experience.

1052
01:11:12,240 --> 01:11:14,960
Speaker 1: It sounds like, so outside of the office, what do

1053
01:11:15,040 --> 01:11:17,120
Speaker 1: you do to relax? What do you do to stay

1054
01:11:17,200 --> 01:11:24,400
Speaker 1: mentally sharp? Um? I read a lot. I I love reading.

1055
01:11:25,439 --> 01:11:30,880
Speaker 1: I talked to friends to actually, I talked to many people.

1056
01:11:31,520 --> 01:11:37,680
Speaker 1: I like communication. I do some sports in winter ice key.

1057
01:11:37,720 --> 01:11:41,720
Speaker 1: In summer, I play golf. I go to the gym,

1058
01:11:41,880 --> 01:11:46,080
Speaker 1: um not too often, once a week or so. I

1059
01:11:46,120 --> 01:11:51,360
Speaker 1: don't do enough sports. I I walk, I bike. I

1060
01:11:51,479 --> 01:11:56,880
Speaker 1: love outdoors, and I do that particularly where the ground

1061
01:11:56,960 --> 01:11:59,880
Speaker 1: is flat, like in Florida or an island. I have

1062
01:12:00,000 --> 01:12:02,720
Speaker 1: a domicile in the North Sea, so you have you

1063
01:12:02,720 --> 01:12:06,480
Speaker 1: have a home in in Geneva, Zurich in in zook

1064
01:12:06,720 --> 01:12:09,320
Speaker 1: Zo Beach is a suburb of Zurich, all right, And

1065
01:12:09,360 --> 01:12:13,080
Speaker 1: then we're in the North Sea. It's the most German

1066
01:12:13,160 --> 01:12:18,439
Speaker 1: island off the Danish coast. Cold suit. It's a very German,

1067
01:12:18,600 --> 01:12:21,519
Speaker 1: very German island. But I love the climate. I love

1068
01:12:22,080 --> 01:12:26,880
Speaker 1: the calmness there. I love the nature. Um, there are

1069
01:12:26,880 --> 01:12:31,360
Speaker 1: four golf courses. You can bike, you can walk, you

1070
01:12:31,400 --> 01:12:35,519
Speaker 1: can enjoy the beach. There is a thirty mile beach

1071
01:12:36,080 --> 01:12:39,639
Speaker 1: you can walk. Can you swim there? You know it's cold,

1072
01:12:39,720 --> 01:12:42,600
Speaker 1: But I grew up at the River Rhine that is

1073
01:12:42,640 --> 01:12:46,120
Speaker 1: always called so I'm used to that. And we're in Florida,

1074
01:12:46,160 --> 01:12:50,200
Speaker 1: you spend time. I have a domicile of vacation domicile

1075
01:12:50,280 --> 01:12:53,600
Speaker 1: in in Naples, so it's lovely. I love it. But

1076
01:12:53,720 --> 01:12:58,800
Speaker 1: now we go down this weekend and uh, to look

1077
01:12:58,960 --> 01:13:01,519
Speaker 1: how it looks like, I think the landscape is pretty

1078
01:13:01,560 --> 01:13:05,080
Speaker 1: much damaged. Right, Well, that's this is still We're still

1079
01:13:05,080 --> 01:13:08,000
Speaker 1: in the last few weeks of hurricane season. So yeah,

1080
01:13:08,120 --> 01:13:11,800
Speaker 1: I my golf clubs down there told me that they

1081
01:13:11,880 --> 01:13:15,880
Speaker 1: lost half the trees. Wow, that's amazing. So what sort

1082
01:13:15,920 --> 01:13:18,839
Speaker 1: of advice would you give to a recent college graduate

1083
01:13:18,920 --> 01:13:21,559
Speaker 1: or a millennial who came to you and said, I'm

1084
01:13:21,600 --> 01:13:24,800
Speaker 1: interested in a career in asset management? What would you

1085
01:13:24,800 --> 01:13:31,800
Speaker 1: say to them? Study history? Study financial history. Also on

1086
01:13:31,920 --> 01:13:36,920
Speaker 1: top of history, UM, look at the long term trends.

1087
01:13:37,360 --> 01:13:41,280
Speaker 1: Try to understand what zeitgeist and changes in the zeitgeist

1088
01:13:41,520 --> 01:13:47,400
Speaker 1: mean for financial markets. Uh. And after having read and

1089
01:13:47,439 --> 01:13:50,519
Speaker 1: studied all that you go to the details that you

1090
01:13:50,600 --> 01:13:53,640
Speaker 1: need in your day to day business. You know, you

1091
01:13:53,640 --> 01:13:58,960
Speaker 1: you learn um analyzing a company, you learn analyzing an economy.

1092
01:13:59,640 --> 01:14:02,560
Speaker 1: You look at the main factors that are driving a

1093
01:14:02,640 --> 01:14:06,800
Speaker 1: cycle and learn how the cycle works. In at university

1094
01:14:06,840 --> 01:14:09,759
Speaker 1: they do not teach you how a business cycle works anymore.

1095
01:14:10,080 --> 01:14:15,120
Speaker 1: It's basically mathematics calculations. But they do not tell you

1096
01:14:15,479 --> 01:14:21,320
Speaker 1: how people interaction work in the economy and in the markets.

1097
01:14:21,880 --> 01:14:25,120
Speaker 1: And our final question, what is it you know today

1098
01:14:25,160 --> 01:14:29,120
Speaker 1: about investing that you wish you knew thirty or forty

1099
01:14:29,200 --> 01:14:31,960
Speaker 1: years ago when you first started your career as an

1100
01:14:31,960 --> 01:14:36,320
Speaker 1: asset manager. Quite frankly, I'm glad I didn't know what

1101
01:14:36,400 --> 01:14:38,880
Speaker 1: I know today because I would not have been as

1102
01:14:38,880 --> 01:14:42,880
Speaker 1: aggressive then as I have been. You know, if I

1103
01:14:43,000 --> 01:14:46,679
Speaker 1: knew all the risks that I know today, I would

1104
01:14:46,720 --> 01:14:50,080
Speaker 1: not have done as well as I have done. So,

1105
01:14:50,080 --> 01:14:54,479
Speaker 1: so a few good words about blind optimism and youth.

1106
01:14:54,720 --> 01:14:57,680
Speaker 1: Is that what you're saying? Absolutely, I think money management

1107
01:14:57,880 --> 01:15:03,480
Speaker 1: is a business for optimists because our system, it's a

1108
01:15:03,479 --> 01:15:09,720
Speaker 1: Fiat currency based system, it's a symmetric towards rising monetary inflation,

1109
01:15:10,160 --> 01:15:14,440
Speaker 1: and that is towards a rising asset prices and therefore

1110
01:15:15,200 --> 01:15:21,080
Speaker 1: a good um portion of optimism. NEIGHBORHOURDS. Thank you Phillips.

1111
01:15:21,080 --> 01:15:25,360
Speaker 1: This has been absolutely fascinating. We have been speaking with

1112
01:15:25,479 --> 01:15:31,479
Speaker 1: Felix Zulov of Zulov Consulting formally zulof Asset Management, Union,

1113
01:15:31,520 --> 01:15:36,000
Speaker 1: Bank of Switzerland, Ubs, etcetera. If you enjoy this conversation,

1114
01:15:36,080 --> 01:15:37,880
Speaker 1: be sure and look up an Inch or down an

1115
01:15:37,880 --> 01:15:44,720
Speaker 1: inch on Apple iTunes, SoundCloud, Bloomberg dot com, overcast wherever

1116
01:15:45,320 --> 01:15:48,280
Speaker 1: fine podcasts are sold, and you can see uh the

1117
01:15:48,360 --> 01:15:53,640
Speaker 1: other hundred and sixty or so such conversations we've had previously.

1118
01:15:54,360 --> 01:15:57,920
Speaker 1: We love your comments, feedback and suggestions right to us

1119
01:15:58,080 --> 01:16:02,320
Speaker 1: at m IB podcast at Bloomberg dot Net. I would

1120
01:16:02,320 --> 01:16:05,639
Speaker 1: be remiss if I did not thank the cracked staff

1121
01:16:05,720 --> 01:16:08,599
Speaker 1: we have here at Bloomberg who help us put together

1122
01:16:08,680 --> 01:16:13,920
Speaker 1: these wonderful conversations each week. Medina Parwana is my producer

1123
01:16:13,960 --> 01:16:18,200
Speaker 1: and audio engineer. Taylor Riggs is our producer and booker.

1124
01:16:18,760 --> 01:16:23,000
Speaker 1: Michael Batnick is our head of research. I'm Barry Retolts.

1125
01:16:23,160 --> 01:16:26,759
Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.