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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along

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Speaker 2: with Paul Sweeney. Join us each day for insight from

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Speaker 2: the best in economics, finance, investment, and international relations. You

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Speaker 2: can also watch the show live on YouTube. Visit the

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Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday

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Speaker 2: mornings from seven to ten am Eastern from our global

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Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify,

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Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio,

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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app. Now to

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Speaker 2: drive the China story forward in economics, finance, and investment.

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Speaker 2: Joining us right now, Virginia Mass New Global Cio Equity

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Speaker 2: at Alion's as well. Virginny. I'm sure you've done this,

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Speaker 2: but if you're at at the restaurant Cafe Monsieur diorg

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Speaker 2: at Montana thirty Montaigna in Paris, and you know you

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Speaker 2: sat down with mister Arnaut's offspring and said, what about China?

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Speaker 2: How would you brief the Arnold family now and the

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Speaker 2: vibrancy in the future of China consumption?

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Speaker 3: Well, thank you that's a great I love the staging here.

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Speaker 3: It's quite quite fun. Listen. I think China clearly has

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Speaker 3: gone through a tough time and when you see particularly

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Speaker 3: demanding luxury good and the substitution that we start seeing

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Speaker 3: within China, luxury is finding it quite tough. However, there

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Speaker 3: is a lot of negative sentiment on China, and I

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Speaker 3: think the packages that they've put yesterday are still underestimated

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Speaker 3: by a lot of investors, particularly because of the impact

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Speaker 3: it could have a domestic consumption confidence as it relates

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Speaker 3: to the property market.

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Speaker 2: Do you just assume fiscal stimulus to come. We're ago

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Speaker 2: and canes today. When the facts change, Beijing changes.

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Speaker 3: Yeah, I think fiscal stimulus is needed. The current package

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Speaker 3: is quite big, as you know, in terms of support

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Speaker 3: to property and capital market. But what I would like

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Speaker 3: to see is an AMC for property, basically an asset

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Speaker 3: management company, the same way we had remember in some

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Speaker 3: of the previous crisis, to help with the banks and pls.

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Speaker 3: I'm not saying this is going to be announced, but

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Speaker 3: what I'm saying is it would make a lot of

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Speaker 3: sense as the next step. And you can see how

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Speaker 3: China has timed the release of this package after the

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Speaker 3: fat cut, so that the impact on the currency versus

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Speaker 3: the dollar was not too strong, and so I think

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Speaker 3: we'll have more coming.

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Speaker 4: We say good morning to your no family and everyone

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Speaker 4: else listening in the eighth in Paris. For let me

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Speaker 4: ask you just about the market reaction to all of

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Speaker 4: this and baked into these plans announced by the PBOC

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Speaker 4: in China or was this stock stabilization fund our friend

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Speaker 4: John Authur's are colleg John authors referring to that is

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Speaker 4: kind of like a FED put in effect.

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Speaker 5: You look at how this.

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Speaker 4: Is rippling out through Asia, not really rippling out through

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Speaker 4: throughout Europe and the US, as one might think, how

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Speaker 4: do you see the market effects the knock on effects

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Speaker 4: of what's happened in China over these last couple of days.

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Speaker 3: Yeah, so I think it's not only China. I think

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Speaker 3: it's you know, we're at an interesting point in the

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Speaker 3: markets with key things in the macroeconomy, the political economy,

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Speaker 3: and the financial economy. So on one hand, you have

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Speaker 3: had all those announcements, and of course positive sentiment on

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Speaker 3: China has an impact on Asia, but you also have

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Speaker 3: the impact of the FED rate cuts, which of course

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Speaker 3: is going to have an impact on areas that are

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Speaker 3: strongly anchored around property, and you can see that with

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Speaker 3: Hong Kong for ext So I think it's the convergence

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Speaker 3: of those two trends that is supporting markets.

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Speaker 4: Love to pull back and look at the United States

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Speaker 4: as well, and you've written about this tension that exists

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Speaker 4: between the political cycle and the economic cycle here in

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Speaker 4: the United States. Where do you see most of that

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Speaker 4: tension lying is in terms of tax policy, tariff's policy,

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Speaker 4: if we want to keep with the China theme that

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Speaker 4: we're having this morning. I think a lot of people

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Speaker 4: downplay the sort of role that an election might have

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Speaker 4: just exclusively. But when you look at policy going forward

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Speaker 4: under either of these two administrations, what stands out to

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Speaker 4: you the most, what's likely to have the biggest effect.

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Speaker 3: Yeah, So I think on one hand, you have continuity.

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Speaker 3: On the other hand, you have unknown with a lot

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Speaker 3: of potential announcements that if you actually look at the

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Speaker 3: announcement and the impact on finances of the country or

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Speaker 3: the realistic the pragmatic view of how you implement those

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Speaker 3: a little bit more questionable. I would say, so we

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Speaker 3: would look at inflation through tariffs if we have one

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Speaker 3: administration versus another That sustainability has been a big topic

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Speaker 3: of mind for over twelve months now. As you know,

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Speaker 3: if you have a continuation of the corporate tax rate cut,

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Speaker 3: you know that's about five six trillion dollars. But if

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Speaker 3: you have more happening, you know, how do we financing

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Speaker 3: at the time where we were quite leveraged, and of

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Speaker 3: course the cost of financing that that is coming down,

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Speaker 3: but the long end is not coming down as much.

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Speaker 2: Right, Virginie, What is the cost of having too much

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Speaker 2: cash in a portfolio right now into twenty twenty five

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Speaker 2: if the facts change, So I've got to look differently

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Speaker 2: at cash, triple leverage or that. Yeah.

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Speaker 3: So, as you know, most of our clients in inequities

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Speaker 3: have maximum cash generally five percent. So but you can

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Speaker 3: absolutely be there. You're still getting some interesting returns on

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Speaker 3: your cash. But I think the way to navigate that

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Speaker 3: volatility is really more about balancing. So in the developed market,

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Speaker 3: you know, having that balanced portfolios between the cyclical aspect

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Speaker 3: of the stocks who might do well on those rate

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Speaker 3: cuts and a more defensive, you know element of the portfolio.

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Speaker 3: Continuing however, to have your your tech long term long

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Speaker 3: term stocks right. At the same time, what you're seeing

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Speaker 3: is exposure, more opportunistic exposure, perhaps in emerging markets or China.

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Speaker 3: In Asia, we still like Japan, and we like China

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Speaker 3: as really an area of the market that's very emptiqu consensus.

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Speaker 2: Virginie, thank you so much to you at Montania thirty

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Speaker 2: there in the New York Cathe virginias a mention of

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Speaker 2: Paris and of course always of Alliance as well. One

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Speaker 2: of the great moments of late September in the early

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Speaker 2: and I will go back as far as a gentleman

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Speaker 2: from Iowa who supported FDR and then became a conservative

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Speaker 2: Republican and moved to the center to get elected. His

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Speaker 2: name was Ronald Reagan. And maybe that's a moment we

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Speaker 2: are with these two candidates, is they frame out who

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Speaker 2: to move to the center. The governor from Connecticut is

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Speaker 2: more than skilled at this discussion. We should point out

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Speaker 2: that Governor Lamont's wife, Annie Lamont, serves as a board

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Speaker 2: member of Bloomberg LP, the parent company of Bloomberg Radio.

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Speaker 2: Ned Lamont, David Gurra knows a lot about moving to

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Speaker 2: the center.

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Speaker 4: Govern Lamont, great to have you with us, and let

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Speaker 4: me start here just by asking you about the speech

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Speaker 4: that we're going to hear today from the Vice President

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Speaker 4: in Pittsburgh, a major economic address. I was reading extracurricular

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Speaker 4: this morning, looked at The Times and Jim tankersly talked

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Speaker 4: about how outside groups are agitating for her to take

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Speaker 4: a more populist position on the economy, Tom mentioning this

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Speaker 4: movement to the center. Are you going to hear from

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Speaker 4: the Vice president today? What do we need to hear

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Speaker 4: from the vice president? What do you want to hear

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Speaker 4: from the Vice president?

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Speaker 6: Well, good boy, David and Tom.

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Speaker 7: Tom, maybe i'll see you up at the Grunwich Economic

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Speaker 7: Forum next month.

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Speaker 6: What I want to hear.

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Speaker 7: Is flesh out continuing the opportunity economy that she alluded

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Speaker 7: to during the convention and going forward, that's a big

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Speaker 7: focus on new business startups, the innovation economy that here

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Speaker 7: in Connecticut we've started more new businesses in the last

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Speaker 7: few years than ever before, and frankly a lot of.

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Speaker 6: Them are women and minority owned businesses. You know, deal

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Speaker 6: with also.

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Speaker 7: AI and advanced manufacturing and all the other places. It's

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Speaker 7: a great time to be in the startup economy. I

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Speaker 7: think that'll be a focus.

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Speaker 4: I hear the former president talking an awful lot about tariffs.

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Speaker 4: He was in Savannah yesterday, talked about tariff's being a

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Speaker 4: beautiful word. As he put it, there's a simplicity to

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Speaker 4: him saying it over and over again. People might misapprehend

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Speaker 4: what it means or what the consequences might be. Our

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Speaker 4: understanding is the Vice President's going to talk about targeted

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Speaker 4: tax incentives today, a difficult term I think to sell

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Speaker 4: to the American public.

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Speaker 5: How does she do it?

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Speaker 4: How does she convince Americans that this kind of industrial

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Speaker 4: policy is going to be a benefit to them.

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Speaker 6: Look, I think terroriff is another word for tax.

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Speaker 7: It's a middle class consumer tax, and you're going to

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Speaker 7: be paying that in terms of higher inflation and higher costs.

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Speaker 7: I think Vice President Harris has a different strategy obviously,

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Speaker 7: with incentives.

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Speaker 6: She wants to help those small companies.

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Speaker 7: Grow and expand more of an ownership of company, opportunity

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Speaker 7: to own your own company, and also, as you know

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Speaker 7: in housing, own your own home as well.

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Speaker 6: It's good to have a stake in your community.

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Speaker 4: I want to ask you about how much time there

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Speaker 4: is between now and the election. You're acutely aware of it,

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Speaker 4: and there's a school of thought that it's too late

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Speaker 4: in the game to change minds, that voters have made

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Speaker 4: up their minds. Yes, we talk about these undecided voters

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Speaker 4: a few as they are in these handful of states

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Speaker 4: and districts. Are you one who believes that at this point,

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Speaker 4: giving a speech like that is unveiling a plan that

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Speaker 4: I gather is going to be about eighty pages long,

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Speaker 4: is gonna is going to do work to do that

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Speaker 4: people can still be convinced here forty plus days till

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Speaker 4: the election.

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Speaker 6: I get the idea that I have a three hundred

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Speaker 6: million people.

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Speaker 7: Maybe there's a million that are still persuadable in five

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Speaker 7: or six states.

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Speaker 6: But I think Kamala Harris, you're going to see what

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Speaker 6: she has.

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Speaker 7: In mind when it comes to manufacturing and jobs and opportunity.

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Speaker 6: I think she's very entrepreneurial in that sense.

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Speaker 2: With us now, the governor of Connecticut, Ned Lamont, we

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Speaker 2: welcome all of you nationwide Bloomberg Surveillance.

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Speaker 5: David, I've got to ask you.

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Speaker 4: You mentioned taxes just a moment ago in the context

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Speaker 4: of Tariff's being like them in your estimation, taxation front

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Speaker 4: and center in your backyard, as we had the former

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Speaker 4: president traveling to Connecticut to talk about the reversal of

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Speaker 4: something that he did.

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Speaker 2: We got to do, we gotta governor, we gotta make

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Speaker 2: this granular. Okay, we got to get granular. There's a

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Speaker 2: houth on North Street in Greenwich, Connecticut that a Spielberg

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Speaker 2: parachuteed in. He'd say, we we can use this. Built

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Speaker 2: in seventeen ninety six, actually pretty reasonable by Connecticut standards,

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Speaker 2: under three million dollars, David, the property tax was rounded

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Speaker 2: out to twenty five thousand, two hundred and seven dollars.

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Speaker 4: Continue, the former president talks about restoring the salt deduction,

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Speaker 4: which was capped when he was the president and his

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Speaker 4: tax bill was pushed through. Help our listeners on Global

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Speaker 4: Wall Street understand the significance of that decision that he

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Speaker 4: and other Republicans made back then and the import of

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Speaker 4: doing away with that cap.

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Speaker 7: A first book on that house you referred to a

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Speaker 7: Grutwich is probably two million dollars five years ago.

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Speaker 6: With his three million dollars a day, A lot of

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Speaker 6: people moving into this state.

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Speaker 7: But you're absolutely right, David, that salt reducing the deduction

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Speaker 7: on that was very costly to states where we invest

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Speaker 7: a lot in K through twelve education that's reflected.

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Speaker 6: In property taxes.

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Speaker 7: So raising that deduction level, which I think is something

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Speaker 7: both Kamala Harris and for President Trump have talked about,

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Speaker 7: would be very.

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Speaker 6: Meaningful up here.

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Speaker 4: Governor Tom often talks to me about the importance of

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Speaker 4: knowing history, thinking about history. As Donald Trump makes his

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Speaker 4: way through Long Island into your neck of the woods,

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Speaker 4: do people remember who's responsible for putting that cap in place?

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Speaker 6: I think we'll be reminded them.

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Speaker 4: As we migrate back to the speech that we're going

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Speaker 4: to get today. Focusing again on this industrial policy, I

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Speaker 4: wonder what the endgame is here for both of these candidates.

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Speaker 4: I think there is a desire to bring more manufacturing

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Speaker 4: to the United States from overseas. We remember, thinking again

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Speaker 4: about history about how much was made in this country before.

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Speaker 4: We're not going to get back to that, are we.

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Speaker 4: I mean, what's the dream, what's the vision that your

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Speaker 4: candidate has that politicians have for a sort of renaissance

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Speaker 4: or resurgence of manufacturing in the United States.

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Speaker 5: What does it look like.

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Speaker 7: I can tell you in the last six years, we've

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Speaker 7: brought more manufacturing back to the state of Connecticut. We

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Speaker 7: have a lower unemployment rate than the national average. That

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Speaker 7: was not true for much generation. I think some of

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Speaker 7: that is related to the fact that advanced manufacturing, it's

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Speaker 7: very calful, intensive, requires high level computer skills. If you

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Speaker 7: go to some of these sublaces where making jet engine

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Speaker 7: and submarines, and I think that old plays or.

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Speaker 2: Strengths Nedlamont tell me about the fancy people, and you've

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Speaker 2: had the class to stay in Connecticut. Frankly, you could

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Speaker 2: do whatever you want. You've done the political game, which

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Speaker 2: is fine. Those fancy people moving to Florida, what's the

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Speaker 2: mistake they're making. I mean, there's an exodus from Connecticut,

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Speaker 2: a fancy people to Florida. Discuss that impact.

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Speaker 7: The good news, Tom is we have more young people

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Speaker 7: moving into the state of Connecticut. Never before more young

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Speaker 7: people staying in the state of Connecticut.

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Speaker 6: But you're absolutely right.

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Speaker 7: You know, going back, even before we had an income tax,

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Speaker 7: a lot of older folks and wealthy folks did go

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Speaker 7: down to Florida. Hope Sound was traded back in the

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Speaker 7: fifties by that crowd. Look, I think far is a

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Speaker 7: great place. The visitor wouldn't want to live there.

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Speaker 2: I want to talk to you about a tough topic.

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Speaker 2: We talked to an elite audience here a Bloomberg, But

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Speaker 2: Governor Lamont, it's just simple people in the you know,

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Speaker 2: you look at a more challenging part of Connecticut, like Bridgeport.

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Speaker 2: They're not worried about Jupiter Island or Hope Sound. They're

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Speaker 2: worried about drugs right now. What do you need from

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Speaker 2: Washington to help this nation with our drug crisis? A fentanyl?

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Speaker 7: The good news is the venyl crisis has received a

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Speaker 7: little bit using some federal resources, a lot by the

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Speaker 7: state doing a lot more in terms of the intervention

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Speaker 7: early on, taking care of narcon in the schools, doing

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Speaker 7: everything we can there. But I'm a big believer in opportunity.

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Speaker 7: When young people see there's opportunity there, they have a

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Speaker 7: better alternative. That's why free workforce training, we guarantee you

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Speaker 7: a job if you pass with those skills.

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Speaker 6: I think that's a big part of the answer too,

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Speaker 6: Tom Govinor.

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Speaker 4: We've been talking an awful lot about polls these last

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Speaker 4: few days, and there have been plenty of them. You've

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Speaker 4: seen them, I'm sure, And what seems to be bubbling

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Speaker 4: up to the top is this interest in passion for

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Speaker 4: getting the economy to be in better shape. That's what

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Speaker 4: voters care about. As you make your rounds through Connecticut,

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Speaker 4: what are voters telling you the problems are when it

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Speaker 4: comes to the economy and what needs to change. How

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Speaker 4: much are they looking to Washington to affect that change?

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Speaker 7: As I go around the state of Connecticut, I think

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Speaker 7: people feel like we're in a pretty good place from

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Speaker 7: an economic point of view, but affordability is an enormous issue.

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Speaker 7: Everything from growthry and right now electric rates going up.

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Speaker 7: You know, electric is a big deal for us because

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Speaker 7: demand is going up through the roof, look at data centers,

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Speaker 7: and yet supply is still tough for at the end

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Speaker 7: of the supply chain here.

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Speaker 6: So that's what I hear afordability.

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Speaker 2: Governor, I got time for one more question. It's the

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Speaker 2: only one that matters. What can the governor of Connecticut

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Speaker 2: do about Amtrak and the wires in the heat of

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Speaker 2: August popping up from New York to Boston, Boston, New York.

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Speaker 2: I mean, I mean, we're not going to blame this

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Speaker 2: on the state of Connecticut. Ned Lamont, what are they

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Speaker 2: They're they're doing better after the tunnels in New York,

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Speaker 2: they're doing better to Washington. What can we do about

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Speaker 2: Amtrak and Connecticut?

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Speaker 7: I think thanks to the Infrastructure Bill, Tom, you're going

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Speaker 7: to see a big difference there.

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Speaker 6: Amtrak.

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Speaker 7: Joe kind of cared a lot about Amtrak, and that

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Speaker 7: means everything can straighten me out. Be a rail where

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Speaker 7: we can so you can get higher speed. You know,

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Speaker 7: one of these hundred year old bridges, Tom costs us

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Speaker 7: about two minutes because you've got to slow down and

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Speaker 7: then speed up on the backside of it. So I

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Speaker 7: think you'll see some real progress there, but it's probably

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Speaker 7: going to take a decade.

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Speaker 2: I got I got a time, like a minute here.

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Speaker 2: This is really important, Edlamont. President Biden speaking to the

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Speaker 2: UN yesterday. We were thrilled he stopped by Bloomberg philanthropies

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Speaker 2: as well. What will be the Joe Biden legacy? You

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Speaker 2: talk about Amtrak? Joe, I think he's comfortable that, but

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Speaker 2: after the Halay, just six months as president has had

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Speaker 2: what will be his Democratic Party legacy builder.

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Speaker 7: I think everybody since I've been around, I've been around

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Speaker 7: for a while says we're going to.

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Speaker 6: Start rebuilding America. I think he did that.

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Speaker 7: Look where we were four years ago with sage Brush

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Speaker 7: blowing down empty streets, and now what you're going to

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Speaker 7: see in terms of roads and bridges and good paying

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Speaker 7: jobs and speeding up Amtrak for you.

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Speaker 6: I think that'll be a big piece of his legacy.

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Speaker 2: Nettla Mount, thank you so much. The governor of Connecticut

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Speaker 2: with us this morning, David Boro, thank you so much

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Speaker 2: for that conversation, just really outstanding. Upon joining us. Now

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Speaker 2: for Global Wall Street, we welcome all of you around

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Speaker 2: the world, across the nation. Here Michael Mobison. I'm going

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Speaker 2: to frame this out, David. He's got a very important

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Speaker 2: Morgan Stanley piece out for Counterpoint Global Insights on stock

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Speaker 2: market concentration. But I think we need to know how

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Speaker 2: we got here. David Gera with Michael Mobison. Somewhere in

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Speaker 2: the late nineties a credit sueee. They put out this

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Speaker 2: literature that was seven eight nine pages and you'd swear

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Speaker 2: because you had to read every word, and you go,

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Speaker 2: who is this mobile I can't even pronounce his name.

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Speaker 2: Who is this Mobison guy? And what began really culminating

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Speaker 2: in the Internet boom, the first boom of two thousand

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Speaker 2: and one two was the required theoretical read on Wall Street.

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Speaker 2: He extended this from Credit Squeeze to like Mason now

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Speaker 2: At and Morgan Stanley. We're thrilled that Michael Mobison could

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Speaker 2: join us for extended conversation today. Do your old essays

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Speaker 2: still hold true today? Those seminal capital allocation essays that

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Speaker 2: you wrote, I'm going to say this twenty five years ago.

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Speaker 2: The math is still the same, right.

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Speaker 5: I think the math is the same. And well, I

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Speaker 5: guess I'll lead it.

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Speaker 8: Leave it to the readers to actually judge ultimately whether

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Speaker 8: that's the case. But I'll say, Tom, just backing up

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Speaker 8: a little bit. You know, I was very fortunate to

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Speaker 8: be able to with the folks in the Santa Fean

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Speaker 8: institude learning about a lot of these concepts like power

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Speaker 8: laws and increasing returns. Now those things are you network effects?

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Speaker 8: These are all it's kind of common language today.

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Speaker 2: Right.

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Speaker 8: That was very novel roughly thirty years ago, So I

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Speaker 8: was able to be maybe a slightly bit ahead of

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Speaker 8: trying to implement those.

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Speaker 5: Ideas and think about it.

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Speaker 8: And by the way, the Internet boom was just like

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Speaker 8: the classic It was a canonical boom and bust, right,

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Speaker 8: and you can see it unfold before your eyes, so

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Speaker 8: you could actually write about it and say, like, we

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Speaker 8: know that ninety percent of these companies are going to

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Speaker 8: go away, but we're experimenting, right.

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Speaker 2: You nailed eight nine ten essays in I can't remember.

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Speaker 2: And this is some electrical engineering folks. You don't go

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Speaker 2: semi log, you go loglog and you end up with

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Speaker 2: a hyperbole. Which is that curvey thing you just studied

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Speaker 2: in David at school. You nailed the few would win

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Speaker 2: I believe Amazon was your model there, but on a

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Speaker 2: loglog chart, a few winners would be there. You absolutely

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Speaker 2: nailed that. Is that our future?

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Speaker 8: Well, I mean, the thing is the distribution of company

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Speaker 8: sizes is a power follows a power law and I

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Speaker 8: don't I don't know that we know exactly why that's

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Speaker 8: the case.

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Speaker 5: So it was.

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Speaker 8: True then, it was true back in the nineteen fifties,

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Speaker 8: and I suspect there's no reason to believe it's not

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Speaker 8: going to be true going forward.

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Speaker 5: So the answer is yes. The challenge is.

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Speaker 8: Figuring out precisely what you said, Tom, which is which

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Speaker 8: companies canna lie where on that power law distribution right,

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Speaker 8: and power law. By the way, power law is it's

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Speaker 8: like it is, it ends up being a straight line

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Speaker 8: when you do it on a log lag. But it's

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Speaker 8: not intuitive when you when you actually run through the numbers,

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Speaker 8: because obviously every log is you're doubling, where you're increasing

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Speaker 8: the same percentage for each tick mark.

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Speaker 2: What Momison is saying is not intuitive is I got

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Speaker 2: to see today. That's what that means. I got to

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Speaker 2: get One more question is because girls worried about the present.

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Speaker 2: If that's the case, and if I go to Krugman,

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Speaker 2: who's been very good about monopsimistic tendencies, is there an

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Speaker 2: American capitalistic tendency where the few just get bigger and

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Speaker 2: bigger the exploitation theory.

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Speaker 5: Yeah, I don't.

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Speaker 8: This is this is another really fascinating thing. If you

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Speaker 8: look at the last twenty years in particular, what our

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Speaker 8: number show, and we do a lot of work on

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Speaker 8: returns on to vesa capal for businesses, what our number

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Speaker 8: show is that the larger companies have distanced themselves.

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Speaker 5: From the smaller companies.

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Speaker 8: So people talk a lot about large cap versus small cap,

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Speaker 8: but the underlying economics for these big guys is actually

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Speaker 8: quite good. And you know this can well, I'm sure

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Speaker 8: we'll talk about stock market concentration, but this ties into

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Speaker 8: that argument, which is the fundamentals seem to be the case.

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Speaker 5: So how does that go on forever? I have no idea.

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Speaker 8: I'm more observing than i'm predicting, but the last twenty

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Speaker 8: years have been quite unusual in that and that specific context.

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Speaker 4: Well, let's go to the present tense, but I'll stick

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Speaker 4: with with with learning from history as well. And I wonder,

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Speaker 4: as we talk about you're writing on the internet in

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Speaker 4: the past, how much that is an analog to what

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Speaker 4: we're seeing today. How much are you thinking about what

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Speaker 4: happened then as you look at what's happening now with

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Speaker 4: kind of the exuber instant excitement about right, artificial intelligence?

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Speaker 8: Right, I look, I think that there's a model, and

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Speaker 8: you go back to the railroads and canals, I mean

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Speaker 8: everyone radio, We see the same pattern every single time.

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Speaker 8: By the way, this is well documented by an econress

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Speaker 8: named Stephen Klepper, formerly a Carnegie Mellon University And basically

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Speaker 8: the patterns is this, you have a huge number of companies.

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Speaker 5: Trying out a lot of stuff.

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Speaker 8: Most of those companies are gonna fail, but you can

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Speaker 8: think about each of them's options. Eventually, the market in

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Speaker 8: quotation marks selects the technology that's going to win and

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Speaker 8: then everything else they consolidate or go out of business,

440
00:22:24,080 --> 00:22:24,480
Speaker 8: whatever it is.

441
00:22:24,680 --> 00:22:25,320
Speaker 2: So you have this.

442
00:22:25,320 --> 00:22:28,199
Speaker 8: Experimentation phase and then you figure it out, and then

443
00:22:28,240 --> 00:22:30,840
Speaker 8: you have this sort of waning of all the all

444
00:22:30,880 --> 00:22:35,200
Speaker 8: the losers. Yeah, we go through every time you see

445
00:22:35,200 --> 00:22:37,160
Speaker 8: a new technology come along. And by the ways, funny

446
00:22:37,160 --> 00:22:38,800
Speaker 8: I was I was with a client this is like

447
00:22:38,840 --> 00:22:41,040
Speaker 8: two thousand and one, and the guy.

448
00:22:40,840 --> 00:22:42,920
Speaker 5: Says, oh, he just lived through the dot com boom

449
00:22:42,960 --> 00:22:45,080
Speaker 5: and bust. You know, do you think we've wisened up

450
00:22:45,080 --> 00:22:48,680
Speaker 5: and that will never do this again? I was like, zero.

451
00:22:48,600 --> 00:22:51,960
Speaker 8: Probability of that. No, not maybe not zero, but basically

452
00:22:52,000 --> 00:22:53,960
Speaker 8: close to zero. I mean, this is how it works.

453
00:22:54,000 --> 00:22:56,880
Speaker 8: And so and by the way, as a fascinating side note,

454
00:22:56,920 --> 00:22:59,040
Speaker 8: scientists said, this is how our brains actually, how we

455
00:22:59,080 --> 00:23:01,320
Speaker 8: develop our brains, naptic connections in our brain to do

456
00:23:01,359 --> 00:23:03,199
Speaker 8: the same thing from the time you're born. In timey three,

457
00:23:03,240 --> 00:23:06,200
Speaker 8: you have the explosion of some naptic connections. Try and also,

458
00:23:06,640 --> 00:23:08,119
Speaker 8: if you've ever been around a three year old, we

459
00:23:08,160 --> 00:23:11,640
Speaker 8: all have been. They're very inefficient little things, but they

460
00:23:11,680 --> 00:23:14,080
Speaker 8: take in everything right, but then you prune away the

461
00:23:14,080 --> 00:23:15,399
Speaker 8: stuff that doesn't matter.

462
00:23:15,200 --> 00:23:16,800
Speaker 5: And you keep the stuff that's good, and you go.

463
00:23:16,760 --> 00:23:18,679
Speaker 2: From David get stuck market concentration.

464
00:23:19,240 --> 00:23:21,600
Speaker 4: I remember talking with Michael Hartnett of Bank of America

465
00:23:21,600 --> 00:23:24,280
Speaker 4: a few years back, he who coined the term Magnificent seven,

466
00:23:24,280 --> 00:23:26,280
Speaker 4: and we talked an awful lot about the need for

467
00:23:26,760 --> 00:23:28,760
Speaker 4: the market to broaden out the concerns that we've heard

468
00:23:28,760 --> 00:23:31,439
Speaker 4: about concentration. We can stay in the present tense, but

469
00:23:31,480 --> 00:23:34,040
Speaker 4: pull back as much as you'd like here, how much

470
00:23:34,080 --> 00:23:35,919
Speaker 4: have we've seen that happen? How vital is it that

471
00:23:35,960 --> 00:23:38,080
Speaker 4: we have that kind of moving back from just a

472
00:23:38,080 --> 00:23:39,040
Speaker 4: handful of names.

473
00:23:39,320 --> 00:23:40,600
Speaker 5: I just don't know how to answer this question.

474
00:23:41,320 --> 00:23:44,119
Speaker 8: I was like, so I was really reticent to waiting

475
00:23:44,160 --> 00:23:45,720
Speaker 8: to this topic at all, But I was like, there

476
00:23:45,720 --> 00:23:46,919
Speaker 8: are a couple of things that seemed.

477
00:23:46,640 --> 00:23:47,240
Speaker 5: To be missing here.

478
00:23:47,320 --> 00:23:49,440
Speaker 8: Number one is just going back further in history, right,

479
00:23:49,480 --> 00:23:52,199
Speaker 8: So we went back to nineteen fifty The concentration we

480
00:23:52,200 --> 00:23:55,040
Speaker 8: see today is clearly precedent. It was the nineteen sixties,

481
00:23:55,080 --> 00:23:57,840
Speaker 8: and why we go back nineteen thirties? That was the basically,

482
00:23:57,880 --> 00:24:01,160
Speaker 8: that was the standard. But number two is he asked

483
00:24:01,160 --> 00:24:03,960
Speaker 8: the basic question, if you had a clean sheet of

484
00:24:03,960 --> 00:24:06,399
Speaker 8: paper and you knew nothing about this, how would you

485
00:24:06,400 --> 00:24:11,000
Speaker 8: figure out what concentration should be. The reason it's so

486
00:24:11,080 --> 00:24:13,080
Speaker 8: disconcerned is because we've gone up a lot in the

487
00:24:13,119 --> 00:24:16,240
Speaker 8: last decade, But what should it be? And so we said, oh,

488
00:24:16,320 --> 00:24:18,719
Speaker 8: one way to think about that's the underlying economic profits. Right,

489
00:24:18,720 --> 00:24:20,720
Speaker 8: economic profits or return on capital times the amount of

490
00:24:20,760 --> 00:24:23,080
Speaker 8: capital you have. And it turns out, for example, the

491
00:24:23,160 --> 00:24:25,679
Speaker 8: year end of twenty twenty three, top ten companies were

492
00:24:25,680 --> 00:24:27,720
Speaker 8: twenty seven percent of the market cap in the United States,

493
00:24:27,800 --> 00:24:29,919
Speaker 8: and they were sixty nine percent of the economic profit.

494
00:24:30,040 --> 00:24:32,200
Speaker 8: If you go back even a decade, they're typically in

495
00:24:32,240 --> 00:24:34,480
Speaker 8: the high teens in terms of percentage, but they're in

496
00:24:34,480 --> 00:24:37,359
Speaker 8: the mid forties in terms of economic profit. So not

497
00:24:37,440 --> 00:24:40,200
Speaker 8: to say that anything is in quotes justified or not justified.

498
00:24:40,440 --> 00:24:42,480
Speaker 8: So widening out the market, you say, like you'd have to,

499
00:24:42,480 --> 00:24:45,320
Speaker 8: there should be an economic justification for it, not just

500
00:24:45,880 --> 00:24:47,359
Speaker 8: this is how it used to be. You should go

501
00:24:47,359 --> 00:24:48,560
Speaker 8: back to being what it used to be.

502
00:24:48,720 --> 00:24:51,080
Speaker 2: So I'm going to read this verbatim. I put it

503
00:24:51,080 --> 00:24:55,280
Speaker 2: on Twitter. This is Harvey D. Shapiro in Barons with

504
00:24:55,480 --> 00:24:59,879
Speaker 2: research from Arizona States. Henrik, that's some blinder. Just eight

505
00:25:00,200 --> 00:25:03,840
Speaker 2: six stocks accounted for half of the total stock market

506
00:25:03,840 --> 00:25:07,639
Speaker 2: wealth creation. Over ninety years, less than half of the

507
00:25:07,680 --> 00:25:12,439
Speaker 2: stocks in the universe generated any returns. Only forty two

508
00:25:12,520 --> 00:25:16,480
Speaker 2: percent earn more than risk free treasuries. Less than four

509
00:25:16,640 --> 00:25:21,680
Speaker 2: percent of thousands and thousands of stacks in this universe

510
00:25:22,240 --> 00:25:26,680
Speaker 2: accounted virtually all of market gains. Harvey Shapiro, tour de

511
00:25:26,800 --> 00:25:29,160
Speaker 2: Force and Barons and the guy to talk to about

512
00:25:29,160 --> 00:25:33,280
Speaker 2: it Michael Mobison with us right now modern portfolio theory

513
00:25:33,359 --> 00:25:36,719
Speaker 2: and Peter Lynch called it diversification? Is it our evil?

514
00:25:37,600 --> 00:25:40,160
Speaker 8: I mean, it's this is the most challenging thing when

515
00:25:40,160 --> 00:25:43,919
Speaker 8: you think about acting active management because let's say, so,

516
00:25:44,200 --> 00:25:45,879
Speaker 8: just just to play back that you said, it's a

517
00:25:45,920 --> 00:25:48,320
Speaker 8: handful of companies that generate most of the shoold of

518
00:25:48,359 --> 00:25:50,679
Speaker 8: wealth over long periods of time. Let's say you're a

519
00:25:50,720 --> 00:25:53,240
Speaker 8: portfolio manager and you're smart enough to have identified one

520
00:25:53,280 --> 00:25:54,840
Speaker 8: of these and put in your portfolio. Let's say you

521
00:25:54,880 --> 00:25:56,480
Speaker 8: bought Apple fifteen years ago.

522
00:25:56,680 --> 00:25:59,879
Speaker 5: Awesome. What happens is it becomes so big in your.

523
00:25:59,720 --> 00:26:05,080
Speaker 8: Poor folio that you blow through all of your diversification requirements.

524
00:26:05,119 --> 00:26:07,240
Speaker 2: Will danofsving this fidelity?

525
00:26:07,280 --> 00:26:09,240
Speaker 5: Will Dan, I mean to anybody that's big like that.

526
00:26:09,440 --> 00:26:11,600
Speaker 8: So so it's a funny thing that on the one hand,

527
00:26:11,600 --> 00:26:13,480
Speaker 8: you see the numbers and you know that, and on

528
00:26:13,560 --> 00:26:16,560
Speaker 8: the other hand it's very difficult to actually take advantage

529
00:26:16,560 --> 00:26:19,000
Speaker 8: of it. And by the way, for your own personal account,

530
00:26:19,000 --> 00:26:21,840
Speaker 8: people can do this, right, even Berkshire Hathaway. I know

531
00:26:21,880 --> 00:26:24,680
Speaker 8: they sold back their apple steak, but a couple of

532
00:26:24,720 --> 00:26:28,360
Speaker 8: quarters ago it was fifty percent of their public equity portfolio.

533
00:26:29,560 --> 00:26:32,399
Speaker 8: You can't run a fund with fifty percent in the

534
00:26:32,480 --> 00:26:34,840
Speaker 8: largest company in the world, mostly liquid company in the

535
00:26:34,880 --> 00:26:37,439
Speaker 8: world right on a viable business basis. So it's a

536
00:26:37,520 --> 00:26:40,760
Speaker 8: very interesting contrast. But the point being, the fundamental point

537
00:26:40,800 --> 00:26:43,040
Speaker 8: is this skewness. And by the way, it's not just

538
00:26:43,080 --> 00:26:43,920
Speaker 8: the United States.

539
00:26:44,400 --> 00:26:45,119
Speaker 5: You go around the.

540
00:26:45,080 --> 00:26:48,280
Speaker 8: World, Best and Bunder around the world Best Best and

541
00:26:48,280 --> 00:26:51,720
Speaker 8: Bunden did a world in developed and developing markets.

542
00:26:51,760 --> 00:26:53,840
Speaker 5: Best and Bunder did his work with some colleagues around

543
00:26:53,880 --> 00:26:55,920
Speaker 5: the world. Same as xact pattern. And by the way,

544
00:26:55,920 --> 00:26:57,520
Speaker 5: we don't know exactly again why.

545
00:26:57,320 --> 00:27:01,719
Speaker 8: This pattern exists, but that's units shows up that extreme

546
00:27:01,760 --> 00:27:03,400
Speaker 8: skewness shows up over time everywhere.

547
00:27:04,480 --> 00:27:07,200
Speaker 4: I'm curious just about the role of active management today

548
00:27:07,200 --> 00:27:09,560
Speaker 4: in light of what you're saying. So for the novice

549
00:27:09,640 --> 00:27:12,399
Speaker 4: or the naive. Why is it still appealing today and

550
00:27:12,400 --> 00:27:14,720
Speaker 4: to whom is it an attractive option?

551
00:27:14,880 --> 00:27:15,000
Speaker 2: Right?

552
00:27:15,040 --> 00:27:17,359
Speaker 8: Well, first of all, I mean active management is never

553
00:27:17,400 --> 00:27:19,000
Speaker 8: going to go away, and nor can it go away

554
00:27:19,040 --> 00:27:20,719
Speaker 8: because it does two things that are vital and by

555
00:27:20,720 --> 00:27:24,160
Speaker 8: the way, these are very important positive externalities.

556
00:27:23,560 --> 00:27:24,040
Speaker 4: For the world.

557
00:27:24,280 --> 00:27:28,000
Speaker 8: Number one is liquidity. People forget about liquidity. It rears

558
00:27:28,000 --> 00:27:29,600
Speaker 8: its head when we don't want to see it. And

559
00:27:29,640 --> 00:27:31,800
Speaker 8: then second ist price discovery. So someone's got to make

560
00:27:31,800 --> 00:27:34,280
Speaker 8: the trains run on time and deliver the mail, making

561
00:27:34,320 --> 00:27:37,560
Speaker 8: price efficient. So indexers are free riders. Jack Bogel, by

562
00:27:37,560 --> 00:27:40,600
Speaker 8: the way, God bless him, would completely agree with this.

563
00:27:40,760 --> 00:27:42,760
Speaker 8: They are all just free riders. And not everybody can

564
00:27:42,800 --> 00:27:44,600
Speaker 8: be a free writer obviously in some sort of a system.

565
00:27:44,920 --> 00:27:45,560
Speaker 5: That's number one.

566
00:27:45,560 --> 00:27:47,639
Speaker 8: Now number two, just David, to your point why this

567
00:27:47,680 --> 00:27:51,280
Speaker 8: has been so difficult is the average mutual fund manager

568
00:27:51,320 --> 00:27:53,000
Speaker 8: who competes with the S and P five hundred as

569
00:27:53,000 --> 00:27:56,040
Speaker 8: his or her benchmark, has an average size of their

570
00:27:56,040 --> 00:27:57,879
Speaker 8: portfolio is smaller.

571
00:27:57,400 --> 00:27:59,720
Speaker 5: Than the market cap of the S and P five hundred. Right.

572
00:28:00,119 --> 00:28:03,280
Speaker 8: Here's the logic is when large caps rip, which is

573
00:28:03,320 --> 00:28:07,479
Speaker 8: what's happened last day? Seen it active gets really struggles, right,

574
00:28:07,480 --> 00:28:10,360
Speaker 8: because you're just not exposed now when, by contrast, when

575
00:28:10,440 --> 00:28:13,440
Speaker 8: small cap does well relative to large cap, active does

576
00:28:13,560 --> 00:28:14,200
Speaker 8: really well.

577
00:28:14,480 --> 00:28:15,840
Speaker 5: So that would be another thing to bear in mind.

578
00:28:15,880 --> 00:28:18,200
Speaker 8: If you say, well, I think this this contry, you

579
00:28:18,240 --> 00:28:19,800
Speaker 8: think it's going to go away, and the small caps

580
00:28:19,800 --> 00:28:22,320
Speaker 8: a gonna do better, We're gonna get more balanced, balanced market.

581
00:28:22,680 --> 00:28:25,640
Speaker 8: That's actually very good as good a backdrop as conceivable

582
00:28:26,280 --> 00:28:28,280
Speaker 8: for active management, and we have all the data in

583
00:28:28,280 --> 00:28:30,120
Speaker 8: the report to sort of back up that assertion.

584
00:28:30,760 --> 00:28:38,160
Speaker 2: Michael Molson Private equity, I just I look at the

585
00:28:37,960 --> 00:28:43,640
Speaker 2: the new credit and equity, the ill liquidity there, the lockups.

586
00:28:43,920 --> 00:28:47,280
Speaker 2: It's like VC reducts once over. How's this How's this

587
00:28:47,360 --> 00:28:48,320
Speaker 2: tragedy gonna end?

588
00:28:49,440 --> 00:28:55,480
Speaker 8: I like that in the in the questions, But no,

589
00:28:55,720 --> 00:28:56,120
Speaker 8: I don't know.

590
00:28:56,200 --> 00:28:56,880
Speaker 5: I mean I think that.

591
00:28:56,960 --> 00:28:59,320
Speaker 8: You know, we wrote a huge piece called Public to

592
00:28:59,360 --> 00:29:01,719
Speaker 8: Private Equity States a long term look. We looked at

593
00:29:01,720 --> 00:29:04,080
Speaker 8: it took a fifty year look at public equities. You know,

594
00:29:04,080 --> 00:29:06,440
Speaker 8: obviously the story there there are fewer public companies around.

595
00:29:06,480 --> 00:29:07,800
Speaker 5: They're all on average larger.

596
00:29:08,040 --> 00:29:09,520
Speaker 8: So why are there you know, why do we have

597
00:29:10,160 --> 00:29:12,320
Speaker 8: sixty percent of the companies We did to nineteen ninety

598
00:29:12,360 --> 00:29:14,320
Speaker 8: six entry question. We looked through the rise of private

599
00:29:14,320 --> 00:29:16,560
Speaker 8: equity and then the rise of venture capital and how

600
00:29:16,560 --> 00:29:18,440
Speaker 8: this happened. Now, look, I think that we were we

601
00:29:18,560 --> 00:29:20,960
Speaker 8: just came through a period of very low interest rates.

602
00:29:21,160 --> 00:29:24,080
Speaker 8: And if you're running money and you have liabilities to satisfy,

603
00:29:24,200 --> 00:29:26,320
Speaker 8: you needed to go out on the risk spectrum. And

604
00:29:26,560 --> 00:29:30,560
Speaker 8: venture does it through speculative companies or young companies, buyouts

605
00:29:30,560 --> 00:29:33,440
Speaker 8: to do it through leverage. We've come through that phase

606
00:29:33,440 --> 00:29:35,720
Speaker 8: and that's done right. So that's an interesting thing, is

607
00:29:35,760 --> 00:29:38,480
Speaker 8: like what do you need to do to satisfy your liabilities?

608
00:29:39,440 --> 00:29:41,479
Speaker 8: And then all these things the problems As you know,

609
00:29:41,640 --> 00:29:45,080
Speaker 8: anytime assets flowed with a certain asset class, it always

610
00:29:45,120 --> 00:29:47,680
Speaker 8: becomes more challenging to deliver access returns, and so we

611
00:29:48,240 --> 00:29:51,640
Speaker 8: follow the flows to some degree. Now, look, clearly in venture,

612
00:29:51,760 --> 00:29:54,479
Speaker 8: clearly in buyouts, there are niches, there are spots, there

613
00:29:54,480 --> 00:29:56,640
Speaker 8: are people that will navigate effectively. So just as I

614
00:29:56,680 --> 00:29:59,040
Speaker 8: don't want to say the whole thing is challenging, but

615
00:29:59,040 --> 00:30:01,080
Speaker 8: by the same time, and it's a.

616
00:30:01,040 --> 00:30:02,960
Speaker 5: Story that people now understand.

617
00:30:03,200 --> 00:30:05,280
Speaker 4: Thomas done such a wonderful job of framing who you

618
00:30:05,320 --> 00:30:06,640
Speaker 4: are and what you've done and I'd love to ask

619
00:30:06,680 --> 00:30:10,280
Speaker 4: you what animates you or gets you thinking about one

620
00:30:10,320 --> 00:30:13,920
Speaker 4: issue or another. In particular, how do you approach your research?

621
00:30:14,040 --> 00:30:16,040
Speaker 4: Is what provides the flash of inspiration.

622
00:30:16,160 --> 00:30:22,000
Speaker 8: David builds on my wealth of ignorance. So basically, there's

623
00:30:22,040 --> 00:30:24,080
Speaker 8: a puzzle out there, there's something I'm curious about I

624
00:30:24,080 --> 00:30:26,400
Speaker 8: don't understand. And even things like active to pass that

625
00:30:26,480 --> 00:30:29,440
Speaker 8: we talk to republic to private or stock market contraction.

626
00:30:29,680 --> 00:30:31,440
Speaker 8: These are things I'm like, I don't really want to

627
00:30:31,440 --> 00:30:33,320
Speaker 8: get involved with them because I know they're big, big

628
00:30:33,360 --> 00:30:36,400
Speaker 8: hunt territory, they're fraud territory. But by the same token,

629
00:30:36,440 --> 00:30:38,080
Speaker 8: I'm like, I'm not sure people are getting down to

630
00:30:38,120 --> 00:30:39,760
Speaker 8: the first principles of the basics of all these.

631
00:30:39,760 --> 00:30:40,320
Speaker 5: Kinds of things.

632
00:30:40,480 --> 00:30:42,600
Speaker 8: So I think that's usually what I've done, And then

633
00:30:42,760 --> 00:30:44,360
Speaker 8: I think a lot about the investment process.

634
00:30:44,440 --> 00:30:44,560
Speaker 2: Right.

635
00:30:44,560 --> 00:30:47,120
Speaker 5: I teach at Columbia Business School, teach do you get along.

636
00:30:46,920 --> 00:30:49,120
Speaker 2: With Abbie Joseph Cohen? And when she says she's dark

637
00:30:49,120 --> 00:30:49,600
Speaker 2: in the door?

638
00:30:49,720 --> 00:30:50,240
Speaker 6: Is it?

639
00:30:50,320 --> 00:30:50,520
Speaker 2: You know?

640
00:30:50,680 --> 00:30:50,880
Speaker 7: Yeah?

641
00:30:50,920 --> 00:30:52,360
Speaker 5: I mean she's great. I mean she's great.

642
00:30:52,360 --> 00:30:55,160
Speaker 8: We actually have a podcast up there and we had

643
00:30:55,200 --> 00:30:57,760
Speaker 8: Abby on there and she was great, and so right,

644
00:30:58,360 --> 00:31:01,560
Speaker 8: she's she's fa so like it does a whole it's a.

645
00:31:01,520 --> 00:31:03,920
Speaker 5: Whole different level. But but the point is that investment.

646
00:31:04,000 --> 00:31:05,720
Speaker 8: So if you say, like from from the beginning of

647
00:31:05,760 --> 00:31:10,040
Speaker 8: identifying attractive investment opportunities to building portfolios are the process,

648
00:31:10,360 --> 00:31:12,120
Speaker 8: every part of that piece to mean is fascinating.

649
00:31:12,120 --> 00:31:14,360
Speaker 2: In Mike, here's the heart. We're gonna have to cut

650
00:31:14,400 --> 00:31:17,160
Speaker 2: this off, fret you. So Michael Bar's did anymore Tiger's coverage?

651
00:31:17,680 --> 00:31:19,840
Speaker 2: Michael Mobis said, I have to oblige. I'm gonna give

652
00:31:19,840 --> 00:31:22,640
Speaker 2: you a nightmare. Okay, I don't care how smart you are,

653
00:31:22,680 --> 00:31:25,160
Speaker 2: how smart I am. Trust me, folks, there's all sorts

654
00:31:25,200 --> 00:31:27,600
Speaker 2: of company names you can whisper in my ear over

655
00:31:27,880 --> 00:31:32,080
Speaker 2: money lost. How do you avoid an Intel? Right?

656
00:31:33,040 --> 00:31:35,280
Speaker 8: Well, I think it's this is really hard and intel

657
00:31:35,360 --> 00:31:38,040
Speaker 8: is you know, this is a case study the framework,

658
00:31:38,080 --> 00:31:40,680
Speaker 8: and we're talking about how do you think about competitivevantage

659
00:31:40,680 --> 00:31:42,840
Speaker 8: and businesses. The framework is typically is if a company

660
00:31:42,880 --> 00:31:45,200
Speaker 8: is making a lot of money doing something, it's very.

661
00:31:45,040 --> 00:31:46,040
Speaker 5: Difficult for them to do us.

662
00:31:46,080 --> 00:31:48,719
Speaker 8: It's Clay Christensen one on what Klay Christiansen wan on

663
00:31:48,720 --> 00:31:49,920
Speaker 8: one disruptive innovation work.

664
00:31:49,960 --> 00:31:50,760
Speaker 5: And so that's the thing.

665
00:31:50,880 --> 00:31:52,960
Speaker 8: Just to be very mindful of and you know, I

666
00:31:52,960 --> 00:31:54,760
Speaker 8: don't think I don't know if it's an apocryphal, but

667
00:31:54,800 --> 00:31:57,200
Speaker 8: apparently Apple Can went to Intel early on say that

668
00:31:57,280 --> 00:31:59,200
Speaker 8: we've got this thing in the worst call this new phone,

669
00:31:59,240 --> 00:32:00,680
Speaker 8: like we'd love you to got to build the chips,

670
00:32:00,680 --> 00:32:03,040
Speaker 8: and they're like, yeah, I don't know. Like that market

671
00:32:03,040 --> 00:32:05,160
Speaker 8: doesn't seem that big, doesn't sem that profitable. And by

672
00:32:05,160 --> 00:32:07,320
Speaker 8: the way, this X eighty six thing is killing it

673
00:32:07,400 --> 00:32:09,480
Speaker 8: for us, right, so you get stuff like that that

674
00:32:09,560 --> 00:32:11,920
Speaker 8: comes along. And by the way, Andy Grove was obviously

675
00:32:11,920 --> 00:32:14,840
Speaker 8: a huge Christiansen fan and actually pivoted the company based

676
00:32:14,880 --> 00:32:17,240
Speaker 8: on Christiansen's work, So that would probably be the thing

677
00:32:17,240 --> 00:32:20,000
Speaker 8: to say is and is to take a look and

678
00:32:20,040 --> 00:32:20,760
Speaker 8: be careful about that.

679
00:32:20,800 --> 00:32:24,000
Speaker 2: I gotta be thirty seconds. The new Intelligent Investor is

680
00:32:24,040 --> 00:32:26,480
Speaker 2: coming out. I've promised myself I'll read it like I

681
00:32:26,520 --> 00:32:29,240
Speaker 2: read it, you know, when I could shave. I mean,

682
00:32:29,440 --> 00:32:32,040
Speaker 2: what's the wisdom from Ben Graham and the crew from

683
00:32:32,080 --> 00:32:34,280
Speaker 2: years ago that's still true today?

684
00:32:34,680 --> 00:32:36,880
Speaker 8: Gosh, and by the way, Jason's wives and such kpe

685
00:32:36,960 --> 00:32:38,600
Speaker 8: kill hands such a great guy to do that.

686
00:32:39,160 --> 00:32:39,720
Speaker 5: A few things.

687
00:32:39,760 --> 00:32:41,640
Speaker 8: I think that the two ideas I think most important

688
00:32:41,640 --> 00:32:43,520
Speaker 8: from Ben Graham. By the way, Ben Graham understood behavioral

689
00:32:43,560 --> 00:32:45,360
Speaker 8: finance before all this stuff was written down in a

690
00:32:45,360 --> 00:32:48,760
Speaker 8: formal fashion. Number one is the mister market metaphor, which

691
00:32:48,800 --> 00:32:50,840
Speaker 8: is this idea that we should always understand that markets

692
00:32:50,880 --> 00:32:55,520
Speaker 8: go from overheated to under enthusiastic, and so there's and

693
00:32:55,560 --> 00:32:57,760
Speaker 8: it's often fair, but you know, you get these extremes

694
00:32:57,760 --> 00:32:59,680
Speaker 8: and that basic framework I think is really powerful. And

695
00:32:59,760 --> 00:33:02,320
Speaker 8: the one tom is margin of safety, right, which is

696
00:33:02,840 --> 00:33:05,840
Speaker 8: if you're long something, always buy something with a lot

697
00:33:05,880 --> 00:33:08,080
Speaker 8: of accommodation for you to be wrong or for things

698
00:33:08,080 --> 00:33:10,440
Speaker 8: to bring in away that are not optimal, but margin

699
00:33:10,480 --> 00:33:14,560
Speaker 8: of safety. Those two fundamental ideas I think will always

700
00:33:14,560 --> 00:33:15,840
Speaker 8: be around as long as we're doing this.

701
00:33:15,960 --> 00:33:19,719
Speaker 2: Micha mobis in consilient research. Morgan Stanley, thank you so much,

702
00:33:30,200 --> 00:33:32,160
Speaker 2: your dad. To look at the front pages of Lisa

703
00:33:32,160 --> 00:33:33,920
Speaker 2: Matteo or Lisa what do you.

704
00:33:33,840 --> 00:33:35,640
Speaker 1: Have, I'm gonna get you fired up because we're talking

705
00:33:35,640 --> 00:33:39,920
Speaker 1: about work from home. That's right, Okay, So you remember Amazon, right,

706
00:33:39,920 --> 00:33:42,640
Speaker 1: they have the new RTO policy kicks it in January,

707
00:33:42,720 --> 00:33:44,920
Speaker 1: five days a week. They want their workers to come back.

708
00:33:45,200 --> 00:33:47,920
Speaker 1: But it just so happens that they ended this popular

709
00:33:48,120 --> 00:33:51,560
Speaker 1: benefit for the remote work people. Amazon gave them the

710
00:33:51,600 --> 00:33:54,840
Speaker 1: option to work for up to four weeks fully remote

711
00:33:54,840 --> 00:33:57,280
Speaker 1: from any location in the country. They were hired, Yes,

712
00:33:57,480 --> 00:34:00,880
Speaker 1: they were hired, kidding. So a lot of people took

713
00:34:00,920 --> 00:34:03,840
Speaker 1: advantage because during the holidays they did this because they

714
00:34:03,880 --> 00:34:06,480
Speaker 1: were able to stay with family still work from home.

715
00:34:06,800 --> 00:34:10,759
Speaker 1: But now Amazon is saying immediately it is done. We're

716
00:34:10,800 --> 00:34:11,840
Speaker 1: not having that either.

717
00:34:12,719 --> 00:34:16,320
Speaker 2: You live this, yeah, well, life, what do you think.

718
00:34:16,880 --> 00:34:18,959
Speaker 4: I mean, your return to office six days a week.

719
00:34:19,120 --> 00:34:25,880
Speaker 4: We see you here hunting these halls. You know, in

720
00:34:25,960 --> 00:34:28,279
Speaker 4: my past job, I was working remote a lot, and

721
00:34:28,280 --> 00:34:31,040
Speaker 4: there were certainly upsides to doing that, and I was

722
00:34:31,080 --> 00:34:33,080
Speaker 4: able to travel a little bit. I think radio listeners

723
00:34:33,080 --> 00:34:34,719
Speaker 4: can be a little bit unaware about where you are

724
00:34:34,760 --> 00:34:37,160
Speaker 4: that you're able to do so much now, But I do,

725
00:34:37,280 --> 00:34:40,879
Speaker 4: I did miss and do enjoy being around folks like Utah,

726
00:34:40,960 --> 00:34:41,960
Speaker 4: and I think that that is.

727
00:34:44,719 --> 00:34:50,640
Speaker 5: A little sacround. It's just too tear to his eye.

728
00:34:50,640 --> 00:34:54,719
Speaker 4: Oh god, my work here is done too early for titos.

729
00:34:54,840 --> 00:34:58,960
Speaker 5: Right continues, Okay, the cyber truck.

730
00:34:59,040 --> 00:35:02,200
Speaker 1: Right, everybody wanted one hundred thousand dollars truck.

731
00:35:02,080 --> 00:35:06,040
Speaker 2: Saw Tucker's the other while I saw Tucker. Tucker dropped

732
00:35:06,040 --> 00:35:09,839
Speaker 2: the dry clean up at Milton's on Madison Avenue. There's

733
00:35:09,960 --> 00:35:12,560
Speaker 2: Tucker's kept the harm Oh we kept the kids have

734
00:35:12,640 --> 00:35:13,040
Speaker 2: the hummer.

735
00:35:13,320 --> 00:35:16,319
Speaker 1: Okay, oh my gosh. Well, you know what it looks like, right,

736
00:35:16,400 --> 00:35:19,880
Speaker 1: it looks like this futuristic stainless steel. But the problem

737
00:35:19,920 --> 00:35:21,680
Speaker 1: with the Wall Street Journal says is the owners are

738
00:35:21,719 --> 00:35:23,960
Speaker 1: complaining because they can't figure out how to clean it.

739
00:35:24,560 --> 00:35:27,080
Speaker 4: When I saw they're not they're not painted right, there's

740
00:35:27,120 --> 00:35:28,719
Speaker 4: no the one.

741
00:35:28,520 --> 00:35:30,920
Speaker 2: I saw looked filthy full disclosure. Go.

742
00:35:31,200 --> 00:35:33,680
Speaker 1: Yeah, so there is all these online forms are going crazy.

743
00:35:33,719 --> 00:35:35,720
Speaker 1: One guy is that he spent like five hundred dollars

744
00:35:35,719 --> 00:35:40,640
Speaker 1: on cleaning products. They're using all these different things. Tesla

745
00:35:40,760 --> 00:35:42,279
Speaker 1: does say the right way to do it is he

746
00:35:42,400 --> 00:35:45,320
Speaker 1: used like a soft sponge, but they don't actually recommend

747
00:35:45,360 --> 00:35:47,640
Speaker 1: that you take it to a car wash. So that's

748
00:35:47,680 --> 00:35:50,120
Speaker 1: the problem that these people are having. They say, don't

749
00:35:50,160 --> 00:35:52,919
Speaker 1: wash it in direct sunlight, like there's all these restrictions

750
00:35:52,960 --> 00:35:55,640
Speaker 1: about how you keep it clean. So now they're saying, hey,

751
00:35:55,719 --> 00:35:57,600
Speaker 1: I invested all this money in this truck, and I

752
00:35:57,680 --> 00:35:59,359
Speaker 1: kind invests more money to keep it clean.

753
00:36:00,080 --> 00:36:03,720
Speaker 2: Dumb questions now so popular they can't make them fast enough.

754
00:36:03,800 --> 00:36:06,160
Speaker 4: Well, I don't know if that's true, but they're very

755
00:36:06,160 --> 00:36:07,480
Speaker 4: eye catching, even though I hate them.

756
00:36:07,480 --> 00:36:07,960
Speaker 5: They hate them.

757
00:36:08,160 --> 00:36:09,839
Speaker 4: I hate the way they look. But you can't help

758
00:36:09,880 --> 00:36:11,279
Speaker 4: but look. And I think that's part of the thing

759
00:36:11,320 --> 00:36:11,480
Speaker 4: with it.

760
00:36:11,920 --> 00:36:14,800
Speaker 2: What do they do to other cars when they bump

761
00:36:14,800 --> 00:36:15,279
Speaker 2: in the night.

762
00:36:15,480 --> 00:36:17,160
Speaker 5: They're huge? I mean, these things look huge.

763
00:36:17,160 --> 00:36:20,640
Speaker 4: They don't even dent, like, yeah, it's stainless steel. Well

764
00:36:20,680 --> 00:36:22,480
Speaker 4: it's not stainless, evidently, but it's steep.

765
00:36:23,080 --> 00:36:26,840
Speaker 2: It's not stainless. Okay.

766
00:36:26,880 --> 00:36:29,560
Speaker 4: I heard someone who's using like baby wipes or alcoholic clean.

767
00:36:29,400 --> 00:36:31,200
Speaker 5: It, yes, or windows wind ducks. Yes.

768
00:36:31,760 --> 00:36:34,239
Speaker 1: Next, Okay, all right, we're gonna get you a two

769
00:36:34,280 --> 00:36:36,880
Speaker 1: for one. Okay, two for We'll start with the White Sox.

770
00:36:36,920 --> 00:36:37,200
Speaker 2: Okay.

771
00:36:37,239 --> 00:36:40,560
Speaker 1: You know their record, right, They're on this trajectory downward,

772
00:36:40,640 --> 00:36:43,280
Speaker 1: not doing so well. So there was a whole breakdown

773
00:36:43,280 --> 00:36:45,960
Speaker 1: as to why this is happening. So the plan is

774
00:36:45,960 --> 00:36:48,560
Speaker 1: that they were gonna tank, suffer some short term pain,

775
00:36:48,680 --> 00:36:51,239
Speaker 1: but then kind of rebuilt, kind of like the Cubs did,

776
00:36:51,320 --> 00:36:53,279
Speaker 1: kind of like the Houston Astros did. But it just

777
00:36:53,320 --> 00:36:54,120
Speaker 1: didn't work out.

778
00:36:54,840 --> 00:36:56,719
Speaker 5: The reason the Wall Street Order book it down.

779
00:36:56,760 --> 00:36:58,520
Speaker 1: They said the reason this is happening is because eight

780
00:36:58,600 --> 00:37:02,160
Speaker 1: years ago, yeh, then General man Rickon, vice president Kenny Williams.

781
00:37:02,200 --> 00:37:05,120
Speaker 1: They started this rebuilding project right with the players. But

782
00:37:05,160 --> 00:37:08,359
Speaker 1: they're saying the rebuilding didn't work because those players didn't

783
00:37:08,400 --> 00:37:10,960
Speaker 1: amount to a championship team. They said, the problem is

784
00:37:11,000 --> 00:37:13,920
Speaker 1: in the executive level. They said that when they added

785
00:37:14,160 --> 00:37:17,279
Speaker 1: their legend Tony Laruss and his manager, they didn't ask

786
00:37:17,320 --> 00:37:18,719
Speaker 1: the others for it, and they just kind of brought

787
00:37:18,760 --> 00:37:20,719
Speaker 1: him in so they didn't have a say. So they're

788
00:37:20,719 --> 00:37:24,080
Speaker 1: saying that is kind of the reason it's that executive.

789
00:37:23,640 --> 00:37:27,480
Speaker 2: She auditioning for the fan. There go right thirty seven one,

790
00:37:27,800 --> 00:37:29,000
Speaker 2: Michael Kay listening.

791
00:37:31,160 --> 00:37:32,800
Speaker 4: Tell what do you do if your record is thirty

792
00:37:32,840 --> 00:37:33,680
Speaker 4: seven and one?

793
00:37:34,239 --> 00:37:37,160
Speaker 2: How do you rebuild it? The way you rebuild is

794
00:37:37,200 --> 00:37:39,879
Speaker 2: a four or five year Mister Rubinstein's getting the back

795
00:37:39,960 --> 00:37:42,719
Speaker 2: end of this at the Baltimore Orioles. It's four or

796
00:37:42,760 --> 00:37:46,560
Speaker 2: five six years. I don't understand the pixie dust, but

797
00:37:46,640 --> 00:37:49,560
Speaker 2: it's four or five six years, and then it's supposed

798
00:37:49,560 --> 00:37:52,239
Speaker 2: to click in. Some of that's happening right now with

799
00:37:52,280 --> 00:37:56,480
Speaker 2: the Detroit Tigers, you know, and I should point out

800
00:37:56,520 --> 00:37:59,920
Speaker 2: the Tigers end the season against the Chicago White Sox,

801
00:38:01,120 --> 00:38:04,799
Speaker 2: and so that's actually really germane to their future. But

802
00:38:04,920 --> 00:38:05,520
Speaker 2: you know, we'll see.

803
00:38:05,640 --> 00:38:07,800
Speaker 1: Okay, I got to talk the Dreaded Red Sox.

804
00:38:07,960 --> 00:38:10,480
Speaker 2: Meana Chimes just emailed in and said, Lisa, you've.

805
00:38:10,440 --> 00:38:14,040
Speaker 1: Killed that, thank you, the Dreaded Red Sox. That'shere we're going.

806
00:38:14,320 --> 00:38:17,160
Speaker 1: They are reportedly retiring the blue alternate jerseys.

807
00:38:17,320 --> 00:38:18,719
Speaker 2: Thank god, you didn't like them.

808
00:38:19,880 --> 00:38:21,080
Speaker 4: Do you like the yellow jersey?

809
00:38:22,280 --> 00:38:27,400
Speaker 1: But they're keeping the yellow report okay, yes, okay, so

810
00:38:27,440 --> 00:38:30,560
Speaker 1: it's the City Connect jerseys. Yes, so they're keeping the yellow,

811
00:38:30,560 --> 00:38:31,960
Speaker 1: but they're going to get rid of the blue, put

812
00:38:31,960 --> 00:38:33,319
Speaker 1: a new one in. They don't know what the new

813
00:38:33,320 --> 00:38:34,960
Speaker 1: one's going to be. So you're going to have the

814
00:38:35,000 --> 00:38:39,080
Speaker 1: regular Home Whites, alternate Home Reds, Road Grays, yellow jerseys,

815
00:38:39,320 --> 00:38:42,240
Speaker 1: and then the new City Connect jerseys as a fifth option.

816
00:38:42,320 --> 00:38:46,239
Speaker 2: Okay, no names of the back, thank you. Okay, and

817
00:38:46,520 --> 00:38:49,359
Speaker 2: just the whole jersey thing, what do you think? Yeah?

818
00:38:49,600 --> 00:38:51,560
Speaker 4: I know you see it in the NBA as well.

819
00:38:51,960 --> 00:38:54,840
Speaker 2: Man. I love the Padres have the military jersey because

820
00:38:54,840 --> 00:38:57,880
Speaker 2: San Diego it's with the Navy there. It's just so

821
00:38:58,520 --> 00:39:01,239
Speaker 2: incredibly important. But you know, it's sort of like in

822
00:39:01,600 --> 00:39:03,879
Speaker 2: you know Pharaoh taught me in the English Premier League.

823
00:39:03,920 --> 00:39:07,880
Speaker 2: It's there's some real fails. There's some down in flames.

824
00:39:08,280 --> 00:39:10,560
Speaker 2: Are you doing? Are you done with baseball? You got one,

825
00:39:10,600 --> 00:39:11,759
Speaker 2: but we're done with baseball.

826
00:39:12,600 --> 00:39:14,839
Speaker 1: For all you soda drinkers out there, I'm not sure

827
00:39:14,880 --> 00:39:16,799
Speaker 1: if you've tried to do someone, But Coca Cola is

828
00:39:16,880 --> 00:39:20,240
Speaker 1: ditching the spiced flavor. I hate to break the news

829
00:39:20,280 --> 00:39:22,239
Speaker 1: to you, but they're ditching it. It wasn't even on

830
00:39:22,280 --> 00:39:26,839
Speaker 1: the market on story, so it's gone. I guess it

831
00:39:26,880 --> 00:39:29,160
Speaker 1: wasn't working out too well. But Coca Cola did say

832
00:39:29,160 --> 00:39:31,439
Speaker 1: they have a new one on the horizon. They won't

833
00:39:31,440 --> 00:39:34,440
Speaker 1: say what it is, but they did have the Oreo flavor.

834
00:39:34,719 --> 00:39:37,320
Speaker 1: Oreo Flavor not too long ago.

835
00:39:39,320 --> 00:39:39,919
Speaker 2: Into your house.

836
00:39:40,080 --> 00:39:40,840
Speaker 5: I do not know.

837
00:39:42,880 --> 00:39:44,520
Speaker 4: They were giving them away for free at the Barkley

838
00:39:44,520 --> 00:39:46,200
Speaker 4: Center when you got off the subway, and how was.

839
00:39:47,840 --> 00:39:51,400
Speaker 2: Yeah, I should point out, and you know, mister Bloomberg

840
00:39:51,880 --> 00:39:55,960
Speaker 2: is the driver of the truck here. Then he reiterated

841
00:39:56,040 --> 00:39:59,319
Speaker 2: yesterday at the Earth Shot Awards, what sugared beverages are

842
00:39:59,320 --> 00:40:03,960
Speaker 2: doing it to diabetes worldwide? Exactly in moderation, I think

843
00:40:04,080 --> 00:40:07,560
Speaker 2: is where we would stand, Lisa Mateo, thank you for that.

844
00:40:07,960 --> 00:40:11,200
Speaker 2: This is a Bloomberg Surveillance podcast, bringing you the best

845
00:40:11,200 --> 00:40:16,000
Speaker 2: in economics, finance, investment, and international relations. You can also

846
00:40:16,040 --> 00:40:20,080
Speaker 2: watch the show live on YouTube. Visit the Bloomberg Podcast

847
00:40:20,200 --> 00:40:24,239
Speaker 2: channel on YouTube to see the show weekday mornings from

848
00:40:24,280 --> 00:40:27,560
Speaker 2: seven to ten am Eastern from our global headquarters in

849
00:40:27,640 --> 00:40:31,319
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850
00:40:31,680 --> 00:40:35,240
Speaker 2: or anywhere else you listen, and always on Bloomberg Radio,

851
00:40:35,440 --> 00:40:38,640
Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app.