1 00:00:02,200 --> 00:00:06,800 Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio. 2 00:00:07,480 --> 00:00:12,520 Speaker 1: This week we have a bonus Masters in Business. Addition, 3 00:00:12,960 --> 00:00:17,240 Speaker 1: it is our premier episode of Masters in Business Live. 4 00:00:17,840 --> 00:00:21,639 Speaker 1: We recorded a live show in the Bloomberg headquarters. It 5 00:00:21,760 --> 00:00:24,799 Speaker 1: was in front of a live audience broadcast live on 6 00:00:24,880 --> 00:00:28,440 Speaker 1: television and radio. People ask me, weren't you nervous about 7 00:00:28,520 --> 00:00:31,320 Speaker 1: doing this? And to be honest, I didn't have time 8 00:00:31,320 --> 00:00:34,760 Speaker 1: to get nervous. I just jumped right into our questions. 9 00:00:35,080 --> 00:00:40,240 Speaker 1: My guest was Ray Dalio of Bridgewater and dear Lord, 10 00:00:40,280 --> 00:00:44,680 Speaker 1: he was just spectacular. He knows exactly what he thinks. Uh. 11 00:00:44,720 --> 00:00:48,400 Speaker 1: He understands his own philosophy, and he knows how to 12 00:00:48,520 --> 00:00:53,360 Speaker 1: articulate it in a way with tremendous clarity and transparency. Uh. 13 00:00:53,400 --> 00:00:56,279 Speaker 1: He spoke for about an hour, or at least two 14 00:00:56,360 --> 00:00:58,560 Speaker 1: questions for me for about an hour. Then we opened 15 00:00:58,600 --> 00:01:00,960 Speaker 1: it up to the audience and we did another thirty 16 00:01:00,960 --> 00:01:03,240 Speaker 1: minutes of Q and A. And I gotta give Ray 17 00:01:03,840 --> 00:01:07,200 Speaker 1: huge kudos. He sat and signed a copy of his 18 00:01:07,280 --> 00:01:10,200 Speaker 1: book for every single person who was in the audience 19 00:01:10,240 --> 00:01:12,319 Speaker 1: that were over a hundred people there. He didn't have 20 00:01:12,360 --> 00:01:15,039 Speaker 1: to do that. It was just charming and delightful. I 21 00:01:15,080 --> 00:01:18,120 Speaker 1: could ramble about how much fun that day was. But 22 00:01:18,480 --> 00:01:21,840 Speaker 1: rather than listen to me, Babel, why don't we simply 23 00:01:21,920 --> 00:01:27,800 Speaker 1: say the premier episode of Masters in Business Live with 24 00:01:27,880 --> 00:01:35,000 Speaker 1: Bridgewaters Ray Dalio, This is Masters in Business with Barry 25 00:01:35,080 --> 00:01:39,520 Speaker 1: Ridholts on Bloomberg Radio. So I have to admit to 26 00:01:39,880 --> 00:01:43,280 Speaker 1: cheating a little bit when when we first proposed the 27 00:01:43,319 --> 00:01:47,720 Speaker 1: idea of Masters in Business Live, Alan Dave were very 28 00:01:47,760 --> 00:01:50,280 Speaker 1: supportive and I said, I'm going to bring in a 29 00:01:50,400 --> 00:01:53,520 Speaker 1: ringer with Ray Dalio. So I really don't have a 30 00:01:53,520 --> 00:01:56,600 Speaker 1: whole lot of work to do. I assume most of 31 00:01:56,720 --> 00:02:01,480 Speaker 1: the viewing and audience present knows who read value is. 32 00:02:01,560 --> 00:02:05,040 Speaker 1: But let me just give you a quick version of 33 00:02:05,080 --> 00:02:08,160 Speaker 1: his background. He is the founder, co chairman and co 34 00:02:08,320 --> 00:02:12,240 Speaker 1: c i oh of Bridgewater Associates the world's largest hedge fund, 35 00:02:12,440 --> 00:02:15,720 Speaker 1: managing over a hundred and sixty billion dollars in assets 36 00:02:15,720 --> 00:02:20,880 Speaker 1: for institutional clients. According to Forbes, Bridgewater has made more 37 00:02:20,919 --> 00:02:25,200 Speaker 1: money for their clients than any other funds in history. 38 00:02:25,320 --> 00:02:27,960 Speaker 1: Uh He is the author of the New York Times 39 00:02:28,080 --> 00:02:32,600 Speaker 1: best selling book Principles for Life and Work, and most recently, 40 00:02:32,840 --> 00:02:37,480 Speaker 1: his new book is principles of big debt crises. Ray 41 00:02:37,600 --> 00:02:40,040 Speaker 1: dally Out, thank you for being our first guest on 42 00:02:40,280 --> 00:02:46,600 Speaker 1: Masters in Business Live. Let's start with the reboot of Bridgewater, 43 00:02:46,760 --> 00:02:50,480 Speaker 1: which you describe in great detail in the first book, 44 00:02:51,040 --> 00:02:55,280 Speaker 1: which came about after a not so great two for you. 45 00:02:55,320 --> 00:02:59,360 Speaker 1: In fact, you just subscribe it as disastrous. What happened 46 00:02:59,400 --> 00:03:02,600 Speaker 1: in too well, you know, I I formed Bridgater in 47 00:03:02,680 --> 00:03:06,760 Speaker 1: seventy two, is like seven years later. That's the reboot. Yeah, 48 00:03:06,840 --> 00:03:13,480 Speaker 1: that's the reboot, right, um. And I had in I 49 00:03:13,480 --> 00:03:17,880 Speaker 1: had calculated that America, that American banks had went way 50 00:03:17,880 --> 00:03:20,839 Speaker 1: more money to emerging countries in those countries were gonna 51 00:03:20,880 --> 00:03:24,040 Speaker 1: pay back and it was about two of their bank capital, 52 00:03:24,440 --> 00:03:27,400 Speaker 1: and so we were going to have a big banking crisis. 53 00:03:27,440 --> 00:03:30,160 Speaker 1: And I thought that was going to happen, and I 54 00:03:30,240 --> 00:03:34,280 Speaker 1: got a lot of attention for for that, um. And 55 00:03:34,320 --> 00:03:40,080 Speaker 1: then in August two, Mexico defaulted and there was a 56 00:03:40,120 --> 00:03:43,000 Speaker 1: sequence of other defaults and there was a big dead crisis, 57 00:03:43,800 --> 00:03:46,680 Speaker 1: and I thought that that was going to cause an 58 00:03:46,680 --> 00:03:50,600 Speaker 1: economic crisis. And I couldn't have been more wrong. That 59 00:03:50,720 --> 00:03:54,080 Speaker 1: was the exact bottom of the stock market when Mexico defaulted. 60 00:03:54,720 --> 00:03:57,960 Speaker 1: And anyway, I received tension. At the time, I was 61 00:03:58,000 --> 00:04:01,760 Speaker 1: on Wall Street week and was on as to testify 62 00:04:01,800 --> 00:04:06,480 Speaker 1: to Congress, and and I was wrong and I had 63 00:04:06,680 --> 00:04:09,000 Speaker 1: I think at the time, maybe eight people who work 64 00:04:09,040 --> 00:04:11,520 Speaker 1: for me. I had to let them all go, and 65 00:04:11,560 --> 00:04:14,360 Speaker 1: I lost money for me, I lost money for clients. 66 00:04:14,400 --> 00:04:18,440 Speaker 1: I had to um I borrow four thousand dollars from 67 00:04:18,480 --> 00:04:21,520 Speaker 1: my dad because I didn't have really enough money even 68 00:04:21,560 --> 00:04:23,520 Speaker 1: to take care of my family at that point. And 69 00:04:23,640 --> 00:04:27,000 Speaker 1: it was very painful, but it was the most valuable 70 00:04:27,040 --> 00:04:29,599 Speaker 1: thing probably that happened in my life, certainly one of those, 71 00:04:29,800 --> 00:04:33,520 Speaker 1: because it changed my approach to thinking, because it made 72 00:04:33,520 --> 00:04:35,920 Speaker 1: me start to think, you know, how do I know 73 00:04:36,120 --> 00:04:39,440 Speaker 1: I'm right? How do I continue to take risk and 74 00:04:39,520 --> 00:04:43,360 Speaker 1: not go through these mistakes? And it made me change 75 00:04:43,400 --> 00:04:45,440 Speaker 1: a lot. Like I wanted to find the smartest people 76 00:04:45,440 --> 00:04:47,760 Speaker 1: I could would disagree with me. I wanted to build 77 00:04:47,760 --> 00:04:52,640 Speaker 1: an idea meritocracy in which independent thinkers would challenge each other. 78 00:04:53,240 --> 00:04:56,839 Speaker 1: And I wanted to deal with risk. How do I 79 00:04:57,160 --> 00:05:00,839 Speaker 1: um maintain the returns but diversive I and do certain 80 00:05:00,839 --> 00:05:03,360 Speaker 1: things to deal with risk. And it was from that 81 00:05:03,440 --> 00:05:07,120 Speaker 1: point really on that everything started to change. So that 82 00:05:07,200 --> 00:05:09,960 Speaker 1: was my terrible experience. And I think that that's, by 83 00:05:09,960 --> 00:05:12,279 Speaker 1: the way, one of those lessons. Like there was a 84 00:05:12,320 --> 00:05:15,480 Speaker 1: book that my son gave me in two thousand fourteen, 85 00:05:15,880 --> 00:05:19,680 Speaker 1: Joseph Campbell here over thousand faces, and he describes about 86 00:05:19,920 --> 00:05:23,480 Speaker 1: how that crashing occurs and that changes. Do you have 87 00:05:23,520 --> 00:05:27,960 Speaker 1: a metamorphosis? So the whole approach to learning from mistakes 88 00:05:27,960 --> 00:05:30,360 Speaker 1: and painful mistakes and making the most out of them 89 00:05:30,560 --> 00:05:34,599 Speaker 1: and writing principles down um in other words, recipes for 90 00:05:34,760 --> 00:05:37,360 Speaker 1: how do you deal with the circumstances learn the lesson 91 00:05:37,440 --> 00:05:40,080 Speaker 1: write those principles down. This is the thing that I 92 00:05:40,120 --> 00:05:43,320 Speaker 1: would recommend to you know, everybody, write them down. And 93 00:05:43,360 --> 00:05:46,120 Speaker 1: I learned also that by being able to write them 94 00:05:46,120 --> 00:05:49,160 Speaker 1: down clearly enough that they could be expressed in what 95 00:05:49,200 --> 00:05:53,120 Speaker 1: were then called equations, are now algorithms that allowed me 96 00:05:53,240 --> 00:05:56,240 Speaker 1: to make decisions and us to make decisions in a 97 00:05:56,760 --> 00:06:00,760 Speaker 1: in a very powerful way. So that experience is really 98 00:06:00,800 --> 00:06:03,720 Speaker 1: the turning point, and that's very abstract. I want to 99 00:06:03,720 --> 00:06:08,520 Speaker 1: describe some of the ideas and products that came out 100 00:06:08,560 --> 00:06:12,560 Speaker 1: of that. Post eight two. You describe in your early 101 00:06:13,520 --> 00:06:16,760 Speaker 1: history some of the products that you had a role 102 00:06:16,839 --> 00:06:20,800 Speaker 1: in the creation of, tips, the inflation protected treasury bonds, 103 00:06:21,400 --> 00:06:26,600 Speaker 1: the US dollar futures Index, the entire concept of risk parity. 104 00:06:26,720 --> 00:06:29,359 Speaker 1: You're very humble and saying you had only a little 105 00:06:29,360 --> 00:06:32,359 Speaker 1: bit to do with the Chinese stock market creation, but 106 00:06:32,400 --> 00:06:35,200 Speaker 1: I know you consulted with very senior people there and 107 00:06:35,279 --> 00:06:38,640 Speaker 1: help that come about. And what I think is the 108 00:06:38,720 --> 00:06:42,040 Speaker 1: least known thing about you, but the most fascinating, You 109 00:06:42,120 --> 00:06:47,400 Speaker 1: helped to engineer chicken McNuggets. Explain that to us, because 110 00:06:47,440 --> 00:06:52,520 Speaker 1: it's absolutely intriguing. Well, I traded commodities then back then. 111 00:06:52,640 --> 00:06:54,239 Speaker 1: I mean that was my big thing, and I really 112 00:06:54,640 --> 00:06:59,920 Speaker 1: uh learned, you know, how to make chicken. And I'm 113 00:07:00,040 --> 00:07:05,240 Speaker 1: much feed what what a chick cost, how uh soybeans 114 00:07:05,240 --> 00:07:08,000 Speaker 1: were grown, how they competed with cotton and corn, and 115 00:07:08,040 --> 00:07:11,440 Speaker 1: that hole mechanics. I liked that whole mechanical thing. Um 116 00:07:11,520 --> 00:07:15,040 Speaker 1: and at the time that and and McDonald's was a 117 00:07:15,080 --> 00:07:17,800 Speaker 1: client of mine at the time, and they wanted to 118 00:07:17,960 --> 00:07:21,600 Speaker 1: uh come out with this chicken McNuggets, but it was 119 00:07:21,680 --> 00:07:24,040 Speaker 1: very volatile. Prices were volatile at the time, and they 120 00:07:24,080 --> 00:07:27,760 Speaker 1: were worried about whether they can get stable menu prices 121 00:07:27,840 --> 00:07:30,200 Speaker 1: or they would have the volatility and that being disrupted. 122 00:07:30,760 --> 00:07:35,320 Speaker 1: Um and I had a chicken processing UH producer was 123 00:07:35,480 --> 00:07:37,600 Speaker 1: I think at the largest at the time, and a client, 124 00:07:38,280 --> 00:07:43,480 Speaker 1: and I could engineer UM the ability to lock in 125 00:07:43,960 --> 00:07:47,200 Speaker 1: the feed prices because it basically the cost of a 126 00:07:47,280 --> 00:07:50,559 Speaker 1: chick is not much relative to the cost of the feed, 127 00:07:50,640 --> 00:07:53,280 Speaker 1: and you have futures contracts on that, and I was 128 00:07:53,320 --> 00:07:56,840 Speaker 1: able to work a deal so that UM that chicken 129 00:07:56,840 --> 00:08:00,880 Speaker 1: producer could get the McDonald's contract and McDonald's could get 130 00:08:00,920 --> 00:08:04,320 Speaker 1: a stable price by engineering how they could do the 131 00:08:04,400 --> 00:08:06,960 Speaker 1: hedge to be able to do that. So that was 132 00:08:07,040 --> 00:08:09,520 Speaker 1: what I did. The word engineering comes up a lot 133 00:08:09,600 --> 00:08:14,200 Speaker 1: for a person who's not an engineer UM, and I 134 00:08:14,880 --> 00:08:17,400 Speaker 1: was very much reminded of that in one of the 135 00:08:17,440 --> 00:08:22,640 Speaker 1: first long form videos you did, how the Economic Machine Works. 136 00:08:23,120 --> 00:08:27,880 Speaker 1: So first, what's the engineering background for the overall economy 137 00:08:27,960 --> 00:08:31,480 Speaker 1: and what motivated you to put that together in a 138 00:08:31,600 --> 00:08:34,360 Speaker 1: video and release it to the world. Well, the one 139 00:08:34,400 --> 00:08:36,720 Speaker 1: thing that I learned over the years is you know, 140 00:08:36,800 --> 00:08:40,600 Speaker 1: like everything has it's every effect, Everything that happened has 141 00:08:40,640 --> 00:08:44,079 Speaker 1: a reason that happened, cause effect relationships, and these things 142 00:08:44,160 --> 00:08:48,080 Speaker 1: happen over and over again. So whenever I got surprised 143 00:08:48,240 --> 00:08:51,640 Speaker 1: by something UH, it was usually because of something that 144 00:08:51,679 --> 00:08:54,960 Speaker 1: didn't happen in my lifetime before, but it happened, you know, 145 00:08:55,040 --> 00:08:58,000 Speaker 1: like these financial crisis is and so on. And what 146 00:08:58,120 --> 00:08:59,840 Speaker 1: I did is I went back and I saw I 147 00:09:00,040 --> 00:09:03,160 Speaker 1: started to see that. If you start to see everything 148 00:09:03,720 --> 00:09:06,800 Speaker 1: is happening over and over again, and then you study 149 00:09:06,880 --> 00:09:10,280 Speaker 1: the cause effect mechanics behind that at a nitty grady level, 150 00:09:10,559 --> 00:09:14,120 Speaker 1: you learn how reality works, and then you can write 151 00:09:14,120 --> 00:09:17,840 Speaker 1: your principles for dealing with reality, which are the recipes 152 00:09:17,960 --> 00:09:22,600 Speaker 1: essentially for making good decisions. So to me it, you know, 153 00:09:22,800 --> 00:09:25,400 Speaker 1: history has shown like the same things happen over and 154 00:09:25,440 --> 00:09:27,960 Speaker 1: over again for the same cause effect relationships. So that 155 00:09:28,080 --> 00:09:30,560 Speaker 1: debt book that you're referring to, you know, it's a 156 00:09:30,600 --> 00:09:35,760 Speaker 1: good example. Um, if we don't spend time understanding the 157 00:09:35,840 --> 00:09:41,360 Speaker 1: mechanics and the cause effect relationships, we just argue with 158 00:09:41,400 --> 00:09:43,400 Speaker 1: each other about what should be done. And it's like 159 00:09:43,440 --> 00:09:47,160 Speaker 1: two doctors who have not spend time understanding and agreeing 160 00:09:47,200 --> 00:09:51,160 Speaker 1: on how the body works, arguing about, you know, what 161 00:09:51,240 --> 00:09:53,560 Speaker 1: should be done for the body. And so the reason 162 00:09:53,640 --> 00:09:56,880 Speaker 1: I did that video how the economic machine works, and 163 00:09:56,880 --> 00:09:58,600 Speaker 1: the reason that I did the book and the reason 164 00:09:58,720 --> 00:10:02,120 Speaker 1: that I wrote principles is to put on the table. 165 00:10:02,520 --> 00:10:05,679 Speaker 1: What I think that those cause effect relationships are so 166 00:10:05,720 --> 00:10:10,240 Speaker 1: we can understand the timeless and universal mechanics behind it. 167 00:10:10,520 --> 00:10:13,679 Speaker 1: And that's been invaluable to me because once I understand 168 00:10:13,720 --> 00:10:16,559 Speaker 1: that mechanics and we could test it, we could test 169 00:10:16,600 --> 00:10:18,520 Speaker 1: it in all time frames, we could test it in 170 00:10:18,640 --> 00:10:21,360 Speaker 1: all countries, and we could understand it. And then with 171 00:10:21,480 --> 00:10:24,240 Speaker 1: that framework, we know how to deal with it. And 172 00:10:24,280 --> 00:10:27,319 Speaker 1: but nowadays being able to deal with it with algorithms 173 00:10:27,320 --> 00:10:29,800 Speaker 1: and technology means you can deal with it all over 174 00:10:29,840 --> 00:10:32,800 Speaker 1: the world. And it's been a powerful force. So it's 175 00:10:32,880 --> 00:10:35,960 Speaker 1: evolved from those experiences, like I remember the first time 176 00:10:36,160 --> 00:10:37,719 Speaker 1: I was clerking on the floor of the New York 177 00:10:37,760 --> 00:10:43,480 Speaker 1: Stock Exchange UM in UM. I was just between college 178 00:10:43,520 --> 00:10:48,080 Speaker 1: and going to business school and the stock and uh, 179 00:10:48,520 --> 00:10:53,000 Speaker 1: we have a dollar crisis. We can't pay for our goods, 180 00:10:53,000 --> 00:10:59,200 Speaker 1: and you if nobody's accepting dollars and UM On August fifteen, uh, 181 00:10:59,440 --> 00:11:03,360 Speaker 1: Richard Nick's and gets on the television and he basically says, 182 00:11:03,520 --> 00:11:07,400 Speaker 1: we're severing the connection between dollars and gold. Back then, 183 00:11:08,120 --> 00:11:11,440 Speaker 1: money was like a check and then checking the checkbook 184 00:11:11,480 --> 00:11:15,320 Speaker 1: has no value. It only what the money is has value. 185 00:11:15,600 --> 00:11:18,920 Speaker 1: And so it would get you money, would get you gold, 186 00:11:18,960 --> 00:11:20,560 Speaker 1: and that was and it was a breakdown. So it 187 00:11:20,600 --> 00:11:23,640 Speaker 1: was a default. And I remember thinking, um, when I 188 00:11:23,679 --> 00:11:25,760 Speaker 1: was going to walk in on Monday morning to the 189 00:11:25,760 --> 00:11:28,640 Speaker 1: New York Stock Exchange, this is a big crisis. And 190 00:11:28,679 --> 00:11:31,320 Speaker 1: I thought the stock market would fall a lot. And 191 00:11:31,400 --> 00:11:34,920 Speaker 1: the stock market went through the roof and I and 192 00:11:35,000 --> 00:11:39,320 Speaker 1: I realized, I said, well, did you have currency breakdowns before? 193 00:11:39,840 --> 00:11:43,839 Speaker 1: And then I was. I studied h currency breakdowns that 194 00:11:43,960 --> 00:11:47,680 Speaker 1: happened in this system, and I realized why when you 195 00:11:47,880 --> 00:11:50,280 Speaker 1: value the currency it's bulls and how that whole thing 196 00:11:50,320 --> 00:11:54,520 Speaker 1: works that I didn't understand. So it's that perspective about mechanics. 197 00:11:54,520 --> 00:11:57,480 Speaker 1: Do we understand? Can we agree on the mechanics of 198 00:11:57,520 --> 00:12:00,120 Speaker 1: how it works? Because once you can do that, you 199 00:12:00,160 --> 00:12:02,720 Speaker 1: know how to deal with it. So you mentioned Principles 200 00:12:02,720 --> 00:12:05,120 Speaker 1: before we talk about big debt crisis. Let's talk about 201 00:12:05,600 --> 00:12:08,120 Speaker 1: the book a bit. He came out last year. It 202 00:12:08,160 --> 00:12:11,720 Speaker 1: became a New York Times bestseller and you kind of 203 00:12:11,760 --> 00:12:15,679 Speaker 1: went on a not quite world tour on the book. 204 00:12:16,120 --> 00:12:20,360 Speaker 1: You said that experience was really educational. What did you 205 00:12:20,480 --> 00:12:25,440 Speaker 1: learn speaking to people about the book Principles? Well, I 206 00:12:25,520 --> 00:12:28,880 Speaker 1: didn't like I didn't like. I never liked being in 207 00:12:29,200 --> 00:12:32,960 Speaker 1: above the U, in the press, above the radar. You 208 00:12:33,000 --> 00:12:36,840 Speaker 1: don't do a lot of media historically, although you're beginning 209 00:12:36,840 --> 00:12:39,400 Speaker 1: to flower now that you're an author. I'll do that, 210 00:12:39,480 --> 00:12:42,719 Speaker 1: I'll do that. I'll do this in my face. I'm 211 00:12:42,720 --> 00:12:46,559 Speaker 1: in a phase of life which is a transition from 212 00:12:46,559 --> 00:12:50,520 Speaker 1: my second phase to my third phase. And so the 213 00:12:50,520 --> 00:12:53,000 Speaker 1: way I look at it is uh, in the first 214 00:12:53,040 --> 00:12:57,080 Speaker 1: phase of life, one is dependent on others, one is learning, 215 00:12:57,120 --> 00:13:01,000 Speaker 1: one's basically a student. Um in set and phase of life, 216 00:13:01,400 --> 00:13:04,719 Speaker 1: one is working, others are dependent on them, and one 217 00:13:04,800 --> 00:13:08,400 Speaker 1: is trying to be successful. As you get to my 218 00:13:08,520 --> 00:13:10,920 Speaker 1: stage in life, which is a transition from the second 219 00:13:10,960 --> 00:13:13,640 Speaker 1: to third stage, the way I think it is, the 220 00:13:13,800 --> 00:13:17,560 Speaker 1: joy is no longer as much to be successful as 221 00:13:17,600 --> 00:13:19,760 Speaker 1: to pass along what you've learned that has helped you 222 00:13:19,960 --> 00:13:22,640 Speaker 1: be successful, the joys and seeing other people be successful. 223 00:13:23,160 --> 00:13:26,440 Speaker 1: And because these principles have been written down over a 224 00:13:26,440 --> 00:13:29,560 Speaker 1: long period of time and they have kind of the recipes, um, 225 00:13:29,920 --> 00:13:31,800 Speaker 1: I wanted to pass those a log and that's what 226 00:13:31,840 --> 00:13:34,480 Speaker 1: I'm in the process of doing, and then I'll phase out. 227 00:13:34,559 --> 00:13:37,520 Speaker 1: But to answer your question in terms of the surprises. Like, 228 00:13:37,720 --> 00:13:40,520 Speaker 1: I thought that was going to be a very uncomfortable experience. 229 00:13:40,559 --> 00:13:44,160 Speaker 1: I thought even the communications would be bad. And I 230 00:13:44,280 --> 00:13:48,760 Speaker 1: have found such a joy in the interactions that I've 231 00:13:48,800 --> 00:13:52,400 Speaker 1: had with people in the in the public and and 232 00:13:52,480 --> 00:13:58,040 Speaker 1: so on. Um So it's been a really pleasurable good experience, 233 00:13:58,120 --> 00:14:01,920 Speaker 1: a sense of relationships, and a think people are now 234 00:14:02,640 --> 00:14:06,320 Speaker 1: looking for principles, and I want to emphasize forget my principles. 235 00:14:06,360 --> 00:14:08,400 Speaker 1: They don't have to be my principles. But I do 236 00:14:08,600 --> 00:14:13,720 Speaker 1: think that everybody would benefit enormously by being crystal clear 237 00:14:13,720 --> 00:14:16,760 Speaker 1: about their principles. I want to pass this this thing along. 238 00:14:16,840 --> 00:14:19,720 Speaker 1: Number one, I will pass this along that if every 239 00:14:19,720 --> 00:14:25,880 Speaker 1: time you're encountering your situation, um at that moment or 240 00:14:26,000 --> 00:14:28,920 Speaker 1: right after you write down the court the criteria for 241 00:14:29,080 --> 00:14:33,160 Speaker 1: making your decisions in words, and that allows you to 242 00:14:33,200 --> 00:14:37,400 Speaker 1: communicate with others, allows you to clarify your decision making, 243 00:14:37,680 --> 00:14:39,880 Speaker 1: and you could take in from others what the best 244 00:14:39,880 --> 00:14:44,040 Speaker 1: criteria is for those circumstances in the future. That is 245 00:14:44,080 --> 00:14:48,120 Speaker 1: invaluable because in all your relationships with people, know people 246 00:14:48,120 --> 00:14:51,520 Speaker 1: will know what your principles are, how you will interact 247 00:14:51,560 --> 00:14:54,000 Speaker 1: with them and why, and then you can go even 248 00:14:54,040 --> 00:14:57,480 Speaker 1: beyond that to convert those into equations and help them 249 00:14:57,520 --> 00:14:59,680 Speaker 1: make the decision that I think that's a powerful thing 250 00:14:59,680 --> 00:15:03,000 Speaker 1: in the future. And so I wanted to pass along mind. 251 00:15:03,000 --> 00:15:05,840 Speaker 1: But I also wanted to more importantly pass along the 252 00:15:05,880 --> 00:15:08,600 Speaker 1: importance of other people doing that. And that's what I'm 253 00:15:08,600 --> 00:15:10,560 Speaker 1: in the phase of. There are two things. So I 254 00:15:10,600 --> 00:15:13,600 Speaker 1: did the Life and Work Principles, and now I'm working 255 00:15:13,640 --> 00:15:17,200 Speaker 1: on Economic and Investment Principles. That will be the third 256 00:15:17,440 --> 00:15:20,680 Speaker 1: third book in the series. So middle one was sort 257 00:15:20,680 --> 00:15:23,720 Speaker 1: of an accident. Well, we'll get to the middle one 258 00:15:23,720 --> 00:15:26,240 Speaker 1: in the moment. Before we leave principles, I have to 259 00:15:26,320 --> 00:15:31,280 Speaker 1: ask about what I think is the most interesting approach 260 00:15:31,320 --> 00:15:35,120 Speaker 1: you bring to managing a firm, which you call being 261 00:15:35,280 --> 00:15:42,320 Speaker 1: radically open minded, having radical transparency, and bringing about thoughtful disagreement. 262 00:15:42,880 --> 00:15:46,080 Speaker 1: Tell me how that developed, because that doesn't seem to 263 00:15:46,080 --> 00:15:50,280 Speaker 1: be the way most of corporate America operates. That's our edge. 264 00:15:50,920 --> 00:15:57,480 Speaker 1: Your edge is thoughtful. Okay, yeah, um okay, So let 265 00:15:57,480 --> 00:15:59,840 Speaker 1: me give you one one sentence. I want an idea 266 00:15:59,840 --> 00:16:02,480 Speaker 1: of meritocracy. In other words, I want the best ideas 267 00:16:02,520 --> 00:16:04,920 Speaker 1: to win as opposed to where it comes from. Right, 268 00:16:05,000 --> 00:16:06,680 Speaker 1: I don't have to be. It doesn't have to come 269 00:16:06,720 --> 00:16:10,040 Speaker 1: from me. I just want the best decisions to be made, UM, 270 00:16:10,160 --> 00:16:12,880 Speaker 1: and I want to What I want is to have 271 00:16:13,040 --> 00:16:17,720 Speaker 1: meaningful work and meaningful relationships. A meaningful work meaning you're 272 00:16:17,760 --> 00:16:21,360 Speaker 1: on a mission together. And those relationships are are deep 273 00:16:21,360 --> 00:16:24,280 Speaker 1: and meaningful in their high quality, there a reward in 274 00:16:24,320 --> 00:16:28,240 Speaker 1: and of themselves, and they make an organization more effective. 275 00:16:28,360 --> 00:16:31,360 Speaker 1: So uh, an idea meritocracy, I'll get it out of 276 00:16:31,360 --> 00:16:35,040 Speaker 1: one sentence. An idea meritocracy which the goals are meaningful 277 00:16:35,040 --> 00:16:40,479 Speaker 1: work and meaningful relationships through radical truthfulness and radical transparency. 278 00:16:40,800 --> 00:16:44,560 Speaker 1: Radical truthfulness means say what you're thinking and others will 279 00:16:44,600 --> 00:16:47,920 Speaker 1: say the same, and let's get away from the behind 280 00:16:47,920 --> 00:16:50,600 Speaker 1: the scenes and the politics of it. And the radical 281 00:16:50,680 --> 00:16:53,840 Speaker 1: transparency means most people can see most everything so that 282 00:16:53,880 --> 00:16:56,640 Speaker 1: they can form the opinions of what's going on themselves, 283 00:16:56,800 --> 00:17:00,160 Speaker 1: independent thinking, and that builds trust. First of all, it 284 00:17:00,200 --> 00:17:07,520 Speaker 1: cuts through the notion of politics and bureaucracy. UM. By 285 00:17:07,520 --> 00:17:11,119 Speaker 1: everybody being able to see most things, you, you build 286 00:17:11,119 --> 00:17:14,280 Speaker 1: trust you and you're dealing with most things without the 287 00:17:14,320 --> 00:17:17,680 Speaker 1: blur of hiding stuff that's in people's heads. And in 288 00:17:17,800 --> 00:17:21,760 Speaker 1: the investment business, UM, I think it's a particularly special important. 289 00:17:21,800 --> 00:17:25,199 Speaker 1: I think it's also an entrepreneurs it's especially important because 290 00:17:25,480 --> 00:17:29,479 Speaker 1: you you have to have the independent thinking in the markets. Um, 291 00:17:30,160 --> 00:17:33,760 Speaker 1: the markets discount the consensus, so whatever the consensus is 292 00:17:33,760 --> 00:17:36,399 Speaker 1: is in the price. So in order to be successful 293 00:17:36,440 --> 00:17:39,520 Speaker 1: in the markets, you have to think differently than from 294 00:17:39,560 --> 00:17:42,719 Speaker 1: the consensus, and you have to be right. And in 295 00:17:42,840 --> 00:17:45,320 Speaker 1: order to have that, you have to have independent thinkers. 296 00:17:45,720 --> 00:17:48,639 Speaker 1: And when you have those differences in independent thinkers, if 297 00:17:48,680 --> 00:17:52,639 Speaker 1: you can work that through through thoughtful disagreement, you have 298 00:17:52,720 --> 00:17:55,520 Speaker 1: the art of thoughtful disagreement. If you work that through, 299 00:17:56,000 --> 00:17:59,160 Speaker 1: you raise your probabilities of getting at the best answer. 300 00:17:59,600 --> 00:18:03,280 Speaker 1: And and that's been a very very powerful thing. And 301 00:18:03,320 --> 00:18:07,119 Speaker 1: it also builds trusts and it builds better relationships because 302 00:18:07,320 --> 00:18:11,159 Speaker 1: trust comes from you know, opting, operating an organizations and 303 00:18:11,240 --> 00:18:14,040 Speaker 1: have this politics. It's all behind the scenes. Everybody gives 304 00:18:14,040 --> 00:18:15,920 Speaker 1: them high fives and they're all happy and so long, 305 00:18:15,960 --> 00:18:19,280 Speaker 1: and they talked behind each other's back. So that's been um, 306 00:18:19,320 --> 00:18:21,960 Speaker 1: it's been a big deal for us. That that's your edge. 307 00:18:22,200 --> 00:18:24,800 Speaker 1: So let's some Let's go forward to the new book 308 00:18:24,840 --> 00:18:29,399 Speaker 1: which just came out, Navigating Big Dead Crises. You mentioned 309 00:18:29,480 --> 00:18:32,520 Speaker 1: you decided to write that because a couple of folks 310 00:18:32,600 --> 00:18:36,240 Speaker 1: ask you to put it together. Ben Bernanke, Tim Geithner, 311 00:18:36,640 --> 00:18:41,000 Speaker 1: other people. I really like the way the book is assembled. 312 00:18:41,040 --> 00:18:45,000 Speaker 1: It's broken into three parts. The template for what the 313 00:18:45,040 --> 00:18:49,639 Speaker 1: big debt cycles look like. Then you use three detailed cases, 314 00:18:49,960 --> 00:18:54,040 Speaker 1: the Great Financial Crisis, the Great Depression in the Weimar Republic, 315 00:18:54,400 --> 00:18:57,600 Speaker 1: and then you you put together forty eight case studies 316 00:18:57,640 --> 00:19:00,800 Speaker 1: from the past century. So let let's start with the 317 00:19:00,840 --> 00:19:04,920 Speaker 1: first one to template what makes all of these very 318 00:19:05,080 --> 00:19:09,880 Speaker 1: different crises follow the same mechanical sort of cycle. How 319 00:19:09,960 --> 00:19:13,640 Speaker 1: how is that even possible? Well, everything's got these cause 320 00:19:13,680 --> 00:19:17,400 Speaker 1: effect relationships and the way you know, in a nutshell, 321 00:19:17,880 --> 00:19:23,280 Speaker 1: I'll try to make it simple. Um, there's productivity over 322 00:19:23,320 --> 00:19:25,920 Speaker 1: a period of time, our living standards rise because we 323 00:19:26,040 --> 00:19:28,520 Speaker 1: learn how to do things better, and the output per 324 00:19:28,560 --> 00:19:32,520 Speaker 1: man hour work increases, and that moves at a fairly 325 00:19:33,160 --> 00:19:35,520 Speaker 1: um it'll go up and down its pace. But by 326 00:19:35,720 --> 00:19:39,560 Speaker 1: nine and large it's not what causes volatility and around 327 00:19:39,600 --> 00:19:42,680 Speaker 1: that we have to debt cycles. We have a short 328 00:19:42,800 --> 00:19:45,760 Speaker 1: term debt cycle, which we understand because that's the business cycle. 329 00:19:46,119 --> 00:19:51,160 Speaker 1: You know, you're in a recession. Central banks E's monetary policy. 330 00:19:51,200 --> 00:19:54,639 Speaker 1: They changed the relationship between short term interest rates, long 331 00:19:54,720 --> 00:19:58,600 Speaker 1: term interest rates, asset prices, but liquidity in and then um, 332 00:19:58,680 --> 00:20:03,639 Speaker 1: you have debt grow. The credit is spending power. So 333 00:20:03,680 --> 00:20:07,960 Speaker 1: when you extend credit, you are extending spending power and 334 00:20:08,000 --> 00:20:10,560 Speaker 1: when and that's good for the economy when that credit 335 00:20:10,600 --> 00:20:13,320 Speaker 1: can be paid back. And what it does, of course, 336 00:20:13,520 --> 00:20:17,320 Speaker 1: is it pushes asset prices up while levels of debt 337 00:20:17,480 --> 00:20:21,479 Speaker 1: continue to increase. And at that part of the cycle, 338 00:20:21,840 --> 00:20:26,399 Speaker 1: people and everybody sort of um conservative about that and 339 00:20:26,480 --> 00:20:30,239 Speaker 1: it pays back. But asset prices when you mean, the 340 00:20:30,280 --> 00:20:33,040 Speaker 1: barrowers have the ability to service that debt even as 341 00:20:33,080 --> 00:20:36,440 Speaker 1: asset prices right, that's right, and everybody wins, and that's 342 00:20:36,440 --> 00:20:39,600 Speaker 1: good credit growth and it's a wonderful thing. Um. Then 343 00:20:39,640 --> 00:20:42,440 Speaker 1: as you get later in the cycle, it's a very 344 00:20:42,440 --> 00:20:47,080 Speaker 1: self reinforcing cycle because as asset prices go up, you 345 00:20:47,280 --> 00:20:51,760 Speaker 1: have more collateral. People are more confident, they believe asset 346 00:20:51,800 --> 00:20:54,840 Speaker 1: prices will continue to rise. They become a little bit 347 00:20:55,119 --> 00:20:57,800 Speaker 1: less careful in terms of that kind of lending. They 348 00:20:57,840 --> 00:21:02,239 Speaker 1: extrapolate that into the future. It and then um and 349 00:21:02,320 --> 00:21:06,520 Speaker 1: of course as um, then there's the shadow banking system. 350 00:21:06,560 --> 00:21:09,119 Speaker 1: There's always a shadow banking system really, not just a 351 00:21:09,200 --> 00:21:12,280 Speaker 1: way or nine. All the time, there's always a shadow 352 00:21:12,280 --> 00:21:15,320 Speaker 1: banking system. There's a shadow banking system now. Um In 353 00:21:15,359 --> 00:21:19,400 Speaker 1: other words, there's a banks and they're regulating controlled within 354 00:21:19,440 --> 00:21:22,640 Speaker 1: their parameters. And then outside of those banks are other 355 00:21:22,800 --> 00:21:26,679 Speaker 1: kind of new forms of lending and capital markets and 356 00:21:26,680 --> 00:21:29,399 Speaker 1: and so on, or it could be online, could have 357 00:21:29,400 --> 00:21:33,200 Speaker 1: different forms, and the there's a pressure to develop that 358 00:21:33,320 --> 00:21:36,920 Speaker 1: outside of the systems shadow banking because the more regulated, 359 00:21:36,960 --> 00:21:40,560 Speaker 1: more controlled one doesn't make as much money and so on, 360 00:21:40,720 --> 00:21:43,400 Speaker 1: and so by being at the periphery, you can use 361 00:21:43,480 --> 00:21:47,399 Speaker 1: higher amounts of leverage, you can do certain things, and 362 00:21:47,440 --> 00:21:51,000 Speaker 1: so that grows. So you develop the shadow banking system 363 00:21:51,000 --> 00:21:53,879 Speaker 1: which is not regulated. And also investors want to go 364 00:21:53,920 --> 00:21:56,159 Speaker 1: to because they'll give you a bit higher return. Like 365 00:21:56,240 --> 00:21:58,600 Speaker 1: I mean, even think about how the money market funds 366 00:21:58,640 --> 00:22:02,119 Speaker 1: developed because by comparison to banks and so on, and 367 00:22:02,160 --> 00:22:06,280 Speaker 1: so that develops outside and it becomes so self reinforcing 368 00:22:06,320 --> 00:22:08,879 Speaker 1: because everybody makes money at it, and also they believe 369 00:22:08,920 --> 00:22:12,160 Speaker 1: it because when things go up, you know, everybody thinks 370 00:22:12,320 --> 00:22:14,960 Speaker 1: things will go up. So so less regulation, more risk, 371 00:22:15,080 --> 00:22:17,959 Speaker 1: better return, that's right, and that's late in the cycle, 372 00:22:18,080 --> 00:22:20,800 Speaker 1: and then what happens, and of course what that does 373 00:22:20,920 --> 00:22:25,560 Speaker 1: is all that demand and liquidity causes rates to come down, 374 00:22:26,000 --> 00:22:28,679 Speaker 1: liquidity go out, So like we see in this cycle, 375 00:22:29,200 --> 00:22:33,040 Speaker 1: um last cycle, we brought interest rates basically down to zero, 376 00:22:33,480 --> 00:22:37,359 Speaker 1: practically down. That wasn't good enough, So central banks brought 377 00:22:37,520 --> 00:22:41,840 Speaker 1: fifteen trillion dollars of assets, push the asset prices up, 378 00:22:41,880 --> 00:22:45,639 Speaker 1: push liquidity into the system, and so asset prices go 379 00:22:45,760 --> 00:22:48,280 Speaker 1: up and people extrapolate. And the funny thing about it 380 00:22:48,320 --> 00:22:51,000 Speaker 1: is as you get to later in the cycle, when 381 00:22:51,040 --> 00:22:53,680 Speaker 1: there is more debt and you know that you're coming 382 00:22:53,720 --> 00:22:56,520 Speaker 1: closer to the end of the cycle, there is more 383 00:22:56,560 --> 00:22:59,760 Speaker 1: of an extrapolating in the market prices of that moving on. 384 00:22:59,800 --> 00:23:01,520 Speaker 1: So if you look at what the discount of growth 385 00:23:01,640 --> 00:23:04,320 Speaker 1: rates are laid in the cycle, they become high, they're 386 00:23:04,320 --> 00:23:06,800 Speaker 1: difficult to meet, and then you get the changing, you 387 00:23:06,880 --> 00:23:10,679 Speaker 1: get the tightening of monetary policy. Tightening, and monetary policy 388 00:23:10,800 --> 00:23:13,480 Speaker 1: has its effect first on asset prices, and then it 389 00:23:13,520 --> 00:23:18,040 Speaker 1: becomes a self reinforcing effect. And that's the normal business cycle, 390 00:23:18,320 --> 00:23:21,199 Speaker 1: a normal sort of debt cycle, because debt is credit 391 00:23:21,280 --> 00:23:24,520 Speaker 1: and credit is buying power, and economy runs on that 392 00:23:25,119 --> 00:23:28,400 Speaker 1: um then you have this longer term debt cycle, which 393 00:23:28,480 --> 00:23:32,560 Speaker 1: is the accumulation of those other cycles. Because the world 394 00:23:32,680 --> 00:23:36,000 Speaker 1: wants to be long. The world wants to be leverage long. 395 00:23:36,240 --> 00:23:38,800 Speaker 1: They want everything to go up, said we all, do 396 00:23:38,920 --> 00:23:42,960 Speaker 1: you know central banks better times? Assets go up, businesses, activity, 397 00:23:43,240 --> 00:23:46,479 Speaker 1: and so on, and there's a strong desire to push credit. 398 00:23:46,880 --> 00:23:50,400 Speaker 1: And so the limitations that start to encounter is when 399 00:23:50,440 --> 00:23:52,960 Speaker 1: you get close to zero interest rates, like we had 400 00:23:53,040 --> 00:23:56,600 Speaker 1: zero interest rates, that changes the game. And when you 401 00:23:56,680 --> 00:24:00,240 Speaker 1: have UH and then the the you need to print 402 00:24:00,320 --> 00:24:03,960 Speaker 1: money and buy assets. That happened in so te to 403 00:24:04,119 --> 00:24:08,760 Speaker 1: thirty two interest rates at zero that central banks need 404 00:24:08,840 --> 00:24:11,639 Speaker 1: to buy assets, They buy assets. They cause that carried 405 00:24:11,680 --> 00:24:15,720 Speaker 1: to very similar situation that we've been in, and so 406 00:24:15,800 --> 00:24:19,720 Speaker 1: will we carry that from two thousand and eight and nine? 407 00:24:20,119 --> 00:24:22,480 Speaker 1: Then and then you come into about you know, a 408 00:24:22,560 --> 00:24:24,840 Speaker 1: year year and a half ago, we start to tighten 409 00:24:24,840 --> 00:24:28,080 Speaker 1: the monetary policy, we pull that in, we have higher 410 00:24:28,160 --> 00:24:31,480 Speaker 1: rates of death growth. That thing goes on and on 411 00:24:31,680 --> 00:24:35,560 Speaker 1: all over in all countries, that same pace of dynamic. 412 00:24:35,720 --> 00:24:37,680 Speaker 1: There's a lot more on that in the book. I mean, 413 00:24:37,720 --> 00:24:39,439 Speaker 1: we don't have the time to go, so let me 414 00:24:39,560 --> 00:24:42,200 Speaker 1: let me pull you forward to today. Given that these 415 00:24:42,240 --> 00:24:46,280 Speaker 1: things are cyclical, they repeat, they look very similar. What 416 00:24:46,520 --> 00:24:50,760 Speaker 1: parallels would you draw from history to today? What what 417 00:24:50,840 --> 00:24:54,159 Speaker 1: eras is today most remind you of? What? What's the 418 00:24:54,200 --> 00:24:57,359 Speaker 1: most intriguing aspect of the current set up? Well, the 419 00:24:57,400 --> 00:25:00,399 Speaker 1: most the most recent period, that's a now guess of 420 00:25:00,440 --> 00:25:06,199 Speaker 1: this is the late thirties. Let's say if you take so, 421 00:25:06,240 --> 00:25:09,800 Speaker 1: why do I say that, I'd say, Um, we're UM, 422 00:25:09,960 --> 00:25:13,840 Speaker 1: well along in the business cycle, the short term debt cycle. 423 00:25:14,200 --> 00:25:16,520 Speaker 1: We're in the seventh or eighth thinning of that. Central 424 00:25:16,520 --> 00:25:20,080 Speaker 1: banks are tightening monetary policy. That's where we are in 425 00:25:20,119 --> 00:25:24,400 Speaker 1: that cycle. UM. Similar to then, uh, when we have 426 00:25:25,240 --> 00:25:28,320 Speaker 1: because of the printing of money and because technologies and 427 00:25:28,320 --> 00:25:32,240 Speaker 1: other reasons, we have a greater amount of UM polarity, 428 00:25:32,480 --> 00:25:37,040 Speaker 1: political polarity. I think this is UM an important important 429 00:25:37,040 --> 00:25:42,200 Speaker 1: issue UM. And that political polarity causes populism around the world. 430 00:25:42,280 --> 00:25:45,000 Speaker 1: In other words, a strong individual to come in get 431 00:25:45,040 --> 00:25:49,280 Speaker 1: control of that situation while they're having that type of polarity. UM. 432 00:25:49,520 --> 00:25:52,520 Speaker 1: So the word populism, for example, in developed countries, was 433 00:25:52,560 --> 00:25:56,119 Speaker 1: not widely used until you go back to the thirties, 434 00:25:56,200 --> 00:26:00,119 Speaker 1: Until more recently now it's of course common and so 435 00:26:00,400 --> 00:26:03,280 Speaker 1: we and we're also late in the longer term death cycle, 436 00:26:03,320 --> 00:26:06,800 Speaker 1: meaning if you were to turn down, if the economy 437 00:26:06,880 --> 00:26:11,639 Speaker 1: was to turn down, UM, the ability to deal with 438 00:26:11,680 --> 00:26:15,040 Speaker 1: that with lowering interest rates is very limited, and the 439 00:26:15,080 --> 00:26:18,600 Speaker 1: ability to deal with that with quantitative easing is very 440 00:26:18,680 --> 00:26:21,800 Speaker 1: limited for a variety of reasons. So it's very much 441 00:26:21,840 --> 00:26:25,080 Speaker 1: like the late thirties. You can't you can't find a 442 00:26:25,119 --> 00:26:29,080 Speaker 1: time that in which both of those circumstances exist. Populism 443 00:26:29,119 --> 00:26:31,879 Speaker 1: together with that difference is wealth caaps and so on. 444 00:26:32,320 --> 00:26:35,680 Speaker 1: And then also we have a situation which is quite similar, 445 00:26:35,840 --> 00:26:39,679 Speaker 1: I think, and we have rising, arising power in the 446 00:26:39,680 --> 00:26:42,760 Speaker 1: form of China. Let's talk about that, because in the 447 00:26:42,800 --> 00:26:46,439 Speaker 1: thirties you had Italy and Japan and Germany rising to 448 00:26:46,600 --> 00:26:52,280 Speaker 1: challenge the existing powers. How parallel is a growing China 449 00:26:52,400 --> 00:26:57,440 Speaker 1: today to that, to that era um? I think it's 450 00:26:57,480 --> 00:27:01,160 Speaker 1: it's not only analogous to that era UM, but there's 451 00:27:01,200 --> 00:27:06,040 Speaker 1: a concept UM called the fucidities trapped by the way 452 00:27:06,040 --> 00:27:11,520 Speaker 1: that in an excellent book by Graham Allison Um called 453 00:27:11,520 --> 00:27:14,200 Speaker 1: Destined for War, he goes through but you can study 454 00:27:14,240 --> 00:27:17,840 Speaker 1: for war well, he's dealing with China relationship. And but 455 00:27:17,880 --> 00:27:22,879 Speaker 1: if another excellent book, by the way, is um UM 456 00:27:23,400 --> 00:27:28,600 Speaker 1: Paul Kennedy's The Rise and Decline of Great Powers. And 457 00:27:28,720 --> 00:27:32,120 Speaker 1: if you study history, I've made a point now to 458 00:27:32,160 --> 00:27:35,880 Speaker 1: study history over the last five hundred years, very very carefully. 459 00:27:36,480 --> 00:27:39,439 Speaker 1: What you see is that in the last five hundred 460 00:27:39,520 --> 00:27:43,840 Speaker 1: years there have been sixteen times where a power UM 461 00:27:43,840 --> 00:27:47,520 Speaker 1: comes to challenge and existing power arising power. So like 462 00:27:47,640 --> 00:27:51,439 Speaker 1: you say, in Germany, UM in within Europe or Japan 463 00:27:51,520 --> 00:27:54,959 Speaker 1: within Asia, that was the nature of of that beast. 464 00:27:55,320 --> 00:27:58,600 Speaker 1: That means that there's certainly rivalry. So a trade war 465 00:27:59,280 --> 00:28:04,080 Speaker 1: a comparable power creates an issue. So sixteen previous examples 466 00:28:04,080 --> 00:28:07,199 Speaker 1: of a rising power, twelve of which led to UM 467 00:28:07,640 --> 00:28:10,639 Speaker 1: actual shooting wars. So I'm not saying we're going to 468 00:28:10,720 --> 00:28:14,520 Speaker 1: get into a shooting war, but I am saying that, UM, 469 00:28:14,560 --> 00:28:19,200 Speaker 1: the history has shown that when you have wars after 470 00:28:19,280 --> 00:28:21,359 Speaker 1: a war, you have a dominant power and you have 471 00:28:21,440 --> 00:28:25,160 Speaker 1: periods of peace because you have a dominant power. After 472 00:28:25,200 --> 00:28:29,800 Speaker 1: World War Two, UM, the United States was powerful both 473 00:28:29,880 --> 00:28:34,280 Speaker 1: economically and also it had a monopoly on nuclear power. UM. 474 00:28:34,400 --> 00:28:38,120 Speaker 1: And so as a result of that power, the you know, 475 00:28:38,280 --> 00:28:41,200 Speaker 1: the United Nations is in New York, the World Bank, 476 00:28:41,240 --> 00:28:44,960 Speaker 1: and the IMF in Washington, d C. Because it determined that. 477 00:28:45,520 --> 00:28:49,280 Speaker 1: And in history, UM, then when you have the rising 478 00:28:49,320 --> 00:28:53,520 Speaker 1: power to challenge the existing power, you have elements of conflict. 479 00:28:54,000 --> 00:28:56,760 Speaker 1: I'm saying I don't want to overdo this, but I 480 00:28:56,800 --> 00:29:00,719 Speaker 1: am saying that we are entering an era in which, um, 481 00:29:01,080 --> 00:29:05,800 Speaker 1: anybody who reads history and policy makers around the world 482 00:29:05,840 --> 00:29:11,400 Speaker 1: and recognize this, that this issue with China rising means 483 00:29:11,440 --> 00:29:14,640 Speaker 1: that there are naturally going to be conflicts. And how 484 00:29:14,640 --> 00:29:17,000 Speaker 1: do you resolve conflicts in the world market. You don't 485 00:29:17,040 --> 00:29:19,560 Speaker 1: go to a court system. There's not a rule of 486 00:29:19,640 --> 00:29:22,240 Speaker 1: law in the world that becomes dominant. So there is 487 00:29:22,280 --> 00:29:25,280 Speaker 1: more of a rule of power, and that's a dynamic. 488 00:29:25,520 --> 00:29:27,800 Speaker 1: So all I'm saying is, if I was to pick 489 00:29:27,920 --> 00:29:31,280 Speaker 1: you asked me when is most analogous, and I would 490 00:29:31,320 --> 00:29:34,520 Speaker 1: say that the nineteen thirties, where you take that period, 491 00:29:34,560 --> 00:29:38,160 Speaker 1: the late nineteen thirties is an analogous period. If you 492 00:29:38,160 --> 00:29:41,520 Speaker 1: were to say cause effect relationships, because how much power 493 00:29:41,520 --> 00:29:44,400 Speaker 1: do we have in terms of monetary policy, how much 494 00:29:44,400 --> 00:29:47,880 Speaker 1: populism do we have analogous? These are important things. And 495 00:29:47,920 --> 00:29:50,680 Speaker 1: then also, um, you know where are we in the 496 00:29:50,800 --> 00:29:54,200 Speaker 1: economic cycle, how our asset prices priced and so on. 497 00:29:54,560 --> 00:29:57,239 Speaker 1: So it looks now the most analogous period you can 498 00:29:57,280 --> 00:30:00,120 Speaker 1: go back to periods in other periods in history you 499 00:30:00,160 --> 00:30:04,360 Speaker 1: could find also other analogous types of periods. But that's 500 00:30:04,360 --> 00:30:06,240 Speaker 1: what it looks. But well, we know how the nine 501 00:30:07,080 --> 00:30:10,920 Speaker 1: ended and it wasn't well with World War two? What's 502 00:30:10,960 --> 00:30:15,320 Speaker 1: the implication. Are we at risk for a shooting conflict 503 00:30:15,400 --> 00:30:18,640 Speaker 1: with China? Or is this going to take more in 504 00:30:18,720 --> 00:30:25,200 Speaker 1: the terms of an economic or competitive I think that 505 00:30:25,280 --> 00:30:29,640 Speaker 1: what our circumstances lead to has a lot to do 506 00:30:29,720 --> 00:30:34,560 Speaker 1: with how we all deal with each other given those circumstances. 507 00:30:34,640 --> 00:30:37,680 Speaker 1: In other words, um, do you mean us individually? Do 508 00:30:37,680 --> 00:30:42,000 Speaker 1: you mean between President she and President Trump? Between? Let's 509 00:30:43,400 --> 00:30:47,480 Speaker 1: history is shown that how conflict is handled is the 510 00:30:47,800 --> 00:30:53,040 Speaker 1: is the big thing. Um so Uh, there's a tendency 511 00:30:53,120 --> 00:30:58,320 Speaker 1: of polarity to cause greater conflict and then hard times 512 00:30:59,360 --> 00:31:03,960 Speaker 1: to quasi and worse conflict in those cases. Um. You 513 00:31:03,960 --> 00:31:09,719 Speaker 1: you even had in Germany and Italy, Japan, Um and Spain, 514 00:31:10,080 --> 00:31:18,120 Speaker 1: you had four democracies that chose to be autocracies because 515 00:31:18,280 --> 00:31:22,160 Speaker 1: of the would somebody get control of the situation because 516 00:31:22,160 --> 00:31:25,800 Speaker 1: it was fairly the chaos of the conflict, it became 517 00:31:25,840 --> 00:31:28,840 Speaker 1: worse and so there was conflict within countries and there 518 00:31:28,880 --> 00:31:32,920 Speaker 1: was conflict between countries. And I think the real question is, 519 00:31:33,240 --> 00:31:36,239 Speaker 1: you know, can you have thoughtful disagreement, can you have 520 00:31:36,320 --> 00:31:44,160 Speaker 1: strong negotiations but with the notion of reaching um, whether 521 00:31:44,160 --> 00:31:49,040 Speaker 1: they're compromises or paths that are you know, not damaging 522 00:31:49,120 --> 00:31:52,240 Speaker 1: type of conflicts. I don't know. This is beyond me, 523 00:31:52,640 --> 00:31:56,600 Speaker 1: but I am saying that I think I can't. I 524 00:31:56,640 --> 00:31:58,320 Speaker 1: can't tell you whether you go to world I think 525 00:31:58,360 --> 00:32:04,520 Speaker 1: that um and that you were I would say that, ah, 526 00:32:04,720 --> 00:32:08,920 Speaker 1: it would be to not consider it as a possibility 527 00:32:09,280 --> 00:32:13,280 Speaker 1: and not be worried about it. Uh, internal conflict and 528 00:32:13,360 --> 00:32:17,840 Speaker 1: external conflict would be dangerous. In other words, I think 529 00:32:17,880 --> 00:32:20,600 Speaker 1: it's the worry and the attention paid to it, and 530 00:32:20,640 --> 00:32:23,120 Speaker 1: the notion of, you know, how do we work together? 531 00:32:23,240 --> 00:32:26,760 Speaker 1: How do we work together as a country. Is there 532 00:32:26,880 --> 00:32:31,160 Speaker 1: is there in America that has common values that we're 533 00:32:31,200 --> 00:32:34,880 Speaker 1: pursuing a common mission and and and what is that? 534 00:32:35,040 --> 00:32:37,320 Speaker 1: How do you deal with that polarity issue? You know? 535 00:32:37,440 --> 00:32:43,480 Speaker 1: I mean there are issues in terms of how effectively 536 00:32:43,680 --> 00:32:47,840 Speaker 1: capitalism is working for everybody. Um, it's it's working, I 537 00:32:47,880 --> 00:32:51,360 Speaker 1: think less effective. I'm a capitalist, I'm professional capitalist. I 538 00:32:51,400 --> 00:32:54,000 Speaker 1: believe in the system. But as it how do you 539 00:32:54,080 --> 00:32:57,840 Speaker 1: deal with all of those those are education equal education? 540 00:32:57,920 --> 00:33:01,040 Speaker 1: These types of things have become fundamental and they're they're 541 00:33:01,160 --> 00:33:04,440 Speaker 1: they're big challenges. Anyway we're going before we move from that, 542 00:33:04,440 --> 00:33:07,320 Speaker 1: you're getting from markets. But you point out in the 543 00:33:07,400 --> 00:33:10,880 Speaker 1: book that every time there's a financial crisis we seem 544 00:33:10,920 --> 00:33:14,760 Speaker 1: to run into issues of economic inequality and widening gap, 545 00:33:14,880 --> 00:33:17,600 Speaker 1: widening gap between the halves and have nuts? Is that 546 00:33:17,720 --> 00:33:20,560 Speaker 1: part of the machinery? Is that something that always happens 547 00:33:20,560 --> 00:33:26,520 Speaker 1: when there's a financial crisis. History is shown that, Um, 548 00:33:26,560 --> 00:33:32,120 Speaker 1: in places where there's a big disparity in conditions at 549 00:33:32,160 --> 00:33:35,640 Speaker 1: the same time as you have an economic downturn, there's 550 00:33:35,720 --> 00:33:39,520 Speaker 1: greater levels of conflict. Now, you could be a poorer 551 00:33:39,560 --> 00:33:42,320 Speaker 1: country in which there's not much difference and you have 552 00:33:42,360 --> 00:33:44,640 Speaker 1: a downturn and you have less conflict, or you could 553 00:33:44,640 --> 00:33:47,400 Speaker 1: be a rich country. Um, you know Switzerland is going 554 00:33:47,440 --> 00:33:49,800 Speaker 1: to have less conflict down there because they're not that 555 00:33:49,880 --> 00:33:54,160 Speaker 1: same element of disparity. So history has shown that when 556 00:33:54,200 --> 00:33:56,520 Speaker 1: there is that and there's a downturn, there's more like 557 00:33:56,720 --> 00:34:00,840 Speaker 1: there's more to argue about. Interesting. We're gonna open this 558 00:34:01,000 --> 00:34:04,880 Speaker 1: up for questions from the audience, but first we're gonna 559 00:34:04,880 --> 00:34:08,920 Speaker 1: do a speed round five questions in in a minute. Uh, 560 00:34:08,960 --> 00:34:10,560 Speaker 1: and then we'll and then we'll do Q and A. 561 00:34:10,680 --> 00:34:14,000 Speaker 1: So let's let's jump right into this. Tell us the 562 00:34:14,040 --> 00:34:18,160 Speaker 1: most important thing that people don't know about you? Most 563 00:34:18,239 --> 00:34:25,640 Speaker 1: important that I have a great wife for forty um 564 00:34:25,680 --> 00:34:28,880 Speaker 1: plus years, who is a is a force of nature 565 00:34:28,960 --> 00:34:31,160 Speaker 1: that I'm crazy about it, and that is also doing 566 00:34:31,680 --> 00:34:35,200 Speaker 1: amazing things in her world. Um, you mentioned a few books. 567 00:34:35,400 --> 00:34:38,080 Speaker 1: Give us your favorite book you would suggest people should 568 00:34:38,120 --> 00:34:41,399 Speaker 1: read outside of your own. I would I would say 569 00:34:41,440 --> 00:34:45,759 Speaker 1: Lessons from History. It's a hundred four pages. Uh. The 570 00:34:45,840 --> 00:34:48,480 Speaker 1: Durance wrote that who are the Great? One of the 571 00:34:48,480 --> 00:34:51,200 Speaker 1: probably the greatest historians, brought five thousand years of five 572 00:34:51,280 --> 00:34:55,040 Speaker 1: They distilled it down in to onion four pages. Fabulous. 573 00:34:55,480 --> 00:34:59,360 Speaker 1: I would say, here of a thousand faces the life cycles, 574 00:34:59,440 --> 00:35:03,239 Speaker 1: which is right? And I particulate Joseph Campbell. And then 575 00:35:03,320 --> 00:35:07,319 Speaker 1: I would particularly say that now they should read which 576 00:35:07,360 --> 00:35:10,440 Speaker 1: I think is a masterpiece, Paul Kennedy's The Rise and 577 00:35:10,480 --> 00:35:14,440 Speaker 1: Decline of Great Powers, so we have some millennials in 578 00:35:14,480 --> 00:35:16,200 Speaker 1: the room. If a millennial came up to you and 579 00:35:16,239 --> 00:35:19,560 Speaker 1: said they were interested in a career in finance, what 580 00:35:19,680 --> 00:35:23,040 Speaker 1: sort of advice would you give them. Well, let's see. 581 00:35:23,719 --> 00:35:28,560 Speaker 1: I think the most important thing is as you're young, 582 00:35:29,120 --> 00:35:32,719 Speaker 1: is to realize that your success comes from knowing how 583 00:35:32,719 --> 00:35:36,120 Speaker 1: to deal with your not knowing more than it comes 584 00:35:36,120 --> 00:35:39,640 Speaker 1: from anything you know. So how to be open mind, 585 00:35:39,640 --> 00:35:41,919 Speaker 1: how to take in the best of the around there. 586 00:35:41,960 --> 00:35:47,120 Speaker 1: Don't think that you're be humble, take in the best, 587 00:35:47,239 --> 00:35:49,960 Speaker 1: know how to deal with not knowing, and then you'll 588 00:35:50,000 --> 00:35:54,200 Speaker 1: be more successful. And um, what is your favorite philanthropic 589 00:35:54,280 --> 00:36:00,440 Speaker 1: focus these days? Um? For me personally, it's two things, UM, 590 00:36:00,600 --> 00:36:08,400 Speaker 1: ocean exploration and particularly micro finance. Microfinance interesting micro finance 591 00:36:08,440 --> 00:36:11,880 Speaker 1: and ocean expedition because I basically believe, I believe this 592 00:36:11,960 --> 00:36:14,600 Speaker 1: issue is a big issue, and I think that you know, 593 00:36:14,680 --> 00:36:19,040 Speaker 1: the fundamentals are blessings that I've had. Can I have 594 00:36:19,080 --> 00:36:21,160 Speaker 1: a family that's a good family take care of me. 595 00:36:21,320 --> 00:36:26,319 Speaker 1: That that's a very important thing, and sometimes that's difficult. Um. Education, 596 00:36:27,160 --> 00:36:30,040 Speaker 1: I was able to go to a good public school. 597 00:36:30,480 --> 00:36:33,439 Speaker 1: You know, can you have good public education? And then 598 00:36:33,440 --> 00:36:37,440 Speaker 1: a few bucks to get you going in terms of 599 00:36:37,480 --> 00:36:41,280 Speaker 1: being able to make decisions. I've seen on micro finance. 600 00:36:41,280 --> 00:36:45,120 Speaker 1: I'm a supporter of gramin America from from the beginning. Uh. 601 00:36:45,200 --> 00:36:47,719 Speaker 1: For every dollar that I give to that UM, there's 602 00:36:47,760 --> 00:36:52,480 Speaker 1: twelve dollars in lending that gets paid back in the 603 00:36:53,080 --> 00:36:55,319 Speaker 1: in the first ten years, and it just keeps going 604 00:36:55,440 --> 00:36:57,799 Speaker 1: round and round and it becomes self financing. So I 605 00:36:57,800 --> 00:37:01,759 Speaker 1: think that's um an important. And then I'm, you know, 606 00:37:01,800 --> 00:37:04,200 Speaker 1: thrilled about ocean exploration because I think it's our biggest 607 00:37:04,200 --> 00:37:07,400 Speaker 1: asset and it's and it's thrilling. And my final question, 608 00:37:07,560 --> 00:37:09,600 Speaker 1: what do you know about the world of investing today? 609 00:37:09,800 --> 00:37:12,400 Speaker 1: You wish you knew forty plus years ago when you 610 00:37:12,440 --> 00:37:16,040 Speaker 1: were beginning. UM, I guess it would be the same thing, 611 00:37:16,120 --> 00:37:21,719 Speaker 1: which is, I wish I knew how to deal with 612 00:37:21,760 --> 00:37:25,680 Speaker 1: my not knowing, how to how to bring in the best, 613 00:37:25,920 --> 00:37:29,840 Speaker 1: how to deal with that thoughtful disagreement, to be radically 614 00:37:29,840 --> 00:37:33,960 Speaker 1: open minded, to be um audacious and going after my goals, 615 00:37:34,160 --> 00:37:36,640 Speaker 1: to try to do great things. But to know that 616 00:37:36,680 --> 00:37:40,440 Speaker 1: I could change my risk return ratio by being able 617 00:37:40,480 --> 00:37:43,920 Speaker 1: to raise my confidence by the art of thoughtful disagreement, 618 00:37:44,120 --> 00:37:48,680 Speaker 1: and to diversify effectively my bets so that I could 619 00:37:49,280 --> 00:37:53,120 Speaker 1: not have anyone that dominates my returns. And uh, you know, 620 00:37:53,200 --> 00:37:57,640 Speaker 1: to place those bets with both aggressiveness and humility. All Right, 621 00:37:57,680 --> 00:37:59,520 Speaker 1: So let's open this up to the audience. I know 622 00:37:59,600 --> 00:38:03,760 Speaker 1: there's a couple of handheld mike's running around. What questions 623 00:38:03,800 --> 00:38:07,040 Speaker 1: do we have from the audience anywhere? Right over here 624 00:38:07,800 --> 00:38:12,840 Speaker 1: on the corner, I told you there was a plant. 625 00:38:13,400 --> 00:38:15,399 Speaker 1: I'm not a plant, but I've always wanted to ask 626 00:38:15,400 --> 00:38:17,839 Speaker 1: you this. UM, thank you for thank you for this, 627 00:38:17,880 --> 00:38:20,480 Speaker 1: by the way, where this has been great? Um, you've 628 00:38:20,480 --> 00:38:22,640 Speaker 1: been one of the most successful funds ever, maybe the 629 00:38:22,680 --> 00:38:25,560 Speaker 1: most successful. A lot of funds that have had success 630 00:38:25,560 --> 00:38:29,320 Speaker 1: have eventually either kicked out their investors and run house 631 00:38:29,360 --> 00:38:34,239 Speaker 1: money or have drastically limited how much outside capital they've 632 00:38:34,280 --> 00:38:37,880 Speaker 1: taken or had become family offices through the years. Is 633 00:38:37,920 --> 00:38:41,160 Speaker 1: that something that you ever considered? And why have you 634 00:38:41,239 --> 00:38:44,279 Speaker 1: completely gone the other way and grown the firm? Um? 635 00:38:44,320 --> 00:38:48,239 Speaker 1: Given how successful you've been, UM, good question. We're we're 636 00:38:49,600 --> 00:38:52,960 Speaker 1: there's alpha, there's alpha, and there's beta. So this is 637 00:38:53,000 --> 00:38:55,720 Speaker 1: gonna probably be a little bit of a technical answer 638 00:38:55,760 --> 00:39:00,279 Speaker 1: to your question first, but UMU beta which is what 639 00:39:00,440 --> 00:39:05,200 Speaker 1: is your strategic acid allocation? Next, you're timeless and universal um. 640 00:39:05,239 --> 00:39:07,680 Speaker 1: There's a lot of liquid and a lot of capacity. 641 00:39:08,000 --> 00:39:11,520 Speaker 1: And so those are the only two accounts we've taken alpha. 642 00:39:11,960 --> 00:39:15,960 Speaker 1: We have capped our alpha. We I don't think, you 643 00:39:15,960 --> 00:39:18,719 Speaker 1: know what, We just don't take in new money that 644 00:39:18,880 --> 00:39:22,160 Speaker 1: is capped UM. And then the way that we do 645 00:39:22,200 --> 00:39:25,160 Speaker 1: it is, yes, we we invest a lot in there, 646 00:39:25,200 --> 00:39:28,640 Speaker 1: but there's a hundred and sixty billion dollars of total 647 00:39:28,680 --> 00:39:32,080 Speaker 1: assets invested, and we haven't had the need to not 648 00:39:32,280 --> 00:39:35,400 Speaker 1: invest for other people. So I don't expect that I 649 00:39:35,440 --> 00:39:39,839 Speaker 1: have no expectation that that would change. I saw her 650 00:39:39,840 --> 00:39:45,680 Speaker 1: hand back in the corner over there. I M. I've 651 00:39:45,880 --> 00:39:49,080 Speaker 1: luckily been lucky enough to read this book already, which 652 00:39:49,120 --> 00:39:53,120 Speaker 1: is very, very entertaining. Could I just ask you to 653 00:39:54,160 --> 00:39:59,719 Speaker 1: talk in a little more detail about one of the shortest, 654 00:40:00,120 --> 00:40:03,480 Speaker 1: most punchy sentences in the in the book, which was 655 00:40:03,920 --> 00:40:09,040 Speaker 1: in the end, policymakers always print? Are we confident that 656 00:40:09,080 --> 00:40:13,400 Speaker 1: they will indeed always print? Might there be any exceptions 657 00:40:14,120 --> 00:40:18,000 Speaker 1: and go ahead? Well, it just takes how much pain 658 00:40:18,080 --> 00:40:20,799 Speaker 1: that gets them to print? You know? I mean, at 659 00:40:20,800 --> 00:40:23,520 Speaker 1: the end of the day, what I'm saying is when 660 00:40:23,560 --> 00:40:26,480 Speaker 1: you have a dead crisis and it keeps going and 661 00:40:26,600 --> 00:40:29,480 Speaker 1: it becomes painful, you'll print money when you hit zero 662 00:40:30,160 --> 00:40:38,080 Speaker 1: interest rates, Um, then you print. That's been true throughout history. 663 00:40:38,320 --> 00:40:41,120 Speaker 1: And you know, there's not a case that I know 664 00:40:41,200 --> 00:40:45,239 Speaker 1: of that's that's different from that, because it's the better alternative. 665 00:40:46,000 --> 00:40:49,719 Speaker 1: So yeah, at the in the end, you know, when 666 00:40:49,719 --> 00:40:53,359 Speaker 1: it gets bad enough, they'll always bread some question over 667 00:40:53,400 --> 00:40:59,080 Speaker 1: here and we'll try and get through as many questions, 668 00:40:59,360 --> 00:41:02,400 Speaker 1: which is, by the way, an interesting consideration if you 669 00:41:02,440 --> 00:41:06,120 Speaker 1: take longer term, not immediate, but you think of what 670 00:41:06,120 --> 00:41:09,360 Speaker 1: what does that mean longer term in terms of reserve currency. 671 00:41:09,600 --> 00:41:12,000 Speaker 1: If you start to think where are we in the cycle, 672 00:41:13,480 --> 00:41:16,680 Speaker 1: and and you start to extrapolate what you know, what 673 00:41:16,880 --> 00:41:19,240 Speaker 1: is going to have to be sold? You the United 674 00:41:19,280 --> 00:41:21,879 Speaker 1: States is going to have to sell a lot more 675 00:41:21,960 --> 00:41:25,160 Speaker 1: debt in the world because of the larger elements of 676 00:41:25,200 --> 00:41:28,000 Speaker 1: budget deficits. You're gonna have to sell more and from 677 00:41:28,000 --> 00:41:32,480 Speaker 1: a buyer of that that what what a bond is 678 00:41:32,480 --> 00:41:35,399 Speaker 1: is a promise to get a lot of currency. That's 679 00:41:35,400 --> 00:41:38,680 Speaker 1: what it is. You get currency and so and we're 680 00:41:38,840 --> 00:41:42,319 Speaker 1: in a monetary system. So if you take you know, 681 00:41:42,560 --> 00:41:46,040 Speaker 1: I don't know five, ten, fifteen years later. UM, I 682 00:41:46,080 --> 00:41:50,319 Speaker 1: think it'll increasingly be UM an issue. You know, what 683 00:41:50,560 --> 00:41:53,400 Speaker 1: is the currency, what is the storehold wealth? Where you know, 684 00:41:53,440 --> 00:41:56,759 Speaker 1: those are elements that lurk in the back, not immediately. 685 00:41:56,920 --> 00:42:03,440 Speaker 1: As as as issues with on on that path of 686 00:42:03,520 --> 00:42:07,880 Speaker 1: the maintaining power, global economic power. You know, many of 687 00:42:07,920 --> 00:42:10,800 Speaker 1: the economies have been on nine stimulus, that is, stimuli 688 00:42:10,960 --> 00:42:13,640 Speaker 1: that can be considered a little bit of a steroids. 689 00:42:14,080 --> 00:42:17,239 Speaker 1: You know. You mentioned that for those economies, you know, 690 00:42:17,320 --> 00:42:20,839 Speaker 1: to succeed in remaining power, um, they have to keep 691 00:42:20,920 --> 00:42:24,960 Speaker 1: the growth growing. So given the current scenario and the 692 00:42:25,080 --> 00:42:27,719 Speaker 1: trade agreements that we're trying to reach, do you have 693 00:42:27,800 --> 00:42:33,880 Speaker 1: an expectation of which economy will fold first? Um? You 694 00:42:35,040 --> 00:42:38,200 Speaker 1: I don't have it. And I think that Europe is 695 00:42:39,200 --> 00:42:41,440 Speaker 1: um is a is an area of conflict and there 696 00:42:41,480 --> 00:42:44,600 Speaker 1: are issues that exist within Europe, but there you know, 697 00:42:45,080 --> 00:42:49,439 Speaker 1: so I don't know that I have I would say 698 00:42:49,800 --> 00:42:53,160 Speaker 1: when we have the downturn, it will be an issue 699 00:42:53,200 --> 00:42:58,960 Speaker 1: of you know, continuity, cohesiveness. I think Europe will have 700 00:42:59,280 --> 00:43:02,279 Speaker 1: a greater out of challenge because they don't have a 701 00:43:02,360 --> 00:43:06,320 Speaker 1: common fiscal policy, they don't have unity within the countries. 702 00:43:06,360 --> 00:43:09,440 Speaker 1: They don't have unity between the countries and they have 703 00:43:10,160 --> 00:43:14,800 Speaker 1: big structural issues. Um So I would say that Europe 704 00:43:14,840 --> 00:43:18,399 Speaker 1: probably would be the most strained. I saw handback over 705 00:43:18,440 --> 00:43:22,880 Speaker 1: there to Tende being from Forrinstan Globe Partners. The question 706 00:43:23,000 --> 00:43:25,200 Speaker 1: is in the long term, what do you think the 707 00:43:25,320 --> 00:43:32,080 Speaker 1: US market will be and what the long term US 708 00:43:32,160 --> 00:43:37,160 Speaker 1: markets where do you see them going? Um? I think 709 00:43:37,280 --> 00:43:41,320 Speaker 1: US market what you mean in terms of size or 710 00:43:41,440 --> 00:43:48,719 Speaker 1: valuation or in terms of performance, I think that we're closer, 711 00:43:49,600 --> 00:43:54,160 Speaker 1: we're not. Long term, well, let's say five or ten years. 712 00:43:54,440 --> 00:43:56,520 Speaker 1: I think we have squeezed a lot out of the 713 00:43:56,600 --> 00:43:58,400 Speaker 1: U S market. I think we're an environment that we 714 00:43:58,480 --> 00:44:02,840 Speaker 1: are going to have low return going forward for a 715 00:44:03,120 --> 00:44:07,640 Speaker 1: very very long time. Because, um, if you look at returns, 716 00:44:07,960 --> 00:44:11,880 Speaker 1: there's the present value effect of lowering interest rates and 717 00:44:11,880 --> 00:44:16,560 Speaker 1: putting liquidity into the system, and that has largely run 718 00:44:16,600 --> 00:44:19,520 Speaker 1: its course. And all assets compete with each other, so 719 00:44:19,560 --> 00:44:22,040 Speaker 1: you can almost look at the yields of those assets. 720 00:44:22,120 --> 00:44:24,480 Speaker 1: What's the yield on cash, the yield on cash, the 721 00:44:24,560 --> 00:44:28,560 Speaker 1: yield on bonds, and then assets equities and so on, 722 00:44:28,600 --> 00:44:30,719 Speaker 1: the brisk premiums of each of those and then that 723 00:44:30,760 --> 00:44:33,719 Speaker 1: carries through to private equity, carries through the real estate, 724 00:44:33,760 --> 00:44:36,399 Speaker 1: and so on. And because so much money has come 725 00:44:36,440 --> 00:44:40,240 Speaker 1: out and interest rates were squeezed, we've brought asset prices 726 00:44:40,360 --> 00:44:44,759 Speaker 1: up to very high levels um um in a storic context, 727 00:44:44,800 --> 00:44:47,560 Speaker 1: but not relative to cash. They haven't gone to such 728 00:44:47,600 --> 00:44:51,960 Speaker 1: extraordinarily high levels UM. And now in that tightening, as 729 00:44:52,000 --> 00:44:56,800 Speaker 1: we're raising cash rates um and the spreads between short 730 00:44:56,920 --> 00:45:00,760 Speaker 1: term interest rates and the longer term exp active returns 731 00:45:00,800 --> 00:45:04,839 Speaker 1: get squeezed, that also squeezes those returns. So when you're 732 00:45:04,880 --> 00:45:08,920 Speaker 1: at almost a zero interest rate low in the United States, 733 00:45:09,040 --> 00:45:12,000 Speaker 1: zero interest rate in Europe, and a zero interest rate 734 00:45:12,200 --> 00:45:16,200 Speaker 1: in Japan, which are the main reserve currencies, and that 735 00:45:16,200 --> 00:45:20,399 Speaker 1: that has all been supported by quantitative easing. Beyond that, 736 00:45:20,760 --> 00:45:23,239 Speaker 1: I think we've squeezed out a lot of assets. I 737 00:45:23,239 --> 00:45:27,600 Speaker 1: think the world by and large is leverage long um 738 00:45:27,800 --> 00:45:33,160 Speaker 1: meaning assets. Let's let's say the buying of um debt, 739 00:45:33,320 --> 00:45:38,759 Speaker 1: corporate debt. One of the biggest sources of returns on 740 00:45:38,800 --> 00:45:42,399 Speaker 1: assets was the fact that the interest rate was low 741 00:45:42,520 --> 00:45:45,640 Speaker 1: relative to the return on equity. And so there's been 742 00:45:45,680 --> 00:45:48,520 Speaker 1: a lot of buy backs, a lot of mergers and acquisition. 743 00:45:48,560 --> 00:45:52,440 Speaker 1: In other words, by companies buying companies and bidding that up, 744 00:45:52,480 --> 00:45:55,520 Speaker 1: and that's been a factor. And that's also then you 745 00:45:55,560 --> 00:45:59,359 Speaker 1: have the tax boost because if you lower corporate tax rates, uh, 746 00:46:00,000 --> 00:46:03,240 Speaker 1: it's are worth more. All of those things have pushed 747 00:46:03,280 --> 00:46:06,840 Speaker 1: those asset prices up to levels where it's difficult to 748 00:46:07,000 --> 00:46:10,080 Speaker 1: see how you can squeeze that with and so you 749 00:46:10,120 --> 00:46:13,560 Speaker 1: can't get the rate structure down much and which is 750 00:46:13,600 --> 00:46:16,319 Speaker 1: the wind to the back and you can't. So all 751 00:46:16,360 --> 00:46:19,400 Speaker 1: of that means I think you've squeezed out a lot. 752 00:46:21,080 --> 00:46:23,840 Speaker 1: So so going forward from here, if you're an investor, 753 00:46:24,400 --> 00:46:27,840 Speaker 1: does that mean you just have to prepare for um 754 00:46:28,040 --> 00:46:31,200 Speaker 1: lower expected returns in the future or is there a 755 00:46:31,200 --> 00:46:33,000 Speaker 1: place where you can hide. No, I think like like 756 00:46:33,080 --> 00:46:41,839 Speaker 1: crypto UM, I think if you're an average investor, I 757 00:46:41,880 --> 00:46:45,920 Speaker 1: think that you again, there's alten this beta um. You 758 00:46:45,960 --> 00:46:48,960 Speaker 1: have to prepare for lower expected returns in the future 759 00:46:49,760 --> 00:46:52,319 Speaker 1: because if you take all these obligations. I'm talking to 760 00:46:52,360 --> 00:46:55,560 Speaker 1: some extent about the debt obligations, but there are unfunded 761 00:46:55,560 --> 00:46:59,359 Speaker 1: pension obligations, they're also healthcare obligations. There's a lot of 762 00:46:59,360 --> 00:47:05,040 Speaker 1: obligations and essentially a lower real interest rate and therefore 763 00:47:05,120 --> 00:47:09,040 Speaker 1: lower asset returns, assets are held by those who are 764 00:47:09,080 --> 00:47:12,399 Speaker 1: more rich relative to that. I think all of those 765 00:47:12,400 --> 00:47:15,920 Speaker 1: things are going to pull that you can expect lower returns, 766 00:47:15,960 --> 00:47:19,359 Speaker 1: and you can expect probably more taxes those in a 767 00:47:19,400 --> 00:47:21,759 Speaker 1: longer term. So that's going to be the nature of 768 00:47:21,800 --> 00:47:25,000 Speaker 1: the beast. As far as and how to deal with it, um, 769 00:47:25,040 --> 00:47:28,880 Speaker 1: I think most people should not be making tactical movements 770 00:47:28,920 --> 00:47:31,360 Speaker 1: in and out of the markets to produce alf I 771 00:47:31,400 --> 00:47:33,400 Speaker 1: think that's difficult. So I think that they have to 772 00:47:33,440 --> 00:47:36,840 Speaker 1: know how to balance their accounts. That's why when I 773 00:47:36,920 --> 00:47:39,760 Speaker 1: refer to what we call all weather, what's risk parity? 774 00:47:39,760 --> 00:47:42,160 Speaker 1: How do you balance those things back? You have to 775 00:47:42,160 --> 00:47:44,600 Speaker 1: have a balance portfolio unless you're going to be able 776 00:47:44,640 --> 00:47:48,040 Speaker 1: to you know, concentration is a risky thing. And then 777 00:47:48,280 --> 00:47:51,120 Speaker 1: or you have to be able to time markets, and 778 00:47:51,160 --> 00:47:54,560 Speaker 1: of course that's that's a difficult thing too. I saw 779 00:47:54,600 --> 00:47:57,239 Speaker 1: a bunch of hands up, Um, why don't we come 780 00:47:57,320 --> 00:47:59,680 Speaker 1: down to the front row over here with this woman? 781 00:48:03,440 --> 00:48:06,480 Speaker 1: Thank you hi, Raight, So my question is actually more 782 00:48:06,560 --> 00:48:10,759 Speaker 1: about management, because I really think that's been that's from 783 00:48:10,760 --> 00:48:13,200 Speaker 1: what my hataway it was from principles was just what 784 00:48:13,360 --> 00:48:18,200 Speaker 1: an incredible and strange culture. You've built a bridgewater and 785 00:48:18,360 --> 00:48:21,799 Speaker 1: I love your advice. You know that to deal with 786 00:48:21,840 --> 00:48:24,240 Speaker 1: not knowing, that's such a horror problem for most people. 787 00:48:24,560 --> 00:48:29,359 Speaker 1: People are uncomfortable to admitting I don't know. So how 788 00:48:29,360 --> 00:48:32,040 Speaker 1: do you teach someone who is either resistant to admitting 789 00:48:32,239 --> 00:48:35,880 Speaker 1: I don't know, or worse yet, who is not aware 790 00:48:36,440 --> 00:48:40,359 Speaker 1: of how much he or she doesn't know. Well, one 791 00:48:40,400 --> 00:48:43,520 Speaker 1: of the best I was gonna just say, play the 792 00:48:43,520 --> 00:48:45,840 Speaker 1: markets and then you'll needalize how difficult it is to 793 00:48:45,840 --> 00:48:49,200 Speaker 1: be confident. That's a but honestly, what happens is to 794 00:48:49,239 --> 00:48:54,799 Speaker 1: make the transformation. Um, you have to explain that through 795 00:48:54,840 --> 00:48:58,560 Speaker 1: them in a way where let's go through this, Like 796 00:48:58,560 --> 00:49:00,840 Speaker 1: if I was to say, um, do you want to 797 00:49:00,880 --> 00:49:04,120 Speaker 1: know what your weaknesses are? Do you want to know 798 00:49:04,600 --> 00:49:07,279 Speaker 1: what I think? Do you want to know be able 799 00:49:07,320 --> 00:49:10,520 Speaker 1: to tell me what you think? Do you want to 800 00:49:10,640 --> 00:49:13,160 Speaker 1: have disagreement when we're disagreement? Do you want to have 801 00:49:13,160 --> 00:49:17,279 Speaker 1: thoughtful disagreement? Because if there's disagreement, there's some chance that 802 00:49:17,360 --> 00:49:21,440 Speaker 1: maybe you that's wrong rather than the other person. Intellectually 803 00:49:21,880 --> 00:49:26,240 Speaker 1: you can get people there, not all people, but intellectually 804 00:49:26,320 --> 00:49:29,960 Speaker 1: you can buy and large say you're struggling with yourself really, 805 00:49:30,440 --> 00:49:33,480 Speaker 1: because there's this intellectual self that said, yeah, I'd like 806 00:49:33,520 --> 00:49:35,600 Speaker 1: to know my weaknesses. I know everybody has strengths and 807 00:49:35,680 --> 00:49:39,200 Speaker 1: weaknesses I can develop. I'd like to have that honest relationship, 808 00:49:39,520 --> 00:49:43,040 Speaker 1: and then you will. Once you intellectually get that you wanted, 809 00:49:43,480 --> 00:49:46,719 Speaker 1: then you're going to encounter your emotional barriers to it. 810 00:49:47,000 --> 00:49:51,279 Speaker 1: And the emotional barriers are either your ego barrier that 811 00:49:51,440 --> 00:49:52,839 Speaker 1: you know that you're going to have to get over, 812 00:49:53,000 --> 00:49:55,759 Speaker 1: or your blind spot barrier. I mean, in other words, 813 00:49:55,760 --> 00:49:59,880 Speaker 1: by ego barrier means um you somehow feel challenged or whatever, 814 00:50:00,280 --> 00:50:03,720 Speaker 1: you feel bad about not knowing, feel good about not knowing. 815 00:50:03,760 --> 00:50:06,480 Speaker 1: And curiosity. If I can get you to see that 816 00:50:06,520 --> 00:50:09,719 Speaker 1: world that way intellectually, you'll you'll want it. And then 817 00:50:09,719 --> 00:50:13,320 Speaker 1: the blindness barrier is you could be really curious. But minds, 818 00:50:14,000 --> 00:50:17,400 Speaker 1: different people's minds work differently. They see things. Some people 819 00:50:17,440 --> 00:50:20,279 Speaker 1: see the big pictures, some people see details, and so on. 820 00:50:20,640 --> 00:50:23,240 Speaker 1: And when you come to see that, different people see 821 00:50:23,280 --> 00:50:26,160 Speaker 1: things differently, and you could when you see things through 822 00:50:26,200 --> 00:50:30,440 Speaker 1: others eyes, that you can see in three dimensions in 823 00:50:30,520 --> 00:50:33,759 Speaker 1: color rather than seeing in this one flat dimension black 824 00:50:33,800 --> 00:50:36,000 Speaker 1: and white, and you can do much better if you 825 00:50:36,080 --> 00:50:40,000 Speaker 1: get them to intellectually understand that and say we're going 826 00:50:40,040 --> 00:50:42,200 Speaker 1: to go through this in a in a way where 827 00:50:42,200 --> 00:50:45,560 Speaker 1: there's trust, where there's meaningful relationships. But you can get 828 00:50:45,560 --> 00:50:48,120 Speaker 1: trust because you can get to see things for yourself. 829 00:50:48,280 --> 00:50:50,799 Speaker 1: Everything is transparent, will talk about it and so on. 830 00:50:51,120 --> 00:50:53,640 Speaker 1: Then you get people to want to be that way, 831 00:50:53,800 --> 00:50:57,160 Speaker 1: but they have to start to realize intellectually that it's 832 00:50:57,239 --> 00:51:00,520 Speaker 1: really a good way of being. It builds better work 833 00:51:00,560 --> 00:51:04,880 Speaker 1: results of builds better relationships, and that's a tremendous power 834 00:51:04,880 --> 00:51:06,680 Speaker 1: to get to the right answer and also get the 835 00:51:06,719 --> 00:51:10,160 Speaker 1: rewards of good work and good relationships. They have to 836 00:51:10,200 --> 00:51:12,000 Speaker 1: go through that, and then they have to go through 837 00:51:12,040 --> 00:51:15,000 Speaker 1: the experience. And then when you take them through the experiences, 838 00:51:15,040 --> 00:51:17,719 Speaker 1: you have to help them through that experiences because some 839 00:51:17,800 --> 00:51:20,560 Speaker 1: of that is different different. I think it's also how 840 00:51:20,640 --> 00:51:23,959 Speaker 1: we teach kids, and we teach our in our own 841 00:51:24,080 --> 00:51:27,280 Speaker 1: environment that you know, did you get the great grade? 842 00:51:27,800 --> 00:51:29,880 Speaker 1: In there? In there? And it's all kind of do 843 00:51:29,960 --> 00:51:32,920 Speaker 1: you know? And the life is not like this. Life 844 00:51:32,920 --> 00:51:35,080 Speaker 1: when you leave school is not like did you get 845 00:51:35,120 --> 00:51:39,600 Speaker 1: the great grade? Life starts succeeding when you start to fail. 846 00:51:40,239 --> 00:51:43,920 Speaker 1: When okay, and and then it's the learning that comes 847 00:51:43,960 --> 00:51:46,520 Speaker 1: from those failures that produces it. So I think that 848 00:51:46,719 --> 00:51:51,360 Speaker 1: whole intellectually getting that being that way is healthy in 849 00:51:51,440 --> 00:51:54,400 Speaker 1: all of those respects. And then once you have that 850 00:51:54,440 --> 00:51:57,359 Speaker 1: in their mind and they experience it, you help them 851 00:51:57,360 --> 00:51:59,640 Speaker 1: through that, then they know they're experiencing and that's what 852 00:51:59,719 --> 00:52:04,520 Speaker 1: works for us to help people make that transition. Thank 853 00:52:04,560 --> 00:52:08,959 Speaker 1: you have about read on here all the way this way? 854 00:52:09,440 --> 00:52:14,120 Speaker 1: H got it, Hi rate. One of my favorite shows 855 00:52:14,200 --> 00:52:17,200 Speaker 1: is a show called Billions, and some people have said 856 00:52:17,239 --> 00:52:20,680 Speaker 1: that the character Babby as Rod in his office is 857 00:52:20,719 --> 00:52:22,840 Speaker 1: somewhat based on you. Have you ever seen the show? 858 00:52:23,480 --> 00:52:25,120 Speaker 1: Any truth to that or what do you think of that? 859 00:52:25,800 --> 00:52:29,080 Speaker 1: I have no idea you speak to those guys. I 860 00:52:29,239 --> 00:52:33,480 Speaker 1: have no idea whether it's true. I um. I watched 861 00:52:33,480 --> 00:52:38,120 Speaker 1: three episodes out of curiosity. I thought it was entertaining, 862 00:52:38,200 --> 00:52:40,279 Speaker 1: and then I, you know, just didn't have the chance 863 00:52:40,320 --> 00:52:42,560 Speaker 1: to pursue it. So I don't have much to had y. 864 00:52:42,719 --> 00:52:46,560 Speaker 1: I guess they got the writers. When you read the 865 00:52:46,560 --> 00:52:49,080 Speaker 1: book that you talk Paul Kendy, the book that Act, 866 00:52:49,160 --> 00:52:51,520 Speaker 1: and read that book well. Of that book, the message 867 00:52:51,520 --> 00:52:54,240 Speaker 1: I take from that book is that every great Paul 868 00:52:54,719 --> 00:52:57,239 Speaker 1: it's because they're all leverage. They borrow too much. At 869 00:52:57,280 --> 00:53:00,520 Speaker 1: that the message you wanted the massive from the focus. 870 00:53:01,120 --> 00:53:04,040 Speaker 1: Now the US really looks like, oh, defice getting bigger 871 00:53:04,040 --> 00:53:06,719 Speaker 1: and the bigger do you see we we are? That's 872 00:53:06,719 --> 00:53:09,080 Speaker 1: where we're going. And then what's the implication to the 873 00:53:09,080 --> 00:53:12,359 Speaker 1: currency of the U store. So in the Polkenny book, 874 00:53:12,440 --> 00:53:18,319 Speaker 1: over leverage is the US over leveraged relative to historical companies. Yeah, 875 00:53:18,480 --> 00:53:20,800 Speaker 1: so there are a number of lessons. One of those 876 00:53:21,000 --> 00:53:24,480 Speaker 1: is UM and it can take the ark by the way, 877 00:53:24,480 --> 00:53:27,520 Speaker 1: typically is two hundred years, two hundred and fifty years, 878 00:53:27,560 --> 00:53:30,160 Speaker 1: so the arc is quite long UM and it by 879 00:53:30,200 --> 00:53:34,279 Speaker 1: the way, it starts off with technological advances that raises 880 00:53:34,719 --> 00:53:38,000 Speaker 1: g d P and then makes them very competitive in 881 00:53:38,000 --> 00:53:42,080 Speaker 1: the world markets. Like UM. The Dutch was the reserve 882 00:53:42,160 --> 00:53:45,640 Speaker 1: currency before the British Empire in ours and then what 883 00:53:45,800 --> 00:53:49,280 Speaker 1: happens is later in the cycle there is that desire 884 00:53:49,360 --> 00:53:53,440 Speaker 1: to push it in leverage UM. Usually it's a matter 885 00:53:53,719 --> 00:53:57,560 Speaker 1: of they become global, they have global trade routes, when 886 00:53:57,560 --> 00:54:01,239 Speaker 1: they travel around there carrying their currency. Then people then 887 00:54:01,400 --> 00:54:04,040 Speaker 1: use that currency, that's what they pay in, that's what 888 00:54:04,120 --> 00:54:10,080 Speaker 1: they lend in. UM. UM Holland. Essentially Amsterdam became half 889 00:54:10,120 --> 00:54:13,239 Speaker 1: of world trade at that time, and it became very 890 00:54:13,400 --> 00:54:17,000 Speaker 1: rich because of those things, and the world use that 891 00:54:17,120 --> 00:54:20,359 Speaker 1: reserve currency, so there was borrowing and lending, and then 892 00:54:20,400 --> 00:54:22,920 Speaker 1: the cycle goes that. Of course, when you have a 893 00:54:23,000 --> 00:54:27,279 Speaker 1: reserve currency, others want to save in it because the 894 00:54:27,360 --> 00:54:29,920 Speaker 1: choice is their local currency and so on, and they 895 00:54:29,960 --> 00:54:32,560 Speaker 1: believe that that's the thing to save in. And when 896 00:54:32,560 --> 00:54:35,920 Speaker 1: they're saving in it, that means that there's borrowing in 897 00:54:36,000 --> 00:54:40,480 Speaker 1: it by that country, and they usually overextend, and as 898 00:54:40,480 --> 00:54:43,239 Speaker 1: a result of over extending, they make they get the 899 00:54:43,560 --> 00:54:46,480 Speaker 1: debt problems that you're dealing with, and then it becomes 900 00:54:46,520 --> 00:54:49,759 Speaker 1: a challenge. I think the United States is following that 901 00:54:49,920 --> 00:54:52,960 Speaker 1: kind of an arc, and we are over extending, and 902 00:54:53,000 --> 00:54:57,320 Speaker 1: that we're operating in this world reserve currency uh fiat 903 00:54:57,360 --> 00:54:59,759 Speaker 1: currency type of assistem. And so if you were to 904 00:54:59,800 --> 00:55:02,880 Speaker 1: take you know, let's say years in the future, I 905 00:55:02,920 --> 00:55:05,680 Speaker 1: think that the role of the US dollar will diminish, 906 00:55:05,960 --> 00:55:10,000 Speaker 1: and the returns on US dollars will US dollar denominated 907 00:55:10,040 --> 00:55:12,839 Speaker 1: debt I think will suffer for the reasons that we're 908 00:55:12,840 --> 00:55:16,239 Speaker 1: talking about here. And then I think then you see 909 00:55:16,239 --> 00:55:19,400 Speaker 1: the emergence of other currencies. What those currencies will be 910 00:55:19,480 --> 00:55:22,680 Speaker 1: exactly how that will work is an interesting question. Um 911 00:55:22,760 --> 00:55:25,279 Speaker 1: So that's too big of a topic to get into 912 00:55:25,320 --> 00:55:28,400 Speaker 1: an answering your uh in this brief a couple of minutes. 913 00:55:28,719 --> 00:55:32,040 Speaker 1: But I would say that that becomes an issue, and 914 00:55:32,160 --> 00:55:35,799 Speaker 1: that probably over the next five and ten years, we're 915 00:55:35,800 --> 00:55:38,520 Speaker 1: going to see that play more of a role. Rate 916 00:55:38,600 --> 00:55:43,000 Speaker 1: given in Kennedy's book, each of the great powers became 917 00:55:43,280 --> 00:55:47,799 Speaker 1: global powers by expanding beyond their borders. What do you 918 00:55:47,800 --> 00:55:51,920 Speaker 1: make of the current deglobalization that seems to be taking 919 00:55:51,920 --> 00:55:55,440 Speaker 1: place in the United States, in the UK and elsewhere. Well, 920 00:55:55,480 --> 00:55:59,240 Speaker 1: I think we're you're talking about there are two different things. 921 00:55:59,360 --> 00:56:03,120 Speaker 1: In those case, says, there wasn't so much the globalization. 922 00:56:03,400 --> 00:56:06,560 Speaker 1: There was the globalization of those countries, just like the 923 00:56:06,560 --> 00:56:10,680 Speaker 1: globalization of China. We're now seeing the One Belt, one Road. 924 00:56:11,160 --> 00:56:14,560 Speaker 1: We're seeing investments all around the world. That's that's carrying 925 00:56:14,600 --> 00:56:17,920 Speaker 1: that forward. With that, you will see more lending in 926 00:56:18,560 --> 00:56:24,080 Speaker 1: uh m MB, you will see more Chinese banks in 927 00:56:24,120 --> 00:56:25,799 Speaker 1: the world, and so on and and so forth, and that 928 00:56:25,840 --> 00:56:31,719 Speaker 1: will expand very very analogous regarding globalization, which is the 929 00:56:31,800 --> 00:56:34,800 Speaker 1: idea of producing at one place and selling it someplace 930 00:56:34,800 --> 00:56:37,479 Speaker 1: else in the most efficient ways that there's not much 931 00:56:37,560 --> 00:56:40,239 Speaker 1: trade barriers so that you can do that. Or the 932 00:56:40,280 --> 00:56:43,960 Speaker 1: globalization of capital markets, the free flow of money into 933 00:56:44,000 --> 00:56:47,479 Speaker 1: and out of countries and all of that. UM, I 934 00:56:47,520 --> 00:56:52,520 Speaker 1: think that that's peaked, and that where now in an 935 00:56:52,640 --> 00:56:55,120 Speaker 1: environment in which will go to a you know, more 936 00:56:55,160 --> 00:56:58,440 Speaker 1: of a D globalization kind of environment. And because of 937 00:56:58,480 --> 00:57:04,120 Speaker 1: this somewhat threatening environment that perceived UM worry that you 938 00:57:04,160 --> 00:57:06,840 Speaker 1: could have a conflict. I think that that creates a 939 00:57:06,920 --> 00:57:11,080 Speaker 1: force that reinforces the D globalization because let's say, if 940 00:57:11,120 --> 00:57:14,239 Speaker 1: you're going to produce something, if you're producing things in 941 00:57:14,320 --> 00:57:16,440 Speaker 1: China that we need in the United States, by way 942 00:57:16,440 --> 00:57:19,680 Speaker 1: of example, there might be a concern about doing that. 943 00:57:20,040 --> 00:57:22,800 Speaker 1: So if you're producing PCs, you might say and might 944 00:57:22,840 --> 00:57:26,080 Speaker 1: need PCs here, there might be a pressure to go 945 00:57:26,360 --> 00:57:29,160 Speaker 1: D globalization that sort of feeds on itself. I think 946 00:57:29,160 --> 00:57:31,520 Speaker 1: that we're seeing those kinds of pressures. I think the 947 00:57:31,560 --> 00:57:35,360 Speaker 1: same thing is true that that could happen with capital flows. UM. 948 00:57:35,680 --> 00:57:38,880 Speaker 1: You know, if Chinese investors are more concerned that you 949 00:57:38,880 --> 00:57:41,480 Speaker 1: could have a conflict, there could be more sanctions of 950 00:57:41,560 --> 00:57:44,120 Speaker 1: investments in the United States, so they're less inclined to 951 00:57:44,280 --> 00:57:46,800 Speaker 1: invest in the United States and so on. So those 952 00:57:46,840 --> 00:57:50,600 Speaker 1: issues I think, UM, I think we're more moving more 953 00:57:50,680 --> 00:57:57,120 Speaker 1: towards d globalization and almost independent self sufficiency is probably 954 00:57:57,200 --> 00:57:59,680 Speaker 1: the more of the direction. And we have time for 955 00:58:00,000 --> 00:58:06,200 Speaker 1: one last question. Let's go right over here. I have 956 00:58:06,280 --> 00:58:09,760 Speaker 1: two questions regarding China. The first one is where do 957 00:58:09,840 --> 00:58:14,120 Speaker 1: you see China's debt situation today? And the second being 958 00:58:14,160 --> 00:58:18,040 Speaker 1: given that China has started to increase the amount of stimulus, 959 00:58:18,360 --> 00:58:21,960 Speaker 1: is that an area that you would potentially increase an 960 00:58:22,000 --> 00:58:26,360 Speaker 1: investment in in this at this point in time, Uh, 961 00:58:27,560 --> 00:58:33,280 Speaker 1: like I said, applying the template to China, UM, Chinese 962 00:58:33,360 --> 00:58:36,240 Speaker 1: debt is mostly in their local currency. The amount of 963 00:58:36,400 --> 00:58:40,720 Speaker 1: foreign currency denomin data debt for China is very small. Okay, 964 00:58:40,720 --> 00:58:45,520 Speaker 1: so now you're dealing mostly with an internal issue. And 965 00:58:46,000 --> 00:58:52,160 Speaker 1: also the lenders to China are within their system. And 966 00:58:52,440 --> 00:58:57,080 Speaker 1: the like I said, the capacity to handle a debt 967 00:58:57,080 --> 00:58:59,880 Speaker 1: crisis by spreading it out in one way or another, 968 00:59:00,320 --> 00:59:04,960 Speaker 1: UM is quite large. Um. They have the expertise to 969 00:59:05,080 --> 00:59:07,200 Speaker 1: know how to do that, to do that spreading it out, 970 00:59:07,680 --> 00:59:12,000 Speaker 1: So UM, I think that when you look at debt cycles, uh, 971 00:59:12,040 --> 00:59:14,760 Speaker 1: there were four cases in which I know the United 972 00:59:14,800 --> 00:59:18,040 Speaker 1: States default had had major debt crisis is and won't 973 00:59:18,120 --> 00:59:20,640 Speaker 1: rattle them all off, and that they were able to 974 00:59:20,640 --> 00:59:23,960 Speaker 1: be managed. The lesson I gave, for example, of the 975 00:59:24,000 --> 00:59:29,120 Speaker 1: two thousand excuse me, the debt crisis that I was 976 00:59:29,160 --> 00:59:32,360 Speaker 1: so wrong about was the ability to spread that out 977 00:59:32,440 --> 00:59:35,200 Speaker 1: and lower interest rates at the same time. China has 978 00:59:35,240 --> 00:59:38,840 Speaker 1: that ability. I think everybody's focused in on that and 979 00:59:38,840 --> 00:59:41,320 Speaker 1: and too focused in on that, and they're not focused 980 00:59:41,320 --> 00:59:44,520 Speaker 1: in on their productivity growth and how they're making changes 981 00:59:44,680 --> 00:59:47,640 Speaker 1: in terms of that productivity growth. I think, um, you know, 982 00:59:47,760 --> 00:59:51,600 Speaker 1: like a bad year of growth, uh will be probably 983 00:59:51,760 --> 00:59:53,640 Speaker 1: twice as good as a good year of growth from 984 00:59:53,760 --> 00:59:57,120 Speaker 1: us in terms of that that whole productivity thing. And 985 00:59:57,160 --> 01:00:00,320 Speaker 1: if you look at indicators of productivity over a period 986 01:00:00,320 --> 01:00:04,840 Speaker 1: of time, quality of education, quality of infrastructure, those kinds 987 01:00:04,880 --> 01:00:08,040 Speaker 1: of things, you know, they have the reasons to continue 988 01:00:08,040 --> 01:00:11,040 Speaker 1: to have high productivity. So to me, it looks like 989 01:00:11,080 --> 01:00:13,680 Speaker 1: one of those cycles, their version of a cycle to 990 01:00:13,720 --> 01:00:17,280 Speaker 1: do a debt restructuring and and a debt organization. They're 991 01:00:17,320 --> 01:00:20,200 Speaker 1: doing it on a proactive basis before the cycle is 992 01:00:20,240 --> 01:00:23,800 Speaker 1: actually caused a crisis. In most of the other cases, 993 01:00:23,920 --> 01:00:27,120 Speaker 1: like in our financial two thousand financial crisis, we had 994 01:00:27,160 --> 01:00:30,360 Speaker 1: the crisis, and then you have reactive. They're doing proactive. 995 01:00:30,760 --> 01:00:34,040 Speaker 1: So I'm very um. I'm not worried about the debt 996 01:00:34,040 --> 01:00:37,680 Speaker 1: crisis in in China or the debt situation in China, 997 01:00:37,760 --> 01:00:40,000 Speaker 1: and I'm you know, I believe that it's going to 998 01:00:40,160 --> 01:00:42,720 Speaker 1: be a very good place for long term investing. I 999 01:00:42,720 --> 01:00:46,000 Speaker 1: think it has to be an important part of everybody's portfolio. 1000 01:00:46,200 --> 01:00:49,080 Speaker 1: It's just opening up to foreign investors. It's a different 1001 01:00:49,160 --> 01:00:51,200 Speaker 1: kind of place, so you have to get to know it. 1002 01:00:51,320 --> 01:00:54,440 Speaker 1: But you know, I'm basically bullish, and I won't get 1003 01:00:54,480 --> 01:00:58,160 Speaker 1: into the particulars of what particular investments I would make 1004 01:00:58,160 --> 01:01:01,200 Speaker 1: there though. So that is all we have time for. 1005 01:01:01,320 --> 01:01:03,360 Speaker 1: I want to thank Ray for being so generous with 1006 01:01:03,440 --> 01:01:05,640 Speaker 1: his time. Let's give him a nice round of applause. 1007 01:01:05,760 --> 01:01:08,320 Speaker 1: Thank you very Oh my pleasure. If you're gonna hang 1008 01:01:08,320 --> 01:01:10,400 Speaker 1: around a little bit and sign some books for people, 1009 01:01:10,480 --> 01:01:13,800 Speaker 1: is that right? If you're fantastic, So stick around rail 1010 01:01:13,800 --> 01:01:15,840 Speaker 1: sign some books and thank you so much for coming