Jeremy Grantham – Bubbles, Value Investing, and the Long Game at GMO (EP. 493)

Summary

• Market Bubbles: Grantham argues the current AI-led surge resembles past overdone bubbles and warns that leaders could ultimately lead the downturn.
• Asset Allocation: He recommends emphasizing non-US value and emerging markets over expensive US equities for the long run.
• Quality Tilt: If constrained to the US, he advises owning quality stocks for survivability, citing 1929-era lessons where robust franchises endured.
• Value Investing: He reiterates that value stocks win over time despite painful cycles, and that timing bubbles is hard but their formation and break drive returns.
• AI Leadership Risk: Mentions Nvidia (NVDA) as “Amazon squared,” expecting eventual mean reversion similar to past tech leaders; Amazon (AMZN) cited as historical parallel.
• Indexing View: Praises index funds for cost savings and broad outperformance versus active as a group, while noting future market-structure challenges if indexing grows too large.
• Climate Investing: His foundation aggressively backs high-impact green tech (e.g., fusion, geothermal, CO2 removal) accepting high failure rates for transformative upside.
• Outlook & Risks: Expects eventual reversal led by mega-cap AI names and urges caution on richly valued US markets amid career-risk dynamics.

Transcript

The gray bubbles are associated with great investment ideas that get overdone. It has to be serious and ideally it has to be obviously serious. Railroads are the best example followed by the internet. If you see the railroads are going to change the world, then of course you want to invest. It was precisely their obviousness and their importance. Internet most people could see that it was pretty serious that it would eventually change the world. Amazon went up six times, something like that, in 2000. Even though it was a successful idea, it went down 92%. Check it. It went down 92% in the bust and then it rose again to inherit the earth. That isn't in a way exceptional. That's what you should expect. So here we are with Nvidia looking like Amazon squared. The money dwarfing any capex program in history. everyone being clear in their mind that this is the biggest thing they've ever had in their lives. And they're right. It is. That's why the investment program is almost certain to be overdone. I'm Ted Sides and this is Capital Allocators. My guest on today's show is Jeremy Grantham, the co-founder of GMO, a hundred billion dollar Bostonbased asset management firm he co-founded in 1977. Over six decades in markets, Jeremy has been one of the most respected and outspoken voices on value, market bubbles, and long-term investing. He recently published The Making of a Permab Bear with Edward Chancellor, an account of his career and investment lessons learned along the way. Our conversation begins with Jeremy's early lessons in frugality growing up in wartime Yorkshire and his interest in numbers and investing. We trace his career through the founding of Battery March and GMO, the golden period of value, the painful lessons of the dotcom bubble, and the challenges since. We cover Jeremy's framework for identifying and navigating market bubbles, career risk, and the current AI investment boom, and close with his essential philanthropic work to change the trajectory of the environment alongside the investment strategy he deploys in his foundation. Before we get going, after a long winter, we're starting to see green shoots in the changing of the season. Spring training for baseball, March Madness for basketball, and the sunshine double in tennis all remind us that hope springs eternal. But these days, it's harder to be optimistic about another list of challenges. Private market liquidity, peace around the world, and keeping up with my son Eric in creating witty spread the word clips. Now, I can't figure out what will happen in private credit, how the private equity bottleneck will ease, what benchmark should replace the S&P 500, or why so many people have reached out commenting on Eric's lack of interest in the show. But I do know that the answers await from our incredible guests, and you should encourage all your colleagues to listen in and find out that truth. Thanks so much for spreading the word. Please enjoy my conversation with Jeremy Grantham. Jeremy, thanks so much for joining me. >> It's a pleasure. >> I'd love you to take me back to the aspects of your upbringing that impacted your beliefs and path in investing. >> I suppose the biggest one was that I grew up in World War II. It was all around us. the blackout, people coming around to make sure that our curtains were drawn, no cars, cars were all on blocks, a few taxis, every vehicle had shutters over the top so that they wouldn't cast much light up into the sky. There was a shortage of everything. I didn't know because that was my life and I was new, but I could tell that everybody was in that frame. You weren't allowed to waste anything. The idea that you would leave anything on your plate was a horror show. Everywhere you went, there were lines for food. There were even lines for bread and potato, the real basics. Almost everything was on coupons. By the end of the war, to get anything looking like meat, you had to hoard your coupons for a few weeks and then cash them in and flirt with the butcher. >> What aspect of that setup do you think influenced how you thought? I think frugality was the big thing in the war. I was up in the north in a coal mining town. Yorkshire, our county is famous for its frugality. Anyway, that was two strikes. Then the man in the family, my grandfather, my father was overseas and then died fairly soon in World War II, had been brought up a Quaker. So that was strike three. By the time you have a Quaker in a Yorkshire coal mining town in World War II, you pretty well know that you're going to have frugality deep into your backbone. When I go into a restaurant, I still look at the menu and take price into account. I know there's quite a lot of us who do that. For some of us, it's not a question of whether you've got money in the piggy bank. It's a question of what is right. and wasting money by paying more for some silly meal gets pretty high up on the agenda. >> When you had value in your veins very early on, what led you to the intrigue about the investment world? >> I was into numbers. I grew up playing Monopoly. Seriously, checking off numbers with a little roulette wheel while pretending to watch games of cricket that went on forever. My cousin and I would be spinning the roulette wheel and checking in a little book. the numbers that came up we had in our silly 13y old minds the idea that we could develop an infallible system which is good to get it out of your system at 13 and 14 and I did I remember the first day I went into a casino in France by then I was 20 I had accumulated a few pounds that I was willing to invest in and experience so at 2:30 when it opened I went in accompanied by about five little old ladies. They took off the cover from the tables that they used to keep the sunlight from fading the green tops. And I played roulette for the first time in my life in the real place. Lost a few pounds and left feeling that it had been worth the experience. I grew up thinking about numbers, thinking about the wise and wherefors of gambling. When I came across the opportunity to buy a stock and I was 16, I took it to see what it was like. >> What was that first stock? >> It was Acro Engineering. A shares. Acro had a patented type of scaffolding which was good. Sold very well. They grew nicely, expanded on too much debt and went bust. Not because the product wasn't selling, but because they overexpanded. Very common. I understand. >> What were some of your other early ventures in investing before it became a profession? >> When I was at business school, I got together with a fellow Englishman. There weren't many of us. We shared investment ideas, went into the library, read what we thought were the unfair advantage publications, vastly expensive publications that gave all the stock brokers recommendations. Of course, I wouldn't give a plug nickel for it today, but at the time, I thought it guaranteed our success. So, we took the money that we had earned in a summer job and invested in a few famous at the time stocks, Magnavox. We kided ourselves. We were slick professionals by knowing the nickname, in that case, Maggis, for the stocks that we wore. Incidentally, the acro engineering which went bust had this interesting twist to it that when I came to America, I sold it to my mother who had acquired a small holding herself. The commissions were quite big. So, we made a big fuss about saving the commission. I had tripled my investment from 16 to 24. Nothing great, nothing terrible. And she bought it off me at a bargain commission free rate. and unfortunately went bankrupt with it as it were. >> In your path through your education, you've often commented on your thoughts about business school and the value of business school for investors. Love to hear your reflections on that. >> It's a unique experience for everybody. I was glad to get a superficial familiarity with all business to know a little bit about everything which would have taken me years and would have left me with big holes no doubt. This way there were few holes. You had this beneer of familiarity with everything. This gave you the confidence to talk. Outsiders would say overconfidence. But when you look around you, you have to say that the biggest thing for getting on in life is to be confident. The worst thing is to be lacking in confidence. It makes it hard to get on. Accusing a business school of teaching you to be overconfident, which in a way it did, is not a vicious accusation. >> Where did you take your career coming out of business school? >> I tried to get into the investment business with Donaldson Lufkin and Genrett. They kind of had a possibility for me, but it wouldn't come through in Europe. In the end, I panicked and fell back on general management consulting, which a lot of people do. buys them time to think more seriously or longer about their career preferences. It took me a day or two to realize that management consulting was for me a waste of space. >> Why was that? >> We picked up a consulting project in business school, three of us. We were paid an amazing amount of money. At the end of the summer project, 60 days of work, I got $6,000, which was one year at business school. It paid half of my entire expenses. The summer job was to serve the lawn and garden business. We drove in the Midwest from one lawn and garden center to another, two of us taking notes and so on. And when we got to Manhattan at the end of the summer, it turned out that each of us were working for the three largest consulting firms. So we decided to have lunch in the first few days and bring with us anything in the file that had to do with lawn and garden business so that we could compare it. Each company by coincidence had done one decent project. We read them and discussed them at lunch. They were amazingly superficial compared to what we knew about the lawn and garden business. We'd had 60 days which is a long time and our future depend on the results. So we were trying very hard but still the difference between what we thought we knew which were many layers of the business and what they knew which was to us extremely superficial. let me know by the first week that consulting was like that that it was a quick once over and typically very superficial. I couldn't wait to get out. >> What'd you do in week two? >> Being lazy and slowm moving. I did what I was told and it took me 18 months to get a good job in the investment business. The critical factor was who was having fun. I asked around my classmates who's having the best time. Those in the investment business by a mile were having the best time. There was an exciting micro bubble going on in the tiny stocks. They were having a splendid time meeting, sharing ideas, speculating, losing money, making money. Thoroughly exciting. I picked up that excitement and realized that that was a pretty good place to start. So with the help of some of my classmates who'd been in the investment business for that first year, I ran quite an efficient program looking in Manhattan, Boston, and London. In the end, got a decent job offer from Keystone Funds in Boston, now long defunct. >> What was your path from the first days in investing until the founding of GMO? In between I was a co-founder of battery march with Dean Lear. That only took me nine months. I went from consulting to Keystone Funds and they offered me a 50% increase in salary which woke me up. I thought what the hell is that? I would have been happy to come at the same price perhaps even less. The extra 50%. Was amazing. I looked around and I found the entire industry was like that. Everybody in investment was getting paid about 50% more than the equivalent work and the equivalent talent anywhere else. What's not to like about that? By the way, I did one or two novel things. So, I got off to a running start. After eight months, I propositioned one of the senior guys, Dean Learon, to come and work with a friend I'd met who was also in the investment business at a different firm. And we thought we could start a little firm. Talk about cocky. He'd been in the business two or three years. I'd been in six months and we were going to start a firm. We propositioned Dean and he said he'd think about it and he'd do it then. No, he wouldn't do it and yes, he would do something similar. He'd do his own firm and would I come and work for him? Dean and I and a secretary started out in a single room up the road. After 8 years, I had fallen out with Dean mainly on the distribution of loot and intellectual credit. So I left my co-artner Dick Mayo left also and four or five of the troops. We stayed in the same building. We took the portfolio with us. I used to joke he kept the name and we kept the portfolio. He quickly changed into computer implementation of Dean's ideas. And we carried on picking stocks by hand using value techniques, getting into dividend discount models and so on. Seamlessly moved our portfolio from battery march to GMO. Battery Marge we' done pretty well. Dick Mayo and I ran the portfolios and D and ran the propaganda machine which was pretty damn good. We had great performance mainly in small cap not exclusively and 100% in value stocks which was not popular at the time that was the heart of the nifty50 Avon IBM Kodak Coca-Cola. We were buying Great Lakes Stock and Dredge and similar unknown companies which was an unfair advantage because no one was following them. The management would talk to us for hours. No one had called them for weeks. Insider information was not even a known comment. No regulations had been passed. So they would tell us how they were getting on. And we would be the one or two professionals on one side of the equation and all the rest of the stock owners were in the town with Twin Disc Clutch, which I think it's Oaklair, Wisconsin. and all the friends and family of the founders led us no doubt very good people but they were amateurs when it came to the stock market that was not a fair fight and we had more information and more experience quickly and so we won of the eight years at battery march we drew one and won six and lost one but we won by an average of six points a year over the eight years so we had what would be considered then and now a dynamite record. We carried that technique and that fund and the portfolio with us into GMO. It got off to an absolutely heroic start. Of course, we didn't know how lucky we were. You never enjoy early success enough because you don't know what bad days are lurking around the corner. We won the first nine years in a row. You can imagine starting a firm that's a good time to do it. And we won by an average of eight points a year. In order to prove ourselves to the world, it was very important that we beat battery march because we were claiming credit for their record. They were claiming that we were idiot subordinated networks and we did beat them handsomely. >> Over that first nine years, what happened with the business alongside of what was a stellar period of performance? >> We were conscious that if you were going to buy Great Lady Stock and Dread, you couldn't have a huge amount of money. We decided that about $250 million would be a lot. Dick Mayo was the serious senior portfolio manager. He was happy to call it a day and turn people down. We had this dynamite record. We were full up and we were beating people away with a stick almost. We thought that was perfectly usual, which is hair raising when you think about it. >> What happened from there? Clearly GMO has become a lot more than the $250 million compounded. >> We fairly quickly got into discomfort with each other having slightly different approach to investing. By accident, we hit on a clever formula which was to have three divisions. So Vanelo ran the international which was brand new. No one did international. Dick Mayo inherited our joint portfolio and managed it for another 15 years. and I started a quantitative division which started by developing an expert system by telling the computer what we thought were sensible selective characteristics for a good stock. The computer would come back initially with some terrible ideas. How did that get in? How would we exclude it? So we redefined the formula until slowly but surely over a few months we got it to kick out a portfolio which was 90% the same as ours. Interestingly the 10% that was different did just as well as our 10%. We called it the finished product and we threw it into battle very slowly. We got a handful of big flats. After a while, as we got more confident, we used exactly the same model to test on different stocks. So, we had a growth fund as well as a value fund. And then we had a small cap growth and a small cap value, REIT fund, eventually an emerging market fund. All using quantitative approaches, but also willing to use the brain and look for exceptions on what was going wrong and change them all. somewhere between a modern quant model and an expert system. >> At what point in time did you see that perhaps your models weren't infallible as you had hoped from the early days? >> We had always had these lulls in the value business. Value had won for 80 years or so, but it only won two out of three years. Every now and then there'd be a two or three year interval where it would do very badly and then it would surge back. It was beating the pants off growth stocks in those days. It was winning by three or four points a year. So enough to really count. There weren't many long intervals that were too much for us. The first one came with the great tech bubble of 98 99 2000. Even that was only two and a half years. A spectacularly painful two and a half years. That introduced us to a new environment where clients could get very quickly fed up with you and quite vicious about it in the internet bubble of 99. By the end, they were treating us as if we'd done it deliberately to cost them money. This was not the usual slight disgruntlement that had gone on when you lagged for a year or two. This was something new to us. This was what the hell are you guys trying to do to us? You seem to have completely lost the plot. Everyone in the world knows that growth stocks and the internet is going to inherit the earth and you seem to be stuck in a world of value that is lagging behind. Interestingly, they weren't going down. We were making good money more than the pension funds were are assuming they had to make, but we weren't making nearly as much as the hot shots at the other end who were outperforming the growth index by taking even riskier portfolios. That got us fired. I say in the book that people think you get fired for underperforming in bare markets, which is nonsense. In a serious bare market, the client becomes catatonic. Terminal paralysis we used to call it in 7374. Getting to work was a hard job. Left foot forward, right foot forward. That's what the pension fund officers, they were in the same mood. They were all frozen with horror. They didn't fire you until the bare market had ended. Then they went through the data and fired a couple. But in the great internet bull market, people were so excited. So much money was being made by their competing pension fund officers. The guys they were playing golf with were killing them and it was more than they could stand. Who likes to see their friends getting rich when they're not. So they would fire you very quickly. We only underperformed for two and a quarter years. But by a year and a half we were getting fired like we were going out of style. We lost probably more than half our market share in two and a quarter years. We went down from 30 billion to 20. Everyone else was doubling in the bull market. This was a huge underperformance of marketing. After the bounce which came reversed those flows, how did you reflect on the intersection of long-term investing and business success and investment management? I took it very seriously. No one came back after firing us even though we were right for the right reasons and we made a ton of money. What happened was that new customers came in. They looked at the wreckage and they saw our performance and we had screamed from the rooftops. The guy who's now boss at Wharton, Jeremy Seagull, I debated him over and over again and then one off with Abby Cohen and Jeffrey Applegate. all the top well-known bulls of that era. I got to debate. I figured if I was going to go down with the ship, everyone better know why I was doing it and what was going on. That helped us pick up business. There were a few other people who did what we did, but they hid under the table and we did not. The business tended to come to us. The outperformance we got was sensational because we didn't decline in the great crash. The S&P went down 50%. The NASDAQ went down 80, which is a lot. We actually made nice money in 2000, nice money in 2001, and hung in by half a percent in 2002, which was minus 22%. The third year of a bare market, and the S&P was down 22%. That was serious. We were not down. We were up nicely. Even our asset base with people still leaving on a lagging basis. Our assets went up from 20 billion to 22 billion. And then after that, we had doubledigit alphas in quite a few of our funds for four or five years. Now, we'd be thrilled, who wouldn't be with two or 3% outperformance, but we were having 11 12% several years in a row in international value and US value and all of these major funds that we ran. That was a very interesting experience. You could look at the risk you took, the assets you lost, and I started to ask the question, what was going on? What was the meta message? And the meta message is if you're a big company, you can't fight a major bull market. It's ridiculous. It's terrible business. You have to roll with the punch. Try and be more persuasive on the way down and up and get back in quicker. Get out faster on the way down. Just execute and talk a good game and you will not be in any serious danger. But if you fight a bull market, you better expect to lose tons of business. You will never hit a Goldman Sachs or a JP Morgan tell you to get out of the market because it's ludicrously overpriced. Everybody knows today it's ludicrously overpriced. But no one can tell you and they never will. I completely get that. I started thinking about that largely because of the pain of the tech bust. How does that influence the investment strategy? Is you've laid out a game theory exercise where if you don't get fired underperforming on the down market and everybody loves the bull, that would imply you'd want to be pretty long and strong all the time from a business perspective. >> Yeah, it does. You can't afford the luxury of even trying to do it our way unless you're independent. An individual can do it and I widely recommend that they try if they follow the market, if they can look simply at the data. It's not rocket science. My favorite bubble was the housing market. The housing market was a bigger bubble statistically than any stock market bubble in America. The US housing bubble of 2005 67. It went up beautifully for three years and then it went down symmetrically back where it came from as a multiple of family income. That's what it looks like. It sucked in about 3% extra people who had never typically bought a house. So instead of 62% it went to 65. And then the 65 poor things went back to 62. Squeezed them out. Cost them a lot of money. Brutal. That kind of behavior. sucking those people in should have been discouraged but wasn't. We found that every bubble had broken and we drew exhibits of all the top bubbles in currencies, in commodities, in stocks and bonds. In major countries, there was no exception to the principle that an overpriced market at two sigma, which is just a statistical measure. If you look at the price, you look at the breakout on the upside. If it's two sigma there is no exception to the rule that all of them went back to the trend that existed prior to the bubble that's a very stringent test and there have been quite a few then the classics like Japan the biggest bubble in history in ' 89 went much higher than anyone else 65 times earners the price you pay when that happens you still go back instead of going back in two years you go back in 20 years and you cause a lost 10 or 20 years in Japan The same in 1929, the same in 1972, the nifty50, the same in the tech bubble, the same in the housing bubble, and of course the great financial crash, and it will be the same this time. Of course, there's never been any statistical doubt. It's something nobody ever seems to make much of a fuss about except me. In the period when I was debating Jeremy Seagull, I got the audience of professional analysts to vote on some particular issues on the annual gathering of the financial analysts in California. There are 1,200 I remember the number and we asked who considers themselves full-time equity professional and about 400 people declared themselves as full-time equity professionals for the institutional business. These are professional financial analysts and I said I've got two questions for you. One is this the market is currently 31 times earnings. If it goes back to 17 and a half, any time in the next 10 years, will it guarantee a major bare market? Everybody agreed. None of them thought it would not. So the jackpot question followed which is and how many of you think it will go back to 17 and a half sometime in the next 10 years? Over 99% less than 1% of the engine room who worked for the Goldman Sachs and the JP Morgans believed in data that it was a new golden era. And 99% of them believed in data that guaranteed a major bare market. Yet the people out there in that great tech bubble, they thought opinion was divided. Yes, there were a few bears, silly old bears getting carried away, but the main topline opinion from the JP Morgans was things will be fine. Their own engine rooms completely agreed with me and disagreed with their own propaganda department, which had to reflect what was required for a sensible business strategy. And no one was interested in that dichotomy. And I could prove it. I had the votes. Isn't that amazing when you think about >> to credit Kanes, he lays all this out in the famous chapter 12 of the general theory in 1932 and he points out that career risk is everything. The key to controlling career risk is never be wrong on your own. Make darn sure that you're doing what everyone else is doing. As he would say, be quicker and slicker in the implementation. He's right. It's amazing that he nailed it. The rest of the world still hasn't caught up. He was the only one foolish enough to admit what I've been telling you. Everybody knows that's the case. But mostly they keep suitably quiet and he foolishly opened his mouth. You have to play when the music's playing. It didn't change anything for us. We decided because we were independent, we could take those bets that the others could not take. We could lose business for a couple of years. It all came back. We went from 32 billion to 22. Then we exploded in four years. We went from 22 to 165. We decided that yes, it's a bumpy road. I completely sympathized with the big guys who wouldn't do it and indeed shouldn't do it. But as long as we were small and independent, we could please ourselves. So we change nothing. Every bull market, we're considered people who've lost our way. An ordinary quick bull market doesn't count for anybody. The only things that matter in life in investing are the founding forming and breaking of the great bubbles that determines everything. If you can sidestep half of the pain that will make all the difference in the world. When you think about taking advantage of the other side of something that statistically is a valuation bubble, you run into the challenges of not knowing how long it's going to go and how far it'll go. How have you thought about those realities in investing capital on behalf of your LPs? Seeing the bubble is easy. Getting the timing right is apparently impossible. We have worked on many iterations of that. Kane said that client's patience is not as long as the market's ability to be irrational. And that's absolutely true. And in the great bubbles, they don't just reach two sigma, which is bubble territory. They go on to two and a half or three sigma, but they go on for years. They're the only ones that really matter. It's the last year or two that really counts. The clients have become impatient and they can't stand it. They start to fire you. As we got older and wiser, we were perhaps more careful in how we phrased it. We made it very clear that US stocks are not the thing to own for a long time now. You should be owning non- US stocks, developed value stocks, and emerging country value stocks. When I'm arguing with people, I don't get the time to say it's not what you don't own, as in the US stock market. It's what you do own that counts. If you own stuff that does better, who cares that you don't own the US? The US is simply too high priced from top to toe. If you had to own US, and a lot of people do, then you have to own quality stocks because they have survivability. What people found in 1929 is the value stocks had a dangerous tendency to go bust in the Great Depression. And the Coca-Cas that were horrendously expensive did not go bust in the end. That's how you stayed alive. The people who went in with the super overpriced Coca-Cas in 1929 survived if they were not leveraged with a portfolio. and the leverage guys went bust whatever they owned and the value guys mostly went bust because they had lowquality companies that couldn't stand the depression. There's some good lessons lurking around as a folk memory of the stock market. >> You discuss in the book trying to create a model to give you a sense of when you were at the later stages of a bubble. I would love to hear what you learned in creating that model. I developed a singular rule that only has occurred four times in US history. The stocks that have been leading the charge up 70% in 1928. The meme stocks in 2020, up huge amounts when they start to underperform dramatically the market as the bull market continues. Now think how unusual that is. They have a very high beta. They're meant to go up one and a half to two times the S&P and they've been going up three times in the earlier stages. Then suddenly the blue chips continue to go up. The S&P continues to go up and they go down. They can't even get the sign right. In 1929, the S&P's lowpriced index that had gone up 70 the year before. The day before the crash was down almost 40% year to date. The primal scream from the stomach of the stock market if ever there was one. The breadth wasn't very good. But that's ridiculous. Nothing like that happens again. That high volatile risky stocks underperform in a bull market until 1972, the final year of the Nifty50, followed by the worst bare market you could ever live through since the depression. still merciless. Everything went down, small, large, everything. The 7374 bare market was preceded in 72 by a market where the blue chips went up 18%. And the average big board stock went down 18%, that symmetry means I can remember it forever. And then nothing like that happens again until 2000. Do you remember in 2000 the market quote breaks in March, but the S&P actually hits the same level again in late September? The growth stocks by then are down 40 or 50%. They were a big chunk of the market, which means that the rest of the market had to go up 15, 16, 17% to balance the books. That is pretty weird that the Coca-Cas once again were grinding up 17% to offset the leading growth stocks getting trash. Nothing like it happens again until 2021. In 2021, you may remember that Kathy Wood's portfolio peeled off and started to drop a lot and was down 35% or so by the end of the year. And yet the S&P continued to climb very nicely. I had a meme stock. I didn't realize it at the time, which I invested in as a venture capital QuantumCape with a second generation battery for cars. By a few years, they hadn't a product. So, they had no profits, no sales even. And yet, they came as a spack in 2020. This was before Kathy Woods stocks had turned down. Mine turned down in December. It came out at 10, as they all do. It exploded to 131 by the end of 2020. For a second was worth more than General Motors, years away from having any sales. This flaky little research, it's a terrific research effort, by the way. I shouldn't say that for the sake of a good story. It's a terrific research, but it's only a research lab back there. It's sold for more than General Motors. You must be kidding me. Anyway, that was by far the biggest investment I had ever made. It's the only one I owned myself because our opportunity to invest in it was only if we bought a whole lot. It was unsuitably large holding. I had 5% of QuantumCape. I think in 2020 it was the first one to go down, but they all went down. All of those stocks that had done so well in general in 2020 and early 21 started to peel off one by one. By the end, most of the junior growth stocks were going down a lot as Kathy Woods found out. And that's the sign. I wrote a paper called Let the Wild Rumpus Begin. I'm a great believer that language counts. There's only two times in my life did I make it absolutely clear that I thought it was now. One of them was July the 15th, 2008 when my quarterly letter used terms like abandoned ship and quoted the old don't be brave, run away, live a fight another day and recommended clearly in the first paragraph that you should take no unnecessary risk at all. those people who'd been taking our advice to carry some emerging should allow us to recat that they should sell everything that was risky that they didn't have to carry and the second one was let the wild rumpus begin which is about as clear an announcement as you can get and it did begin 2022 of course crashed it opened weaker than any year since 1939 the year after I was born the first six months By the end of the year, the S&P was down 25, the growth stocks were down 35, the MAG 7 was down 40%. The bond market had its worst year in history. But then in early December, the game changed because of AI. AI is clearly a dramatic development. Everyone quickly went on there and tested it. I did. I asked it to summarize war in peace in 12 points and then translate the whole thing into German and it took it seven seconds. It was pretty damn impressive. Only the MAG 7 went up. For the first almost 12 months, the MAG7 doubled and the rest of the S&P and the broad market continued to go down slightly for the balance of the time until about October, November of 23 when they became sufficiently impressed with the durability of the rally and they all started to go up. The invasion of chat and AI ruined my perfectly good bare market. I still got a bare market. It was way over 20% decline. But it wasn't the crushing of a super bubble that would have happened without the great investment associated the capex associated with AI without the huge stock market gains associated with the mag 7 animal spirits would have been quite different. And Kane's my one and only hero makes this point that the bestlaid plans go ary. If people decide to be discouraged, the market will go to hell. They were thinking about being very discouraged. AI changed that. >> Where does that leave us today? If the bubble as defined by that two standard deviation move didn't quite go back all the way to trend before it bounced. >> No, it didn't by a considerable margin. Didn't get to trend. it would have had to go down another 20% to get a checkpoint. Let's say it was halfway. Where it leaves us now is with a unique event that's never happened before, which is historians love to have repetition so you can design a battle plan based on things behaving quote like normal. There's never been a second bubble coming in like that. I don't think it would ever work unless it was a truly tremendous new idea. AI moving at warp speed involving a greater capex program than has ever happened before outside of war. This is the real McCoy. That doesn't mean that you can't have a bubble associated with AI. It's quite the reverse. If you look back in history, what you find is that the great bubbles are associated with great investment ideas that get overdone. It has to be serious and ideally it has to be obviously serious. Railroads are the best example followed by the internet. If you see the railroads are going to change the world, then of course you want to invest. The ordinary guys, you're going to have enormous momentum. So all the momentum guys are in there too. And you build as the joke goes six tracks between Leeds and Manchester. You could badly use one and two wouldn't be too bad, but everybody loses money and they all get cleaned out. Doesn't mean that railroads didn't change the world. Of course they did, but it was precisely their obviousness and their importance. Internet, most people could see that it was pretty serious that it would eventually change the world. Amazon went up six times, something like that in 2000. Even though it was a successful idea, it went down 92%. Check it. It went down 92% in the bust and then it rose again to inherit the earth. That isn't in a way exceptional. That's what you should expect. So here we are with Nvidia looking like Amazon squared. The money dwarfing any capex program in history. Everyone being clear in their mind that this is the biggest thing they've ever had in their lives. And they're right. It is. That's why the investment program is almost certain to be overdone. Why would it not be? Humans being who they are. Why would you not invest more than you should in something this big and this obvious? This is exactly where you'd expect the bubble to break. And you would expect other things being even that it will be led down by Nvidia followed closely by the other giants. There'll be little precursors of small peripheral ideas associated with it and they'll go first, but they don't really count. Then when the real action happens, it's the big guys that get hurt. That's how things proceed. And I'm sure it will happen this time. You've encapsulated some of your favorite learnings sometimes in 15 minutes, sometimes in 10 minutes, sometimes in 20 minutes. I'd love to hear as you think back now some of your favorite investment lessons. >> The most important thing is that an individual who keeps his brains functioning and realizes that the advice they're getting has a optimistic spin and understand that of course that's the case. The great investment houses have to do that. If only they could have the courage of their foundation. The tendency is to think that if the authorities say something and you think they're wrong, they're probably right. I just disagree with that. The authorities are great complex organizations with thousands of people. To run such a beast, you have to have highly defined political skills. And the key to a political skill is Kane's chapter 12. Never be wrong on your own. They insist at the great turning points of looking around, taking precautions, getting ready, but not pulling the pluck until everyone else is pulling the plug. That means you can be right individual who can see the data. The data is like my housing bubble. It's like you're running along on the plane, you get one single rocky mountain and back it goes. You have to be brain dead not to see it. It is not hard to see even Bernani who ran the Fed at the top of the housing bubble which had never anything like that had occurred in American history a three sigma event much worse than any stock market event including 1929 in terms of its unlikeliness. It took Greenspan and Bernani pushing like mad for years to get it to bubble everywhere. The American housing market had famously bubbled in Chicago and bust in California, bubbled in Florida, etc. Never altogether until Greenspan and Bernani. Right at the peak of that three sigma remarkable new development, Bernani says, "Oh, the US housing market merely reflects a strong US economy." The US housing market has never had a major decline. Of course, it's never had a major decline because it's never had a major bubble before. And every major bubble has broken. Why would this one be different? Of course, it wasn't. It was a perfect, well- behaved bubble that went down symmetrically, exactly as you'd hope. As a bubble student, how is it possible? How is it possible for the president of the Fed, who'd written a book about 1929 and drawn all the wrong conclusions, he was a student of 1929, I should say, surrounded by statisticians, PhDs coming out of their ears, and no one can say this is a three sigma event. They tend to be very painful and it behaved perfectly according to the old battle plan and he denied it. It comes with the territory. It is not a bug in the system. Complex organizations always get it wrong at major turning points or almost always. You as an individual don't have to do that once you're an institution. Regrettably, you're in the same game playing political games. You have lots and lots of career risk as a pension fund officer. They used to call me up, "Oh, Jeremy, give me some more material. I know you're right. The committee is about to shoot you." Then a quarter or two later, well, Jeremy, it's you or me, and I'm afraid it's you. when you're able to identify at least from a longer term perspective some of the behavioral mistakes you see broadly in the market I'm curious how you think about the big movement of index fund management and the potential for active management going forward >> I was associated with the introduction of the index fund was an idea that came more or less fully baked in 1971 in a case taught at the business school to which Dean Learon and I were invited and we sat on in the back row. I watched them trying to decide whether they'd invest in the new growth guys, Morgan Guarantee Trust, JP Morgan, or this little new value small cap guys in Boston. Troll price were the growth guys. Hard to imagine that growth was a new idea, but it was back then. The idea was it's a zero sum game, isn't it? We do not make widgets in the investment business. We shuffle bits of paper around in the old days. Now we shuffle electrons bow. We don't add to the cumulative wealth of society. Quite the reverse. We extract back then all the friction which was commissions were 1% of the trade. So you had a painful commissions and then you had 1% management fees and that comes out of the game. So if you compare the guys watching the poker game, they're sitting at the bar and they're not paying these fees. They're buying the index cheaply and you're down there in the poker game playing with the best players. Who do you think drops out of a poker syndicate? The best guys or the worst guys? The worst guys drop out. I can assure you. So, the players get very smart. By definition, they sum to the market minus the cost of transactions and minus the fees that they charge. And the guys at the bar watching you, they sum to zero. There are no costs. So they will beat you as a group. They must outperform you. The only serious paper I wrote in my career with the Journal of Portfolio Management was called, "But you can't fool all of the people all of the time," which is a Lincoln quote. I thought back in 72 that we would offer indexing and in a few years indexing would gobble up the market. We sat there and we waited. Basically, there was a 30-year law and nothing much happened until the early 2000s. Then it started to get traction and in the last 25 years took off and is now more than half the market. It has saved an enormous amount of money for investors. It is a brilliant idea and Jack Bogle was one of my heroes, a formidable fellow. you get into some intellectual problems as the percentage of indexing rises towards 100%. In the end, you have to have some price work. You have to find a way of paying a few thousand good analysts to help price the equities. And I don't know how they will work it out. is over my pay grade. But one day in the distant future, there might be a very tiny tax on all stocks to pay for 10,000 well-trained analysts to help price it. >> Having sat on the other side of so many clients and investment committees for decades now, I'd love to hear your thoughts on what advice you give someone who's either in a CIO seat or a board member of a committee. Many committees are a nearly impossible task where particularly in the endowment business colleges because rich graduates who've made big donations would love to sit on the board. They are treated with kid gloves because they're wonderfully good at making money at private equity or venture capital or hedge funds does not mean that they know everything about everything. But it makes it for the relatively lowly paid hired guns. It's an impossibly difficult job to try and manage these giant egos. There's no easy answer to that. Some pension funds have become very professional at dealing with these things and thinking about how to deal with it on a very intellectual basis, but they're a small minority. You have to think about it, find out what are best practices to balance all these temptations and they can afford to be a little more contrarian, a little more valueoriented and take a little more business risk because that's not their business. They can be better positioned in the long run than fully commercial advisers, money managers, and some of them are. It's not easy. Most of us have to bend with the local career risk, which is who gives more money gets more votes, which is not necessarily the most rational system, but that's life. As you've looked at examples of pension funds, endowments, foundations doing it well, what's an example of someone you would call out as more of a success in navigating those challenges? >> It's the earnest, hardworking people who think they will try and get the most intellectual approach to managing a giant pension fund. They try hard and they often subs. I'd feel uncomfortable mentioning any names, but one or two of the very largest are the best. They have the most resources and quite sensibly they've used them. A lot of people know who they are, but >> I can't really say that unless I want to offend everybody else. >> I don't have a lot of career risk, but that's probably the question with the most career risk. Jeremy, for many years you had a close working relationship with David Swenson. Would love to hear what you thought he did exceptionally well. >> He had a lot of advantages. You can be an early mover at a leading college endowment more easily than most people can. The pension fund officer of a a medium large firm has got so much career risk he doesn't know whether he's coming or going. The aura of a great university is that you're intellectual. You're a thought mover. You have a wonderful setup to lead the charge. So that's the background. Secondly, he was well suited to lead the charge. He had lots of good ideas. He could scoop up other people's good ideas as well as anybody. He would gather the latest and greatest ideas. When we had a cutting edge new product, he'd be knocking on our door. when it was well established and still doing well, he'd long gone. So, we got used to that. That's a great luxury. He had the huge advantage that once he had a reputation, everybody wanted him and he could get into funds that other people couldn't dream of getting into brilliant private equity and venture capital. And they are so much stickier than general money management. They don't turn over as fast in private equity and venture capital. The winners tend to stay winners. Being in the right ones is a bigger factor. And he had that advantage that they wanted him. He could analyze who was good as well as anybody and they did. So they had lots of advantages and they were nicely suited to take advantage of them and they did. Their combination for a long time was dynamite. one or two other people. Princeton did approximately as well with similar advantages but not quite as much. I'm curious what led you to write this book. >> It was somewhat ignaminiously. One of my colleagues on the GMO board who was a friend of my co-writer decided that she would ask the board if we shouldn't do a book. It was decided to do it. Edward Chancellor had to keep me under control and wouldn't allow me to do too much of this and too much of that because it would lose readership. The irony is that it has my voice. It sounds like I'm talking because it started with 1,200 pages of quarterly letters which were indeed written by me and were well polished and ready to go. So he had 1,200 pages plus 30 40 hours of interview on tape plus a few articles floating around. He had to beat it into shape and make it readable. It's not a painful read. It's not listening to Granthm trying to explain the deeper essence of life and death which I might have veered into on my own. It's reasonably light and a quick skip. And happily for the reader, I've been through the investment business since 1964. It hardly existed in ' 64. Pension fund business had not started. Very few people with talent had any reason to go into the stock market. 1929 crash was not that far away, 35 years. GMO is 49 years old. When I started, it was much closer to the day the market crashed. The real pain wasn't 1929. It was really 1938. That was much closer. Investing was still a suspicious business to be in. The serious business was run by JP Morgan and the not so smart son of a well-connected family who would take rich people out for lunch with a nice bottle of wine and he'd buy them a few shares of Coca-Cola. That was it. There were no option models. There was no pricing theory. No one had thought about asset allocation. Everything was waiting to be thought about. That was the big turnon for me. thinking of ways to play this game, this monopoly, this complicated thing, and try and work out what made it tick and what could help you outperform with all the unfair advantages I mentioned that we specialized in small cap for years where we had little competition and life was easy. >> The last bunch of years, you spent a fair amount of time in your philanthropic efforts focused on the environment. would love to hear how you think about some of the parallels in the investment world and what you see happening with climate. >> At the end of the book, I realized that humans have some pretty powerful biases and one of them is we're not really interested in long term and the longer the term the less our interest. Secondly, we don't like unpleasant news. We really do not like it. So, we have a positive spin. I believe that optimism is a survival characteristic. I suspect that the real pessimist didn't thrive as well as the real optimist for the last 200,000 years. Survival of the fittest included along with being stronger and faster being more optimistic. Contrarians apparently survived. You need the odd contrarian in your tribe. Useful to have someone thinking about what happens when the crops fail. what happens when there are no buffalo and so on, but a small minority. You have to deal with an optimistic bias and a short-term bias. That explains a lot about the market. The market really is an extrapolation of today's conditions. Everyone tells this joke story about the market is projecting forward in time an infinite series of dividend payments. No, it's not. Check the data. The market is extrapolating today's conditions. If you're sitting in 1929 and you've had wonderful earnings and profit margins are one and a half times normal, do you anticipate that bad times will come? No. You assume that one and a half times normal will be there forever. And it explains the price in July 1929. And you come back in 1974 and the margins are crushed and you've got an oil crisis. Surely the market must expect a magnificent recovery. Absolutely not. The market sells at seven times earnings indicating it thinks that there will be no recovery. It's quite appropriate for most stocks to yield 7 8 9 10%. Because that's all you're going to get. So the market just takes the worst and has a low PE takes the best multiplies by a high PE. It's extrapolating. Kanes once again he said extrapolation is the convention we adopt even though we know from personal experience that it is not the case because if you all agree to extrapolate then you're all on the same page. You don't have to guess what the enemy is going to do. He doesn't have to work out what you're going to do. You're all going to jump over the cliff together and you will not lose your job. >> How does that reflect on how you see people treating the environment? >> The hatred of long-term and unpleasantness. Think about that in climate change. I don't want to hear that. Oh god, no. They've been saying bad things about the climate forever. Can't possibly be any sustained deterioration just because of burning a few gallons. It's all absolutely predictable, programmable. You know what the effect of each part per million really is of CO2 in the atmosphere. You know what happens if you double it. And we're doing precisely that. The temperature is rising give or take what they would have predicted 50 years ago, 80 years ago, and 10 years ago, but people are prepared to ignore it. Today, the floods and fires are not going to make my life unbearable tomorrow unless I live in a fire zone or a flood zone, can't get insurance this year. So, it's beginning to bite, but only just beginning. Then you think of everything else that really matters in the long run. Another one would be toxicity that is ruining our health. We've created a toxic stew and we're losing the ability to procreate. No one will talk about that. I asked AI over the weekend to explain why baby production was dropping and made it take the lead and it gradually filled in very professionally all of the dozens of ideas, economic and social reasons for not having children like you did in the old days. to which of course one agrees. Then I got to say, have you missed anything? It found three or four things. Then I bushwacked it and said, "Yeah, but what about toxicity?" Oh yes, toxicity is huge. And it lays out the whole case. All the data drops in sperm count. It's a horror story. And it got it right. It knew it all the time. So when that finished, I said basically, "Dude, what is going on here? Everyone's telling me how smart you are. And despite your smartness, even when I'm pushing you, what have you missed? You don't come up with something that you then admit is important. Gave a very easily understood dissertation over five or six paragraphs that yes, you're right. Of course, we only talk about things that are on the radar screen. If people are ignoring it, we ignore it. That's it. So AI will only tell you what the mainstream is. The waiting system means that the more people are talking about it, the more they think it's serious, the bigger the role is. That's how you get to the top of the old Google list and that's how you get to the top of the AI list. And if you're a contrarian idea, they're uncomfortable. When I feed it contrarian ideas, every paragraph says, "Yes, but you realize this is not commonly accepted. You realize this over and over again to the extent that a machine can be uncomfortable. It appears to be uncomfortable with contrarian views and with toxicity. It admits that it's faster moving and more dangerous than climate change that at this rate it is will fail under stress from lack of newbies. Do you know the 20-year-old cohort in Japan is 50% of what it was in 1948. 50%. Then the fertility rate in China has just dropped below one which means every young person has four grandparents to support. In South Korea it's 7 which means every young person has five and a half old costintensive health inensive people to support. So you know that those systems are bust that South Korea cannot be a viable political entity in as little as 40 50 years. cannot if the young people leave to go to say the US which is less bad they make the less bad ones a bit better and they make the bad ones much worse so that very quickly they have to pass a law that you can't leave >> how do you think about trying to use your philanthropic work to change the inflection of those trajectories >> the foundation does it two ways we address the most enterprising on topic people as a grant and pleased to say that we might reach a billion dollars of grant checks written by the end of this year cumulatively. Then with our portfolio we try and back it up by investing in green tech where it would make a marvelous different if it works. The more important the idea, the more points it gets from us. The riskier the idea in a way the more points it gets for us. We want to be doing the things that in a purely capitalist world might fail even though if they could succeed it would make a hell of a difference. It's just not going to make you any money in the early stages. Perfect. So we do that and we've done 120 ourselves and a lot of them will fail. The great majority will fail. But one or two of them, if they worked, would change everything. Cheap infinite supply of green energy would change everything. Some forms of geothermal or fusion would change everything. One or two other ideas that change the effectiveness of energy that they lose less in the process. Extracting CO2 from the atmosphere effectively. If you could do that cheaply enough, you could fly the odd plane and extract and charge the ticket for the cost of extracting if if it was practically cheap. There are chances that that will happen. And we want to be backing them. as you distilled everything you've seen across the investment landscape, both what you did at GMO and then externally with clients into your family foundation, it's curious how you chose to pursue the investment strategy for the foundation. >> Maybe this is a painful question. Maybe we've made a mistake. We decided to put a lot into early stage new ideas that might move us along if we got lucky. If the one in 50 hit one in a 100 and really make a difference, it might be worth it. We could have done as an alternative invested in super profitable venture capital. And we've done a big chunk of our portfolio in that. We call that the best of the rest. And the best of the rest has averaged 19% return. Three years ago, before the current unpleasantness and the venture capital green business, we were number zero on the Cambridge Associates database, which is their code for number one. On a 10-year basis, we were beating Harvard and Yale and Princeton with our portfolio. Now, of course, our annual results are close to the bottom. The 10 years is still okay and a lot more will fail probably given the level of help from the administration. I would think we're good for at least another two or three bad years. >> How did you think about the riskreward of pursuing particularly the super venture capital and the non-environmental stuff compared to everything you know about the public markets >> as a theoretician? Venture capital being the riskiest having the biggest distribution of returns should have the highest returns in order to attract sufficient funds. Cambridge Associates would say look at the data it seems to suggest that there's a bigger gap between the top 10% and the bottom 10% but there is a higher return. So that's fine. I can take the volatility. I have no career risk. I just want the best return. The best return in the long run is probably well selected venture cabin. It should be in theory. It appears to be in real life. There's an error bar around that. It may not be accurate, but it's at least approximately accurate and it may be completely accurate. There's something I worry about, but I think it's the right thing to do. And in the end, you have to make these choices. It's not the end of the world if I get it wrong. Jeremy, I want to get a chance to ask you a couple of fun closing questions and then we'll wrap up. Before we get to the closing questions, I want to tell you about one of our strategic investments. We've made a few and each are working on a product or service we think will be valuable to our community. One is Oldwell Labs or Owl. Owl is the very best software I've seen for allocators to find and track managers and I've seen a lot of them. Trust me, it'll be worth the look. There's a link in the show notes so you can learn more. And here are those closing questions. What's your favorite hobby or activity outside of work and family? >> I love to play tennis doubles these days with friends. Life is too short to play with people just because they can hit the ball over the net. Tennis is widely thought recently to be the best for living a long life. And partly because it has the right kind of camaraderie. Soccer is not so bad, but you don't really talk much in a soccer game. I played soccer twice a weekend up until my hips went. But tennis on a clay court, you can go on for a long, long time. It's a great experience. Other than that, I spend too much time glued to my iPad reading good books and bit of science fiction. Beginning to spend too much time maybe chatting with Claude and Deepse where they disagree. >> Which two people have had the biggest impact on your professional life? I am astonished in this bookw writing process to realize just how in a sense brainwashed I was or maybe everybody is by the people who bring them up that I'm like a little creature of my grandfather. These are not things I have any choice about. I don't think I have any real choice with that joke about the menu. I have to look at the menu and take the prices into consideration. I have to have a distaste for super lavish ridiculous expenditures. It's not a choice. It's not a wellworked out value response to morality or something. It's just there. My grandfather is a easy choice. And the second one, I come up with a hero like Jack Bogle. That's easy, but I can't come up with a decent candidate for number two. I may be good if I have a week to think about it. What's your biggest pet peeve? >> I have a lot of peeves. Yes. My pet peeve is the unwillingness of people to see the world the way it is. They want to spin it the way they would like it. If people insist on pointing out wrong, they they assume that they have some evil plot. My pet peeve, yes, is climate denials. If Claude and the boys will tell you that the climate is serious, that toxicity is serious, and they'll give you all the references, that's a good clue that it might be right. In terms of the climate, we have the opportunity to mix with the superstars of the business and many of the ordinary stars. This is not a debate that the world is having. You don't find climate deniers around the world. You find a few in England, all extreme right-wing libertarians, and you find a small army in the US, but that's it. This is an American thing, climate denial. It's bit like flatearthers. What are you supposed to do? >> How about on the investment side? Your biggest investment pet peeve. >> My biggest investment pet peeve is that the Greenspans and the Larry Summers, they'd get away with murder. I call them the Teflon men. I was heartbroken when they kept getting reappointed by new presidents that I had higher hopes for, even as they had just presided over the great financial crash. To put this into perspective, Greenspan and Summers and Lev of the SEC waged war against the CFTC doing its job of regulating subprime instruments. They each in turn called up Brooks Lee Bourne who was the boss, a lady of iron nerve and principal. They heranged her saying, "What are you talking about? The financial industry knows what's in its best interest. If this is dangerous, they will not do those dangerous things. I'm not kidding you. That was the argument that they used. When she told them to get lost, they took it to Congress and got the law changed. They were so emphatic that you should leave the banks uncontrolled in this area. So then we wouldn't have to worry about subprime instruments being too racy, too risky, and too designed to make money for the wrong people at the expense of ordinary homeowners. What a price we paid. It nearly brought the entire financial system to its knees because of that kind of crazy attitude that banks would be naturally so smart that they would be well behaved. And of course they were badly behaved. Yet Greenspan got kned by the queen and Summers went on to offend other people for other reasons. But he was appointed here there and everywhere. Levit is the one who admitted that he'd made a big mistake. So we give him some points. But this teflon man thing is a terrible thing. That is my number one peak. >> Jeremy, last one. If the next five years are a chapter in your life, what's that chapter about? >> Trying to promote, publicize as much as anything the importance of climate change, toxicity, and basically a long-term sensible way of running the planet. Capitalism will either change or we will cease to exist as a successful species. Changing capitalism will take a long time and a lot of talent and will be the greatest achievement ever by humans if we pull it off. We have to arrive let's say by 2022 in a society where the production of 2.1 healthy well educated children are really valued. Clean air, clean water and good soil clearly valued all possible all doable. But the hardest of them will be changing the attitude away from consumption and personal success at any price to one where a sustainable coherent society that helps each other to some extent and their values family. >> Well, Jeremy, thanks so much for sharing all your wisdom. Greatly appreciate it. >> Been a pleasure. Thank you. >> Thanks for listening to the show. If you like what you heard, hop on our website at capitalallocators.com where you can access past shows, join our mailing list, and sign up for premium content. Have a good one and see you next time. All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms. This podcast is forformational purposes only and should not be relied upon as a basis for investment decisions. Clients of capital allocators or podcast guests may maintain positions in securities discussed on this