Why is it that equity returns are at record-highs – and yet beating the market is harder than ever? Josh Wolfe, co-founder and managing partner at Lux Capital, sits down with Mike Green, chief strategist and portfolio manager at Logica Capital Advisers, to explore this question. After Wolfe discusses a few of his recent successful venture exits, the pair discusses how excessive liquidity is making it harder to deploy capital, a process Green calls “alpha-degradation.” Other topics include Tesla, Bloomberg, and the “first-mover disadvantage.” Filmed on January 23, 2020, in New York.
Transcript
00:01MIKE GREEN: Well, you can tell by the smile on my face, I’m happy to be here.00:04I’m sitting down with one of my best friends, Josh Wolfe, so excited to be back here in00:08New York and chatting with you.00:09Welcome back to Real Vision.00:10JOSH WOLFE: Symmetrical happiness.00:12Always thrilled to be with you.00:13MIKE GREEN: Every time you come on the show, we get to talk about a new success.00:18Last time, we talked about the magic.00:19You were so excited about CTRL-labs, and pushed you on the idea that maybe you were falling00:23in love with something and where’s my sales commission?00:26JOSH WOLFE: Man, we got to do these interviews more often.00:29It’s been a streak of good luck.00:31MIKE GREEN: With CTRL-labs, now, you sold it to Facebook.00:34Remind people what CTRL-labs is, remind me why you’re begrudging in the sale.00:40What do you think Facebook wants to do with something like this?00:42JOSH WOLFE: The thesis behind CTRL-labs which led to three nights of sleepless nights in00:47pursuit of this entrepreneur, Thomas Reardon and Patrick Kaifosh, his co-founder, was premised00:53with this intercepting phenomenon that I call these two arrows, one of inevitability, and00:59one of the perception of the impossibility.01:01Inevitability is this directional arrow of progress where it doesn’t necessarily tell01:04you who the entrepreneur is or what the company is but there’s this inevitable high probability01:09that this is the way that technology is trending.01:12The impossibility is when everybody else in the field, peer VCs, just don’t see it.01:16They think, oh, that’ll never work.01:18It’s impossible.01:19Impossibility ends up dictating low prices or less competition and inevitability raises01:23our confidence and conviction.01:25In this case, the arrow of progress, the inevitable, was the idea that something we call the half-life01:31of technology intimacy.01:33This buzzword that we coined but basically 50 years ago, you had a giant ENIAC computer,01:37you physically went up and pulled some plugs and buttons.01:39First half-life, 25 years ago, you have a personal computer and you’re tickling the01:43keys, you’re touching the monitor, you’re flipping the power switch on the back.01:4612 and a quarter years ago, the next half-life, you have a laptop, physically touching your01:51thighs, becoming a little bit more intimate with you, you trade the mouse for a trackpad.01:54Six and a quarter years ago, now you’ve got your phone cradled in your hand.01:57First thing you touch in the morning, last thing you touch tonight, separated from your02:00body only by a thin film of fabric.02:01Three and a half years ago, your iWatch.02:0324 hours a day on your hand or 18 hours a day.02:06A year and a half ago, AirPods with a computer inside for voice recognition.02:09That directional arrow of progress, the inevitability was computability was becoming more and more02:14intimate and close to you.02:15We shared that thesis with a lot of people and then we ended up meeting this researcher02:18at one of our other companies, Charles Zucker, who’s a PhD neuroscientist.02:21He said you got to meet this guy, Reardon.02:23Reardon was the inventor of this technology that we use called Internet Explorer when02:27he was at Microsoft as a young guy.02:30He was one of 17 kids, 10 biological, seven adopted.02:34Just insane family situation.02:35Bill Gates taps him, he goes and works at Microsoft for a decade from ’90 to 2000.02:40He’s also Bill’s right hand guy during the monopoly DOJ trial.02:43Then after making a lot of money and being technologically renowned and reasonably wealthy,02:49he does what anybody would do in his shoes, he starts another company, Openwave, which02:52ends up creating a mobile browser that we all use and then goes back to college and02:57gets a degree in Classics in Latin.02:58Then spends the next near decade getting a PhD in Neuroscience, where the thesis he was03:03working on is this myoelectric response.03:05The idea that you could detect from the surface of your skin, the roughly 15,000 neurons,03:12that innervate roughly 14 muscles in your hand, which is important because if I’m typing,03:16my brain is telling my fingers to do something.03:18If I am turning a knob or switch or a lever or doing anything, my brain is subconsciously03:24telling my hand to move.03:25He figured out how you could take that signal, detect it and map it to the technological03:30devices we use.03:32Instead of having to type on a keyboard, instead of having to type a switch, instead of having03:35to turn a thermostat, I could effectively either do that motion in free space, or, and03:40this was the crazy part, think about making that motion and I can control the devices.03:44MIKE GREEN: We talked about this last time.03:46You highlighted that even if we go back and look at the Tom Cruise film, Minority Report,03:51where he has this dynamic and he’s moving this, he’s wearing gloves, he’s making the03:55gestures, et cetera, what Thomas Reardon figured out was that that subconscious thought was04:00actually sending a signal that they are then restricting and so the process of learning04:04how to type on Mavis Beacon is actually just your brain sending those signals to your fingers,04:09your fingers then figuring out how to do it, and you’re training that interface back and04:12forth.04:13CTRL-labs basically shortcuts that process.04:15JOSH WOLFE: In fact, they had a maddening demo, which we may have talked about, where04:19you try to hit the button before the device knows that you intend to hit the button and04:25you can’t do it.04:26MIKE GREEN: That’s amazing.04:27JOSH WOLFE: It can detect your intention to fire your muscle and move it before you actually04:31move it, which makes that, because if you have 1000 neurons that are activating a single04:35muscle, if there’s 100 of them, and if you were to do this now and you think about just04:38moving a finger, you get the sensation, this feeling of that finger, and it can detect04:43that.04:44I became obsessed with the entrepreneur, I lost sleep in pursuit of the deal for three04:48nights.04:49My wife, when she finally met Reardon was like you, you’re responsible for this household04:53duress.04:55It was an amazing experience, but it was too short.04:57It was too short.04:58It was about a year and a half, almost two years and Facebook made an entry on the company,05:01which we rejected.05:02Zuckerberg came back and made a more persuasive entry.05:05These founders, some of whom, unlike Reardon, had never made money before.05:09It was very compelling, the amount of capital that Facebook was going to invest into the05:14company on an ongoing basis, as well as the liquidity that people were going to get now.05:19I wish we would have held it longer.05:20I truly think this would have been a $10 billion business instead of something a little under05:22a billion dollars, but it was a great outcome for our investors and a thrill to be part05:26of what I think is going to be a historic technology that we will all be using.05:29MIKE GREEN: Now, I want to come back to this but this also brings up another topic that05:33you and I’ve discussed before, which is basically the concentration of capability inside companies.05:38What we have very clearly seen are companies like Google and Facebook, Apple, Microsoft,05:44have become very acquisitive.05:45They have an extraordinarily low cost of capital and have been able to buy these.05:50Do you think for Thomas Reardon as he thinks about going inside Facebook, that that creates05:56a limitation or that that changes the trajectory of the technology versus its original vision?06:00JOSH WOLFE: I’ll give you two answers because I tried the no answer.06:04I tried the moral suasion.06:06I tried– and this was at a time when Zuck was in front of Congress being lambasted as06:11a poster child of technological excess and election meddling.06:14I’m trying to make the case, my God, you are going to take a technology that can capture06:17your neural intention and give it to Facebook?06:20You’re going to spend the next two years in front of Congressional committees yourself.06:23I tried emotional suasion with my kids, saying don’t sell, sending videos to the board.06:28We don’t trust Facebook.06:29I tried financial suasion to do a secondary in capitalized business.06:33In the end, I think Reardon actually had a very rational view of this.06:36Again, he worked for Bill Gates at Microsoft when Microsoft was arguably the evil empire.06:42His view was back then, Bill Gates was a lot more powerful, and Microsoft was a lot more06:45powerful than Facebook is today.06:48Bill today is considered a president of the world in many ways.06:51He’s curing malaria, he’s taking on poverty, he’s doing big global things in a way that06:55many of our other elected leaders are not and there’s no reason that you couldn’t imagine06:59a decade hence, as hard as it is, that XOC because of Chan Zuckerberg Initiative might07:04find a cure to Alzheimer’s or something and suddenly be in that same position.07:08I think the idea that there’s going to be the monopolistic power concentrated, he felt07:13was overblown.07:14The thing that I think was really appealing to him, when you get bit by the bug of taking07:19Internet Explorer from one person to a billion users, the idea that you could take this technology07:26and its ability to let humans express themselves and control the world around them, from one07:31person or in our case, a few dozen people to 8 billion people, which is his goal, you07:37want a platform like a Facebook.07:41I think that the world will be better off with this scaling and I think it will unleash07:46many technologies in almost this moral imperative case to invent so that genius can get unleashed07:51and unlocked, that a lot of genius will get unlocked as people start to use this and discover07:56what they can create with it.07:57Again, I just wish it was still in my hands for a few more years at a much higher multiple.08:02MIKE GREEN: I wish it was to actually, but you didn’t try the physical violence approach,08:06which might have been my return.08:10Last time we got together, we had a similar discussion.08:12This time, it was John– that time, it was Johnson and Johnson acquiring the robotic08:17surgical company– JOSH WOLFE: Auris for just under 6 billion.08:22MIKE GREEN: Yes.08:23Exactly.08:24I haven’t had a robot operate on me yet.08:27Do you keep tabs on how that progress is developing, how that technology is developing and what08:32the next stages are when you exit these vehicles or just the bandwidth that that would consume?08:37JOSH WOLFE: No, we continue to track that because again, the thesis is sound and the08:40idea that the skill of a human in the operating room is the rate limiting factor to be able08:46to scale surgeries, particularly if you are a highly skilled surgeon.08:49The ones that make the most money, they’re the most sought after for the most sophisticated08:53procedures.08:54I think that that’s going to start to go away and the sophistication of the surgeon will08:57be embedded in the machine.08:59We see that across the history of technology where somebody that has manual dexterity,09:04that has precision replicability, rather than that being the implicit knowledge of the surgeon09:10through many experiences, why should they not be able to effectively download that into09:15a machine so that that can scale and reach many?09:17MIKE GREEN: It’s interesting.09:19Every time you and I talk, occasionally I get shivers down my back.09:21I’m reminded of a paper by Mark Koyama describing the innovations that actually led to the creation09:27of the Industrial Revolution.09:29One of those innovations was actually the transition from needlepoint in designs and09:34fabric to printed fabric can go.09:37What they did was they introduced variety into the consumption basket of young women09:41being courted by young men and that the young men had to enter into the labor force to obtain09:45dollars so that they could actually go buy stuff dramatically changed the work habits09:49of the world.09:51When you say something like that, and you highlight that type of technological development,09:55I can only see the number of opportunities that it expands in terms of the capability10:00to lower the costs, increase the ability of people to have the surgeries that they might10:04otherwise not have in the United States, the developing world, et cetera.10:09Really excited to see how that moves forward.10:12My next bet for the one though, that’s going to be acquired, is one you just started talking10:15about, which is the Variant Pharma.10:17JOSH WOLFE: Yeah, this is early.10:20It’s consistent with the theme which we follow, which is the decreasing gap between science10:23fiction and science fact.10:25In this case, the inspiration really came from X-Men and Professor X puts on this helmet10:31called Cerebro and is able, from a call crowd of mutants ridiculously, to spot the one in10:35a million person who can shoot lasers out of their eyes and conjure fire from their10:38fingers.10:39He got us thinking, okay, if there’s a one in a billion chance of some super rare phenotype,10:43a trait, which has [indiscernible], seven people walking around that have extreme high10:48oxygen saturation at high altitudes, they get into an accident, their bones don’t break,10:53they have extremely high metabolism, lots of interesting traits, and you just have to10:57go and find them.10:58Now, the other interesting thing, and here’s where there’s this arbitrage is the vast majority11:02of money and effort and research and talent has gone into sequencing, pale, male, stale11:07white Europeans, people like us.11:09Maybe not the stale part, but very few people have gone to the outer regions of the world11:15because those people don’t have money to find these outlier traits in these outlier regions.11:20I think that there is an absolute genetic goldmine of these people who are quite literally11:29mutants whose traits, and it’s really important because the team here, the fourth or fifth11:36person that they hired was a computational geneticist but the second and third was a11:39cultural anthropologist and an ethicist because they want to get benefit sharing and have11:44these people participate in both the economic profits but also the scientific progress that11:50comes from finding these unique individuals.11:52You will take a minority mutant population and end up helping find cures for the masses.11:58I think it’s an area of medicine in genetics that has never been explored.12:01We started the company, filled a team, they have now gone and it’s interesting we call12:05them at the moment Treks.12:07There’s a lot of thought– T-R-E-K, like a trek.12:13Which even they don’t really love that, they killed the idea of a mission, because that12:17has a connotation of expertise of your [indiscernible].12:20Lots of consideration about that even just like how do we approach these populations12:24who are rightly skeptical from having been exploited in the past by big companies or12:28explorers, or whatever.12:29We don’t call them explorations, we don’t call expedition.12:32There’s a lot of thought into the etymology of what we call these– MIKE GREEN: Extreme12:35wokeness.12:36JOSH WOLFE: Yeah.12:38They’ve done a handful of different partnerships, the ones that have been publicly announced,12:42I’ve been with them, our recent New Zealand who have really interesting metabolic traits.12:46Pakistan, which is a genetic island population and that Pakistan is not an island geographically,12:51but there’s a lot of interrelated marriages and cousins marrying cousins.12:55Because of that, you get interesting traits, which are likely or more likely to have a13:00monogenic condition, a similar gene that goes [indiscernible] and does something.13:04Then they just went to Nepal and were with the Sherpas and it was absolutely stunning.13:09They brought back some video.13:10They have a Nat Geo documentary person that’s going around with them filming their treks.13:15These Sherpas are going up with hundred pounds on their back and they’re completely not out13:20of breath and our team is dying and there is a genetic predisposition for that.13:25MIKE GREEN: You skipped one that actually caught my attention, was just the Samoan populations.13:30Very quickly, like from reading about the Varian Pharma website, resistance to diabetes13:36in the Samoan population run something like 30%.13:42As a result, the statistics was to replicate a Variant Pharma study that required only13:4810,000 people in Samoa, would require roughly 10 million, if I got those numbers correct,13:54in Europe?13:55JOSH WOLFE: Yes.13:56Because you already have the traits manifest in the people.13:57You’re not searching for all this needle in haystack, you have all the needles.14:01MIKE GREEN: It’s just absolutely incredible.14:03I don’t think people can fully appreciate the revolution that’s in front of us from14:08this standpoint.14:09I have a number of friends that are in the biotech space.14:12One who is going to join us tonight to drink after this event.14:17They are highlighting that there’s just this extraordinary advances coming in the biotech14:22space as people approach things from a standpoint of how do we change the way we study it, not14:27necessarily how do we change the tools?14:29The ’80s and the ’90s were largely about innovations in terms of what are the tools?14:35JOSH WOLFE: Sequencing.14:36MIKE GREEN: Right, exactly.14:37Now, you’re talking about the redesign of the actual process of how do you think about14:41the problem?14:42JOSH WOLFE: Exactly.14:43In fact, the way that we think about it is search is really, arguably the first competitive14:46advantage because you’re trying to find and identify these populations, some of which14:48they’re not publicly disclosing.14:49I’ll share one with you, not where it is but what the traits are.14:53Sequence, which is relatively as you point out, because the technological curves in this14:56are commodity, then you want to go and basically develop and you’re either going to partner15:01with Big Pharma, or in some cases, develop your own clinical trials, and that’s a lotmore money.It’s really the search of how do you partner and develop a competitive advantage.Arguably, the most important competitive advantage is trust, with the reputation that you have, how you’re contracting with local researchers, how you’re treating the local population,15:19how you’re prioritizing them, how you’re deprioritizing them, if that might be the case and what legacy15:24you leave.15:25One of the populations, South America, nine people were mean.15:29This is like a tiny group of people who have extremely high metabolic rate that spikes15:35at night.15:36Adaptation to the environment, temperature precipitously drops, they almost have like15:39a Heat Shock Protein that raises their body temperature.15:42Now, if you think about this, if that proved and I don’t know if it is, but if it proved15:45to be a monogenic condition, the gene makes the protein that raises the body temperature15:48at night and that was a targetable drug, you’re talking about a pill that you take a night–?15:53MIKE GREEN: Makes you skinny.15:54JOSH WOLFE: I don’t know if it makes you skinny, but you’re definitely burning fat while you’re15:56sleeping and with the obesity epidemic in the US, it would be pretty interesting.15:59MIKE GREEN: That really is just fascinating, fascinating.16:03It is my bet for the next one by the way.16:05I don’t know everything in your portfolio, but that is one that strikes me as just an16:08instantaneous.16:09JOSH WOLFE: Well, if we keep this pattern going, then the next time we sit down– MIKE16:12GREEN: I know, who wants to talk about the sale of Variant Pharma?16:14You have been begging them not to sell.16:16One of the other companies you talked about that got away from you, and I think you actually16:18became involved, Zoox.16:20This is in the self-driving space.16:22There was big announcement from General Motors or Drive more accurately in the past– JOSH16:26WOLFE: Cruise.16:27MIKE GREEN: Cruise, absolutely.16:28Correct.16:29Can you talk a little about what’s going on in that space?16:30JOSH WOLFE: Cruise was actually the one that got away from us.16:31We had offered Kyle $20 million at a 40 million pre-money so 60 million post and somebody16:40else did it, another great VC, at 80 million.16:43We thought that was double the price that we were in.16:45We were being priced disciplined on this.16:46Then we introduced Kyle to GM.16:49GM bought them nominally $4 billion, a little bit less.16:53Yeah, so that would have been 11x in nine months or something.16:58That was a big error of omission in hindsight, and that is an amazing team.17:03I think that they are serious.17:04I think that Aurora, which is another competitor, is serious.17:07I think that Zoox is the most serious, obviously biased, we’re invested but we only full stack17:13autonomous vehicle driving highway city in San Francisco, in Nevada, elsewhere, actually17:20doing robo taxi rides in Vegas.17:22Tesla, as you know, if you follow me on Twitter at all, that is mostly BS when it comes to17:28autopilot.17:29It’s actually dangerous that this is even on the road but the level of sophistication17:33that you have on everything from solid state LiDAR to the software simulation to being17:37able to navigate double parked cars, pedestrians, right hand turn, left hand turns, multi-coordination,17:43intersections, it’s really complex.17:45It’s still going to take a very long time for all of these things to see the light of17:48day, billions of dollars will be invested.17:50My hand to my heart, I actually think that the first real application of this, which17:54is another interesting phenomenon and trend that I think is going to play into cities17:58in a big way and it’s going to touch everything from Amazon to the smart home, I think you18:03will see self-driving cars first manifest in right hand turn lanes in certain city districts18:08where just like bike lanes, you are making multiple rights and doing a traveling salesman18:14problem trying to figure out how you navigate from neighborhood to neighborhood, 24 hours18:18a day delivering things, not people but things.18:21Even Zoox is focused on people and Cruise is focused on people.18:25There are some others that I think are thinking about commerce and goods.18:28Now, if you think about just the trend, again in a directional arrow progress, we are used18:32to our phone as a remote control where you press a button, you get your stuff.18:36Amazon Prime has primed us for one-hour delivery or two-hour delivery.18:40You press your button, something comes from a warehouse in New Jersey, using New York18:43as an example.18:44There is an autonomous vehicle that runs a route, gets to New York, has a human in there18:49to do the last mile delivery, which eventually might see robots that are people that are18:52trying to do that but I think it’s too many variables situations coming out of a vehicle18:56into apartment buildings and others that you’ll see that but human will come out like a FedEx19:00Delivery person.19:01Then the next thing that they will need in this value chain is access control.19:05I actually think that you’re going to see a whole suite of industrial blocks and cameras,19:09some of which you’re seeing early incarnations of, we have one called Latch Access, Amazon19:13bought a camera company called Ring.19:16There’s going to be many others in the space, but the ability to give trusted access tocomplete strangers to enter your home and treat your cupboard, your medicine cabinet,your fridge or closets in the same way you might give somebody trusted access to accessor deposit a file into a box or Dropbox or Google Drive.This idea of access control, I think it’s this next phase.19:38From pressing a button on your remote control for the thing you want, to an autonomous vehicle19:42delivering at 24 hours a day, to a human entering your home, because you’ve given the trusted19:46access.19:47Again, this is almost like if I would say 10 years ago, you’re going to get in cars19:51with strangers, you’d be like, no way.19:53Today, because you mostly trust the brand, and the accountability and the choke point19:57of an Uber or Lyft, you get into stranger’s cars.20:00I think you’re going to be letting strangers into your home to do this last quarter mileof cars.MIKE GREEN: I actually very much agree with that vision, that we are ultimately movingto an environment in which trust becomes the underlying dynamic.We’ve talked about this occasionally in the dynamic of crypto or various other thingsthat trust is becoming a feature that is embedded into the application layer.JOSH WOLFE: It’s actually the one feature that I’ve joked with Facebook Portal, is totallyabsent.I always said that.Facebook Portal just got this great design, but it’s missing the one feature which istrust.MIKE GREEN: Also my pushback on companies like Uber and Lyft actually has been the daysare going to suffer from a first mover disadvantage.They have had to address the issue of how do I transport people by “hiring” millionsof people?The process of shedding those employees is actually going to be far more difficult than20:49they think.20:50That actually sets up a dynamic in which a company like Zoox or and others who has built20:55themselves purposely, not to establish an app and get the app installed on the phone,20:59which is actually remarkably easy, although the trust layer becomes an important component21:02of it.21:04They’ve cut out the labor component that the separation there was going to create a bunch21:08of social anxiety and potentially lead to far more enforced regulations.21:12We’re already seeing this in California, where they’re being forced to treat them as employees21:16as compared to contractors.21:17JOSH WOLFE: They’re trying to say, look, we are just layered to match a driver and rider21:21and we don’t want to employ or be responsible, but you’re right.21:24The regulatory aspect of this is going to apply pressure to labor.21:26MIKE GREEN: Yeah, I think that’s ultimately right.21:28Now, you mentioned this idea that we’re going to take things, so I understand what you’re21:32saying.21:33I wonder if the challenge there is the person who has to be there to take the delivery.21:38JOSH WOLFE: I think that there will be a designated– and I’ve actually seen privately some of the21:45apps that some of these companies have, that are almost like an augmented reality thing21:49that when, let’s say a UPS delivery person, or if it was an Amazon Prime delivery person,21:54they look at their phone, they’re given a provision code to enter the apartment.21:59It takes a picture so it knows who’s there, knows what they’ve entered with.22:03They enter and they see this augmented reality thing of where they should– it might literally22:07be X marks the spot that they’re looking on the phone, put this here, or might be when22:12they go over the fridge, put this here.22:14They literally use that as a layer, which itself is another interesting thing I want22:18to talk about but the simulation layer to place things in certain places.22:22It may not be that you’re trusting them to come into your bedroom yet, for your bathroom22:25yet.22:26People will trust an Amazon Prime to come in and load their fridge and put away all22:30their groceries.22:31We get fresh, direct delivered on a weekly basis, and what do they do?22:34They come into our home, and they lay down all the bags.22:37Then my wife and I and the kids put everything away.22:40There’s no reason that I wouldn’t pay another $5 during that delivery fee to have them put22:44everything away for us in a consistent predictable way.22:46MIKE GREEN: Yeah, that consistent predictable way is actually a great distinction.22:50We have people who help maintain our home and when they unload the dishwasher, I’m constantly22:55saying, where the hell did they put this?22:58The ability to actually have that enforced in a consistent manner, I completely agree23:01with you, and I actually share your– JOSH WOLFE: We’ve read your head style, everything23:03in its right place.23:04MIKE GREEN: Everything in its right place, which sounds terrible in a lot of ways.23:08We all see those homes with the– I think the condo stuff is what it’s called, Marie23:13Kondo, where everything’s labeled and it’s got its own specific place.23:16I think you and I look at that, like, oh my God.23:18JOSH WOLFE: That stresses me out.23:19MIKE GREEN: That would drive me insane.23:21There is a component of predictability that you want to life hack, expend the minimal23:26amount of energy saying, hey, where’s the rolling pin today?23:29Where is the measuring cup?23:31When I think about that question that we started to address in terms of this self-driving capability23:38and you referred to the Tesla solution as being dangerous, which I share your concerns.23:46The challenge of self-driving, as I understand it, there’s certainly as it is presented is23:51this idea of miles on the ground.23:53How many miles do you have to travel to solve every possible permutation?23:59That seems like such a flawed model to me it, what’s your reaction to that?24:04JOSH WOLFE: I think it’s going to be a combination.24:05It’s going to be a combination of simulation where you’re trying to predict every scenario24:08from a human walking out, three humans walking out, old person, young person, ball coming24:12across, horse, dogs, different weather situations, potholes.24:16Why?24:17Because in any model, including what I would argue in human consciousness, you have this24:20prediction, memory prediction framework.24:22The computer basically has a memory based on either simulation or reality of what the24:26thing ought to be.24:28Then it experiences in real time what that reality is and maps it.24:31If it confirms to what the memory is, then the prediction, there’s no surprise.24:35This is the same thing I think that we experience in human consciousness.24:38I see you, I see if you see my funky shoes, you predict, hey, that’s Josh.24:43If you were looking at somebody else, and you saw this funky shoes and you– hey, that’s24:47Josh, but then it was Steve, you’d be like, oh, surprised.24:49Then you have this emotional salience that updates your prior, updates your model.24:53Computers are the same way.24:54These simulations in the self-driving cars and robots are the same way.24:57There’s a prior, whether that is through experience for programming, and the programming could25:02be from simulation.25:03Then there’s the actual experience.25:05Then when those map and conform, there’s no surprise, you don’t have to update the model.25:09If you think about all of the permutations that occur in reality, it’s infinitely complex.25:14You’re going to need a mix of models that are mapping onto the real world, and then25:18the ability to quickly discern.25:20In Zoox’s case, when you watch some of these videos online of the situations that they’re25:25able to navigate, in many of the cases, there’s no programming of those situations.25:29Having a double parked car, followed by a biker coming out of nowhere and a pedestrian,25:34every one of those things has to be almost consciously recognizing objects, and then25:38classifying those objects as humans, as bikes, as cars, as static objects.25:43Then intuiting what an intention might be and making a prediction about that.25:47It’s super complex, it’s going to be years of iteration.25:50I do think that these things are still very dangerous.25:53The idea of putting cars out on the road and calling them autopilot and giving people this25:57false sense of confidence is super dangerous.26:00It’s irresponsible.26:01It’s an accounting trick being used to book revenue and pull it forward, but this will26:09happen.26:10We will be in autonomous vehicles.26:11MIKE GREEN: It’s interesting, actually, because what you described as a very complex system26:18has features that I think are actually that overlay with some of the work that I’m doing26:22and I think you know this but I’m involved in some– my first machine learning projects26:25and there’s this issue of tractability, what can actually program.26:30Ironically, the transition to self-driving is the most difficult.26:35Because you have the unpredictability of human beings that may or may not conform to the26:39laws, that may or may not conform to these components.26:41Balls will always be there, children are always run out into the street.26:46The car driving itself, somebody double parking and behaving in a manner that’s not consistent,26:50having no mechanism to communicate that to you other than the very rudimentary signals26:54that come from brake lights, hazard signals, turn signals, et cetera, that’s ultimately26:59going to give way to a much more tractable problem as you have more and more machine-driven27:05vehicles on the road.27:06JOSH WOLFE: Well, especially as vehicle to vehicle protocols start to communicate the27:10intentions with each other.27:12Humans have this where if you and I are walking on the sidewalk in New York, and we come into27:15each other, you have that awkward Larry David like moment where you’re going left, I’m going27:19right then we make a mistake and the coordination problem.27:23Coordination is a function of both prediction and communication.27:25I do agree with you that you will have all kinds of layers of protocols where self-driving27:30cars and other robot systems, autonomous systems will have this coordination communication27:35protocol.27:36MIKE GREEN: Well, and we tend to take for granted the human’s capability to do that.27:42We all have the experience of making eye contact with a pedestrian crossing the crosswalk and–27:47JOSH WOLFE: You do a little dance and– MIKE GREEN: Well, even a car driver.27:50It’s just all it requires is that eye contact that allows people to be aware that you’ve27:53actually seen them then you can proceed under conditions.27:57It would be the rare assumption that you would make eye contact with the driver, enter the28:01crosswalk, and they would run you over.28:04We are very much programmed.28:06It’s built into our capabilities to understand when somebody has actually seen us.28:10That flash of recognition of this is a human being like it’s very much built in there.28:14We tend to take that for granted.28:16Machines don’t have that capability yet, or they’re developing it, as you’re highlighting28:20the Zoox, but once they have, then they’ll have their own native protocol as well that28:24makes this problem so much easier.28:26JOSH WOLFE: That, by the way, is one of the hallmarks just generally of human intelligence28:29and relevant entirely markets, which is I know that you know that I know.28:33Then it’s how many layers is that?28:36One of my kids I think, is very savvy.28:38She knows that I know that she knows that she’s like four layers whereas one of my other28:41kids is like, I know.28:43MIKE GREEN: Well, since we’re now crossing over to the virtual world, you introduce your28:46Twitter handle.28:48My character is the Vizzini from The Princess Bride.28:51I always focus on that– JOSH WOLFE: Inconceivable.28:54MIKE GREEN: Inconceivable, but the most important part for me of that character is actually28:57the iocane powder, where it’s a game being played but people are actually not aware with29:01it.29:02He believes he’s outsmarting somebody, but he doesn’t actually know the game that’s being29:05played involves poison in both cups.29:07It’s like immunity condition.29:09Which brings us to actually a discussion of a game that I’ve had with a number of people,29:12and one of our mutual friends, Mike Mobizen.29:16We’re going to transition into discussing public markets for a second here and Mike29:19has written several books and he’s talked often about the dynamic of skill development29:24in markets and how markets are becoming more challenging.29:27The alpha degradation that we’re seeing in public markets he attributes to an increase29:32in skill that is being accumulated in the market.29:35I think Michael actually misunderstands the game that’s being played.29:39He uses the poker analogy.29:41He says, we saw this online, there was a game of poker.29:45As poker moved online, there’s an explosion of players.29:48Initially, they were a bunch of Patsy’s that decided that they had been good at their local29:52games, got online and the pros were able to basically fleece these players and take their29:56money away.29:57Eventually, you’re left to the game in which only pros are playing pros.30:00JOSH WOLFE: Skill level has leveled up and a lot of the variance is more attributed to30:06luck.30:07MIKE GREEN: Correct.30:08The stock market is the extension of that analogy for him.30:12I think it’s a flawed analogy, and I wanted to get your reaction to that.30:16The way I look at it is poker is a fixed game.30:20It’s ergodic in nature.30:21We know at every point that the number of cards is going to be unchanged, there’s the30:24probability of a hand is going to be unchanged.30:26The configuration of the river or what you have in your hand can influence your perception30:30of those probabilities, but the odds really don’t change.30:34Stock markets or any form of market for that matter, is nonergodic.30:40We have no knowledge about what the distribution of the possible configurations are in the30:43future.30:45I actually think that he’s improperly framing the question, I think he’s using an ergodic30:49game to make an analogy to a non-ergodic game, in which the idea of skill development really30:55can’t exist.30:56JOSH WOLFE: I think Michael would agree that markets are complex adaptive systems.31:01There’s punctuated periods where there is a game, there’s a recognition of how that31:05game is played, then people level up to that game.31:08Then at some point, they may not be aware that the game is changing, but I think during31:11the period where people understand what the game is, the skill level is rising and so31:17the variation between investors is increasingly attributed to luck, but then, like you say,31:22the undulating landscape changes and suddenly the game that you thought you were playing,31:26you’re no longer playing.31:27You see this all the time.31:29Hedge fund guys before ’07 didn’t care about macro at all.31:33They were just bottoms up stock pickers, long short equity, short always overvalued, be31:38long, it was undervalued.31:39All of a sudden, everybody came, all the quarter letters, while the top value guys were suddenly31:44talking about macro.31:45They were pledging, oh, well, we didn’t because the game changed, macro mattered.31:50I think that at any given point in time, now you could argue it’s people that are getting31:53smart to the structure of the market as you are about passive indexation and inflows and31:58incremental flows and how that is changing the game.32:03I think Michael’s point is markets are complex adaptive systems, people can get wise to what32:09the game is.32:11They may not realize that the game has changed, but as long as there’s a general agreement32:14about the game, skill level rises and variance is more attributed to luck.32:17MIKE GREEN: That’s fascinating insight in terms of the way I’ve been thinking about32:21it, because it resonates with me, a discussion I had recently with a legendary investor from32:25the 2000s who I’m not going to name, said to me, Mike, I was meant to invest in the32:302000s.32:31The game that is being played today, I don’t understand.32:35I’m at this point too old and too rich to try to figure it out entirely.32:39It’s really interesting to think about it in that context.32:42Because it becomes a question of are those who have been so successful and accumulated32:46the– JOSH WOLFE: Half listening and half thinking about who I think it is, and I think32:48I know who I think it is.32:50MIKE GREEN: Do you think you know what I think I know?32:53JOSH WOLFE: Inconceivable.32:55MIKE GREEN: Exactly.32:56That actually becomes a really interesting question, though, because it then raises the33:01issue of have we allowed that concentration of wealth, have we allowed that to blind ourselves33:05to the potential that the game has completely changed, which certainly what my research33:08would lead, that the market is no longer the market as people think about it?33:12There are exploitable phenomenon, but it requires a complete rethinking of how you approach33:16the problems.33:18As phrased in those terms, I completely agree.33:21I think that will still lead me to say that it’s actually not skill development.33:25That would be a cyclical phenomenon that would show up slightly differently, the tools that33:30were developed for how we manage markets, how we think about them were largely created33:34in that time period.33:36The assumptions that we make in the use of those tools, things like alpha, beta, Sharpe,33:41et cetera, I think are actually improperly suited for the current environment but that33:45brings us then into the general discussion of public markets, which is, let’s talk about33:49how you see the world of public market’s valuations, and how you think about how that is either33:54influencing or being influenced by the private markets as you primarily participate in.33:58JOSH WOLFE: I just had a dinner with also a very prominent and maybe the most prominent34:02CIO in the endowment world.34:04I asked him, do you see risks about liquidity and illiquidity in both public markets and34:11private markets?34:12In the public markets, is it a function of passive indexation and inflows and whether34:17it’s Fed, algos, momentum, whatever it is, dollar and by everything rising, what happens34:22if there are withdrawals and everything comes down?34:25His view on that was with passive roughly 20% of market structure today?34:31MIKE GREEN: It’s about 35%.34:32JOSH WOLFE: Okay with but I think you’ve made the point that something like 80% or 90% of34:36the incremental dollars are going into passive?34:37MIKE GREEN: Far more than 100%.34:39JOSH WOLFE: Okay.34:40His view was when it got to like 90%, he would be worried and I recalled and actually raised34:45you as an example, I said, I have a smart friend who mathematically has shown actually34:48when it gets around where we are now, 35%, I thought it was for, that’s when you get34:52the structural runaway risk on liquidity side of passive indexation.34:57That was on the public side.34:58On the private side, he has done something interesting, which was, he never wants his35:04illiquid portfolio to be more than 50% of the endowment.35:06What he’s done because of who he is, has gone to the underlying GPs and said, give me your35:10hand to the heart mark of what you think this is worth, not the fast 157 mark based on accounting35:17basis.35:18Historically, when he did this, in 2000 and in 2007, or ’08, both saving them from substantial35:25drawdowns during the crisis.35:27It was somewhere between 25% and 30% discount to what any given company that ended up exiting35:32in that year, proved to exit at.35:35There was a level of conservatism that the managers expressed because they valued the35:39relationship with this particular CIO.35:41They said they were going to be super honest and ethical about what their hand to the heart35:44was because they wanted to continue to be hired as a manager.35:48Today, he says it’s between zero and 10%, so elevated valuations on the private equity35:54side.35:55If you look at the total amount of PE money today– MIKE GREEN: Well, just to be clear35:57what you’re saying.35:58What they are saying is they see no discount to where they’ve marked it in the event that36:02they would have to sell under distress type conditions?36:04JOSH WOLFE: Correct.36:05MIKE GREEN: That’s astonishing.36:06JOSH WOLFE: $1.5 trillion of PE assets are sitting on the sidelines right now, so there’s36:10an enormous amount of dry powder.36:12Now if you’re a public market investor, maybe that’s a positive thing.36:14MIKE GREEN: Well, wait a second.36:15Again, I want to be clear, when you say PE assets are sitting on the sideline, this is36:19the cash that has been raised but not yet deployed?36:22JOSH WOLFE: Correct, by buyout funds and venture funds.36:24Venture is a mouse to the elephant here, but 1.5 trillion globally, 800 billion of that36:30is North America.36:31That’s about two times the level of what it was 10, 11 years ago going into even then36:36a PE crisis 2007, ’08, ’09.36:38VC itself has raised about 50 billion across 250 funds in each of the last two years, which36:44is four times what it was 10 years ago.36:46Again, we’ve talked about this in the past, but the number one thing that is predictive36:49of returns is not the BCG McKinsey, whatever.36:53It’s the amount of capital that’s flooding in.36:54The amount of capital that’s flooding in is undeniably high.36:57You look at some of the surveys for LPs, they will say 80% of them feel unequipped in a37:02downturn that they’re well-positioned, yet two thirds of them are continuing to increase37:06their allocation to PE notwithstanding the numbers that I just gave you.37:11When there was a downturn, and you had this denominator effect, again, 10 years ago, two37:16thirds of those LPs were not making any new commitments to new funds on a private equity37:22side.37:23They anticipate that they’re not quite there, but they can’t help but continue to allocate37:26and I think that’s setting up a problem.37:28You had public markets to your point up 32%, 33%?37:31MIKE GREEN: 31% last year.37:33JOSH WOLFE: Denominator effect.37:35If that were to continue, great, everybody’s portfolio looks good.37:37You got high marks on these private equity for the other people that are not doing this37:40more conservatively.37:41If the public markets were to decline, you have a denominator effect, what are people37:45going to do with this PE portfolio?37:48There’s going to be a race for secondaries and liquidity.37:50I think the secondary guys in the next few years are going to be really well-poised,37:53they might be sitting on cash for longer than people expect.37:57On the public market side, there’s really interesting thing that Jim Grant had recently38:04shown, PE on the S&P; is 21, 22.38:07The PE is of course market cap weighted on the S&P; 500, but if you market cap weight38:14the E part, instead of just aggregating and averaging as it is, you actually have a 3238:18times multiple.38:20MIKE GREEN: Is the difference– the way it’s calculated on the public indices is what’s38:23called the harmonic median.38:24Effectively, you are going through and it’s almost like ignoring the outliers.38:29JOSH WOLFE: Because each of the cases aren’t you’re taking a multiple where you’re taking38:33the PE of Apple times the weighting of Apple and the PE of GE and the weighting of GE and38:37just basically aggregating that.38:39MIKE GREEN: Not quite.38:40The details, we can walk through another point, so it’s the calculation is actually what’s38:46called the harmonic median.38:47If actually, you’re going through the 50th percentile type dynamic.38:50You’re 100% right.38:53The other point that I would raise is that we’ve never seen a larger gap between GAAP,38:58G-A-A-P, and the “operating earnings” that make up that 21, 22 PE that you’re referring39:03to.39:04JOSH WOLFE: Well, and on top of this, you have something like 95% of companies that39:05are now reporting non-GAAP earnings.They’re making up funny metrics.39:10Now, we saw this in WeWork on the private side, when you had community adjusted EBITDA.39:14Tesla is like ground zero of like ridiculous terms like, what are delivery sales?39:19What does that actually mean?39:21There’s a lot of companies that are just using funny language because in a bull market, people39:23are less scrutinizing.39:25I think that that’s really a ripe situation where you have lots of non-GAAP accountingterms that are signifiers of risk.You have S&P; growing revenue 3%, 4%, 2%, 3%, 4%?MIKE GREEN: Somewhere in that range, yeah.39:36On per share basis, slightly higher, but yeah.39:40JOSH WOLFE: Most of the 31%, 32% return over the past year was mostly for multiple expansion39:44because I’ve had– MIKE GREEN: More than 100% actually flat to slightly negative earnings.39:47JOSH WOLFE: For the past four quarters.39:49People are paying higher multiples for lower or negative growth.39:52One interesting thing and this is a forming hypothesis that is a little bit more wishful39:56thinking from the venture side.39:59If we are at peak earnings, and people have been talking about peak earnings forever,40:02but if we’re at peak earnings, and corporates are looking and saying, okay, how do I actually40:06maintain margins at a time where 60% of COGS is labor, I think that there will be an increasing40:12turn to technology.40:14Now, I don’t know the timeframe.40:15That’s not going to be like, okay, let’s quickly implement the system and lay off a bunch of40:18people and maintain our margins again.40:20I do think that some of the things that we’re investing in, whether it’s metal 3D printing40:23or certain technological systems for efficiency, you have the opportunity for at least margin40:30stability against a situation where revenues are declining, prices are coming down.40:36There’s another question about what happens to input costs?40:39Well, a lot of smart people are– and I don’t know if you agree with this or not, but weak40:44dollar, long commodities, long gold, higher input prices, smaller margins.40:49MIKE GREEN: Not on that account.40:50JOSH WOLFE: You’re in the higher dollar camp?40:52MIKE GREEN: I tend to think that we’re going to have a higher dollar simply because the40:56global system is ultimately set up on a collateral basis and everything we’re describing in terms41:02of high valuations and increasing risk is actually touching that collateral dynamic.41:07We’re concerned about the risks that the collateral contracts.41:10If the collateral contracts and the debt actually becomes increasingly due, which means the41:13dollar is under demand.41:16I fall into the higher dollar camp, but– JOSH WOLFE: Do you have a view on margin pressure?41:21MIKE GREEN: I think the margin pressure is likely to come actually from a couple of different41:25areas.41:26We’ve seen unequivocally the margin pressure.41:29We’re allowing the system to increasingly run with tight labor, whether that shows up41:35in wages or not is heavily influenced by the composition.41:40When you have lots of old people, wages don’t go up all that much because they tend not41:45to ask for raises and that tends to conceal the relatively rapid wage gains that we’re41:50seeing in the younger generation.41:51There’s a couple of good reports that I could send you on that stuff.41:54JOSH WOLFE: I do wonder if the wage gains are happening taking into account the amount41:58of new company formation.42:00When you have a flood of capital into any sector, if there’s a lot of company formation,42:04those companies are competing with each other for talent and so wages are rising.42:08I do wonder if some of that capital inflow starts to abate, that you would actually see42:13more people consolidating, more supply of talent going into fewer companies, and wage42:17suppression.42:18MIKE GREEN: What we’re seeing is actually more on the opposite side.42:20The rates cut– while you’re very active in the process of business formation, I actually42:24would suggest that many of the statistics that we receive from the Bureau of Labor Statistics,42:28the BLS, are inflated by the assumptions around business formation.42:33Actually, the data suggests that business formation has fallen dramatically, not your42:37type of business– JOSH WOLFE: The mom and pop shops and independent contractors.42:42MIKE GREEN: That type of business formation has taken an extraordinary hit.42:46That, in turn, actually weirdly increases the potential for this to behave in a convex42:54fashion because what you’re beginning to see, and you’re seeing this very clearly in the42:58data is as the economy has slowed in this last cycle, we have seen overtime hours decline,43:03we have seen weekly hours decline, which has pressured some of the headline numbers in43:07terms of the average weekly compensation that people are receiving, you’re beginning to43:10see this show up and stress in terms of credit cards, et cetera.43:13The early signs of some weakness are there.43:16The primary dynamic that we’re actually seeing is this issue of hoarding of labor.43:22Companies are seeing decreased utilization of their labor but because of the headline,43:27finding new employees is so hard, they’re resisting with every fiber of their being43:32letting go employees that they currently have.43:34We haven’t yet seen that turn and we may not.43:37It’s very hard to know how that plays, but the data actually suggested it’s heading in43:41the opposite direction of the way that your hypothesis– JOSH WOLFE: That wages will continue43:44to rise.43:45MIKE GREEN: We are at an inflection point in which that could continue to tighten.43:48That’s one of the risks that the Federal Reserve may have created with reinforcing the cycle43:53with the interest rate cuts.43:55Only the future can actually tell us what actually ends up happening.43:58JOSH WOLFE: Demographics.44:00Let me ask you, because I always love your views.44:01MIKE GREEN: I’m interviewing you.44:02JOSH WOLFE: But your answers inform me.44:05MIKE GREEN: I understand that.44:07Nobody is interested in what I have to say on this topic.44:09We’ll talk offline on the demographics.44:11I want to touch though on a topic that demographics does influence that you and I both care fairly44:15passionately about, which is politics, the election that’s approaching.44:19You and I have publicly sparred, you have supported Bloomberg as a candidate, he wouldn’t44:25be among my last choices.44:28I’m interested to hear how you’re thinking about it.44:30I’m sure– JOSH WOLFE: Mine is very simple.44:32These are debates that I used to get into with Lauren, my wife, that I never really44:38thought the president matter.44:39I thought that all you needed was a good figurehead, who mostly was the better looking person that44:44conveyed all the evolutionary psychology appeals of symmetry and dominance and that stuff.44:50I think, in this case, I want the candidate and this is something that Bill Gates who44:56I serve on a board with said to my friend, Andrew Sorkin at the [indiscernible] conference45:00earlier this year, I just want the most professional person that really resonated with me, I just45:05want the most professional person.45:09The rancor that I see, the debasement of the office that I see with the current individual,45:16maybe I have this false nostalgia of pining for somebody that can set a level of behavior45:22and that is presidential, one that I want my kids to look up to and say like that is45:27the way to behave.45:28That is the way to make decisions.45:29That’s the way under pressure or criticism to react.45:33My preference for Bloomberg is really in actually thinking that unlike Trump, he’s actuallya billionaire and he can’t be bought and that the appeal that he has is more about legacythan short term gratification.45:45I find him to be the most professional and the most rational, but tell me your counter45:53thesis.45:54MIKE GREEN: My counter thesis would be almost saying exactly what you’re saying, which ishe perceives himself as the most professional but doesn’t perceive himself as a statesman.Someone who’s meant to represent.You can actually see it in what he is describing is his approach to the central office.He’s going to open it up, turn it into a bullpen, he’s going to manage it.He’s going to manage the US economy like he’s managed Bloomberg.That, unfortunately, is not the job of the president.My fear is, is that he very clearly doesn’t know that.46:23JOSH WOLFE: Do you think with the management of New York, which is a vibrant, complex,46:28diverse economy, that he did a bad job?46:31MIKE GREEN: I don’t I think that he did a bad job, but I think that he was handed a46:34gift.46:36The inflation that we saw through the 1990s created a revenue stream.46:39We, unfortunately, are going to run out of time here.46:42We didn’t get to talk about China, which you’ve also become very vocal on.46:46You and I are both involved there.46:47Let’s treat that for another time.46:49JOSH WOLFE: I will say, to your credit, this was something I was hyper bullish on in the46:53idea that there were two Chinas, an old China and a new China.46:56You would say, Josh, you’re wrong, you’re missing this.46:59I got to tell you, you changed my mind because I’ve come to see the evils and the skepticism47:04and there’s an idealistic view about what China could be and there’s a realist view47:09of what it is today, and I become much more in your camp.47:12It’s a great example of something I’ve changed my mind on because of you.47:14MIKE GREEN: To your credit, you absolutely have done that.47:17I’m very excited to see that.47:19My guess is we’ll get the same way with Bloomberg.47:20Hope we don’t actually see the need for that to happen once he’s in office.47:24Josh, as always, such an amazing time spending with you.47:27The time flies by and we’ve run out of it now.47:29Look forward to seeing you again.47:32Hopefully within a year.47:33JOSH WOLFE: Thank you, Mike.47:34Always good.47:35MIKE GREEN: Take care, Josh.
Politics In America Has Changed And We Need A New Way To Talk About It
It’s time to rethink how we view the U.S. political spectrum.
The 2016 election and President Trump’s first term in office has transformed politics in this country. His election represented not only a radical change in policy but an assault on what we consider fundamental American values.
Going into the 2020 election, many on the left are thinking about the work that the next president and Congress will have to do to repair the damage done since 2016 and address the crises Trump has created and exacerbated. Protect Democracy, for example, has proposed a package of legislative reforms to prevent presidential abuse of power. However, some have argued that Democrats should adopt some of the tactics Trump has used and bend some rules to set the country back on the correct course.
This represents a big shift in the way we think about politics, and we need new terminology to accurately discuss what we believe in.
For most of my life, our political spectrum has run from the political left to the political right. People are socially liberal or socially conservative, economically liberal or economically conservative. Increasingly, this dichotomy fails to capture a new spectrum emerging in American politics — those committed to “liberal democracy” and those more willing to sacrifice it and live under a more authoritarian style of government in order to secure policy gains.
The emergence of this new political spectrum has come about through what has been called “the big sort,” where people’s identities are increasingly aligned with their political parties. Gone are the days when someone who shares your life experience across geography, age, race, and education may belong to either political party. Increasingly, if you know someone’s race, age and education level, you can guess their political affiliation. For example, as a 28-year-old non-white law school graduate, you can guess that I am a Democrat because 73% of non-white millennials lean Democrat as do 59% of voters with post-graduate experience.
Leaders from Modi in India to Trump in the United States to far-right populist movements in Europe are using the fact that our political opponents are often different from us across religion, race, age, and education level to make us fear and even hate them. Around the world, we have seen this suspicion of the “other” play out in political movements through a rise of would-be dictators using racism and a narrow view of national identity for their own political gain. In the United States, Americans increasingly view their political opponents as the enemy, saying that they’d oppose their child marrying someone of a different political belief. In 2018, in a perfect encapsulation of suspicion of the other party, we saw Republican voters wearing shirts saying, “I’d rather be a Russian than a Democrat”.
Furthermore, because of the “big sort,” we have increasingly little interaction with people of different political parties and, therefore, less opportunity to challenge these suspicions or narratives from opportunistic political leaders. For example, I had not knowingly interacted with a Republican until a year and a half ago, when I started at Protect Democracy, a non-partisan non-profit working to prevent the United States from declining into a more authoritarian form of government. Working with Republicans has caused me to challenge my idea that the GOP is the enemy and forced me to think about the extent of my tolerance and inclusion.
I have found myself surprised by my Republican colleagues’ indignation around racism and sexism. And then embarrassed by my surprise. I have found myself moved by their willingness to fight their own party, which for some of them has also meant a loss of close friends or family, because they believe in higher principles and a version of America that more closely aligns with mine than with the Trump-led GOP on race and gender. I’ve become less judgmental and more curious. I also have more trust in the intentions, if not the impact, of my fellow Americans’ political decision-making.
This is important, not only for me as an individual but for American democracy as a whole. We know from the research that “levels of personal trust tend to be linked with people’s broader views on institutions and civic life.” Put simply, if we don’t trust each other then we don’t trust our democratic process to deliver for us. To be sure, our processes are not neutral and often rooted in historic inequality and power disparities. However, if we are unwilling to engage in the project of improving the processes of liberal democracy and are instead focused solely on implementing policy we agree with at all costs, we may create more problems for ourselves in the future.
“Democracy in the United States is not guaranteed, it’s an idea that each generation has to renew and redefine. “For example, some Members of Congress have called for the next President to declare a national emergency to address the actual emergency of climate change. They would have the next President replicate the abuses of President Trump by bypassing Congress for the sake of policy expediency. While I deeply appreciate the urgency of the climate crisis, I also see the danger in a Democratic president legitimizing Trump’s abuse of the National Emergency Act — it could be abused yet again when someone I disagree with gets elected again.
Even as I look back on President Obama’s presidency, I can see the ways that President Obama — struggling with a Republican Senate that wouldn’t work with him — laid the groundwork for some of the abuses that we’re seeing under President Trump on appointments and executive orders. President Trump has taken that lesson and gone well beyond it. I fear what a president with similar inclinations to Trump, but more strategic wherewithal would do.
American politics is no longer split merely between left vs. right. We are in an era of American politics when some people recognize and value the frustrating moderating effects of the checks and balances of American democracy, whereas others view it as a hindrance to achieving their policy goals. Right now many think that it’s those in the opposing party who don’t care about democracy, but I am not convinced. We need a better way to discuss the precedents in decision-making the parties are cementing and the dangers they may be setting us up for.
We need an additional ideological spectrum to talk about politics in America today, one that places those who care about our democracy on one end, and those willing to live under a more authoritarian style of government for policy gains on the other.
As I watch the 2020 primary season play out, I find myself looking beyond a candidate’s policy preferences and paying attention to whether their plans for implementing their agenda will help or hurt our democracy. I believe it’s not enough to win. We have to think about the process and structures we’re leaving in place for the next person, whose policy views we may not agree with. I want to know what candidates will do to prevent the emergence of another president like Trump. How will they make sure our checks and balances work so that someone can’t blatantly disregard norms? How will they ensure elections are free, fair and accessible? What will they change to make sure the marginalized are protected and our right to dissent is maintained?
In order to solve the new problems we’ve been confronted with, we need new solutions. Democracy in the United States is not guaranteed, it’s an idea that each generation has to renew and redefine. By including this new political spectrum in our thinking, we can ensure that we work to preserve and perfect our democracy for future generations.
Knight Foundation’s Jennifer Preston: ‘Improve the flow of accurate information’
Jennifer Preston, Vice President, Journalism at the John S. and James L. Knight Foundation, describes the foundation’s efforts to battle misinformation and encourage organizations across the country to rebuild trust in journalism on a local level.
What we need to do to battle misinformation is to improve the flow of accurate information and strong reporting.
Neil Howe: “Deep Demographic Problems Plaguing The U.S. Economy” (Hedgeye Investing Summit)
32:29great irony is that the real ideologicaledge of the whole Bitcoin movement waswas guys like you know James DaleDavidson and REE smog and they therewere sovereign individual these areboomers and all the Xers that followedthem these are all libertarians theybelieve radically in the idea of nogovernment you know and we’re just youknow the with no need for trust I meantalk about an ideal Society for most GenXers no trust necessary so so anywaywe’re gonna do a world with that trustand and that was really it was it wasactually I think an ideological edge toa lot of people’s interest in Bitcoin itwas sort of the kind of world sociallypolitically that they really wantedand unfortunately ideology as you knowand you’ve often spoken about that inyour programs ideology always warps yourmarket driven judgment right big timeyou don’t want to start with ideology ifyou’re marketing an ideology and you’regood at it you might make a lot of moneyin a short period of time but thatdoesn’t mean that your views on it orgoing to be non cyclical and or crashingand that’s that’s that’s what you knowsadly is happening a lot of purveyors or34:47and speaking about money and again thisis sort of very deep sort ofintellectual history there kind of twotheories about the origin of moneyone is the barter theory you know westarted out bothering Bob Barton justtreating goods for goods and then youknow then gold and other things and soon so it’s basically that’s the kind ofthe libertarian theory so the Canadianguy from like the Hudson’s Bay Companylike yeah you know forever that piece ofpaper but then there’s a whole nothertheory which also has a long kind ofintellectual pedigree which is more thepurview of sociologists and that isgovernment the money was really creationof governments and there’s a lot to sayfor that because in fact that’s howmoney wasreally introduce now it’s the governmentpeople right that whole theory thatwhole that whole intellectual pedigreekind of feeds into modern monetarytheory and that is its government thatcreates money I mean forget this wholeidea that it all comes from gold andthere’s some intrinsic value no god it’sa system of Social Credit and Society itmakes a collective decision to create itthey can do it as they wish allgovernment all currency has always beenfiat currency and this whole idea thatonly recently we’ve had fiat currency soanyway that’s the idea behind monetarytheory you don’t have to worry about howmuch you issue because you can issue anyamount you want so long as the economyis it is running at full employment andso long as you keep inflation to youknow down to a reasonable degree now Ialways say that the argument frommonetary theory post GFC is a lot betterthan it was right because no matter howlow we get interest rates we had troublegetting to full employment and inflationnever seemed to show up on our radarscreen so I think this is the reason whymodern monetary theory is so big if thereason it’s going to be practicallyimportant is not now when we’re you knowunemployment is down at 3% and althoughit’s gonna be a big issue come the nextrecession right that’s when it’s gonnahit right and we haven’t even talkedabout that when is the nest recession isthat gonna be perfectly time for thenext election or not right that’s goingto be fascinating there are many moreDemocrats believe in this mmt thencertainly like you said libertarians buttheir but their chances of introducingthat are going to be hugely improved atthe right political juncture with theeconomy on the right conditions yeahwait until the economy is flat on itsback with our unemployment rate up at 1037:19percent and 11 percent whatever it is37:21suddenly the Fed is sitting there37:24flatlining at SERP right not knowing37:26what more they come on yeah hundred37:29mandatory thirty would be back plus huge37:33fiscal spending and you know the two37:35kind of merged together right modern37:36monetary theory and huge37:38of fiscal deficits you’ve been greater37:40than we have now so long as you got the37:42economy back working again37:44what’s the matter we did it with in37:46World War two we did it during the New37:48Deal mm-hmm the green New Deal37:50come on you got bad you got a New Deal37:52and the green New Deal37:53actually we’re getting some questions on37:54that why there’s actually question on37:57climate change if it figures into your37:59outlook does it you know on climate38:02change I’m more of a I have a matt the38:06ridley you know the guy the the british38:10intellectual who who wrote a a number of38:13great books on on genetics and and38:16evolution and so I’ve been equine38:17deterrent because he he actually covered38:19climate change for many many years but38:21he coined the term Luke warming he said38:24he’s a lukewarm ER which means that he38:27thinks it he thinks that rising carbon38:29dioxide levels are responsible for a38:31little bit of warming but not not a lot38:34and not nearly the kind of alarmist38:37picture that people think I’m kind of38:39more of a lukewarm ER what interesting38:42thing warmer sounds like Luke Skywalker38:43it’s like an appeal to people because it38:46sounds like it makes some sense how’s it38:49look warmer yeah a little bit more of a38:51hot because you can’t you know we like38:52it you can’t be like a total like38:54Treehugger or you know you did you got a38:57it sounds like a little bit more neutral38:59yeah kind of sounds disgusting39:02anyway alright great thinking on the39:05economic Turan economic direction39:08long-term Neil Central Bank policy will39:10likely continue to counter the39:12demographic gravity and fall failure39:14will likely manifest in market and39:16monetary crises so slow with chaotic big39:19bumps ahead question mark sounds like39:21more of a comment but a lot of people39:23believe that I got into this with with39:25with Lakai a39:27lot of people believe that no worries39:29more cowbell markets could never go down39:31again no I clearly don’t believe that39:34and and actually I think around October39:36to December you were brown right you’re39:39on this side of the you know this side39:40of the earth on the right side of the39:42grass yeah the markets went down yes39:47this is memories are so short it’s39:50almost like people watch the market day39:52they completely forget what happens you39:54could have lot if you’re along the39:55Russell 2000 which is a pretty broad39:56index of US stocks and now 27 percent39:59from August the 30th to December the40:0124th what could go wrong that’s that’s40:04called a bear market yeah yeah I mean40:06it’s a rash so but I think what what40:10they’re referring to is the idea could40:12could the economy go down yeah and and40:15and not only do I think it will i40:17actually this is all a part with a lot40:20of people i think it’s a good thing I40:21actually do I think that is when we40:24correct institutions and we rebuild40:26institutions I think the idea that you40:29would have an economy just constantly40:30dribble along you know is actually not40:34good for us40:34well there’s many periods of40:36Reconstruction and and not only that but40:38the whole point about market crashes40:41depends which side you’re on if you’re40:43young and you’re being an invest you get40:45to buy into the American dream40:47at a discount there are always two sides40:49to a transaction and I do believe you40:51know when I’ve I see the media following40:53Wall Street all the time and every time40:55markets will go down a treeless type40:56price but whenever the prices go down40:57it’s like a terrible tragedy yeah for41:00all the older people that owned41:01everything but the next generation is41:04coming on right it’s their opportunity41:05there are always two sides to a41:07transaction and and for life to go on we41:12have to think about what’s coming on41:13after us well what you have seen is the41:15opposite like by virtue of not having a41:17recession this is the longest u.s.41:18economic expansion in US history41:20Republicans and Democrats when it comes41:22to monetary policy have gravitated to41:24the same thing there’s no difference you41:26know there’s no difference between41:28Donald Trump wanting more cowbell and41:30Barack Obama wanted more cowbell there’s41:32no difference between this the federal41:34reserve members how they go about their41:37day job that it’s all one in the same41:40thing totally but when the economy goes41:45down again and when we’re back at that41:47you know that zero bound then all this41:50other stuff comes back onto the table41:51and and I don’t believe by the way that41:54you know people talk about inflation the41:58governments can very easily engineer42:00inflation if there were enough I believe42:02Japan was very near that point a couple42:04of years ago and and the way they would42:06have done it was simply to say any42:08worker or anyone with a payroll you put42:12your stuff in a bank and we just we’re42:13gonna index it out by a percent a month42:15or something like I mean thank you guys42:17but but no in other words you can42:20engineer it if you if you have the42:23incentive to do so a Jubilee what are42:25the advantages of that well suddenly now42:27your monetary policy has teeth once you42:31get inflation going again then holding42:33that interest rate low right actually42:36gives traction to your monetary policy42:39and and we are gonna see that if this42:44next time puts us in that same situation42:46we were gonna see a lot of the stuff42:47that was only discussed before yeah and42:49and the inflation to be clear comes from42:51the deflation because the deflation is42:53what causes the inflation so I mean you42:55come from a very asymmetric point42:56there’s big opportunity politically in42:58that and you save the world according to43:00yourself let’s see here43:05there’s a lot of political questions and43:07I want to go there what what would be43:11here this is an interesting one given43:13you join the term Millennials what what43:16would be your biggest long-term bet as a43:18millennial investor given stagnation and43:21slowing growth if it comes to fruition43:27as a millennial so I assume they’re just43:30meaning if you’re Milan you’re looking43:32like what’s the best way to play your43:33outlook good answer I mean I you know43:49other than all the standard answers43:51about you know diversifying your assets43:53and being geographically diversified43:55obviously at a time of crisis you43:57certainly want to be geographically43:59diversified I mean I often get asked44:01which areas of the we you know you’re44:03the demographer which areas of the world44:05I should be you know invested in from44:07that point44:07view and you can see that I mean if you44:09just look at any of my you know 2044:12charts on the subject you can look at44:14you can look at areas which are44:16reasonably decent in terms of you know44:22security legal structure corruption and44:25all that and yet have high population44:27growth so if you’re really looking for44:29that wave you know you’re looking at the44:31at the Malaysia’s and Indonesia’s the44:33Philippines and so on there there is44:35there is again looking at quadrants44:37there is an area there where you can44:40find economies for the long run that are44:43probably going to you know they still44:44have a lot of catch-up to do in terms of44:46productivity they’re still gonna have a44:47proactivity you know dividend over the44:50so if you’re looking long term but be44:53diversified because you know how any one44:55of those countries is gonna go but there44:57are ease of the world where you where44:59you where you certainly particularly if45:01you know if your millennial you probably45:02have a target date fund you know out45:04there I don’t know45:05that’s tough hundred forty five or those45:07four old wall products like those are45:09like you can’t do it within that product45:10so I’m saying if you can take some money45:12out of that product yeah you you’d want45:15to diversify what is it one way to45:17things like Josephine’s for up Neil’s45:19four quadrant map with the countries45:21quickly if you can what I think you’re45:23saying – if I put it within the context45:26of my process is if we go to a slowdown45:29like one that’s beyond stagnating to45:31slow down in the US and then you have45:33political change and you have MMT the45:37dollar is going to get castrated in that45:39environment and those countries that are45:41in quod one that you just showed are45:44gonna have in dollars don’t forget that45:46eeehm does very well when when when the45:49US government is burning its currency at45:51the stake so you know that is you know45:53that is the units the rebalancing of45:56global power so rebalancing of45:57incentives it’s a rebalancing of growth45:59expectations to where you actually have46:01the population growth going okay so46:04that’s maybe another way to think about46:06yeah I I agree with that and it it46:09really depends a little bit on the46:11nature of the crisis I mean obviously at46:13the at the worst of the crisis the46:14dollar was strong because that was sort46:17of the the safe haven currency but as46:19things begin to sort out46:21the dollar may still be strong relative46:23– you’re absolutely right with regard to46:25the EMS but we have I mean if if we46:27follow our sector we you know not only46:29do I do this kind of long term general46:31stuff we actually have particular46:33industries we like and I’ll just mention46:35two of them here because we’ve written46:36about them yeah very particular46:39industries which we’re very bullish on46:41from from a demographic standpoint one46:44is pet care there are a lot of46:47interesting ways you know everyone’s46:49owning pets and boomers and Xers have46:51completely reimagined how we treat our46:53animals right I mean you know everything46:55about them is is you know the food and46:57you know it’s organic it’s every the46:59amount of money we spend on my father47:02treats my his two dogs better than I was47:05ever treated today they know if dogs47:07have now have parents and grandparents47:09and you know they weekend yeah but but47:17another is a huge change there and in47:21particularly assertive although I’m not47:24big social media generally they’ve got47:26the kind of Google Facebook duopoly I’m47:28not very positive on I think that you47:34know online dating is an incredible47:37growth opportunity and we had a piece47:38recently on that because you know47:40virtually everyone is waiting a lot47:42longer to get married older people are47:45getting divorced and that’s an entire47:48area where there’s been very little47:49market penetration in your long the47:51screening process I mean that’s that’s47:52pretty much the other one is cannabis47:55we’ve done a extensive amount of work47:56there you could see that the well we47:58have lifting we home security that does48:01that silly but but it’s it’s not48:03shocking to see Shane Laidlaw as hockey48:07sticking charts on cannabis consumption48:09relative to alcohol consumption yeah and48:11it is he calls it hit paper high or48:14whatever he calls it you know hit for I48:16yeah because it’s a lower it cost less48:18here’s a here’s another question this is48:21this is this is definitely this could48:23take you a whole day to answer this do48:25you need capitalism and favourable48:26demographics for GDP growth48:32well obviously not especially out the48:34GDP growth number you can have it all48:36the time48:37you need you need some form of48:39capitalism just to have any kind of48:40efficiency in your economy so that’s48:42kind of a loaded question I think the48:44more interesting question is do you need48:45democracy and I think that’s becoming a48:48bigger issue I’ve written about that youknow our Millennials giving up ondemocracy I think that’s actually aninteresting global question now we knowfrom a lot of surveys that Millennialsare less interested in democracy thanolder generations and you look at notonly is it true and the UK and in theUnited States but it’s true around theworld now if you look at particularlyEast Asian countries you know with thesenew charismatic leaders in a NarendraModi and India appealing to the theHindu mainstream you look at you knowBurma they’re the Buddhist mainstreamand you know uncle she is appealing inChina to the great Han you know to allof these leaders in Shinzo Ivy appealingtraditional right you and then you go tothis this this madman is in charge ofthe Philippines now you know RodrigoDuterte dirty-dirty duterte as they callit but my point is is that you havethese charismatic authoritarian leaderswho are appealing to the mainstream oftheir countries don’t give a damn aboutwho’s on the fringes right who is votingmost for them younger voters and that isfascinating to me because earlier in thepost-war era the authoritarian leadersmainly were voted for him only about theolder voters younger people didn’t wantthem and that’s changing around and Ipeople often asked me this question whendo we know when the world is going fromhost word of pre war you know when whenare we going from a post-war mood to apre well it’s kind of hard to tell untilyou have the next big crisis right butone key is is that in a in a post-warera it’s the the generation that justcreated the new era they were just wentthrough the crisis so they reallyidentify with the institution‘s theybuild and generally younger people tendto want more freedom they want lessorder they want less rules that wellwrite less conformity and all that buteventually as time goes by rightthose younger leaders are in power andgenerally have a pretty less a fair youknow libertarian world it’s youngerpeople who want more order morecertainty more route you soon I’m goingwith this that is a sign you’re in apre-war little pre-crisis does that lineup with the fourth term absolutely yeahthat’s that’s well that you know I don’tsay pre-war because that kind ofpredisposes about kind of crisis but I Isay pre-crisis pre-crisis yeah for thoseof you that haven’t read the fourthturning that I’m biased because I thinkthat’s your favorite book I think that’smy favorite book I think that wouldprobably be a consensus though is it notyour favorite people’s favorite book51:20that you write it’s it’s either that or51:22the original one we did generations51:24generation shoes yeah that was kind of51:27the first big book I guess we’ve had51:29this question and maybe a good one to51:31wrap up on here because people are51:33constantly asking where do you think51:35Trump the Trump administration fits51:37within your framework of what is the51:39fourth turning I you know Trump and I51:43thought that the two most interesting51:46fascinating and path breakingdevelopments in 2016 were Bernie Sandersand Donald Trump because there’s arecurring edge on both the left and theright of this whole new kind of populismand authoritarianism right the threechairs on the left every bit as much ofpossibilities of thorough tourism on theright and you know Bernie Bernie Sandersis a guy who believes in top-downgovernment just you know government andbaking big decisions creating winnersand losers and you always have to admirethe guy I mean when was the last time wehad leaders just say this is how it’sgonna besingle-payer you know and andMillennials actually gravitate towardthat yeah you know the paradox of choicewhy have so many choices is somethingsmall one choice but it works reallywell right at least and you find thisnow becoming a very dominant view on the52:36left so I think just like Jeremy Corbyn52:39now sort of the you know the elder sort52:40of great champion in the UK of the left52:42of the millennial left and you have52:45Bernie Sanders here but I think that52:47thatthat Donald Trump is the kind of theexponent of the leader the first one whoreally galvanized this new populism butif I had to bet I would say that whenthose final populism finally takes shapein America it’s gonna be a littleafternoon on the right so this is thisis why the you know 2020 election loomsreally large and when you look at youknow futures markets and remember againI come back to this the economy is now53:19at three point something percent53:21unemployment and already you have53:23futures markets predicting right that53:26that Democrats are going to come in and53:28sweep in 2020 wait and until the economy53:32is yeah a little more negative you take53:34that outlook and maybe last question on53:36this if you take that out looking again53:37we’re not I’m not trying to be political53:39I’m not a Republican or Democrat I’m53:40Canadian I’ve said that all the time53:41because it’s it’s it’s of course true53:43but if you look at them if you take that53:46let’s say the economy’s long we have53:47quad three four three quarters in a row53:49that’s my outlook and if that’s the path53:51and and what you just said is still the53:53truth you know what kind of a candidate53:56and what generation could or should they53:58be from within your lens would come out54:01of the Democratic Democratic Party as54:03the as the as a front-runner well this54:06is the big moment for Generation X right54:09you got a lot of candidates in yeah Gen54:12Xers you know you have you have you know54:17Camilla Harris and Bader O’Rourke and54:19you know you know what’s-his-name from54:21New Jersey you know they’re all my age54:23so you’ve Pro cannabis to New Jersey guy54:27yeah but interestingly enough you have a54:33millennial candidate running you know54:35this guy Pete Bennett reach out of South54:37Bend Indiana he’s 37 years old and just54:42to show you and I actually had a piece54:44on that recently I think he came out54:46yesterday but an amazing stat l just54:48leave people this one amazing statistic54:51and that is as as proof of how54:54absolutely disinterested Generation X54:57has been in politics you know they’re54:59way behind the age curve it actually55:01in Congress you know taking the house55:02taking the Senate taking us governor’s55:04at their current age you know boomers55:07had already we’re into the third55:08president and already at pluralities in55:11both the house in the Senate Gen Xers55:13have been so slow55:14you know Gen X is in both parties tend55:16toward the libertarian edge of their55:18party right55:19but as proof positive of how55:21disinterested Gen Xers are in politics55:24we look back and found we looked at all55:26of the contenders for the primaries in55:28the every presidential election since55:33198655:34and for the past almost 30 years55:37the youngest contender in either party55:41was a Boomer all the way up through all55:45the way up through 2012 there were no55:48gen extra candidates actually contending55:51for the presidency obviously in 2016 you55:54had a lot of them the two younger ones55:55were Marco Rubio and that guy from55:57Louisiana you know the governor from55:59louisiana agenda button bobby Jindal56:03they were born in 1975 and interesting56:07Lena 2020 we have a millennial contender56:10so only one year only one president of56:13presidential election was a gen Xer the56:16youngest contender and it’s already56:19moving on to Millennials and this is56:21what anyone who’s read the fourth56:22turning or my books knows we bill and I56:25used to always make the point that56:27Millennials are destined to make an56:29early and strong entrance into politics56:33as a generation and basically filling56:35the vacuum that Gen Xers have left56:38behind even to some extent so they could56:39circumvent Gen X presidential candidates56:42altogether and you know most references56:43and most Gen Xers always knew it was56:45cutting in the cards you know by Stan56:491975 yeah I have a genuine I do not hate56:54but I genuinely don’t like any56:57politician like that I don’t like their56:59parties I don’t like either party and57:01the ones that ran to your point57:03Gen X Rubio like those are like wet57:07Kleenex they feel like that’s not a57:09leader that’s not like you know you57:11don’t memorize your lines and57:12you know so I think that you’re right I57:14mean if you certainly if you take57:15somebody like me I’m just like disgusted57:17by politics and politicians so maybe57:19there is somebody there to inspire57:21somebody because I’d love to change my57:22mind we do we do talk in our ratings57:24about dominant and recessive generations57:26so between the GI generation which57:30fought in World War two you know the57:31so-called greatest generation right of57:33that was in the white house for a long57:36time from John Kennedy you know born in57:38the century all the way up through you57:40know George Bush Senior and then we had57:43a Boomer that completely bypassed the57:46Silent Generation yeah anyone who57:48remembers the Great Depression and World57:50War two as children but were you know57:53not old enough to serve that an entire57:57generation nearly twenty years was57:59completely bypassed for the White House58:01and look what’s coming up they say we we58:04do this we have dominant generations we58:07have recessive generations that’s uh I58:10don’t know if that’s a good or a bad way58:12to end today’s discussion but for us Gen58:15Xers we’re just going to go back into58:16our a political holes and we’re gonna58:18keep you data dependent as we tried to58:20keep you across by the way durations58:22today don’t forget we’re trying to talk58:23about a multi duration framework so58:25whether it’s short term intermediate58:26term or Neil House super long term there58:29are so many different things for us58:30human beings to attempt to contextualize58:32it at the end of the day we don’t know58:34what the real answers are gonna be but58:36we can probability wait how we go along58:38the way in terms of positioning58:40ourselves and being in better spots oops58:42would have been if we were ignorant of a58:44lot of these data’s and economic facts58:50[Music]58:59[Music]