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Burnbrae’s Mellon Says Shell and BP Are Good Long-Term Investments · Merryn Talks Money

• 0:00
  Speaker 1: John.
• 0:01
  Speaker 2: You know, we talk a lot about how cheap UK
• 0:05
  Speaker 2: equities are, I mean endlessly right, And last week we
• 0:08
  Speaker 2: had Rob are not telling us that there is trade
• 0:11
  Speaker 2: of the decade, etc. And you and I both agree
• 0:13
  Speaker 2: with that, we believe in this story. But we're always
• 0:16
  Speaker 2: so busy talking about how cheap UK equities are. We
• 0:20
  Speaker 2: very rarely talk about how incredibly expensive American equities are.
• 0:25
  Speaker 2: We're always looking at one end of the thing and
• 0:28
  Speaker 2: kind of ignoring the other. Because the key thing here
• 0:30
  Speaker 2: is it's partly the UK equity is achieap, but also
• 0:33
  Speaker 2: that US equities are still off the scale expensive.
• 0:37
  Speaker 3: Yeah, I mean the main reason for that maybe because
• 0:41
  Speaker 3: we're horribly embodised, But.
• 0:46
  Speaker 1: Why are we embarrassed? I'm not embarrassed.
• 0:48
  Speaker 3: The basically the problem with US equities is that the
• 0:51
  Speaker 3: art expensive. But they've been expensive for an insanely long
• 0:55
  Speaker 3: amount of tame compared to cane like Hasterday. So and
• 0:59
  Speaker 3: I think this is best summed up and that kind
• 1:03
  Speaker 3: of piece of research from US as the manager's GMO.
• 1:08
  Speaker 3: And they've got a strategies there called James Monte who excellent, Yeah, excellent,
• 1:14
  Speaker 3: kind of right, And I remember prior to two thousand
• 1:17
  Speaker 3: and eight.
• 1:17
  Speaker 4: He was really on.
• 1:18
  Speaker 3: The ball about it coming up and then afterwards. One
• 1:22
  Speaker 3: thing that really sticks in my mind is that he
• 1:24
  Speaker 3: wrote about this basically portfolio bombed out stocks at a
• 1:28
  Speaker 3: time when everyone else was like, don't touch the stock
• 1:31
  Speaker 3: market at a temper passport. And if you just bought the
• 1:33
  Speaker 3: ones that he'd looked at, then you made like multiples
• 1:38
  Speaker 3: there money, like probably like a tenth Do.
• 1:40
  Speaker 1: That we read that? Well, why didn't we do that?
• 1:46
  Speaker 5: See?
• 1:46
  Speaker 1: I like we still here.
• 1:48
  Speaker 4: I like to blame compliance reasons.
• 1:50
  Speaker 1: And was complaint.
• 1:54
  Speaker 4: Yeah, exactly. It's just it's the admin.
• 1:57
  Speaker 3: It's the admin, isn't it.
• 2:00
  Speaker 4: The bit of my life? If I was better admint,
• 2:03
  Speaker 4: I would be rich.
• 2:04
  Speaker 1: It's both of us. I mean, this is the problem,
• 2:07
  Speaker 1: and it's one of the things that we do.
• 2:08
  Speaker 2: I'm going off topic here, but one of the things
• 2:10
  Speaker 2: that I always think about whenever we write anything but
• 2:13
  Speaker 2: our reader and listeners. How big is the admin leap
• 2:18
  Speaker 2: that they have to take to do anything? So hard?
• 2:22
  Speaker 4: Yeah?
• 2:22
  Speaker 5: And that's important.
• 2:23
  Speaker 3: I mean, actually that's I mean that regardlessly of views
• 2:26
  Speaker 3: on crypto currency, that is one of the big issues
• 2:28
  Speaker 3: we betcoin and always was, and I see the period
• 2:32
  Speaker 3: reason I don't want any so yes.
• 2:35
  Speaker 1: No customer service when you get the admin wrong.
• 2:38
  Speaker 3: Yeah, that's my problem with crypt although to be fair
• 2:41
  Speaker 3: that that expine extends to just about every kind of
• 2:44
  Speaker 3: service these days any week, so.
• 2:46
  Speaker 2: You might as well by bitcoin anyway.
• 2:52
  Speaker 3: Yeah, So back to James. Actually, so James, like in
• 2:55
  Speaker 3: March twenty twelve, I think it was, wrote an article
• 2:57
  Speaker 3: for GMO. The GMO have always been that's where Jeemy
• 3:01
  Speaker 3: Grantham works, and they've always been on the value side, et.
• 3:04
  Speaker 4: Cetera, et cetera.
• 3:05
  Speaker 3: But he basically pointed out that US stocks were very expensive,
• 3:09
  Speaker 3: but also US profit margins were very high. So say
• 3:13
  Speaker 3: the long run average from about nineteen fifty was six percent,
• 3:16
  Speaker 3: and they were running about nine percent. He came up
• 3:20
  Speaker 3: with various reasons as to why that might be, but
• 3:23
  Speaker 3: to be honest, they're not important just now because it's
• 3:25
  Speaker 3: complicated istion, it's a bit a distraction. His point was
• 3:28
  Speaker 3: that corporate margins should, in theory mean revert, so in
• 3:32
  Speaker 3: other words, they should go back from nine percent to
• 3:35
  Speaker 3: six percent, and therefore you would end this US out performance.
• 3:40
  Speaker 3: And just in case anyone's wondering the reason that corporate
• 3:42
  Speaker 3: profit margins should presumably kind of you know, mean revert
• 3:45
  Speaker 3: is because capitalism, So you get a free market. One
• 3:49
  Speaker 3: company starts making outside profit margins, the others come along,
• 3:52
  Speaker 3: they all compete with each other, and the margins come down.
• 3:56
  Speaker 3: And so obviously that didn't actually happen. Then US stocks
• 3:59
  Speaker 3: continue to performed for the following decade, and even even
• 4:04
  Speaker 3: now we've kind of gone back into this weird situation
• 4:07
  Speaker 3: where we're kind of going back to growth outperforming value
• 4:11
  Speaker 3: again despite the recent changes and interest rates, etc. And
• 4:15
  Speaker 3: so James is a technolo look at this in a
• 4:18
  Speaker 3: paper that you can download off the GMO website. He's
• 4:20
  Speaker 3: basically sort of like saying, look, oh, where did I
• 4:22
  Speaker 3: go wrong? And again, that's more about the economics side
• 4:25
  Speaker 3: of it, and it's not actually that important to our discussion.
• 4:29
  Speaker 3: His point low was that, Okay, I've been wrong for
• 4:32
  Speaker 3: the past ten years. What happs if this on this one?
• 4:37
  Speaker 5: Definite?
• 4:38
  Speaker 3: Yeah, I recognize that ire wrong for the past ten years.
• 4:41
  Speaker 3: What happens with profit margins just stay the same? And
• 4:44
  Speaker 3: the point he was making was that, well, but the
• 4:46
  Speaker 3: things valuations have increased so much that even if you
• 4:50
  Speaker 3: think the corporate profit margins is going to stay at
• 4:52
  Speaker 3: nine percent. US stocks are sitting on a shillerpe or
• 4:56
  Speaker 3: a cape ratio of about thirty, which makes them as
• 5:01
  Speaker 3: expensive as they were at the top of the tech
• 5:03
  Speaker 3: bubble in two thousand and that that was the most
• 5:05
  Speaker 3: expensive US stocks or stocked pretty much.
• 5:09
  Speaker 2: Brave interruption, brave interruption. UK market is on a Shillippe
• 5:13
  Speaker 2: more like fourteen till half the press just.
• 5:15
  Speaker 3: Saying exactly, and then he was saying, his point is
• 5:19
  Speaker 3: that's even if profit margins stay where they are, if
• 5:22
  Speaker 3: profit margins do actually revert to the means to go
• 5:25
  Speaker 3: back to the six percent overall, then if you adjust
• 5:29
  Speaker 3: the cape for that, the cape is more like forty
• 5:31
  Speaker 3: five fifty, and that's way higher than it was even
• 5:34
  Speaker 3: at the dot com bubble. And again Bernmin dot com
• 5:37
  Speaker 3: bubble was essentially the most expensive US stocks.
• 5:40
  Speaker 4: I've ever been.
• 5:41
  Speaker 3: And so his point was that, so even if you
• 5:43
  Speaker 3: think everyone's going to go perfectly correct and it's going
• 5:46
  Speaker 3: to be absolutely fine, then if margins stay high and
• 5:50
  Speaker 3: valuations don't change, you're still looking at roughly a three
• 5:53
  Speaker 3: percent real return based on real annual return based on
• 5:58
  Speaker 3: GMO's views, which is slower than you would normally expect
• 6:01
  Speaker 3: to get from equities. You know, it's not enough money
• 6:04
  Speaker 3: to get paid for taking the risk of buying equities.
• 6:07
  Speaker 2: And he's pointing positive, A positive real return of any
• 6:10
  Speaker 2: kind feels kind of good.
• 6:11
  Speaker 4: Oh yeah, but we're talking over a decade.
• 6:13
  Speaker 3: I mean, you would have hoped that something else would
• 6:15
  Speaker 3: do better than that, or I mean you would have hoped, right,
• 6:18
  Speaker 3: I mean, maybe maybe it won't put I mean I
• 6:21
  Speaker 3: think then there's linked kind of like UK points and
• 6:23
  Speaker 3: there often a real yield of one percent over thirty years,
• 6:26
  Speaker 3: so you know, when you look at it, three percent
• 6:29
  Speaker 3: is not that great. So very so that's that is
• 6:33
  Speaker 3: the kind of I've probably butchered all the academic side
• 6:37
  Speaker 3: of that paper. But long story short, even if things
• 6:40
  Speaker 3: go perfectly for the next ten years, US stocks are
• 6:43
  Speaker 3: rampantly over valued, and know.
• 6:46
  Speaker 2: They won't go perfectly. We know they won't go perfectly.
• 6:48
  Speaker 2: Did he give any sense of what it might be
• 6:51
  Speaker 2: that would bring those corporate margins down? Is it the
• 6:53
  Speaker 2: return of the power of labor? Is it big glaberalization?
• 6:57
  Speaker 2: Is it all these things that we've been talking about.
• 6:59
  Speaker 5: Thank you?
• 7:00
  Speaker 3: He doesn't address that in this particular piece. Because he's
• 7:03
  Speaker 3: looking I mean, his argument and it's all about accounting
• 7:06
  Speaker 3: identities basically, but his argument that the thing that has
• 7:09
  Speaker 3: enabled corporate profit margins to be so high is the
• 7:12
  Speaker 3: US running a kind of massive deficit, and that was
• 7:16
  Speaker 3: that's the big sort of change that's happened, that kind
• 7:20
  Speaker 3: of permanent deficit, because his argument is basically that they
• 7:23
  Speaker 3: must be coming from somewhere over this extra money essentially,
• 7:29
  Speaker 3: and then there's all sorts of arguments about you know
• 7:30
  Speaker 3: what intangible assets and kind of like, you know, the
• 7:34
  Speaker 3: tech tech companies.
• 7:36
  Speaker 1: He said earlier, earlier in this conversation, do you want to.
• 7:41
  Speaker 2: Now now we're finding out John didn't want to touch
• 7:43
  Speaker 2: the detail with a.
• 7:44
  Speaker 3: Barge ball something called the Kalei equation in there, and
• 7:48
  Speaker 3: I'm likeing that, let's let's not let's not.
• 7:51
  Speaker 4: Getting the listeners.
• 7:53
  Speaker 1: You're boring them.
• 7:55
  Speaker 4: Switched off. Sorry, come back, Jim Mellon's on that.
• 7:57
  Speaker 1: Everyone, Come back, Jim Mellon.
• 8:00
  Speaker 6: Listen, We're going to talk to somebody now who doesn't
• 8:02
  Speaker 6: make very many errors at all. Welcome to Meren Talks Money,
• 8:10
  Speaker 6: the podcast in which people who do know the markets
• 8:13
  Speaker 6: explain the markets. I'm Maren zumset web this week a
• 8:16
  Speaker 6: conversation with Jim Mellon, chairman of Burnberry and well known
• 8:19
  Speaker 6: invest in gurup.
• 8:22
  Speaker 2: Jim, thank you so much for joining us. It is
• 8:24
  Speaker 2: lovely to have you on today.
• 8:26
  Speaker 5: Great to be here. Thank you.
• 8:27
  Speaker 2: Now listen. I did, and I'm sorry about this. In fact,
• 8:30
  Speaker 2: I'm really sorry about this. But before I sat down
• 8:33
  Speaker 2: to record, I asked on Twitter what questions any of
• 8:38
  Speaker 2: my followers might have for you, And then I sat
• 8:41
  Speaker 2: back to wait for lots of interesting conversations on you know,
• 8:45
  Speaker 2: out of weather, inflationary times, and biotechnology and agronomics and
• 8:50
  Speaker 2: all kinds of technology, etc.
• 8:51
  Speaker 1: Instead of which.
• 8:52
  Speaker 2: They all said, ask him how he thinks Brexit is going.
• 8:56
  Speaker 2: So I'm sorry we have to start there.
• 8:58
  Speaker 5: Well, it's a reasonable question.
• 9:00
  Speaker 7: I mean, obviously it's neither going as well as the
• 9:04
  Speaker 7: Brexiteers would have hoped, nor as badly as the remainers
• 9:07
  Speaker 7: would have.
• 9:09
  Speaker 5: Suggested.
• 9:10
  Speaker 7: I'm not sure hoped, but I think hoped is fair.
• 9:13
  Speaker 7: I can't say there's a lot of good stuff. I
• 9:15
  Speaker 7: can't say a lot of good stuff about the government's
• 9:19
  Speaker 7: handling of the situation. And as you know, if it
• 9:23
  Speaker 7: had been me in charge or you in charge the
• 9:26
  Speaker 7: day after Brexit, we would have applied for a Norwegian
• 9:29
  Speaker 7: style trade agreement with the European Union, which would have
• 9:32
  Speaker 7: been so much better than the current situation. I mean,
• 9:36
  Speaker 7: I think that, you know, things are getting better rather
• 9:39
  Speaker 7: than worse. And I don't believe all the predictions, which
• 9:45
  Speaker 7: as you know, are generally wrong. About four percent of
• 9:48
  Speaker 7: GNP is going to be lost over the next ten
• 9:51
  Speaker 7: years or whatever as a result of Brexit, and I
• 9:54
  Speaker 7: do see there are some signs of equilibrium, and particularly
• 9:59
  Speaker 7: in services trade, where the UK is doing very well
• 10:01
  Speaker 7: at the moment, funnily enough. But overall, you know, I've
• 10:05
  Speaker 7: got my regrets. I mean, that's simple as that. And
• 10:10
  Speaker 7: although I didn't have a vote in the referendum, I
• 10:14
  Speaker 7: think I would have been neutral as opposed to have
• 10:17
  Speaker 7: been so in favor of it. I mean, I think
• 10:21
  Speaker 7: it's caused much more chaos than I would have expected.
• 10:24
  Speaker 7: I'm not saying that we should now try and rejoin,
• 10:28
  Speaker 7: because I think that that's probably not the best thing,
• 10:31
  Speaker 7: but we should definitely try and do this Norway arrangement
• 10:34
  Speaker 7: or EA arrangement that should have been done ab initio.
• 10:39
  Speaker 7: It's been very badly handled by the Tories. I mean,
• 10:41
  Speaker 7: I think you and I are both worried about a
• 10:45
  Speaker 7: labor government, and so we should be. But the Tories
• 10:48
  Speaker 7: have really not covered themselves in glory in any respect
• 10:51
  Speaker 7: in the last five years or six years.
• 10:53
  Speaker 2: No, it's interesting they've been empowered for a long time.
• 10:55
  Speaker 1: It's hard to see the positives they.
• 10:57
  Speaker 2: Leave behind them. And I agree with you on that
• 11:00
  Speaker 2: that like a lot of sort of semi soft Brexiteers.
• 11:03
  Speaker 2: I kind of assumed that after type arrangement would be
• 11:06
  Speaker 2: come to very quickly, but I'm increasingly seeing evidence that
• 11:09
  Speaker 2: we will come to pretty much that kind of deal.
• 11:11
  Speaker 2: It's just taking quite a long time. So now when
• 11:13
  Speaker 2: anyone asks me how I think Brexit's going, I'm falling
• 11:16
  Speaker 2: back on too early to tell, which I think it
• 11:19
  Speaker 2: probably probably is, Which it probably is, But there is
• 11:23
  Speaker 2: I mean, there is a big positive to Brexit for investors,
• 11:28
  Speaker 2: and it's a long term positive, which is that by
• 11:32
  Speaker 2: discouraging international investors from coming into our market in the
• 11:35
  Speaker 2: shorter term, we've had what been great Brexit discount and
• 11:39
  Speaker 2: anything else discount on our equity market. And that's I think,
• 11:44
  Speaker 2: and John and I both written about this endlessly, and
• 11:46
  Speaker 2: I think we're beginning to see people beginning to agree
• 11:49
  Speaker 2: with us. That's made the UK equity market phenomenally cheap
• 11:52
  Speaker 2: and a phenomenally good long term opportunity for investors. And
• 11:56
  Speaker 2: you and I've discussed this before, but are you're still
• 11:58
  Speaker 2: on board with that view?
• 11:59
  Speaker 5: Yeah? I am.
• 12:00
  Speaker 7: And you know, we talked around a year ago about
• 12:04
  Speaker 7: exactly this, and actually the UK market's not done so
• 12:07
  Speaker 7: badly since then, and the pand has been relatively strong,
• 12:12
  Speaker 7: and I think it will continue to be strong. That
• 12:14
  Speaker 7: having been said, you know, if the British government wasn't
• 12:18
  Speaker 7: intent on throwing molotov cocktails in the way of a
• 12:23
  Speaker 7: relatively robust economy in the form of increased corporation tax,
• 12:28
  Speaker 7: stealth taxes by raising by basically putting more people into
• 12:31
  Speaker 7: the forty percent tax band, and all sorts of other taxes,
• 12:36
  Speaker 7: as well as you know, not unpicking regulations that should
• 12:40
  Speaker 7: have been unpicked ages ago.
• 12:41
  Speaker 2: Well and adding more regulation on top relentless editions of regulation.
• 12:46
  Speaker 2: So we suffer from this sort of huge heaviness of
• 12:49
  Speaker 2: regulation before we even start on anything else. I was
• 12:51
  Speaker 2: thinking about this the other day wheneveryone was complaining on
• 12:54
  Speaker 2: the same day about too much regulation in the UK
• 12:57
  Speaker 2: economy and more and more regulation coming in and at
• 12:59
  Speaker 2: the same time time complaining about obesity in and the
• 13:03
  Speaker 2: effect that that has on the NHS. And it's like
• 13:05
  Speaker 2: it's the same kind of thing, you know, these big
• 13:07
  Speaker 2: sort of burdens weighing down our NHS, of weighing down
• 13:11
  Speaker 2: our economy on the other hand, and what do.
• 13:13
  Speaker 1: We do about them?
• 13:14
  Speaker 2: And are we taking the crab interrupted?
• 13:16
  Speaker 1: You you carry on, you carry on.
• 13:18
  Speaker 5: No, but I'm with you.
• 13:19
  Speaker 7: I mean, you know, why is the government so damned
• 13:24
  Speaker 7: incompetent And you know, it's just it beggars belief really.
• 13:29
  Speaker 7: You know, there are obviously some very good ministers out there.
• 13:32
  Speaker 7: I don't think Richie's doing a bad job. He seems
• 13:34
  Speaker 7: to have stabilized the ship and you know he internationally
• 13:37
  Speaker 7: he's doing quite well. But there's just so much more
• 13:41
  Speaker 7: that could be done. And they had an eighty seat majority.
• 13:44
  Speaker 7: I mean, they could have done so much. He could
• 13:46
  Speaker 7: have done anything they wanted, and it's just a wasted opportunity.
• 13:51
  Speaker 5: They haven't been said.
• 13:52
  Speaker 7: You know, I read and I don't mean to say
• 13:54
  Speaker 7: I read it in any great detail or with great
• 13:57
  Speaker 7: linguistic skill, but I read the French newspaper her every day,
• 14:00
  Speaker 7: and I read built Sitong, which is Germany's equivalent to
• 14:03
  Speaker 7: the Sun, every day. And you know, we think that
• 14:08
  Speaker 7: we're in this sort of economic malaise that's specific to
• 14:11
  Speaker 7: the UK, It's just not true. Every other country in
• 14:13
  Speaker 7: Europe thinks it's in a dire situation as well. And
• 14:17
  Speaker 7: there's a lot of inward looking stuff going on in
• 14:19
  Speaker 7: Europe as well as in the United States. So while
• 14:23
  Speaker 7: we hunters going on about how we're talking ourselves into,
• 14:27
  Speaker 7: you know, going backwards economically, every other country that I
• 14:32
  Speaker 7: can read their press of is doing exactly the same,
• 14:35
  Speaker 7: and including where I spend a lot of time, which
• 14:36
  Speaker 7: is in Spain.
• 14:37
  Speaker 1: Okay, So is.
• 14:38
  Speaker 2: There still value in the UK equity market with that
• 14:40
  Speaker 2: in mind, and if everyone's talking themselves into a funk
• 14:43
  Speaker 2: and UK equities which are certainly at the top end,
• 14:46
  Speaker 2: very international anyway, trading at a thirty five forty percent
• 14:50
  Speaker 2: discount to similar companies in the US, seems like a
• 14:53
  Speaker 2: no brainer to buy those.
• 14:55
  Speaker 7: Yeah, I completely agree, And you know, I'm sure that
• 14:59
  Speaker 7: the the large sort of fossil fuel related companies like
• 15:05
  Speaker 7: Shell and BP are good long term investments. I'm sure
• 15:08
  Speaker 7: that our defense stocks are good long term investments. I'm
• 15:11
  Speaker 7: sure that our financial services companies are good long term investments.
• 15:14
  Speaker 7: We're not likely the US banking system, where basically the
• 15:17
  Speaker 7: money market funds have completely upended the whole banking model
• 15:21
  Speaker 7: for regional banks, and where there are far too many
• 15:23
  Speaker 7: banks in the first place. I think the insurance companies
• 15:26
  Speaker 7: are also attractive. Some of our investment trusts are attractive
• 15:30
  Speaker 7: to buy. There's a whole plethora of stuff that you
• 15:32
  Speaker 7: can buy in the UK with long term confidence, whereas
• 15:35
  Speaker 7: you know, if you buy something in the US, you
• 15:37
  Speaker 7: are paying a very distinct premium at a time when
• 15:41
  Speaker 7: you know earnings are all time high as a percentage
• 15:44
  Speaker 7: of GDP in the US and are probably going to
• 15:46
  Speaker 7: start falling.
• 15:48
  Speaker 5: So yeah, I'm with you.
• 15:51
  Speaker 7: Let's buy the UK and carry on buying the UK.
• 15:54
  Speaker 7: And you know, as for London losing its position as
• 15:57
  Speaker 7: the largest market in Europe, well, I actually don't think
• 16:01
  Speaker 7: it really matters. London is still the pre eminent, or
• 16:05
  Speaker 7: at least equal pre eminent financial capital in the world.
• 16:09
  Speaker 7: There's no sign that it's losing its pre eminence in
• 16:14
  Speaker 7: the whole of Europe. Only a trickle of people have
• 16:16
  Speaker 7: moved elsewhere, and as I said at the beginning, services
• 16:21
  Speaker 7: exports are an all time high from the UK, which
• 16:24
  Speaker 7: is our main strength. So although you know the government's
• 16:29
  Speaker 7: doing everything it can to sort of put the reins
• 16:32
  Speaker 7: on the economy, the economy is being remarkably resilient. And
• 16:35
  Speaker 7: there's no doubt in my mind, and I said this
• 16:38
  Speaker 7: from September last year onwards that rather than being the
• 16:42
  Speaker 7: weakest economy in the G seven, this year will be somewhere.
• 16:45
  Speaker 5: Near the top.
• 16:46
  Speaker 7: The UK is remarkably resilient as an economy. And we
• 16:50
  Speaker 7: also have the effect, whether you like it or not,
• 16:53
  Speaker 7: and I actually don't mind it, of very very fast
• 16:57
  Speaker 7: flowing inward immigration and that is going to add to
• 17:04
  Speaker 7: our economy in coming years.
• 17:06
  Speaker 2: I mean, it's not as to our economy as to
• 17:09
  Speaker 2: our economy in terms of GDP, but we're not sure
• 17:12
  Speaker 2: that it adds in terms of GDP per head. Oh
• 17:15
  Speaker 2: we which is the thing that really matters. We're not
• 17:19
  Speaker 2: really interested in what the overall GDP of the UK is.
• 17:23
  Speaker 2: We're interested in whether individuals are seeing their incomes rise
• 17:27
  Speaker 2: and their living standards rise. We don't necessarily see that
• 17:31
  Speaker 2: with large waves of immigration governments like it because it
• 17:34
  Speaker 2: means they can say, oh, no, GDP is going up,
• 17:36
  Speaker 2: But do individuals like it if it's not actually improving
• 17:40
  Speaker 2: their personal standard of living?
• 17:42
  Speaker 7: Well, that's a very good point, and I think in
• 17:44
  Speaker 7: the short term, almost certainly, it's going to.
• 17:47
  Speaker 5: Be diluted of GDP per capita.
• 17:51
  Speaker 7: And you know, I think there's a couple of things
• 17:54
  Speaker 7: that can be done about that, including allowing migrants to
• 17:57
  Speaker 7: work much earlier or even I wouldn't forcing them, but
• 18:01
  Speaker 7: making it attractive for them to work, and secondly training
• 18:04
  Speaker 7: them in skill sets that the UK is lacking in.
• 18:09
  Speaker 7: And I think also importantly that we need to target
• 18:12
  Speaker 7: migrants who are of a younger demographic because you know,
• 18:15
  Speaker 7: if XYZ comes in and then brings his whole elderly
• 18:20
  Speaker 7: relative cohorts with him or her, that is definitely going
• 18:24
  Speaker 7: to constitute a drain on the resources of the economy.
• 18:28
  Speaker 7: But longer term, every single developed country, including the one
• 18:32
  Speaker 7: I'm going to tomorrow, in particular Singapore, is facing a
• 18:37
  Speaker 7: major demographic crisis. You've talked about this before, I've talked
• 18:41
  Speaker 7: about it, but it's actually becoming It's one of those crises.
• 18:44
  Speaker 5: That doesn't really hit you until it hits you.
• 18:46
  Speaker 7: We're basically facing population collapse in many countries around the world,
• 18:51
  Speaker 7: and far from discouraging migrants in ten or twenty years time,
• 18:55
  Speaker 7: will be begging them to come to the UK, or
• 18:57
  Speaker 7: to Germany or to wherever else is sure of people.
• 19:00
  Speaker 7: And although we're not on hand, if this.
• 19:03
  Speaker 2: Is a global dynamic, which it will become, there aren't
• 19:06
  Speaker 2: that many countries left in the world where the population
• 19:08
  Speaker 2: is growing very fast, and very few left, and mostly
• 19:10
  Speaker 2: in Sub Saharan Africa, whether patiliarated through over four or five. Right, So,
• 19:15
  Speaker 2: if we're suffering from the potential for populations to decline
• 19:20
  Speaker 2: in western countries now and in pretty much every other
• 19:23
  Speaker 2: country over the next few decades, should we be trying
• 19:27
  Speaker 2: to deal with this problem by pushing other people's kids,
• 19:30
  Speaker 2: or should we be trying to find a way to
• 19:33
  Speaker 2: manage our economies in our societies such that we can
• 19:36
  Speaker 2: cope with our aging populations that we're going to give you. Japan,
• 19:39
  Speaker 2: for example, which is ahead of the game here and
• 19:41
  Speaker 2: there's been beginning to figure out ways to make it work.
• 19:45
  Speaker 2: Rather than thinking, jeez, we can't be doing without young people.
• 19:47
  Speaker 2: Let's get someone else's in well.
• 19:49
  Speaker 7: Japan's are very as you know much better than me,
• 19:51
  Speaker 7: that Japan's a very particular country.
• 19:53
  Speaker 5: And the sense of it, it really doesn't.
• 19:55
  Speaker 7: It's quite xenophobic, and it definitely not multicultural by any
• 20:01
  Speaker 7: stretch of the imagination. And Japan also has an older
• 20:07
  Speaker 7: population that is quite happy. A lot of them are
• 20:10
  Speaker 7: quite happy to go out and work and continued to
• 20:13
  Speaker 7: be employed at lesser salaries than they got when they
• 20:16
  Speaker 7: were at the peak of their careers. And admittedly a
• 20:21
  Speaker 7: lot of it is non jobs, you know, just sort
• 20:23
  Speaker 7: of like opening and shutting barriers and things like that.
• 20:26
  Speaker 7: But flag waving a very very different society to ours.
• 20:30
  Speaker 5: I'm sure you know this.
• 20:31
  Speaker 7: But by two thousand and seventy, which is not that
• 20:34
  Speaker 7: far off, more than half of the G seven's population
• 20:37
  Speaker 7: will be over sixty five years old. And in some
• 20:40
  Speaker 7: of those countries, not ours, but including out I don't know, well, yeah,
• 20:45
  Speaker 7: we'll be over sixty five fifty Well, you know, we
• 20:48
  Speaker 7: will all be over sixty five much sooner than that.
• 20:50
  Speaker 7: But the thing is that in some of those countries,
• 20:53
  Speaker 7: and you're going to see Japan obviously is one example
• 20:56
  Speaker 7: of that, the population will be seventy five percent over
• 21:00
  Speaker 7: sixty five years old.
• 21:02
  Speaker 5: And so there are two things that need to be done.
• 21:05
  Speaker 7: One is to prevent people from becoming frail and you know,
• 21:10
  Speaker 7: build robustness and to older people, and that's something that
• 21:13
  Speaker 7: you know, longevity science is trying to do. I don't
• 21:16
  Speaker 7: think it's doing it fast enough to be quite honest.
• 21:19
  Speaker 7: And then the second thing is to let you know,
• 21:22
  Speaker 7: the population know that the good old days of being born, learning, earning,
• 21:28
  Speaker 7: retiring and expiring are gone, that everything is changing, that
• 21:32
  Speaker 7: life is a different trajectory now, and that they can
• 21:36
  Speaker 7: expect to be working much longer. So you don't get
• 21:39
  Speaker 7: the riots that you got in France over the sixty
• 21:41
  Speaker 7: two to sixty four pension age, and you don't get
• 21:46
  Speaker 7: the sort of mess resistance to later retirement because we
• 21:51
  Speaker 7: are all going to have to retire, not that you
• 21:53
  Speaker 7: and I, oh, I'm mad for it.
• 21:55
  Speaker 2: I'm absolutely mad for it. I mean, when I have
• 21:58
  Speaker 2: fand disease and dreams, I imagine that when I went
• 22:01
  Speaker 2: into work, instead of going into the private sector and
• 22:04
  Speaker 2: all that I'd gone into the public sectors, I don't know,
• 22:06
  Speaker 2: a mid ranking civil servant or something, and now I
• 22:09
  Speaker 2: was looking forward to retiring in a couple of years
• 22:11
  Speaker 2: on an RPI linked to define benefit pension. I could
• 22:15
  Speaker 2: join all those other fifty five year olds on cruises
• 22:17
  Speaker 2: up and down the Danube. I dreamed it all the time.
• 22:20
  Speaker 5: Yeah, I don't believe it. Actually, I can't see you
• 22:23
  Speaker 5: doing that, So you're.
• 22:26
  Speaker 1: Not thinking hard enough. I don't know where to go now.
• 22:30
  Speaker 2: I want to talk about Japan, and I want to
• 22:31
  Speaker 2: talk about longevity science and where you're investing there.
• 22:34
  Speaker 1: Let's start with Japan.
• 22:35
  Speaker 2: Let's start with Japan and investing in Japan. You know,
• 22:37
  Speaker 2: Warren Buffett has just come out of Japan and said,
• 22:40
  Speaker 2: we're not done investing in Japan yet. You know those
• 22:43
  Speaker 2: are those exact words, right, And you know that he's
• 22:45
  Speaker 2: got big holdings in in some of the big Japanese conglomerates,
• 22:49
  Speaker 2: in the trading companies, which he thinks are fantastic, and
• 22:51
  Speaker 2: he started investing in them a while back. They pretty
• 22:53
  Speaker 2: much doubled since he started. And now he's looking at
• 22:56
  Speaker 2: Japan and he's saying, I'm buying more there. I'm staying in.
• 23:00
  Speaker 2: Not to do all the becaus is Warren Buffett. This
• 23:02
  Speaker 2: is not to do with him expecting a bull market
• 23:03
  Speaker 2: in the next next month, two months, three months, so
• 23:06
  Speaker 2: then he can sell. Obviously he's in for the very
• 23:08
  Speaker 2: long term, and these are now pretty much is only
• 23:12
  Speaker 2: big non US investments, So it's a it's a huge
• 23:17
  Speaker 2: expression of faith in Japan that everyone is generally incredibly
• 23:21
  Speaker 2: pessimistic about. Not me, John and I have been bills
• 23:24
  Speaker 2: on Japan for so long it's kind of embarrassing now.
• 23:26
  Speaker 2: But now we've got Warren Buffett walking by our side,
• 23:30
  Speaker 2: I think we can feel a bit more confident. So
• 23:33
  Speaker 2: I'm wondering, given that we've just talking about the value
• 23:35
  Speaker 2: market that is the UK, are you also positive with
• 23:38
  Speaker 2: me and Warren on the value market that is Japan.
• 23:41
  Speaker 5: Yeah.
• 23:42
  Speaker 7: So whereas Warren Buffett has billions of dollars invested in Japan,
• 23:46
  Speaker 7: I've got a few million invested in Japan and I
• 23:49
  Speaker 7: think that it'll do very well. And you know, when
• 23:52
  Speaker 7: I started my career a long time ago, I was
• 23:55
  Speaker 7: a kind of Japanese analyst. Possibly when you were younger
• 23:58
  Speaker 7: as well, marrying all the you're of the age gap
• 24:00
  Speaker 7: is significant between you and me, But when I was younger,
• 24:05
  Speaker 7: I had to write out all the questions at night
• 24:07
  Speaker 7: for the meeting the next day, and research the company
• 24:10
  Speaker 7: and do all that sort of stuff. I honestly don't
• 24:13
  Speaker 7: think any junior people and any companies do that anymore.
• 24:17
  Speaker 7: There's a sort of sense of entitlement, entitlement or just like,
• 24:23
  Speaker 7: you know, I don't need to spend my evenings doing
• 24:26
  Speaker 7: this at homework on behalf of the boss. When I
• 24:29
  Speaker 7: was doing that, you could throw a dart on any
• 24:32
  Speaker 7: quick number on the Japanese stock market and it would
• 24:35
  Speaker 7: be didn't really matter. It was going up. And John Greenwood,
• 24:38
  Speaker 7: who worked at GT at that time, you know, a
• 24:40
  Speaker 7: great monetarists, was you know, propounding the fact that money
• 24:45
  Speaker 7: supply dictated stock markets, and it worked, and then it
• 24:48
  Speaker 7: stopped working in about nineteen eighty nine because the Japanese
• 24:54
  Speaker 7: market went ballistic and it was just ridiculously overpriced. And
• 25:00
  Speaker 7: I think any market that's ridicularly as overpriced you walk
• 25:02
  Speaker 7: away from. And Warren Buffett walks into markets when they're underpriced.
• 25:05
  Speaker 7: So UK and Japan, Yes, the difference between the UK
• 25:10
  Speaker 7: and Japan is that although there's a talk of activism
• 25:13
  Speaker 7: and you know, foreigners stirring up trouble in Japan and
• 25:16
  Speaker 7: trying to unravel the cross shoholdings in Japan, and the
• 25:21
  Speaker 7: undervaluation of the book values and all that sort of stuff.
• 25:24
  Speaker 5: Very unlikely.
• 25:24
  Speaker 7: There will be a lot of takeover activity in Japan
• 25:27
  Speaker 7: for reasons that you're very familiar with, whereas I do
• 25:30
  Speaker 7: think there we're going to see some mega deals coming
• 25:32
  Speaker 7: to the UK PE companies. Anyone with dry powder is
• 25:38
  Speaker 7: going to be coming and snapping up our possibly some
• 25:41
  Speaker 7: of our biggest companies over the next year or two.
• 25:44
  Speaker 7: And maybe that's why the pound's been relatively strong against
• 25:49
  Speaker 7: the Japanese yen, because actually the yen is much more
• 25:52
  Speaker 7: undervalue than really any major currency in the world, and
• 25:55
  Speaker 7: it just I don't really understand why the yen hasn't
• 26:00
  Speaker 7: mean going up. I don't know, do you have any
• 26:01
  Speaker 7: view on that. I know that they're going to remove
• 26:04
  Speaker 7: YCC at some point in the relatively near future, so
• 26:08
  Speaker 7: I really don't understand.
• 26:09
  Speaker 5: Well.
• 26:09
  Speaker 2: With that in mind that there are things that you
• 26:11
  Speaker 2: don't understand, which is unusual. The money you do have
• 26:14
  Speaker 2: in Japan, what kind of stocks is it in?
• 26:16
  Speaker 7: I mean like you I buy the I buy trust,
• 26:19
  Speaker 7: so the Nipon, the Nipon activist value funders one, even
• 26:24
  Speaker 7: though it's not very active one.
• 26:25
  Speaker 1: Active value just just a merger announced.
• 26:29
  Speaker 5: Yeah, they're taking over a small trust, aren't they.
• 26:32
  Speaker 2: Yeah yeah, yeah, interesting, Okay, that's an actual value fund.
• 26:36
  Speaker 2: I was looking today earlier today at some of the
• 26:38
  Speaker 2: japan trusts, and very few of them have followed the
• 26:43
  Speaker 2: Japanese market as a whole. I ei they've all underperformed,
• 26:46
  Speaker 2: which is kind of interesting, and suggested to me that
• 26:48
  Speaker 2: when they looked at Japan, they think to themselves, well,
• 26:51
  Speaker 2: we should be in Japan was because of the Japanese trust,
• 26:53
  Speaker 2: but we have very little faith in it as a
• 26:55
  Speaker 2: wholy little faith in the economy and little faith in
• 26:57
  Speaker 2: the stock market, so we'll invest in international and all
• 27:00
  Speaker 2: growthy stuff. And so they've missed the more value end
• 27:04
  Speaker 2: of the market, which is a bit where the air
• 27:05
  Speaker 2: performance has been, which is kind of interesting. Whereas it
• 27:08
  Speaker 2: live on active value, one hopes has been diving around
• 27:11
  Speaker 2: in active value and not done the same.
• 27:14
  Speaker 5: Yeah.
• 27:14
  Speaker 7: I mean I brought into Zenna recently and I bought
• 27:19
  Speaker 7: individual stocks. So I think Sonny is a real cracker
• 27:22
  Speaker 7: of a stock actually, because if you look at it
• 27:24
  Speaker 7: compared to the US media companies, and Sonny effectively is
• 27:28
  Speaker 7: a media and gaming company, it looks very cheap and
• 27:32
  Speaker 7: seems to be quite well managed, and you're you know,
• 27:34
  Speaker 7: buying it about ten or eleven times earnings, and you know,
• 27:38
  Speaker 7: as far as I'm concerned, that's that's a deal. So
• 27:40
  Speaker 7: I've been buying Sonny, and I've got some of the
• 27:44
  Speaker 7: car companies. I've got Toyota, which you know, when Tesla
• 27:49
  Speaker 7: goes bus, which it will, you know, Toyota will will continue,
• 27:54
  Speaker 7: and it's a very cheap company. Something to note, actually
• 27:57
  Speaker 7: is that two things on electric vehicles. The one is
• 28:00
  Speaker 7: that the Chinese are now producing electric vehicles of as
• 28:05
  Speaker 7: high a standard or higher standard than the Americans and
• 28:08
  Speaker 7: the Germans, and they will start exporting in very large quantities.
• 28:12
  Speaker 7: And there are forty electric vehicle companies in China, so
• 28:16
  Speaker 7: the price competition is going to be very intense. And secondly,
• 28:20
  Speaker 7: the electric vehicles are not the great panacea that they seemed,
• 28:25
  Speaker 7: because you know, you can't put them on ferries, you
• 28:26
  Speaker 7: can't put them in certain car parks, you can't put
• 28:28
  Speaker 7: them on bridges because the batteries are so heavy and
• 28:32
  Speaker 7: when they catch fire they cause massive destruction.
• 28:35
  Speaker 5: So I just think we have to be a little
• 28:36
  Speaker 5: bit careful about evs.
• 28:38
  Speaker 2: But hey, and I need to go back there. You
• 28:40
  Speaker 2: can't put electric cars on ferries.
• 28:44
  Speaker 7: They are banning electric cars from a lot of ferries now, So.
• 28:48
  Speaker 2: If you want to drive your car to one of
• 28:50
  Speaker 2: the Scottish islands, in fact they forget that because you'll
• 28:53
  Speaker 2: never find a ferry to get on. That's not really
• 28:54
  Speaker 2: an issue, is it? No ferries in Scotland, So you
• 28:57
  Speaker 2: can't be down from taking an electric car and a
• 28:59
  Speaker 2: ferry that doesn't exist. But let's say you wanted to
• 29:01
  Speaker 2: take it on a cross channel ferry.
• 29:02
  Speaker 1: Do they still exist?
• 29:04
  Speaker 7: Cross channel theories do exist, and I don't know whether
• 29:06
  Speaker 7: they're banning them or not, but I do know that
• 29:08
  Speaker 7: there have been recent unextinguishable fires on ferries as a
• 29:12
  Speaker 7: result of EV cars catching fire. And so either they
• 29:18
  Speaker 7: find new batteries, which is probably what they're going to do,
• 29:21
  Speaker 7: solid state batteries, or the other issue is the weight.
• 29:24
  Speaker 7: I mean, electric vehicles are much much heavier than conventional cars.
• 29:28
  Speaker 5: That's a problem as well.
• 29:29
  Speaker 7: I don't want to make it stand that this is
• 29:33
  Speaker 7: a very major issue. Maybe it's an issue that can
• 29:35
  Speaker 7: be solved, but it's just another roadblock in the rollout
• 29:38
  Speaker 7: of evs. And you know another thing, the British government
• 29:40
  Speaker 7: is being stupid about is saying that we have to
• 29:43
  Speaker 7: start producing regular cars by the year twenty and thirty,
• 29:47
  Speaker 7: whereas the Europeans have kind of extend and pretend beyond
• 29:50
  Speaker 7: two thousand and thirty five. It's just not feasible. It's
• 29:52
  Speaker 7: going to destroy our car industry. We really you know,
• 29:55
  Speaker 7: why are they shooting themselves and both feet at the
• 29:58
  Speaker 7: same time.
• 30:00
  Speaker 2: Well, interestingly, the car industry is one of the areas
• 30:03
  Speaker 2: where UK productivity has fallen the fastest, and again that
• 30:06
  Speaker 2: is blamed on the sort of slu of environmental regulation
• 30:09
  Speaker 2: that has been put on top of our car manufacturers.
• 30:12
  Speaker 2: But be that for good or bad, it's definitely affecting
• 30:15
  Speaker 2: our productivity, which is the bad bit, right, Okay, So
• 30:19
  Speaker 2: Tesla's going bust?
• 30:20
  Speaker 1: Do you want to just leave that one there?
• 30:23
  Speaker 7: Well, I mean, look when I say it's going bust,
• 30:26
  Speaker 7: they haven't had a new car for a few years.
• 30:30
  Speaker 7: There's no sign that they're going to introduce a new car.
• 30:32
  Speaker 7: They're cutting their prices and various jurisdictions around the world,
• 30:36
  Speaker 7: and that production rate is way higher on a quarterly
• 30:39
  Speaker 7: basis than their sales rate.
• 30:42
  Speaker 5: Of course, Elon must talks it up as.
• 30:43
  Speaker 7: Being a problem about vehicles in transit being in the
• 30:46
  Speaker 7: wrong place, et cetera, et cetera.
• 30:48
  Speaker 5: But to my mind that's not a good sign.
• 30:52
  Speaker 7: And yet their market cap can still buy the nearest
• 30:57
  Speaker 7: seven largest car companies, which are catching up very rapidly
• 31:00
  Speaker 7: in terms of quality and evs, and have decades maybe
• 31:05
  Speaker 7: one hundred years more experienced in some cases, of producing cars,
• 31:09
  Speaker 7: and are remarkably cheap on many multiples. I mean, I think,
• 31:13
  Speaker 7: you know, you could do a good trade. You could
• 31:15
  Speaker 7: go long Toyot to short Tesla, or you could go
• 31:18
  Speaker 7: long General Motors and go short Tesla and over the
• 31:22
  Speaker 7: next year or so you'll do well. And I've actually
• 31:24
  Speaker 7: made money by shorting Tesla. It's you know, very volatile
• 31:27
  Speaker 7: stop so every time it spikes up, you want to
• 31:29
  Speaker 7: short it. And every time it goes it looks like
• 31:31
  Speaker 7: it's an internal decline. Maybe buy it back, but ultimately
• 31:35
  Speaker 7: it's going to end up with a very low value
• 31:38
  Speaker 7: relative to its current market cap.
• 31:40
  Speaker 2: Okay, we'll get hate mail, you know that, right, you
• 31:42
  Speaker 2: should address everybody.
• 31:43
  Speaker 5: Well, you don't have my address, so that's good. I'm
• 31:46
  Speaker 5: in Dubai, not mine, Dubai.
• 31:50
  Speaker 1: On your way to sing, a boy, you're safe.
• 31:52
  Speaker 2: Leave it all with me. Let's talk long longevity, the
• 31:56
  Speaker 2: other the other topic or met what are the other
• 31:58
  Speaker 2: many topics? I know, very incident.
• 32:00
  Speaker 1: How long are we going to live?
• 32:02
  Speaker 5: Jim, Well, we are living longer.
• 32:04
  Speaker 2: I mean there's a problem here because we're not living longer. Actually,
• 32:07
  Speaker 2: life expectancy is be going to fall, particularly in the
• 32:10
  Speaker 2: US average life expectancy obviously, and in the UK as well.
• 32:14
  Speaker 2: And we've got the very high level of excess deaths
• 32:17
  Speaker 2: in it well and pretty much all Western countries presumably
• 32:19
  Speaker 2: as a result of lack of healthcare during the.
• 32:21
  Speaker 1: Pandemic, etc.
• 32:22
  Speaker 2: So we're hitting a bit of a blip in the
• 32:24
  Speaker 2: every one living longer story.
• 32:26
  Speaker 4: Feels yeah.
• 32:27
  Speaker 7: I mean I think that the UK, the rate of
• 32:31
  Speaker 7: increase in life expectancy is very low at the moment,
• 32:35
  Speaker 7: but it's not gone backwards.
• 32:37
  Speaker 5: In the US. There are particular reasons.
• 32:39
  Speaker 7: I mean, the US is lamentable, you know, by two
• 32:41
  Speaker 7: thousand and forty and we're only talking what seventeen years away,
• 32:47
  Speaker 7: thirty five percent of US GDP will be spent on healthcare.
• 32:50
  Speaker 7: I mean that's outrageous, right, Yet the life expectancy is
• 32:55
  Speaker 7: four and a half years shorter than our own life
• 32:57
  Speaker 7: expectancy in the UK, which is not the highest in
• 32:59
  Speaker 7: the world, as you know, Singapore, Japan, career and some
• 33:03
  Speaker 7: European countries like Spain, life expectancy is considerably considerably higher.
• 33:10
  Speaker 5: But generally the trajectory is slightly upwards.
• 33:13
  Speaker 7: But the great gains coming from environmental factors in improvement
• 33:18
  Speaker 7: and life expectancy have have been taken. So now we're
• 33:23
  Speaker 7: waiting for gains from biological intervention. And there is no
• 33:27
  Speaker 7: biological intervention yet that can keep you alive healthier for longer.
• 33:33
  Speaker 7: But I do see that some things are beginning to
• 33:37
  Speaker 7: show promise. It's taken longer than I expect it to,
• 33:40
  Speaker 7: be quite honest, and there's some very interesting stuff happening,
• 33:46
  Speaker 7: but it's like a duck paddling underwater. Most people don't
• 33:48
  Speaker 7: see it, but you know, there are definitely signs of
• 33:52
  Speaker 7: biological intervention in a poly drug form. So there's lots
• 33:57
  Speaker 7: of different interventions could lead to us living most importantly
• 34:02
  Speaker 7: healthier in later life and secondly potentially for longer, and
• 34:07
  Speaker 7: that would be a great relief because if people just
• 34:10
  Speaker 7: get older and get more decrepit and frailer, first of all,
• 34:14
  Speaker 7: they can't work, someone's got to pay for them, someone's
• 34:16
  Speaker 7: got to look after them. And then the healthcare costs
• 34:20
  Speaker 7: in the last part of their lives become untenable for
• 34:22
  Speaker 7: most healthcare systems around the world, and so we need
• 34:26
  Speaker 7: to find some way of reducing that burden. So it's
• 34:30
  Speaker 7: an imperative that something is done to improve the robustness
• 34:35
  Speaker 7: of old people. And you know, money's coming into the sector.
• 34:39
  Speaker 7: Jeff Bezos has invested three billion dollars in a UK company,
• 34:42
  Speaker 7: Altos Labs, based outside of Cambridge. Google's invested two and
• 34:46
  Speaker 7: a half billion dollars. There's money coming in to a
• 34:50
  Speaker 7: variety of other companies and philanthropies and all that sort
• 34:53
  Speaker 7: of stuff, and so relatively optimistic. And we just hired
• 34:58
  Speaker 7: a very top dog from Astrazen to come and head
• 35:01
  Speaker 7: up to in Essence and he's really very good at
• 35:04
  Speaker 7: delivering drugs into the market. And I don't know if
• 35:07
  Speaker 7: you know, Marin, that Estra is now the biggest drug
• 35:08
  Speaker 7: company in the world. It's overtaking the Pizer. So most people,
• 35:11
  Speaker 7: you know, something that the UK should be trumpeting. We
• 35:14
  Speaker 7: have the world's biggest drug company on the London Stock
• 35:16
  Speaker 7: Exchange and No one's saying that.
• 35:18
  Speaker 2: I'm going to tweet that the second we've finished talking,
• 35:21
  Speaker 2: and then everyone will come back and tell me it's
• 35:22
  Speaker 2: not true. Possibly be true because it's British.
• 35:25
  Speaker 5: It's true.
• 35:27
  Speaker 2: How do how do ordinary people invest in this amazing trend?
• 35:33
  Speaker 2: When I asked you about this a couple of years ago,
• 35:34
  Speaker 2: one of the things you said was just by Google,
• 35:36
  Speaker 2: because they've got fingers in all the best pies.
• 35:38
  Speaker 5: Well that was more than two years ago, but maybe
• 35:41
  Speaker 5: more than two years ago.
• 35:42
  Speaker 7: Oh, no, it was, And I think Google probably has gone,
• 35:46
  Speaker 7: you know, is going ex growth like all these big
• 35:48
  Speaker 7: fang stocks.
• 35:50
  Speaker 5: But no, that's not the way to invest in this.
• 35:52
  Speaker 7: And actually I don't really know what Google's done in
• 35:54
  Speaker 7: longevity because there's very little information that's coming out of them.
• 35:57
  Speaker 7: But what I would say is that I'll watch this
• 36:00
  Speaker 7: space so you know. For instance, juven Essence has said
• 36:03
  Speaker 7: that as sheets thank god it didn't go public because
• 36:06
  Speaker 7: the biotech sector has been massacred. Essences said it expects
• 36:10
  Speaker 7: to go public by the end of next year, and
• 36:11
  Speaker 7: I think that's that's entirely possible, and it might even
• 36:14
  Speaker 7: go public in the UK because the center of its
• 36:16
  Speaker 7: operations is in the UK, even though most of its
• 36:19
  Speaker 7: investments are in the US, and.
• 36:23
  Speaker 5: So that might be one way of playing it.
• 36:24
  Speaker 7: But there's nothing really that I could recommend for the
• 36:30
  Speaker 7: average investor in longevity yet, but just keep a watching
• 36:34
  Speaker 7: brief on it. I mean, that's that's the best that
• 36:36
  Speaker 7: one can do. The big farmer companies have not yet
• 36:38
  Speaker 7: dipped their toe into this area, and I'm sure that
• 36:41
  Speaker 7: they will, but not yet, And so it's just it's
• 36:47
  Speaker 7: something to keep a watching brief on.
• 36:49
  Speaker 2: All right, we will watch and wait on that one.
• 36:51
  Speaker 2: And as you will be watching.
• 36:54
  Speaker 7: Yeah, and you've got a little and ten, you've got
• 36:56
  Speaker 7: plenty of time to make your investments.
• 36:58
  Speaker 2: Yeah, still got to make my at the right time.
• 37:01
  Speaker 2: Let's talk about the other technology area that you're very
• 37:05
  Speaker 2: interested in, and also have a vehicle for agronomics, so
• 37:09
  Speaker 2: the idea of agritech and changing environment around that. And
• 37:13
  Speaker 2: then they're particularly interested in cultivated meat, which because if
• 37:16
  Speaker 2: you I try very hard to think about it in
• 37:18
  Speaker 2: a positive way, but still find mildly repellent. Let's talk
• 37:23
  Speaker 2: about what you're doing there and what you're interested in that.
• 37:26
  Speaker 7: Okay, so I'm here in Dubai and the UAE because
• 37:31
  Speaker 7: they important ninety five percent of their food, they happen
• 37:33
  Speaker 7: to have a fairly forward thinking, technocratic view of what
• 37:38
  Speaker 7: they can do, and they also have lots of money,
• 37:41
  Speaker 7: so I don't think it'll be very long before factories
• 37:44
  Speaker 7: are built in the UAE to produce novel proteins. There
• 37:48
  Speaker 7: are two elements to cellar agriculture. One is growing meat
• 37:53
  Speaker 7: fish materials in laboratories using stem cells as the basis
• 37:58
  Speaker 7: for the development of those products, and then the other
• 38:01
  Speaker 7: is what's called precision fermentation, which is a kind of
• 38:03
  Speaker 7: brewing process. Precision fermentation is further ahead because it's a
• 38:07
  Speaker 7: long established biotech process now moving into foods and materials,
• 38:12
  Speaker 7: and it's already approved in the United States to make
• 38:16
  Speaker 7: dairy proteins are bioidentical to milk proteins or egg proteins
• 38:21
  Speaker 7: that are bioidentical to albumen used in the industrial egg
• 38:27
  Speaker 7: businesses like baking, confectionery, et cetera, et cetera. So we
• 38:31
  Speaker 7: invest in both of those and actually since we started Agronomics,
• 38:36
  Speaker 7: the nav of the company has gone up by nearly
• 38:39
  Speaker 7: four times. The share price has been very volatile and
• 38:42
  Speaker 7: now sells like most investment trusts. Of this nature at
• 38:46
  Speaker 7: a discount as NAV. But I can tell you the
• 38:48
  Speaker 7: NAV is genuine and the outlook is very positive. So
• 38:52
  Speaker 7: because of our experience, my experience in biotech in the
• 38:56
  Speaker 7: last twenty years, I know that if you start your
• 39:00
  Speaker 7: own company and back scientists entrepreneurs to develop.
• 39:04
  Speaker 5: It for you, you.
• 39:06
  Speaker 7: End up with a much bigger share of the company
• 39:08
  Speaker 7: and a much higher return on your money. So when
• 39:10
  Speaker 7: we started Agronomics and Newer Grari, which is the other
• 39:13
  Speaker 7: fund we have, we invested in other people's businesses and
• 39:20
  Speaker 7: that's great, and those businesses are generally doing quite well.
• 39:23
  Speaker 7: They all have products, some of them are being approved
• 39:25
  Speaker 7: right now, some of them are on sale right now.
• 39:28
  Speaker 7: But starting your own company gives you in a white
• 39:31
  Speaker 7: space opportunity. It gives you a much bigger upside. So
• 39:33
  Speaker 7: we started a company called Liberation Labs, and that is
• 39:37
  Speaker 7: building fermenting capacity around the world for food companies to
• 39:42
  Speaker 7: share to act as a contract manufacturer for those producers
• 39:46
  Speaker 7: of dairy proteins or egg proteins. So our first factory
• 39:50
  Speaker 7: will be up and running at the end of next
• 39:52
  Speaker 7: year in the United States, and that's one hundred and
• 39:54
  Speaker 7: fifteen million dollar factory with very very attractive returns, and
• 39:58
  Speaker 7: we will be the first second, third, fourth, fifth, sixth, seventh, eight, nine,
• 40:01
  Speaker 7: tenth factory in the world through Liberation Labs, because no
• 40:04
  Speaker 7: one else is anywhere close to being able to build
• 40:08
  Speaker 7: these factories in the same way as the two people
• 40:11
  Speaker 7: that we hired who are the world experts in this field.
• 40:14
  Speaker 7: So Agonomics ends up with a much bigger share of
• 40:16
  Speaker 7: that company and also a very exciting industry. Our dog
• 40:21
  Speaker 7: food which is being done in the UK are called
• 40:25
  Speaker 7: Good dog Food.
• 40:26
  Speaker 5: I hope that company will go public.
• 40:28
  Speaker 7: Before the end of this year in the United Kingdom,
• 40:30
  Speaker 7: and I'm pretty sure that its product will be on
• 40:33
  Speaker 7: the market, and it's a sell ag chicken product that
• 40:38
  Speaker 7: will be sold on the.
• 40:41
  Speaker 5: UK market by the end of this year for dogs.
• 40:43
  Speaker 7: And the dog food market is twenty five percent of
• 40:45
  Speaker 7: the meat market in the UK and twenty five percent
• 40:47
  Speaker 7: of the meat market in the United States and growing
• 40:49
  Speaker 7: faster than the human meat market.
• 40:52
  Speaker 5: And we got.
• 40:53
  Speaker 2: Sorry, I just want to interrupt you briefly to be
• 40:56
  Speaker 2: absolutely clear, because there may be people listening to this
• 40:59
  Speaker 2: who do not understand the distinction between what we're talking
• 41:02
  Speaker 2: about and the sort of pretend meat made out of
• 41:06
  Speaker 2: vegetable growthing, you know, the impossible and beyond, etc. So
• 41:10
  Speaker 2: I just want to be clear when anyone's listening, that
• 41:13
  Speaker 2: is not.
• 41:13
  Speaker 1: What we're talking about.
• 41:14
  Speaker 2: We're talking about bioidentical meats made in labs.
• 41:17
  Speaker 5: Yeah, so meats that I just wanted to get that clear.
• 41:20
  Speaker 7: Right, Meats that don't have the same environmental impact as
• 41:23
  Speaker 7: growing conventional foods, and meats that don't have you know,
• 41:31
  Speaker 7: ten billion animals sorted every year and eighty billion held
• 41:34
  Speaker 7: in captivity waiting to be slaughtered on an annual basis,
• 41:37
  Speaker 7: which is the current situation, displacing the water supply around
• 41:41
  Speaker 7: the world with lots of contaminants, lots of antibiotic use,
• 41:45
  Speaker 7: lots of hormone use, none of that.
• 41:48
  Speaker 5: So this is what I call clean meat.
• 41:51
  Speaker 7: Some people might call it Frankenstein meat or you know,
• 41:55
  Speaker 7: synthetic meat.
• 41:56
  Speaker 5: It's not.
• 41:56
  Speaker 7: It's real meat. It's grown in a lab. You can't
• 41:59
  Speaker 7: catch cancer on it. It is identical to the best
• 42:04
  Speaker 7: of farmed meat. And the same goes for fish, and
• 42:08
  Speaker 7: the same goes for leather, and the same goes for
• 42:11
  Speaker 7: other things as well, including cocoa, coffee, cotton. So that's
• 42:18
  Speaker 7: completely different to the as that's plant based foods that
• 42:22
  Speaker 7: we don't invest in. So that you and I could
• 42:27
  Speaker 7: set up a plant based company tomorrowle at Merin and
• 42:29
  Speaker 7: James Kitchen, and we'd face huge amounts of competition. We're
• 42:33
  Speaker 7: producing highly processed foods. We'd be struggling to get space
• 42:37
  Speaker 7: on the supermarket shelves, et cetera.
• 42:39
  Speaker 5: So that's not and as we've.
• 42:41
  Speaker 2: Seen from these companies, people don't really want to buy
• 42:43
  Speaker 2: that stuff anyway.
• 42:44
  Speaker 7: Well, there are there is a market. I hate Beyon
• 42:47
  Speaker 7: Burger for lunch here in Dubai today. I have to say,
• 42:50
  Speaker 7: you know, I've gone off them because they just don't
• 42:52
  Speaker 7: They don't do it for me. But we don't eat
• 42:54
  Speaker 7: meat at home, so obviously occasionally it's quite nice to
• 42:56
  Speaker 7: have a sort of a SATs one. But very soon
• 42:59
  Speaker 7: we'll be to have the real meat produced in the lab.
• 43:02
  Speaker 7: And two companies have had their chicken products approved in
• 43:04
  Speaker 7: the United States already. I wanted to say just about
• 43:07
  Speaker 7: Good dog Food that pets at home, which everyone in
• 43:11
  Speaker 7: the UK is familiar with. It's a multi billion pound company,
• 43:13
  Speaker 7: a really really good company has invested in Good dog
• 43:17
  Speaker 7: Food and it's going to be its exclusive distributor of
• 43:20
  Speaker 7: the food for two or three years. So that's a
• 43:23
  Speaker 7: really great endorsement from one of the leaders in the industry.
• 43:26
  Speaker 2: So it seems like a brilliant way to get people
• 43:28
  Speaker 2: used to the idea.
• 43:29
  Speaker 1: You know, it's a.
• 43:30
  Speaker 2: Great market entry point, doesn't it. People get used to
• 43:33
  Speaker 2: the idea that they're feeding their dogs real meat, but
• 43:36
  Speaker 2: not meat that is affecting animal lives and the planet, etc.
• 43:41
  Speaker 2: And then it's not much of a leief to move
• 43:43
  Speaker 2: into it themselves exactly.
• 43:45
  Speaker 7: And I'm going to tell you a very quick anecdote
• 43:47
  Speaker 7: about being in Dubai.
• 43:50
  Speaker 5: I met a guy.
• 43:51
  Speaker 7: Who's a senior sort of investment chap and during the pandemic,
• 43:56
  Speaker 7: he and his family were stuck in Dubai and every
• 43:59
  Speaker 7: day they would go to the same sushi restaurant because
• 44:02
  Speaker 7: the chefs were tested there every day for COVID, and
• 44:06
  Speaker 7: so he's eating the sushi every single day. And after
• 44:08
  Speaker 7: the pandemic he goes and gets a medical check up,
• 44:11
  Speaker 7: and his mercury levels were off the scale because tuna
• 44:16
  Speaker 7: fish is full of mercury, so you should only eat
• 44:18
  Speaker 7: it once a week, and also it's got microplastics in it.
• 44:23
  Speaker 7: Next year, Blue Naliu, the US company that we're investors in,
• 44:26
  Speaker 7: will have a tuna fish product on the market with
• 44:28
  Speaker 7: no mercury and no microplastics and no desipolation of the ocean.
• 44:35
  Speaker 7: So it's not just about meat, it's about all sorts
• 44:37
  Speaker 7: of other stuff and.
• 44:37
  Speaker 2: No suffering fish. No suffering fish also seems to like
• 44:41
  Speaker 2: a good bit.
• 44:42
  Speaker 7: Yeah, well, I eat fish, and I try and pretend that,
• 44:45
  Speaker 7: you know, they don't stuffer, and they're all you mainly
• 44:47
  Speaker 7: treated and so forth. But you know, this is not
• 44:51
  Speaker 7: going to be displacing the farming industry, particularly good farming industry,
• 44:57
  Speaker 7: such as is practiced in the United Kingdom for for
• 45:00
  Speaker 7: a long long time. This is basically taking the margins
• 45:04
  Speaker 7: where the Indians and the Chinese want extra protein, and
• 45:06
  Speaker 7: quite rightly, but if they if they want the protein
• 45:09
  Speaker 7: that they want to get, they're going to collapse the environment.
• 45:14
  Speaker 7: So this is like the this is like the buffer
• 45:17
  Speaker 7: really zone, and it will take many, many many years,
• 45:20
  Speaker 7: particularly in building the infrastructure, for this to take a
• 45:23
  Speaker 7: considerable chunk out of the meat or food market. But
• 45:27
  Speaker 7: nonetheless it's a very large addressable market, and it's one
• 45:30
  Speaker 7: that is super exciting, and ultimately you can produce food
• 45:33
  Speaker 7: lower than the cost of conventionally farm food. But ultimately,
• 45:37
  Speaker 7: you know, it could be thirty years away. So this
• 45:40
  Speaker 7: is not something I'm suggesting it's going to eradicate farming
• 45:43
  Speaker 7: anytime soon.
• 45:44
  Speaker 2: Okay, that is very interesting and useful long term information. Now, Jim,
• 45:49
  Speaker 2: I've had you for long enough, and they've got better
• 45:51
  Speaker 2: things to do than continue to.
• 45:53
  Speaker 5: Chat with me in order to do than to talk
• 45:55
  Speaker 5: to you.
• 45:56
  Speaker 7: But unfortunately, the Longevity Forum, which I'm a co host,
• 46:00
  Speaker 7: is having its sort of once every two week meeting
• 46:03
  Speaker 7: as we run into the next cycle for this coming November.
• 46:07
  Speaker 5: And so okay, well.
• 46:08
  Speaker 2: Let me just ask you one quick final question. Then
• 46:12
  Speaker 2: it's a tough one.
• 46:15
  Speaker 5: They're all tough.
• 46:16
  Speaker 1: Now, this is the toughest Bitcoin.
• 46:18
  Speaker 5: Or gold, oh one hundred gold.
• 46:22
  Speaker 1: I was teasing about it being difficult.
• 46:24
  Speaker 7: No, I mean, and I think you'd answer the same way.
• 46:27
  Speaker 7: I mean, if you look at it, gold is very
• 46:29
  Speaker 7: close to its all time high. It's retained value. I mean,
• 46:33
  Speaker 7: you're the big gold bag, so it's retained value all
• 46:35
  Speaker 7: the way through. And Bitcoin maybe at twenty six or
• 46:40
  Speaker 7: twenty seven thousand dollars, but it was at sixty four thousand,
• 46:43
  Speaker 7: so the volatility would kill you. And whereas gold, although
• 46:48
  Speaker 7: it's volatile, it's nowhere near as volatile as bitcoin. And
• 46:52
  Speaker 7: I much prefer to look at the shiny stuff in
• 46:55
  Speaker 7: my safe than to think about someone trying to hack
• 46:59
  Speaker 7: into my Internet safe and see my bitcoins from me.
• 47:04
  Speaker 7: So I don't think bitcoin's got any real This is
• 47:08
  Speaker 7: more hate mail, right, so not no real validity.
• 47:12
  Speaker 5: I think that the.
• 47:13
  Speaker 7: Americans are particularly going to crack down on the exchanges,
• 47:17
  Speaker 7: and there's going to be a lot of announcements over
• 47:19
  Speaker 7: the next year or so about that, and it's just
• 47:23
  Speaker 7: going to be there'll be no contests. A gold, by
• 47:27
  Speaker 7: the way, is going to go to three thousand dollars
• 47:29
  Speaker 7: announces in the next eighteen months. And you've got to
• 47:32
  Speaker 7: get on the bandwagon. You keep on saying this, Maren,
• 47:34
  Speaker 7: You're so right. Everyone has to have an extension to gold.
• 47:37
  Speaker 7: Everyone brilliant.
• 47:38
  Speaker 2: That was the right answer, and you didn't make it
• 47:40
  Speaker 2: complicated at all. Now, thank you. Now, there is one
• 47:44
  Speaker 2: final thing that we must talk about before you go.
• 47:46
  Speaker 2: We've talked about lots of the wonderful and exciting and
• 47:48
  Speaker 2: interesting things that you do, but we haven't talked about
• 47:50
  Speaker 2: an interesting turn you've taken in your career recently, which
• 47:53
  Speaker 2: is writing a children's book.
• 47:55
  Speaker 5: Oh, thank you, Maren. Yeah, I wrote this book.
• 47:59
  Speaker 7: All the process go to two charities, Compassion and World Farming,
• 48:02
  Speaker 7: and not just the profits, all the proceeds and a
• 48:05
  Speaker 7: dog shelter and Abtha that's very close to our hearts.
• 48:08
  Speaker 7: We have seven dogs, as you know. So one of
• 48:11
  Speaker 7: the story is centered around one of the dogs, Juno,
• 48:15
  Speaker 7: and it's her adventure in rescuing not regularly fund but
• 48:18
  Speaker 7: cruly fund animals and then coming across cell agg And
• 48:23
  Speaker 7: it's aimed at eight to twelve year olds. Orthough it's
• 48:25
  Speaker 7: a kind of wide band. So I really enjoy writing
• 48:28
  Speaker 7: this and you know, hopefully some people will will buy
• 48:32
  Speaker 7: it and read it, and the money all goes to
• 48:34
  Speaker 7: those wonderful charities.
• 48:36
  Speaker 1: Brilliant, Jim.
• 48:37
  Speaker 5: Thank you so.
• 48:39
  Speaker 1: Juno's Ark it's called I have a copy.
• 48:41
  Speaker 2: My children are not too old to read it.
• 48:45
  Speaker 1: Thank you so much, Jim. Thanks Baron, thanks for listening
• 48:49
  Speaker 1: to this week's Marin Talks Money. We'll be back next
• 48:51
  Speaker 1: week in the meantime.
• 48:52
  Speaker 2: If you like us, show, rate, review, and subscribe wherever
• 48:55
  Speaker 2: you listen to your podcast. This episode was hosted by
• 48:58
  Speaker 2: me Maren Sunset, where it was produced by Someasadi A
• 49:01
  Speaker 2: Mohammad Faruk, additional editing by Blake Maples. Special thanks of
• 49:05
  Speaker 2: course to Jim Mellon, Thank you, Jim, and to John
• 49:08
  Speaker 2: Steppek and of course our weekly reminder to sign up
• 49:11
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• 49:14
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• 49:17
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• 49:20
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