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The 5 o' Clock Shadow with Viv Govender · Strictly Business

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You're listening to Strictly Business Podcast with Lindsay Williams.
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JSE has almost closed its doors for another day so it's time for Not the Five
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O'Clock Shadow with Viv Govender from the award-winning Randsuisse
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in Johannesburg.
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Now, Viv, I've got a whole list of things I want to talk to you about.
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David's not here, by the way, because he's travelling.
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Well, he says he's...
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No, he's celebrating.
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Sorry, he's not travelling.
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I want to talk about...
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Let's see which one I want to start with.
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Let's talk about space, the final frontier.
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four astronauts
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would-be astronauts blasting from the NASA facility in America.
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And it's going to go, this rocket that they're in is going to go further than any
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man has gone into space before, etc.
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And you can talk about the tens of billions that have been spent on it.
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Is it worth it?
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Is what they're doing worth it, Viv?
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You're a scholar in these matters.
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Look, I mean, it's obviously a bit of a long shot, not a guaranteed shot.
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But I mean, if you think about it, like right now, come like SpaceX, for instance,
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you look at a little dot of Earth and everything else that effectively belongs
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to SpaceX because they do the most of the travel out of it.
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That has to be worth something at some point in time.
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We are living in a very transformational time at the moment for whatever reason,
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AI, space and so on.
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And at the moment, we're not at the point where we can do, for instance, the space
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mining that they talked about, which I think,
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quite frankly, is incredibly dangerous.
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A company that can...
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do space mining effectively has more power than all the nuclear arsons in the world
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combined just just by definition because you have
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stuff you bring for space you just drop it in earth it's more powerful than nuclear
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bomb you know what i mean they're talking about they're talking about not
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intercepting an
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asteroid but but um grabbing
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onto some sort of asteroid and mining that that giant rock that's hurtling through
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the sky
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and i don't quite understand the the physics of it obviously but the the sort
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of things that they're talking about is beyond me and
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I'll be dead by the time it happens if it ever does happen.
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But the general question is, is space worth exploring?
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Almost certainly.
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Look, I mean, the AI stuff, right?
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I mean, there comes a point if the AI thing really takes off in a big way with
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the next decade or two, where you don't have enough power on Earth.
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And what you want to do is really put that power into space.
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And I think that might work because then you're not transferring physical stuff
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from space to Earth, which, like I said, becomes incredibly dangerous.
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Any company that can transport this mine equipment from space to earth effectively
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has a nuclear arsenal bigger than Russia or bigger than
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the US.
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Because you can translate a couple of hundred cages of rock, like of metal,
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dropped on a city.
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It's like dropping a small bomb on the city, you know what I mean?
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A couple of tons or a hundred tons of rock on a city is like a nuclear weapon.
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That is the power of transporting, like mining.
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I don't think that is going to be allowed by any government or whatever.
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But if you put a data center in space, where you basically have your AI running
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on Space Data Center,
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which Elon Musk is talking about, and which Eric Schmidt talked about, that I
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think becomes viable.
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If you think about the fact that this year alone, we are spending $650 billion on AI
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infrastructure,
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that is a use case that suddenly becomes a lot more attractive.
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I mean, if you can move to spend $650 billion on AI infrastructure this year,
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and people are expecting it to increase exponentially from here.
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then suddenly those kind of things, those space data centers and stuff, become
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viable into the future.
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Colonizing Mars, never going to happen.
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I don't know anybody besides the worst losers on Earth who are going to basically
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go on a one-way trip to...
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I mean, nobody's successful, nobody with a family, nobody with a future is going to
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give up Earth and go away effectively forever to
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Mars.
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Because, I mean, the round trip is going to be two plus years, you know, at best.
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Yes, the city on Mars theory is out the window.
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I mean, that's just something that Elon Musk has been talking about and talking
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about him.
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In a very different way, he has suddenly decided to list
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SpaceX. He's filed quietly, and that's the difference.
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He's filed very quietly the forms to have an IPO for SpaceX.
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I don't know why there's no fanfare.
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There's lots of trumpeters and him jumping around on a stage and dancing.
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But this time he's done it in a very discreet manner.
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What is that all about?
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Is it because he's a little bit sheepish about the AI story?
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Is it because the market is a little bit sort of dodgy at the moment?
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What do you think?
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And is it a good IPO?
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Look, I mean, I think that, like I said, it may be a long shot,
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but the price is so large that you basically have to have, if SpaceX lists,
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you have to have a piece of SpaceX in your portfolio,
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because there's literally nothing like that in the world.
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It's an amazingly successful company.
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You cannot think in all of like you know corporate history of a single company that
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had
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90 plus percent share of the global market of any product that the world really
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wanted You know what I mean?
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90 plus percent share of transporting stuff into space is done by SpaceX.
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That's an incredible market share.
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And so, therefore, that's something I think you have to get into.
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Whether or not you're really overpaid for XAI, I think you did.
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Whether or not it's going to basically be diluted by some of the stuff happening
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with Tesla, probably.
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But it is a good thing.
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And I think most people are going to, most big investors are probably going to put
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some money into it.
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Now, the valuation they're coming out with is big.
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It's bigger than Saudi Aramco.
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You know what I mean?
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We're talking about maybe a couple trillion dollar IPO, which is huge.
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But as a punt that you have in your portfolio, I think it's good.
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Whether or not it's probably going to be a long-term successful thing, I mean, on
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balance of probabilities,
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I don't think it's going to live up to valuation.
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But I think that the opportunity, the asymmetry in terms of the payoff profile
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is so large that you probably must
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have some of it in your portfolio.
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Okay, we've done space and SpaceX.
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Now we have to talk about Trump because he's really starting to mess with markets,
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not on a weekly basis or a monthly basis,
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on a daily basis.
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He spoke to Reuters.
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What day is it today?
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Thursday.
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He spoke to Reuters on Wednesday in the morning, and he said that he thought he
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would be out of Iran quite quickly,
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but he'd go back.
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He'd pop back if necessary.
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And the markets thought this is great, and they rallied.
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We had a massive rally.
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quarter-end rally, 3.78%, I think it was, on the NASDAQ, whatever.
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Then today we've had, or rather in the early hours,
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we've had Trump coming out and giving a speech to the nation and saying we're
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going to hit them in the next two to three weeks
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with hellfire like you've never seen before, whatever terminology he used.
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And the oil price shoots up and the indices are well down, over 1%
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at the moment as we speak in the United States.
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I mean, this is...
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this can't go on.
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Surely somebody has the guts at the SEC to say no and look into this.
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Because it's not just disturbing because he's a maniac,
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but it's also affecting the lives of an awful lot of people.
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Yeah, I mean, look, unfortunately, the people that's going to be most affected
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are people that don't count, in inverted commas, in the world at the moment.
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When the food situation becomes, like, you know, really bad, which is going to happen
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this year.
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I mean, we're talking about the growing season for the northern hemisphere.
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It's now, and there's no fertilizer available.
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You know, what does that mean?
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There's something like about 120 days of food in the world.
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Something like 90 to 120 days, somewhere around about three to four months of food
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in the world.
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As a backup, we have to replenish that stock every single quarter, effectively.
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This is the biggest quarter of the year happening right now, and we have not
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enough fertilizer in the world to basically do the proper
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fertilization and get the proper yields we need to get.
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And the people who are going to suffer are the poorest people in the world, the
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people that spend 30, 40% of their income currently on food, that will be pushing up
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to maybe 50 or 60%
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of their income by the end of the year.
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The guy that spends 1% and goes to 1.2 or 1.3% of his income, that guy might have a
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bit of a problem with the price of eggs, but he's not going to really be in
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trouble.
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And I think that's the real issue.
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Unfortunately, those guys have no voice.
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Those guys have gone for nothing.
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And in the U.S.
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right now, I mean, yes, the price of gas has gone up.
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Yes, we are seeing a bit of inflation coming through.
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But the US is so powerful and so large that they can get by with this being
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nothing more than a minor irritation at the moment.
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So I think he's probably going to lose the midterms in terms of his party.
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He might even lose the Senate.
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He might lose the Congress.
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He probably might lose the Senate.
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That's a bit of a harder thing.
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And I think that might be the only thing that stops his kind of rampage.
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Because at that point in time...
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But let's say that between now and November, which I think is November the
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5th or the 6th, when the midterms occur.
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If something happens and he regains or he manages to hang on to what he's got at the
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moment,
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then the danger is that in the next three years, it's bedlam, it's chaos.
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And there could be things happening to a democratic society that America is that
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we've never ever seen
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before in the 250-year history of the country.
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And it's scary.
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Oh, you must be.
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What's up?
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The thing is that, I mean, he also happens to be, you know, president, not just at
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this point in time in history, but over the time when AI is taking off.
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It's quite possible next year that the U.S.
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economy grows like five, six, seven percent a year.
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You know what I mean?
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AI takes off in a way.
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Look, Oracle cut 30,000 jobs this week.
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Why are they doing that?
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We are seeing job cuts from Amazon, job cuts from a number of different high-tech
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companies.
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We're seeing unemployment rising among young computer scientists.
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AI is taking off.
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And if that is the case, I do think that he could have an advantage.
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But the problem is that I think right now, the midterms I think are probably too soon
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for Mr. Ticket to change,
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and I think he's probably going to be in trouble.
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Okay, well, let's hope so.
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That's my personal view.
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Oil is something that's been around since, what, the late 19th century, early 20th
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century?
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I don't know.
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But it is something that is, it's quite funny that you say that AI is this and AI
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is that,
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and this will be the influence and this is what it'll do.
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But we're still being held to ransom by an old fashioned oil price, a fossil fuel.
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It's ridiculous, isn't it?
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And a tiny 22 mile gap between two landmasses.
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that oil tankers go through.
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It's ridiculous how pathetically prehistoric we are as human beings.
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I mean, the thing is that if you look at history, right, and human history from a
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very, very high vantage point,
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what you find is that it's the use of energy that defines the level of comfort,
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the living standards of a country.
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So if you look at, for instance, animals back in the day, people don't realize
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this.
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But until we used oil and coal, pretty much the amount of work you could get done
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in the country was dependent on
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the amount of food you had in the country.
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The amount of actual construction effort and whatever, how much you could
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transport, what you could build, whatever,
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was literally dependent on how much food you had.
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Because you had to feed the animals, you had to feed the people that did the stuff.
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Oil and coal, those things, those fossil fuels, basically changed that in a way
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that's very dramatic.
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And you say it's primitive, but the amount of
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of like your work available for like see for a liter of petrol is insane
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okay it's like hundreds of hours for one liter petrol which now costs like 25
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rounds
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okay so and there's nothing that replaces it very easily because yes you could have
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uh
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you know electric vehicles you're gonna have electric ships you're gonna have
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electric plates and so that's something i think that we we
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have to consider that even today as Protopost oil seems you don't have a
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replacement for many industries.
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You can't do, for instance,
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renewable manufacturing of steel or renewable creation of cement because the
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energy density is just not great
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enough in renewables.
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You have to have nuclear or you have to have oil or some kind of fossil fuels.
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Yes, we have to.
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And that brings me to driverless taxis.
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Now, as a Luddite, I smiled a bit when I...
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turned on the BBC this morning because I saw there was a huge traffic jam
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somewhere.
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I think it was Guangdong actually in China because the driverless taxi market had
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collapsed because of a
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technical glitch.
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This is the future.
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Someone will find out, find a way and it'll be like a Bond film villain.
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We'll find a way to scupper normal society every single day by turning off something.
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Viv, that's me being simple.
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a simpleton but you saw the story about the taxes this morning surely well look i
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mean yes we are going to have these issues
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but it's about security i mean security for our mandatory
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system think about that if you can hack it to something anything just because it's
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digital you could hack into
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the banks you know what i mean and there
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is a way to get digital stuff reasonably secure i think we will get to that point
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The advantage of the driverless taxis and the autonomous vehicle market is just so
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great.
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Once you have it, you basically eliminate traffic jams, you eliminate a lot of
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accidents.
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I mean, right now, Teslas, right?
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To see how safe it is.
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Forget about the Hyperon, Elon Musk or whatever.
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Insurance companies offer you a lower premium when you're driverless or when
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you're driven by the
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full stop driving as opposed to when the human is driving.
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But the insurance companies already looked at the thing and say, you know, on
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average, the full-staff driving system is safer than the human driver.
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That's now, already.
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And this is improving over time.
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And in the next five to ten years, this is going to come to a point where it's going
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to be a no-brainer that you
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want to have the driverless taxi as opposed to the human-driven one, just
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because of the safety involved.
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And the problem is that the number of workers in these places is insane.
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It's the number one job in most parts of the world, driver.
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Not the only job.
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But you don't look at all jobs like driver, forklift driver, taxi driver, bus
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driver, train driver, bulldozer driver.
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That's the only job in the world.
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You know what I mean?
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And a lot of people that make a reasonable, middle-class living from that
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is shocking.
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And what happens when they get replaced?
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That's what we're dealing with right now going forward.
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This is the argument, you see, because the replacement factor is very important.
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You say that these jobs will be lost and...
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And someone like David and yourself will say, well, there's so many jobs being
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created.
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But you can't immediately say job vacancies and job losses, they can come
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together.
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Because the person that is losing his or her job doesn't have the skills to go into
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the new job created by AI.
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It's a whole new world out there.
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Look, I would say it's going to be a job apocalypse, whatever you want to call it.
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It's going to be a disaster for jobs.
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And the other thing, people talk about the Industrial Revolution and say, oh, the
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Industrial Revolution and new jobs were created.
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The Industrial Revolution was primarily occurring in Europe.
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Europe exported many of the negative side effects of the job creation to places like
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India, Africa, and other parts of the world.
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If you look at the impact globally of the Industrial Revolution, even though it took
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many years to occur,
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much slower than this current revolution.
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The negative impact was still pretty spectacular.
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It just wasn't occurring in places that had the factories.
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You know what I mean?
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And I think that's something to be looked at here as well.
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When the impact happens, places like Silicon Valley are going to be doing very
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well.
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Lagos, not so well.
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Lagos, what happens in Lagos?
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What happens in Johannesburg?
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When the taxi driver has no job, when the delivery driver has no job, when the
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bulldozer driver has no job, the forklift driver.
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Like I said.
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The jobs for these people aren't good.
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There's social unrest.
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This is what I've been saying all the time.
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And I remember having a conversation with you and David and we talked the bigger
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picture.
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And I said, what about the future of society when there are squadrons of people
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that don't have jobs?
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That causes unrest.
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You sit at home all day, you can watch as much Netflix and television and streaming
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and listen to as many podcasts as you like,
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but you get bored and you get, you feel dissatisfied and you go out and you cause
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trouble.
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That's what's happened.
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That's what's happened throughout history.
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So there will be societal unrest and there will be, as I've said before, chaos.
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But David just dismissed this.
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And also, I have to say, Viv, you did as well.
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You talked about something else.
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I'm talking about the bigger picture of society.
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There will be 20, 30 percent unemployment globally and then there'll be madness.
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Look, I mean, unfortunately, there won't be madness.
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The reason for it is because the control.
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Look, I mean, this is the word.
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of like the out there you know i go out there sometimes but this game for me is
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out there yeah the reason that we have democracy okay is two things it's
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number one it is guns number two it is the factory okay why because the guns and
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factory give power to the masses to
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basically withhold either you know or to put violence or to withhold their labor
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which affects countries that's why if you look at it
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initially you know when we had the french revolution and stuff this all happened
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when guns became more prevalent allowing a bunch of people with guns let's
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trained to defeat them.
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well-trained soldiers.
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And then in the 20th century and 19th century, the whole democracy movement,
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the whole progressive movement moved to the unions.
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Why?
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Because the factory gave the worker the ability to withhold their labor,
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and that allowed them power in the society.
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When you have drones that take away the power of an individual gun, when you have
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robots and automation that takes away the power of the person in the factory,
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the people, like you talk about, that didn't go and cause chaos.
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become powerless.
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And we've seen in human history what happens to powerless people.
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They're not treated well.
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You know what I mean?
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And I think that is the future we are seeing here.
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When it becomes a problem, what are you going to do?
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Are you going to go in the streets and write when you have a space technician,
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when you have autonomous drones flying above you,
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when you have robots basically doing your job?
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What power would you have to affect the people in power?
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And the other question is, is who are the people in power and will they be able to
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be overthrown?
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Is it a government that is, you know, you can storm the Palace of Westminster or
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something in London by walking across
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Westminster Bridge.
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But in the future, will there be that sort of, that building full of people, you
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know,
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debating every day, the House of Lords, the House of Commons, or you'll go to
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Capitol Hill, something like that.
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I don't think in the future they'll be there.
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So these peasants that are revolting, where will they go to revolt?
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And who are they revolting against?
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And also, they won't be able to revolt because the one thing that saved the guy
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from Westminster, once he went and attacked Westminster,
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is the policeman is somebody that lives in his street and won't want to just shoot
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the granny or the teenager that's basically rioting
18:57
outside Westminster.
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Right?
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That's the feedback mechanism.
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It's the fact that the people enforcing the laws are part of the people.
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What happens to the people enforcing the laws are actually the robots.
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Or the law enforcement arm becomes the drones.
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What happens to the law enforcement arm becomes like, you know, some guy sitting
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on a turbo subway or some
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AI system that's running somewhere.
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They're not going to have the same level of hesitation when it comes to, you know,
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attacking civilian populations or whatever.
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Again, this is put out there.
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But the thing is that...
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Recently they did war studies, or war game studies with the big LLMs,
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and LLMs are significantly more likely to resort to nuclear weapons than humans are.
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Like 95% of the time they resort to nuclear weapons when an LLM has control.
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The issue here is that...
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Again, from the very top level view, what happens is, forget about trying to attack
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people,
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you won't have the power to attack people because you don't have the ability to
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overcome the defences they will put up there.
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And you won't have the ability to hold your labour to do anything.
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I mean, think of it right now.
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What a protest.
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You stop, you know, the trains from working by going on strike.
20:07
You protest by blocking the streets.
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You basically, you know, mass movements on the streets.
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How does that affect?
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an autonomous AI economy.
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You're blocking the streets.
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They don't use the streets for their transport.
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It's meaningless.
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It's a gesture.
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They'll look back at that,
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blocking the Westminster Bridge so the police can't get to the Palace of
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Westminster or whatever.
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And they'll look back at that as we look back at what happened in medieval times.
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It's that dramatic, I think.
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It's very depressing actually what you've just said.
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It'll be like basically the Walling Dervishes versus the Gatlinga.
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That's what it's going to be like.
20:51
Exactly.
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Talk about medicines first of all, rather lastly,
20:57
because the Strait of Hormuz is blocked and we can't get fertilizer and we can't
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get oil.
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But you spoke in a message you sent to me about medicine and tablets, etc.
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What were you saying there?
21:09
Yes.
21:09
I mean...
21:12
We look at, obviously, oil as the basis here.
21:14
But remember, the Middle East has a lot of stuff coming out of it.
21:17
It's a very important thing.
21:18
And modern supply chains are more complicated than you think.
21:23
You know, like ASML, there's thousands of suppliers in total that supply that
21:29
company to make that
21:31
machine.
21:33
If you look at things like medicine and so on, I don't know for certain, but I would
21:38
suspect that there's a danger that some of the supply chains don't work
21:40
as nicely as they did before.
21:42
we've already seen, for instance, recently things like Zempik and the new GLP-1 drugs
21:45
and so on.
21:46
There's been shortages there.
21:47
There have been shortages for other medicines in the past as well.
21:51
What we're doing right now, disrupting one of the key pathways for human trade,
21:56
we don't know what the downstream effects of that are going to be.
21:58
And I think that if you do, if you are dependent on any kind of chronic
22:05
medication, it behooves you to go and get a month or two extra supply just to make
22:07
sure that
22:09
you don't get caught in other ways.
22:10
If suddenly the medication your life depends on is not available for a few
22:16
weeks, and I think that is a possibility.
22:18
I think that what's happening right now with chemicals, what's happening with
22:21
trade,
22:23
it's going to really have an impact on global supply chains, and you don't know
22:29
exactly what's going to be the stuff that's going to break down.
22:31
And it might just be the medicine that you need to live.
22:33
Do you think that this war that's been going on for four weeks now will extend,
22:38
first of all, that's the first part of the question, and secondly,
22:40
Do you think that the ramifications are more than four weeks or eight weeks or
22:46
three months and will carry on because of
22:48
the supply chain issues that you just spoke about?
22:49
I mean, do you think that it'll take a long time, even if it's only a two month
22:54
war, to unwind?
22:56
Look, I mean, the people say you've never been able to change the regime via, you
23:01
know,
23:02
air power alone.
23:04
That being said, there's never been air power like this before.
23:07
We don't even know who's running.
23:08
the Iranian government at the moment.
23:10
We haven't seen the guy who's technically in charge since basically he was put in
23:13
charge.
23:14
We've seen a number of deaths of race senior members of the Iranian regime.
23:19
It could be quite true that, you know, in a couple months' time, there is no Iran
23:25
overarching government to look at.
23:27
It could be warlords in different areas, which makes it much more difficult.
23:29
Because at that point in time, who do you negotiate with?
23:32
Who's keeping control of the country?
23:33
Who's doing whatever?
23:34
It becomes a lot more difficult to go and have a victory.
23:37
You have somebody surrender when there's 100 people to surrender, okay?
23:40
And I think that is the kind of downstream thing.
23:44
If not that, then there is an Iranian regime in power.
23:48
That Iranian regime, quite frankly, is going to have a huge incentive to
23:53
basically get nuclear weapons.
23:55
And the U.S.
23:57
knows that.
23:59
And the U.S.
24:01
knows that the only way to stop that is to actually go and seize that nuclear
24:03
material, which means boots on the ground.
24:05
And we've seen with Afghanistan, with Iraq, et cetera.
24:07
That's not very easy in the modern world.
24:09
And the example I give to you is this.
24:11
And the reason I say this is you can't go to war with somebody you're trying to
24:12
save.
24:14
You can't go and say, I'm trying to save the Iranian people and then go to war with
24:18
the Iranian people.
24:20
You know what I mean?
24:22
That's one of the reasons that...
24:24
Yeah, I'm looking for peace in the Middle East, but at the same time, I'm invading
24:25
Iran.
24:27
I mean, it just doesn't make sense, does it?
24:29
Yeah, but you can't say, I'm trying to save the Iranians from the evil regime by
24:31
going and invading Iran.
24:33
You know what I mean?
24:35
Because the things that you need to do to win a war...
24:37
Like what was done in Germany or Japan in World War II.
24:38
That just doesn't, like, you know, muster when you say, I'm trying to save the
24:44
German people when you're firebombing Dresden.
24:46
I'm trying to save the Japanese people when you're, you know, bombing Hiroshima
24:47
or Tokyo.
24:49
You know what I mean?
24:51
There's a limit to what you can do in warfare when that is your thing here.
24:53
And when you have a war that you basically started, which people don't think is a war
25:00
of need,
25:00
but a war of choice, you can't do the things that you need to do to really win
25:06
that war in the world of commerce.
25:08
And so, at least not quickly.
25:10
So that basically becomes a quagmire for the US.
25:12
So I don't see how this ends quickly because the Iranian regime...
25:18
must know that if they make an agreement with America, they'll be bombed again in
25:22
five years' time.
25:23
Give me an investment idea.
25:25
Give us an investment idea, whether it be short-term, long-term, super long-term or
25:30
for tomorrow.
25:32
Is it sell?
25:34
Is it as simple as sell?
25:36
Is it buy oil?
25:38
Is it stick with your AI portfolio as it is?
25:39
Is it subscribe to the SpaceX IPO? What would you say?
25:43
And I won't hold you to this or ran Swiss to this.
25:47
Okay, I'm going for what's called a barbell strategy.
25:50
So there's two parts to the investment.
25:51
One part is the AI portfolio, is the SpaceX, is the high-risk, high-return kind
25:56
of stuff.
25:56
It's the gold stocks, it's that kind of stuff.
25:58
You put a certain portion of your money there.
25:59
So if these things take off, you get the upside.
26:01
But a larger part of money, of your money, your investment capital, you put in what's
26:07
called capital-protected structures,
26:09
where you basically protect your money against a downturn, against craziness,
26:16
where you say, I want to accept a 12% US dollar return.
26:18
But with the benefit of not having all the money at risk or having maybe a third of
26:24
the money protected against a downturn or whatever it may be,
26:26
that is the strategy right now.
26:27
We are pushing clients significantly towards structured products as well as, I
26:32
mean, we still keep the AI portfolio.
26:34
We still keep the high risk stuff because it's quite possible that AI gets into a
26:39
recursive improvement loop at which point in time
26:41
nothing else matters in the next two or three years.
26:43
And that becomes the new story of the world.
26:46
But in the meantime, you need to eat, especially if you're retired, especially
26:52
if you may be close to retirement or need that capital for something.
26:54
And in that situation, you want a certain portion of your money, probably the larger
26:59
portion of your money, in something that's going to give you more of a guaranteed
27:01
return.
27:03
But for that guaranteed return, you're also basically sacrificing upside.
27:04
You're not going to get the super returns, the market goes crazy, but you're
27:09
basically giving yourself a bit more of a guarantee.
27:11
It's a barbell approach.
27:13
It's I think what's really suitable for this kind of weird point in time where we
27:15
have massive risks.
27:17
but also massive upside.
27:19
You hardly ever have the risk and the upside at the same time.
27:21
Okay, lots to think about.
27:21
Goodness me, my head is swimming.
27:23
Viv, thanks so much for your time as always.
27:25
Viv Govender is from RAND Swiss, the award-winning RAND Swiss, and that was not
27:30
the 5 o'clock shadow.
27:32
The views and opinions expressed in these podcasts are those of Lindsay Williams and
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