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The Cathie Wood Aftershow · Merryn Talks Money

0:09
Speaker 1: Welcome to Maren Talks Money, the after Show. This is
0:11
Speaker 1: where we unpack all the commentary or some of the
0:14
Speaker 1: commentary at least that you hear in our regular podcast.
0:17
Speaker 1: I'm Maren Sunset Web this week. John Seppek, senior reporter
0:20
Speaker 1: at Bloomberg, author of the Daily Money to Still the
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Speaker 1: newsletter which you should be reading every day. Do so
0:25
Speaker 1: if you are not, joins me to discuss my conversation
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Speaker 1: with our investment management founder, CEO and CIO Kathy would John,
0:35
Speaker 1: you'll have listened to the whole thing by.
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Speaker 2: Now right, I have read the transcript. Yes, that's like
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Speaker 2: listening to it.
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Speaker 1: It is like listening to it. The fact is better
0:45
Speaker 1: than listening to it. And it was a longer conversation
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Speaker 1: than a lot of the ones that we have on
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Speaker 1: this podcast, And I thought I would let the conversation
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Speaker 1: run because a lot of people are still very heavily
0:55
Speaker 1: invested in our innovation. A lot of people are incredibly
0:59
Speaker 1: loyal to Kathy and those people and other people really
1:02
Speaker 1: want to hear what she says. So did you enjoy it? Yeah?
1:06
Speaker 2: I mean she's a very engaging and entertaining storyteller, and
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Speaker 2: I think that's basically the secret of her success. I
1:17
Speaker 2: think that that is Katy's edge. Kathy's edge has been
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Speaker 2: able to sell a good story to investors and make
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Speaker 2: money from it. That doesn't necessarily mean that the investments
1:29
Speaker 2: that she's in are going to make money, or certainly
1:31
Speaker 2: not necessarily from the prices at which she's been keen
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Speaker 2: to pay for them.
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Speaker 1: I think that's calling her are you are you? Are
1:39
Speaker 1: you calling her an asset gatherer the way stock picker
1:43
Speaker 1: because it's quite rd John Well, I.
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Speaker 2: Know, I mean, I mean only within fund management circles,
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Speaker 2: but I guess that's the ones that she moves in.
1:51
Speaker 2: I mean, yeah, I mean it's a it's it's ingenious marketing.
1:57
Speaker 2: And I actually think that you know, it's it's interesting
2:00
Speaker 2: because obviously, I know it's something you didn't touch on,
2:03
Speaker 2: but Kathy has has kind of discussed our kind of
2:09
Speaker 2: strong religious kind of views, and there is something evangelical
2:13
Speaker 2: about ARC I mean obviously even the name, and whenever
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Speaker 2: it was going through the conversation, I just thought it
2:21
Speaker 2: was really interesting because it's like they're very convincing arguments,
2:25
Speaker 2: but they are also very much arguments that are kind
2:30
Speaker 2: of cherry picked tape so they're also macro based, you know,
2:34
Speaker 2: for somebody who's a stockpicker, they're all about themes and
2:37
Speaker 2: they're all about, you know, the big picture and talking
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Speaker 2: about deflation. For example, I.
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Speaker 1: Did ask her about that. To be fair, I did
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Speaker 1: start with let's let's start with macro, I said, because
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Speaker 1: she's known to be quite a good macro analyst, right,
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Speaker 1: So so we started with that. I led her into
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Speaker 1: the conversation about about deflation.
3:00
Speaker 3: And nothing like that. And I actually think, and I
3:02
Speaker 3: have been saying for quite some time, that we're going
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Speaker 3: to see defleation before all of this is over, and
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Speaker 3: we're beginning to say it already.
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Speaker 2: Yeah, but isn't it a bit convenient deflation? You know,
3:15
Speaker 2: because basically all of the stuff that she owns in ARP,
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Speaker 2: and the reason that the ARK has done badly over
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Speaker 2: the last couple of years is because interest rates have
3:24
Speaker 2: gone up, and it's very much been associated as the
3:27
Speaker 2: most you know, the kind of long duration stocks, the
3:30
Speaker 2: ones that don't make any money yet, but as long
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Speaker 2: as you hold them and believe then eventually they'll make
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Speaker 2: lots of money. They kind of fairy tale stocks and
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Speaker 2: the sort of things that's thrived in the low interest
3:41
Speaker 2: rate world, and I guess it's like it's a bit
3:44
Speaker 2: like soft Bank. So when you look at soft Bank,
3:47
Speaker 2: the big Japanese kind of investment fund that's owned by
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Speaker 2: Massa y or She's sowing and he's got these kind
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Speaker 2: of like almost comedy PowerPoint packs where he'll talk about
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Speaker 2: all the private companies that he ones and you know
4:00
Speaker 2: that he's kind of found, and there'll be like he
4:05
Speaker 2: had one for we Work that somebody put up the
4:08
Speaker 2: other day and reminded us of them whenever they bought
4:10
Speaker 2: we Walk. The idea was that there was a kind
4:13
Speaker 2: of a graph and it showed the line going down
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Speaker 2: and then bouncing back up to never before seeing hies
4:19
Speaker 2: and it was kind of like the commentary around it was,
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Speaker 2: this is the the the theoretical turn around for this company.
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Speaker 2: And of course we worked, just went bust.
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Speaker 1: This is the week we said goodbye to we worked.
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Speaker 1: Maybe for that maybe for the last time, it can
4:36
Speaker 1: be reincarnated things like we worked, So let's not right
4:38
Speaker 1: it off John next year. This is the week we
4:43
Speaker 1: said everyone said say goodbye to the money, that's for sure,
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Speaker 1: But I.
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Speaker 2: Think it's this. We've lived in a bull market for storytelling,
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Speaker 2: and that was created by low interest rates, so you
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Speaker 2: could basically tell any story as long as it was
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Speaker 2: a good one, somebody would give you money. And I
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Speaker 2: think Kathy's still stuck in that world because.
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Speaker 1: I thought the success is based on Yeah, the bit
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Speaker 1: I thought you'd like best in the entire transcript or
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Speaker 1: audio for people who are you know, the time to
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Speaker 1: listen to the audio as opposed to skim the transcript.
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Speaker 1: The best bit was when Kathy told me that her
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Speaker 1: fund was a deep value fund and said, that'll that'll
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Speaker 1: give John a bit of a spluttering into his coffee.
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Speaker 1: You know, are but you're not really valuation driven, are you.
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Speaker 3: We are if you give us five years, and if
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Speaker 3: you give us five years, then we are a deep
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Speaker 3: value manager. We're a deep value manager.
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Speaker 2: That was brilliant. That was the idea that it's like
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Speaker 2: Wardern buffet John his cigar, but these proper Ben Graham
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Speaker 2: stuff and yeah, so it's deep value relative to kind
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Speaker 2: of like I mean, you know, Becoin is deep value.
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Speaker 2: Now if you believe I think Kathy does that, it's
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Speaker 2: going to go to one point five million dollars before
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Speaker 2: twenty thirty, I think was her most recent forecast for bitcoin.
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Speaker 2: So yeah, it should if you buy it slightly grand
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Speaker 2: and yes it's deep value, but only in the sense
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Speaker 2: that if you believe the most outlined dish production is
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Speaker 2: going to be correct, then it's cheap relative to that protection.
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Speaker 1: Yeah, it was an interesting because she did say that
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Speaker 1: there's a bit here. You know, most people when they
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Speaker 1: when they look at their valuation, they're looking just at
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Speaker 1: this year, maybe next year, and then say, well, we
6:23
Speaker 1: look at five years now. I listened to her saying that,
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Speaker 1: and I thought, well, quite right, you should give up
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Speaker 1: five years. And I think everybody does. Yeah, I mean
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Speaker 1: fas kind of a trope of fund management to say,
6:34
Speaker 1: judge us over five years, not over one year or
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Speaker 1: two years. Of course, we don't much to judgem over
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Speaker 1: one year or two years. You know, we enjoyed that
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Speaker 1: a lot more, don't we. But we should obviously judge
6:43
Speaker 1: everyone over five years. But I think the thing that
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Speaker 1: I found interesting was that she knows and we discussed
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Speaker 1: that very rising interest rates are horrible for long duration assets,
6:56
Speaker 1: but and high interest rates are horrible for long duration
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Speaker 1: assets assets to the returns come far in the future.
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Speaker 1: Jam tomorrow stocks as you like to call them, John,
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Speaker 1: but she still feels that the stocks in her hopefully
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Speaker 1: have been featured unfairly.
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Speaker 2: Yeah, I mean, and I suppose that's the only thing
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Speaker 2: you start from, that kin of you start from, like king,
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Speaker 2: a top down approach. And also, like I said, the
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Speaker 2: micro story that she's telling one about deflation, So she
7:26
Speaker 2: clearly realizes the falling interest rates would be bullish for
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Speaker 2: her fund. But she said she's also got a hedge
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Speaker 2: it by saying, yeah, but these stocks will do well anyway.
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Speaker 1: I mean, again, have a period. She's had a previous
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Speaker 1: period of performing well when rates arising, but obviously nothing
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Speaker 1: like this when rates arising just a little bit in
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Speaker 1: a rather different environment, there's a massive rise in interest rates.
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Speaker 1: The constant rises a very different environment.
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Speaker 2: Yeah, and also staying high is a different environment as well.
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Speaker 2: And I just don't think that you can. Well, I
8:05
Speaker 2: suppose it's it makes sense that she wouldn't change her
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Speaker 2: story now, because well, yeah, why why would you? I mean,
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Speaker 2: that's not people people do buy fund managers on the
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Speaker 2: basis of their style, and one of the kind of
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Speaker 2: killer things for any fund manager is style drift. If
8:24
Speaker 2: you turn around and you know, if everyone's owning you
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Speaker 2: for one reason and then you say, oh, so I'm
8:29
Speaker 2: going to change my mind, then that's that's going to
8:32
Speaker 2: destroy your career. And that's absolutely fair enough. And from
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Speaker 2: that point of view, you know, I've got a lot
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Speaker 2: of respect for it. I mean, in lots of ways,
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Speaker 2: she's just a more kind of aggressive American AE style
8:45
Speaker 2: Scottish mortgage trust.
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Speaker 1: And I was like, well, interestingly, one of when I
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Speaker 1: was at an event the other day and talking to
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Speaker 1: people about about oh and also about Scottish mortgage, and
8:57
Speaker 1: several people said to me that they used either our
9:00
Speaker 1: course Scottish mortgage interchangeably to balance out they're rougher and
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Speaker 1: their personal assets.
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Speaker 2: I think thats just.
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Speaker 1: In case, just incaseion. And these are fascinating stories and
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Speaker 1: incredibly compelling, and you know, so many of these things
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Speaker 1: may well happen, will probably happen. You know, we're on
9:20
Speaker 1: the edge, we hope, you and I and everybody else,
9:22
Speaker 1: we're on the edge of the kind of technological revolution
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Speaker 1: that will give us see the productivity revolution that we've
9:27
Speaker 1: been waiting for for decades. In decades some way we've
9:29
Speaker 1: been saying for ages, look at all this new tech.
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Speaker 1: It's going to be a productivity revolution, revolution in healthcare revolution,
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Speaker 1: and this revolution of that. It hasn't quite happened, but
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Speaker 1: it feels like if you look at the kind of
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Speaker 1: thing that things that Cafie says, I know she've been
9:41
Speaker 1: saying them for a few years, but nonetheless, the technology
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Speaker 1: is ready, it's available. We may be on the edge
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Speaker 1: of the explosion that we've been waiting for, but that
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Speaker 1: won't necessarily translate into the prices of the stocks in
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Speaker 1: portfolios like that going up another four hundred percent in
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Speaker 1: a year.
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Speaker 2: Yeah, that the difficulty. It's like, there's always timing with
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Speaker 2: these kinds of things, and there's always the winners and
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Speaker 2: the losers where any kind of tech thing, I mean,
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Speaker 2: one of the interesting point is that obviously the biggest
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Speaker 2: tech kind of hype this year has been around artificial intelligence,
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Speaker 2: and the best stock, in fact, pretty much the only
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Speaker 2: stock to play that as a picks and shovels play
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Speaker 2: was Navidia, the big chip manufacturer, and of course Katy
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Speaker 2: famously got rid of that, one of the few tech
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Speaker 2: stocks that she kind of disposed of before it then
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Speaker 2: kind of rocketed earlier this year.
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Speaker 1: And that is an interesting one really.
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Speaker 2: Now competition well it's not as much as getting no competed,
10:43
Speaker 2: but so yeah, you know what I mean. It's like
10:44
Speaker 2: it's very much the go to stock for that sector,
10:49
Speaker 2: and it was actually was the go to for the
10:50
Speaker 2: gaming boom and the bitcoin boom as well, because their
10:53
Speaker 2: chips are the key ones for all of those process
10:57
Speaker 2: and activities. And I just thought it was in the
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Speaker 2: the same time as everybody else was jumping on that
11:03
Speaker 2: bind wagon, she actually kind of exited it and unfortunately
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Speaker 2: the wrong tame. But it does she sure you that
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Speaker 2: even I find this focused on this stuff is going
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Speaker 2: to get it wrong sometimes sometimes.
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Speaker 1: The thing one of the things that I thought was
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Speaker 1: interesting was the discussion we had about chemical and nuclear
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Speaker 1: and her firm belief that moving into uranium and bdefault
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Speaker 1: obviously into nuclear energy is the only way forward for
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Speaker 1: the energy transition, and she's very into the idea of
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Speaker 1: the modular reactors, et cetera. I thought that was quite
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Speaker 1: interesting because it's not the subject that I would have
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Speaker 1: associated with her, And she tells me that, in fact,
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Speaker 1: she's been looking at that since well for the last
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Speaker 1: decade or so two.
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Speaker 3: Decades about nuclear because they're looking at tax again, we
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Speaker 3: believe it is the cleanest other other than hydro.
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Speaker 1: It is the.
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Speaker 3: Cleanest energy source out there. It is the safest when
11:59
Speaker 3: you're good. Accidents associated with exploring and developing for energy,
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Speaker 3: and yes, we think that after years there is you know,
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Speaker 3: ten twelve years are being denigrated that environmentalists and others
12:20
Speaker 3: are now looking at the facts when it comes to
12:23
Speaker 3: nuclear and deciding, you know what, we probably well, I.
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Speaker 2: Mean, that's interesting. I think that was interesting. I'm quite
12:31
Speaker 2: bullih in nuclear as well. It is a very different
12:37
Speaker 2: area low and when you think about it, the nuclear
12:40
Speaker 2: story is pretty old one. Actually, it has come back
12:43
Speaker 2: over and over again in cycles, and what has tended
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Speaker 2: to happen is unfortunately, if it's something you like. For
12:49
Speaker 2: Kushima was what put an end to the last uranium
12:52
Speaker 2: bull market, and hopefully this time it is different. And
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Speaker 2: finally we're kind of outgrowing a fear of and nuclear,
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Speaker 2: partly driven by even needn't you find the way you
13:04
Speaker 2: keep the lights in?
13:05
Speaker 1: Way?
13:05
Speaker 2: We decided this mindal look kind of force all fuel infrastructure.
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Speaker 1: Well, it feels like now we're beginning to accept that
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Speaker 1: wind and solar are not as cheap and effective as
13:13
Speaker 1: we thought they might because pretty much our any way
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Speaker 1: out if we want an effective energy transition.
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Speaker 2: Yeah, but it's interesting because, as you say, that's not
13:22
Speaker 2: really it's a bit different. And again it sort of
13:27
Speaker 2: feels like this is a booll market you've supported that
13:30
Speaker 2: you think you can get on board, rather than we
13:34
Speaker 2: can't be cause a very old companies have any old
13:36
Speaker 2: school company as well? Renovation there Well yeah, I mean
13:39
Speaker 2: I'm assuming to being in a manor the deploy have
13:42
Speaker 2: get slightly more innovation than we.
13:46
Speaker 1: No, you're right, but that's one of the things that
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Speaker 1: Ed Conway kept telling us over and over and over.
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Speaker 1: Don't underestimate or we need to recognize how incredibly productive
13:54
Speaker 1: these minds have become. The innovation in mining is massive.
13:57
Speaker 1: There's not as many people down minds as they used
13:59
Speaker 1: to be. Very innovative, very productive. So now you're right
14:02
Speaker 1: to take it back. It's an innovative coming is interesting.
14:06
Speaker 1: Love me if you get the bill.
14:09
Speaker 2: No, and I just pulled a chart of Camico up.
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Speaker 2: So Camiico, as you would expect, kind of last peaked
14:15
Speaker 2: in twenty eleven when you know figures you my up.
14:20
Speaker 2: It then basically went down pretty much NonStop. We a
14:23
Speaker 2: little blip up in twenty fourteen, and it kind of
14:26
Speaker 2: came to its absolute bottom in the March twenty twenty,
14:30
Speaker 2: whenever obviously the pandemic was causing the amount of havoc.
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Speaker 2: It's now almost back at that twenty eleven high. So
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Speaker 2: I'm just wondering at which point in the billmarket between
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Speaker 2: the bottom in twenty twenty and then reaching the old
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Speaker 2: kind of twenty eleven high Kathy actually bought it, having
14:47
Speaker 2: you know, been thinking about it for a decade.
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Speaker 1: I can't answer that, but we'll look it up later.
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Speaker 2: I just wondering through it that way.
14:56
Speaker 1: Well, look at up leisure. Okay, anything else we want
15:00
Speaker 1: to talk about in there? Anything else? Grab your attention.
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Speaker 2: I thought it was really interesting and I love hearing
15:07
Speaker 2: the body of these technologies. I love you a little bit. Crespos,
15:09
Speaker 2: fun conversations, robots boy, that sort of stuff. But as
15:14
Speaker 2: a classic casey, story drive an investment, and one of
15:18
Speaker 2: the things that we're always told to try and avoid
15:21
Speaker 2: doing this investors is being seduced by stories focusing on
15:26
Speaker 2: the numbers. Yeah, so yeah, absolutely bill market for storytelling.
15:32
Speaker 2: And I don't think she should change because you know
15:34
Speaker 2: it's not I could wait be.
15:36
Speaker 1: People buy her for what she is. And the thing
15:39
Speaker 1: I didn't talk about with her, and if she ever
15:41
Speaker 1: comes on again, I'd really like to talk to about
15:43
Speaker 1: her is the building of the business, you know, because
15:46
Speaker 1: it is an extraordinary business. Billions and billions under management,
15:51
Speaker 1: pretty high management fees relative to some other fund manager
15:54
Speaker 1: managers working in the same area, so you know, it
15:57
Speaker 1: makes a fortune. It makes an absolute fortune based on
16:00
Speaker 1: the as on the management on the fleet. So she's
16:02
Speaker 1: running the performance of the assets aside, she's running a
16:05
Speaker 1: really fabulous business.
16:08
Speaker 2: Yeah, and I mean she's a very good entrepreneur. Great
16:13
Speaker 2: now absolutely have to handle that.
16:15
Speaker 1: Yeah, and I mean she she counts as her company
16:18
Speaker 1: is also an innovative company. She's an innovative disruptor in
16:21
Speaker 1: her own right, which is impressive. And when I ask
16:24
Speaker 1: you the question about gold and bitcoin, I guess I
16:27
Speaker 1: kind of knew the answer, I'm afraid. So if I'm
16:30
Speaker 1: going to give you a choice of three asset classes
16:33
Speaker 1: or three assets, should I say, and you have to
16:35
Speaker 1: choose one to hold for ten years, You're not going
16:38
Speaker 1: to have to think very hard. The three are gold,
16:43
Speaker 1: a deposit account, cash deposit account, or bitcoin.
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Speaker 3: Bitcoin hands down, hands down, Bitcoin is a hedge against
16:54
Speaker 3: both inflation and deflation.
16:57
Speaker 1: So is gold. Yes, so is gold, but.
17:01
Speaker 3: Bitcoin is digital and if you look at the incremental demand,
17:06
Speaker 3: we're going to see gold already has its demand. You know,
17:10
Speaker 3: it's happened right. Bitcoin is new and institutions are barely involved,
17:18
Speaker 3: and young people would much prefer to hold bitcoin then
17:24
Speaker 3: to hold gold. So you know, it's interesting that both
17:29
Speaker 3: gold and bitcoin are hedges against deflation. But bitcoin's been
17:36
Speaker 3: doing better recently.
17:38
Speaker 1: Yeah.
17:40
Speaker 2: Yeah, But what I like's with us, it's like, to
17:42
Speaker 2: be fair, she's the one that's coming closest to anyone
17:45
Speaker 2: that we've talked to of sort of kevin the rationale
17:49
Speaker 2: for it, and uh, you know, in a clear way
17:53
Speaker 2: whether you agree with it or not, what you know,
17:57
Speaker 2: to be honest, that only the main reason that favorite
17:59
Speaker 2: gold is cause well it's been around for ags and
18:03
Speaker 2: onnlike most things, that's actually a benefit in this your circumstance.
18:07
Speaker 2: But absolutely I don't disagree be the argument. I think
18:10
Speaker 2: there's a valid argument. I mean, I'm not convinced that
18:15
Speaker 2: it's going to go over a million dollars, but then
18:18
Speaker 2: maybe one day I'll be kicking myself. Keep telling you
18:20
Speaker 2: about some and we'll just lose the password, please you.
18:26
Speaker 1: All right, all right, A lot of people keep telling
18:28
Speaker 1: you on Twitter, I'm just better. Well do you know
18:30
Speaker 1: what I am better? It's true, It's true, right, okay.
18:37
Speaker 1: So another one to add to our bitcoin lister, and
18:38
Speaker 1: the last thing I'm going to say on it. She
18:40
Speaker 1: is the first person who has told us that you
18:42
Speaker 1: should hold bitcoin because it's a hedge against deflation and inflation.
18:46
Speaker 1: No one's ever said that to us before, and obviously
18:49
Speaker 1: there is no evidence of that yet early days for bitcoin,
18:51
Speaker 1: but it'll be quite interesting if that turned out to
18:53
Speaker 1: be true, which I suspect it won't, but you never know.
18:56
Speaker 1: You never know, John, thank you so much for your
18:58
Speaker 1: criticisms and misery. Thanks film, thanks for listening this week's
19:04
Speaker 1: Maren Dog's Money The After Show. This episode was hosted
19:07
Speaker 1: by me Myren Subset Web alongside John Stepfak. It was
19:09
Speaker 1: produced by Summersaidi and additional editing by Blake Naples