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Jim Reid on Why Cash Is the Riskiest Investment of All · Merryn Talks Money

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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Hello, Maren Talks Money. Listeners. Now,
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Speaker 1: before we get started, a quick reminder, we are recording
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Speaker 1: love to see you. Welcome to Meren Talks Money, the
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Speaker 1: podcast in which people who know the markets explain the markets.
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Speaker 1: I'm Maren sumset Web this week with me Jim Read,
1:00
Speaker 1: head of macro and Thematic research at Deutsche Bank. We
1:03
Speaker 1: have bought Jim back on the show. You'll remember his
1:05
Speaker 1: last appearance to talk to us about the latest long
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Speaker 1: term asset return study from the Deutsche Bank Research Institute.
1:12
Speaker 1: It's a super interesting report. John has already looked in
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Speaker 1: one of his newsletters, so some of you may already
1:17
Speaker 1: know a little bit about this year is The idea
1:19
Speaker 1: is that it looks at real after inflation returns for
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Speaker 1: a range of asset classes across a fold two hundred
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Speaker 1: years and fifty six different global markets. So a lot
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Speaker 1: to look at that and some very interesting takeaways that
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Speaker 1: we will get into now. Jim, welcome to Marin Talks Money.
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Speaker 2: Lovely to be here. Thank you for the invite again.
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Speaker 1: Again, well exactly. Not many people get two appearances. I'm
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Speaker 1: flattered mainly an admin fail, but not many people get
1:45
Speaker 1: to get on twice, so we're very pleased to have
1:46
Speaker 1: you now listen. Before we start, I want to tell
1:49
Speaker 1: listeners that this is a long and interesting report. We're
1:52
Speaker 1: going to go through some of the main things, but
1:54
Speaker 1: if you want to hear what you can read it yourself.
1:57
Speaker 1: We will put the link in the show notes that
1:59
Speaker 1: you can get to it from there. But also, Jim
2:01
Speaker 1: is on the website, right, How do they find it
2:03
Speaker 1: direct like that?
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Speaker 2: Yeah, if you just google Deutsche Bank Research Institute. We've
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Speaker 2: made it publicly available to everybody, so you can look
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Speaker 2: at it on that good.
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Speaker 1: Now, where I want to start, Jim, if you don't mind,
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Speaker 1: is with cash, holding cash instead of investing. This has
2:20
Speaker 1: been a subject under much discussion in the UK over
2:23
Speaker 1: the last couple of years because various reports have come
2:25
Speaker 1: out across the board showing how many hundreds of billions
2:28
Speaker 1: we hold in cash that we really shouldn't, the most
2:31
Speaker 1: recent number being six hundred and ten billion held in
2:34
Speaker 1: cash that really could be invested, And the UK Saver
2:39
Speaker 1: is actually much worse at this than the saver in
2:41
Speaker 1: many other countries. We tend to hold a lot more
2:44
Speaker 1: cash than other people in the amount of cash that
2:46
Speaker 1: we're holding in that way is up quite a lot
2:48
Speaker 1: even since twenty twenty two, because rising interest rates, of course,
2:51
Speaker 1: have encouraged people to hold even more of their money
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Speaker 1: in cash. There is some conversation about there being some
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Speaker 1: pushes in the to try and get people to put
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Speaker 1: more of their money into stock markets in general, perhaps
3:04
Speaker 1: by changing the way that you can invest inside your
3:07
Speaker 1: ISO wrapper, less allowance for cash, more allowance for stocks
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Speaker 1: and shares, et cetera. But let's just talk about what
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Speaker 1: a terrible idea it is to have too much of
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Speaker 1: your cash. Well to words, for your cash and cash
3:19
Speaker 1: over the long term.
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Speaker 2: Yeah, it is right. And I must admit when I
3:22
Speaker 2: speak to kind of family and friends and they say, well,
3:25
Speaker 2: you know it's risky to invest in markets, I kind
3:28
Speaker 2: of almost flip it around. In the long term, it's
3:31
Speaker 2: risky to have money in cash over the long run
3:34
Speaker 2: because it will always be inflated away. And I think,
3:37
Speaker 2: especially in the last fifty five years, when we've lived
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Speaker 2: in a fa money system where nothing is back in
3:43
Speaker 2: paper money, there is always going to be a crisis
3:45
Speaker 2: and there is always going to be a reason why
3:47
Speaker 2: the money supply is expanded. And while that while norminal
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Speaker 2: activity goes up because the authorities need it to. Really so,
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Speaker 2: I think you always have to be predisposed to try
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Speaker 2: to invest in riskier assets. However uncomfortable it feels. And
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Speaker 2: it does feel uncomfortable, and you know, I as an analyst,
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Speaker 2: I look at things sometimes I think this is this
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Speaker 2: is a terrible moment to invest. But you just for
4:10
Speaker 2: the long term, you just have to look at the
4:13
Speaker 2: historical data and realize that cash is an incredibly risky asset.
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Speaker 2: I mean, over the two hundred years of our report,
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Speaker 2: it gives you a minus two percent real return per annum,
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Speaker 2: and I think that that's probably accelerated rather than decelerated.
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Speaker 2: Are you got worse over time?
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Speaker 1: And if you look at that nominal equities that I'm
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Speaker 1: looking at your data now, normal equities have only a
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Speaker 1: zero point eight percent probability of underperforming cash under the mattress.
4:37
Speaker 1: Are you earning no return at all over a twenty
4:39
Speaker 1: five year period? Now, that probability rises slightly over over
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Speaker 1: ten years and over five years, six point three percent
4:46
Speaker 1: every ten years, thirteen point six percent over five years.
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Speaker 1: So obviously the shorter your time period are, the more
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Speaker 1: likely it is that maybe you be better off in cash,
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Speaker 1: But it's still pretty low odds.
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Speaker 2: Yeah, no, it is. And you know, when we drill
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Speaker 2: down into those probabilities you've just discussed, the times that
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Speaker 2: cash have outperformed have often been around just you know,
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Speaker 2: massive events like you know, world wars, you know, massive
5:13
Speaker 2: massive dislocations. And look that these events you know, will
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Speaker 2: happen over two hundred year period, but it's very difficult
5:19
Speaker 2: to set your portfolio up solely to wait for them,
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Speaker 2: if that makes sense.
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Speaker 1: Yeah, And one thing that we do always say, John
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Speaker 1: and I is that you know when equities are very expensive.
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Speaker 1: Perhaps it makes sense a little bit more cashtan than
5:30
Speaker 1: usual in that it does give you optionality. Cash means
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Speaker 1: that when when something bad happens, you have the cash
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Speaker 1: available to dive into the market. So there are there
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Speaker 1: are times where it makes sense to have more cash
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Speaker 1: than other times, but really not for very long.
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Speaker 2: Yeah, and it's a good point that the title of
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Speaker 2: this report is the Ultimate Guide to long term invest
5:48
Speaker 2: in and it's a little bit of a grandiose title.
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Speaker 2: I apologize for that, but you know, one of the
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Speaker 2: things we're trying to do is how can you get
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Speaker 2: the probabilities on your side over the long on long run.
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Speaker 2: And obviously we know that riskier assets perform better the
6:00
Speaker 2: longer horizon you have. But one of the way you
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Speaker 2: can get probabilities on your side is is to look
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Speaker 2: at valuations. Now it's not rocket science, just simple valuations.
6:10
Speaker 2: And obviously if markets that achieve you probably wait a
6:14
Speaker 2: little bit more. To markets are expensive, you wagh a
6:16
Speaker 2: little bit less to I think valuations are more important
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Speaker 2: for long term investment than they are obviously for short
6:22
Speaker 2: term investment, which clearly in my day job I have
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Speaker 2: to tell I fund managers et cetera, how to invest
6:27
Speaker 2: their money in three months. And that is a difficult job.
6:29
Speaker 2: That is the really difficult job. Long term investment is
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Speaker 2: a lot easier.
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Speaker 1: Well, it is, isn't it, because you can tell people
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Speaker 1: you know, everything reverts to the mean in the end.
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Speaker 1: And we have all the very very long time data
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Speaker 1: that tells us that works, tells us what works in
6:42
Speaker 1: value investing works. I mean, you have a very clear
6:45
Speaker 1: line in when you've got this section in the report,
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Speaker 1: which variables predict long term performance best? And the answer
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Speaker 1: is starting valuations matter anormously. A low pee portfolio has
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Speaker 1: returned twenty point two percent a year of the last
6:58
Speaker 1: seventy years, and the high portfolio eleven point four percent,
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Speaker 1: So you're starting your starting point really matters. The same
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Speaker 1: with dividends, the high dividend portfolio in terms twelve point
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Speaker 1: eight percent a year over two hundred years, the low
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Speaker 1: dividend portfolio nine point three percent.
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Speaker 2: The one thing I'll pick you up on I think
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Speaker 2: you said the low pee portfolio instead of the high
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Speaker 2: pea portfolio.
7:18
Speaker 1: There, oh did I sorry? Low pe portfolio is the
7:21
Speaker 1: good one. High pee portfolio is the bad one. Just
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Speaker 1: to be.
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Speaker 2: Absolutely clear, you had me worried there.
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Speaker 1: Sorry about that. Now. Some people would say that pees
7:32
Speaker 1: don't matter as long as you get growth.
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Speaker 2: Yeah, and look, I think what we came up with
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Speaker 2: in the report is that you can have expensive markets
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Speaker 2: that perform well, and obviously the US is an example
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Speaker 2: of that. But I think that the problem with the
7:48
Speaker 2: US market because it's so important, because it's so big,
7:51
Speaker 2: it's easy to get biased by thinking that the US
7:54
Speaker 2: way to outperform is the global way to outperform, if
7:58
Speaker 2: that makes sense, And it's it's also easy to think
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Speaker 2: that it will continue to go down that route. So
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Speaker 2: I suppose the report looks at enough countries, so it
8:06
Speaker 2: looks at fifty six countries to realize that the US
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Speaker 2: is the exception, massive exception rather than the norm. And
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Speaker 2: if you look at over an aggregated, wider collection of countries,
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Speaker 2: valuations matter more than anything else.
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Speaker 1: And it isn't necessarily the case that the US has
8:23
Speaker 1: always been more expensive than other markets. I mean you
8:26
Speaker 1: say here that it's obviously an incredibly interesting case study
8:29
Speaker 1: because despite having these very high valuations, both the p
8:32
Speaker 1: and the cape ratios and pretty much anything else you
8:35
Speaker 1: look at, dividends, etc. It is extraordinarily expensive, and we
8:39
Speaker 1: look at that and we go, oh, yeah, well that's
8:41
Speaker 1: the that's the premium for being exceptional. But it hasn't
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Speaker 1: always been there, has it, And it was relatively recent,
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Speaker 1: this idea that the US market should be valued at
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Speaker 1: a much higher level than other markets.
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Speaker 2: Yeah, and look at it has kind of emerged over
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Speaker 2: the last two or three decades. Obviously, within that two
8:57
Speaker 2: or three decades there's been times where the US is
8:59
Speaker 2: as plumber down to more normal valuations. But I suppose
9:02
Speaker 2: for the last twenty thirty years you've kind of had
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Speaker 2: this role in higher valuation than the rest of the world.
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Speaker 2: But yeah, if you go back before that, that was
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Speaker 2: not really a massive premium on valuations in the US.
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Speaker 2: It's it has been really something that's developed over the
9:19
Speaker 2: last two or three decades, and obviously in particular in
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Speaker 2: the last seven or eight years with the mag seven
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Speaker 2: and the megacaps. So the current kind of difference between
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Speaker 2: valuations in the US and the rest of the world
9:31
Speaker 2: are probably as wide as they ever have been because obviously,
9:34
Speaker 2: as you and I remember from two thousand, everything was
9:37
Speaker 2: pretty expensive. In two thousand, most markets were pretty expensive,
9:40
Speaker 2: whereas this is a slightly different market in the US
9:44
Speaker 2: is quite considerably more expensive than most of the other
9:48
Speaker 2: global markets.
9:49
Speaker 1: I mean, this is interesting, then, isn't it, Because this
9:51
Speaker 1: is one of those occasions when other options are available.
9:54
Speaker 1: And we could have said back back in the period
9:56
Speaker 1: when the Japanese market was insanely expensive, when everyone thought
9:59
Speaker 1: that that would continue forever because japan was so special.
10:02
Speaker 1: I remember when I went to work in the Japanese
10:04
Speaker 1: market not long after the crash in the early nineteen nineties,
10:07
Speaker 1: the clear expectation was that Japanese exceptionalism was so clear
10:11
Speaker 1: that the market would soon return to its previous valuations,
10:14
Speaker 1: which of course it never did and probably never would.
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Speaker 1: But that was another example of the time when other
10:19
Speaker 1: options were available, because it was an exceptionally expensive market
10:22
Speaker 1: but surrounded by markets which weren't particularly expensive.
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Speaker 2: Yeah, And actually it's an interesting one because as part
10:29
Speaker 2: of the portfolio returns you mentioned earlier, what we did.
10:32
Speaker 2: We took our fifty six countries and every year we
10:36
Speaker 2: ranked them high to low, and we basically bought the
10:39
Speaker 2: twenty eight sheepest markets and we sold the twenty eight
10:42
Speaker 2: most expensive markets, and then every year we rebalanced it.
10:47
Speaker 2: And when we do that the returns from the lower
10:51
Speaker 2: PE portfolio are so much better than the higher PA
10:54
Speaker 2: portfolio over time, and that you know, Japan would have
10:56
Speaker 2: been a classic example of where that would have ranked
10:59
Speaker 2: right at the top and we would have completely left
11:02
Speaker 2: it and other markets would have been cheap. It won't
11:06
Speaker 2: work on a year to year basis. There will be
11:08
Speaker 2: you know, the peer be piers where clearly momentum and
11:11
Speaker 2: high valuations just keep on going. But I don't think
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Speaker 2: it takes particularly long. We show a couple of graphs
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Speaker 2: in the piece where we look at the twenty five
11:19
Speaker 2: year returns and then we look at the five year returns,
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Speaker 2: and actually the correlation between valuation and twenty five year
11:24
Speaker 2: returns are very linear. I High valuations, low returns, low
11:29
Speaker 2: valuation to high returns. It's a fairly linear relationship, even
11:33
Speaker 2: though with five years it isn't quite as linear, but
11:36
Speaker 2: it's still very good. So even over a five year period,
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Speaker 2: valuations mattering. You know, from the two hundred years of
11:42
Speaker 2: data we've looked at.
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Speaker 1: So do you think that when we talk about long
11:46
Speaker 1: term investing, short term investing, hold in cash, etc. That
11:49
Speaker 1: somebody new to the market. One of these people the
11:52
Speaker 1: FCA gets so cross with because they've got more than
11:54
Speaker 1: ten thousand pounds in savings and they hold one hundred
11:56
Speaker 1: percent of it in cash, and this is considered to
11:58
Speaker 1: be a very bad day if they are going to invest.
12:02
Speaker 1: Is the bare minimum five years?
12:05
Speaker 2: I mean, obviously luck plays a part of it, so
12:07
Speaker 2: one you know, you can't rule out being unlucky. I
12:12
Speaker 2: think five years is probably where you start to see
12:16
Speaker 2: the probabilities get much more in your favor. No guarantees,
12:20
Speaker 2: but you get much more in favor. If you know,
12:22
Speaker 2: listeners want to have a look at the report, they'll
12:25
Speaker 2: they'll see a nice graph where we show five, ten,
12:28
Speaker 2: and twenty five year probabilities of outperforming from different asset classes, well,
12:33
Speaker 2: stocks bonds, sixty forty portfolio and stocks versus bonds, etcetera.
12:38
Speaker 2: So you can kind of do your own kind of
12:40
Speaker 2: judgment about where your risk tolerance is. But I think
12:43
Speaker 2: probably five years is what you need to give yourself
12:46
Speaker 2: and to give yourself the best chance anyway.
12:48
Speaker 1: Yeah, but when you talk about that probability, I mean,
12:51
Speaker 1: it's interesting because if let's say, let's still keep a
12:54
Speaker 1: hypothetical person who has only cash in mind, and I
12:57
Speaker 1: was thinking Okay, well that sounds good. I will now
12:59
Speaker 1: go and invest, knowing that if I put the money
13:02
Speaker 1: in the market for five years, I've got an excellent
13:04
Speaker 1: chance of at the very least not losing it. Right.
13:07
Speaker 1: But if they now go and do that, the odds
13:09
Speaker 1: are that they will go and buy a global tracker,
13:12
Speaker 1: and that will mean that they are not buying what
13:15
Speaker 1: you are talking about. They are, in fact buying because
13:18
Speaker 1: all of these indices are market cab based. They are
13:20
Speaker 1: in fact buying the most expensive markets in great volume,
13:25
Speaker 1: and the cheapest ones really not at all. Whereas what
13:28
Speaker 1: you're talking about is I think an equal weighted portfolio. Right,
13:32
Speaker 1: we're talking about something very different.
13:34
Speaker 2: I suppose it's difficult to pitch this obviously, because you
13:38
Speaker 2: know that there are people who are experts in their
13:41
Speaker 2: own field, but they're not particularly experts in the finance field.
13:43
Speaker 2: And it's easy, as you say, to buy a tracker.
13:46
Speaker 2: And there's also people that are more sophisticated, and I think, yeah,
13:50
Speaker 2: you probably need to find a way of removing that
13:54
Speaker 2: expensiveness bias into a portfolio. So some kind of equal
13:59
Speaker 2: weight global portfolio or a global portfolio X you can
14:04
Speaker 2: buy ATFS or trackers that are global portfolio x a
14:07
Speaker 2: certain market. You know, I'd rather not give individual kind
14:11
Speaker 2: of No.
14:11
Speaker 1: No, I'm not expecting you to give into the advice.
14:14
Speaker 1: What I'm just trying to point out is that the
14:16
Speaker 1: automatic and easy way for a novice to invest over
14:20
Speaker 1: a five year period based on your research, is probably
14:24
Speaker 1: the wrong way.
14:25
Speaker 2: I think the entry easy entry option, yes, is typically
14:29
Speaker 2: a kind of a global tracker, so I think it
14:32
Speaker 2: still would be a decent long term investment, but it
14:34
Speaker 2: probably wouldn't be getting at the key of this report,
14:37
Speaker 2: and that is that valuations matter.
14:40
Speaker 1: Okay, we're going to come back to that in a minute,
14:41
Speaker 1: but before we do that, I just want to pick
14:43
Speaker 1: up on gold, which you also wrote about, which has
14:47
Speaker 1: been the standout investment of the century so far, right
14:50
Speaker 1: to everyone's everyone's massive surprise, not to hours, by the way,
14:53
Speaker 1: not to this podcast surprise, but to everyone else's surprise.
14:56
Speaker 1: And it is true, isn't it that a portfolio of
14:59
Speaker 1: just gold would pretty much have you even with inflation
15:02
Speaker 1: over the long term. But that's about it.
15:05
Speaker 2: Gold is a fascinating one because obviously we've got two
15:07
Speaker 2: hundred plus years of data here, and if you look
15:10
Speaker 2: at that full two hundred year period, gold has only
15:13
Speaker 2: given you zero point four percent per annum over inflation.
15:17
Speaker 2: But I suppose what you have to take into account
15:20
Speaker 2: is that for the best part of one hundred and
15:23
Speaker 2: fifteen hundred and seventy years, the price of gold was
15:26
Speaker 2: fixed to the dollar, and the dollar was fixed to
15:30
Speaker 2: most other currencies, so you had a gold based financial system. However,
15:36
Speaker 2: I mean that broke down a cup a few times
15:39
Speaker 2: in the last couple of centuries when there was a war, depression,
15:42
Speaker 2: bad economic times, and maybe the gold price got reset
15:47
Speaker 2: of your currency to gold. But it wasn't until nineteen
15:50
Speaker 2: seventy one where you know, Nixon effectively pulled the US
15:53
Speaker 2: out of the Breton was system, which was a system
15:57
Speaker 2: that was the dollar was tied to gold and every
15:59
Speaker 2: other currency was tied to the dollar. It wasn't until
16:02
Speaker 2: that point that we completely broke free of gold based money,
16:07
Speaker 2: and since then we've been in a more inflationary environment
16:11
Speaker 2: because there's nothing back in paper money, and gold has
16:15
Speaker 2: been a good performer. Now in that full fifty five
16:18
Speaker 2: year period, gold hasn't beaten equities. It's been competitive, but
16:22
Speaker 2: it hasn't beaten equities. But actually in the twenty first century,
16:26
Speaker 2: it has beaten equities quite convincingly. But at the start
16:31
Speaker 2: of the twenty first century it was quite low. It
16:33
Speaker 2: has gone low because a lot of central banks had
16:35
Speaker 2: sold their holdings and gold had gone out of fashion
16:38
Speaker 2: in the kind of nineteen nineties. So look, I think
16:41
Speaker 2: gold is is a good inflation hedge, and I think
16:44
Speaker 2: it should be part of a portfolio. The two things
16:48
Speaker 2: that make me a bit nervous upon gold is the
16:50
Speaker 2: fact that it doesn't pay a coupon or a dividend
16:52
Speaker 2: whereas other assets do, and also just how far it's
16:55
Speaker 2: run in the last year or two. I mean, I
16:58
Speaker 2: think I was on your podcast eighteen months ago and
17:00
Speaker 2: ask me if I prefer gold or bitcoin, and I said,
17:03
Speaker 2: I prefer gold. I think it's a great inflation hedge.
17:06
Speaker 2: I probably should have held bitcoin. I haven't done the
17:08
Speaker 2: math to see which is outperformed since that point, but
17:12
Speaker 2: you know, I wouldn't say that. I wouldn't say I
17:14
Speaker 2: was as optimistic on gold today as I was eighteen
17:17
Speaker 2: months ago, purely because valuations have changed.
17:20
Speaker 1: But also, I mean, it should be distressing when you
17:23
Speaker 1: see gold outperform equities. It's not right for something that
17:28
Speaker 1: is merely an inflation hedge to outperform an asset class
17:31
Speaker 1: that is supposed to reflect their productivity and the growth
17:34
Speaker 1: of well humanity.
17:36
Speaker 2: Yeah, to me, most commodities, because they go into production
17:41
Speaker 2: of various things that we consume around the world, they
17:45
Speaker 2: probably should be in inflation hedge because if their price
17:47
Speaker 2: goes up too much, people should look at alternatives. Now,
17:50
Speaker 2: I appreciate gold is slightly different because.
17:52
Speaker 1: Gold doesn't really have an alternative. Yeah.
17:54
Speaker 2: Yeah, it's a store of value. But I mean you could,
17:56
Speaker 2: you know, you could own other precious metals if you
17:58
Speaker 2: really wanted to. But look, I'm not anti gold at all,
18:01
Speaker 2: because I've been a bit of a gold bug for
18:04
Speaker 2: a long period of time. It's just when I see
18:05
Speaker 2: such violent upward moving price, it kind of makes me
18:09
Speaker 2: a little bit nervous on the valuation side.
18:11
Speaker 1: Interesting though, isn't it. I mean, I rather expected when
18:14
Speaker 1: it came back down through four thousand. I mean, not
18:16
Speaker 1: a chartist, obviously having it come down below four thousand,
18:20
Speaker 1: it slightly expected it to keep going down, that is,
18:22
Speaker 1: but it absolutely didn't. It really come hanging on.
18:25
Speaker 2: Yeah, and I suppose if you wanted to create the
18:27
Speaker 2: ball story for gold, it's that central banks are buying again,
18:31
Speaker 2: and I think that you know, their holdings are still
18:34
Speaker 2: a fraction of where they were in let's say nineteen eighty.
18:37
Speaker 2: Now that doesn't mean to say they get anywhere close
18:38
Speaker 2: to that, But if you're looking for the ball story,
18:41
Speaker 2: it's that central banks are still buying.
18:44
Speaker 1: Don't fight the central banks.
18:45
Speaker 2: Eh, that's not been a bad bit of a vice
18:49
Speaker 2: through once for it.
19:04
Speaker 1: Let's look at a wider portfolio construction. So we tell
19:08
Speaker 1: people that over a five year period, the probability of
19:10
Speaker 1: them losing money in real terms in the acta market
19:12
Speaker 1: is relatively low. But obviously a one hundred percent equity
19:16
Speaker 1: portfolio is pushing it a little. You've looked again at
19:19
Speaker 1: a sixty to forty portfolio. Forty percent in the bond
19:22
Speaker 1: market has historically given the lowest probability of making nominal
19:26
Speaker 1: losses at least chance of a negative nominal returns over
19:29
Speaker 1: twenty five years to zero point one percent. It doesn't
19:32
Speaker 1: sound so.
19:33
Speaker 2: Bad, yeah, I think. I think if you're very loss
19:36
Speaker 2: a verse, you really don't like losing money, then I
19:39
Speaker 2: think a six forty portfolio is a reasonably good way
19:44
Speaker 2: of minimizing that risk, and the stats in this document
19:48
Speaker 2: you can look at it. I'm going to tell you
19:50
Speaker 2: it's on page thirty four. You can look at it
19:52
Speaker 2: at your leisure. That the stats basically tell you that
19:57
Speaker 2: bonds do have a nice hedge in property. So in
20:01
Speaker 2: the times where equities that are the most vulnerable, bonds
20:03
Speaker 2: tend to rally. And although over time you're not going
20:07
Speaker 2: to outperform equities, you are going to probably minimize your
20:11
Speaker 2: drawdown risk. So you know, again everything depends on your
20:14
Speaker 2: risk tolerance and how much you hate losses.
20:18
Speaker 1: So we talked there about it being a very very
20:21
Speaker 1: low possibility of anomenal loss, But what about a real
20:24
Speaker 1: terms loss for.
20:25
Speaker 2: A sixty forty portfolio over twenty five years, it's a
20:30
Speaker 2: round about eight percent. For equities it's around about seven
20:34
Speaker 2: and a half. So it's it's similar in real terms,
20:37
Speaker 2: because over twenty five years, the fact that equities gives
20:42
Speaker 2: a superior return starts to, you know, make it more
20:45
Speaker 2: attractive to own an outright equity portfolio.
20:48
Speaker 1: Okay, so what point, at what time frame should we
20:53
Speaker 1: say to our listeners, perhaps get the bond a bit
20:57
Speaker 1: and go all in on equities cheap equity.
21:00
Speaker 2: Going back to the sixty forty question, I suppose twenty
21:03
Speaker 2: five years is probably the point where you don't need
21:06
Speaker 2: a sixty forty portfolio, if that makes sense, because equities
21:09
Speaker 2: are probably better if you had twenty years. You might
21:12
Speaker 2: actually say that sixty forty give you a slightly better
21:15
Speaker 2: chance of not having a loss, if that makes sense.
21:17
Speaker 2: So I think that the kind of break even for
21:20
Speaker 2: where your lost probability starts to favor equities is probably
21:26
Speaker 2: in the twenty to twenty five year bucket. But this
21:28
Speaker 2: is don't forget, this is just a loss avoiding strategy.
21:32
Speaker 2: This is not a maximizing your return strategy.
21:34
Speaker 1: Okay, how do we maximize our returns one hundred percent
21:37
Speaker 1: equities always.
21:38
Speaker 2: And as I said earlier, by it by the lowest
21:40
Speaker 2: p ones.
21:41
Speaker 1: Okay, So if I want to make the most possible
21:43
Speaker 1: money over a twenty five year period, I've had the
21:46
Speaker 1: cheapest possible markets and only hold equities for twenty five years.
21:50
Speaker 2: That's what the data would say. Yeah, I'll hide behind
21:54
Speaker 2: the data.
21:55
Speaker 1: Hide behind the data definitely. And what are those very
21:58
Speaker 1: cheap pe markets right now? What page are the charts
22:01
Speaker 1: for that?
22:01
Speaker 2: On the charts that you'll see that, and I'm going
22:05
Speaker 2: to flick through my document here. And the reason I
22:07
Speaker 2: don't want to kind of say is because I'm not
22:09
Speaker 2: a micro analyst. I actually heard your podcast with Albert
22:13
Speaker 2: Edwards and he kind of took fright when he was
22:17
Speaker 2: asked to comment on micro names and stuff, and I
22:20
Speaker 2: agree with him. It gives us macro people a bit
22:23
Speaker 2: of cause for concern when we're asked to talk about
22:27
Speaker 2: individual countries or companies. But if you look at page
22:30
Speaker 2: twenty three in the report, we basically show the cheapest
22:36
Speaker 2: and most expensive markets of our fifty six countries in
22:40
Speaker 2: our study by the P ratio, by the CAPE ratio,
22:43
Speaker 2: and for those who don't know, the CAPE ratio just
22:46
Speaker 2: looks at earnings over a ten year horizon rather than
22:48
Speaker 2: just a single year, just to give you a bit
22:50
Speaker 2: of sick horcality moving to it. And we've also done
22:54
Speaker 2: it by dividend yiels. Now you've got to be slightly
22:56
Speaker 2: careful on dividend yeals because countries like the US have
22:59
Speaker 2: used by backs to replace dividends, so the dividend yield
23:04
Speaker 2: on the US is quite low. Doesn't mean to say
23:07
Speaker 2: that investors aren't getting distribution from other means, so you've
23:11
Speaker 2: got to be slightly careful. But on page twenty three
23:14
Speaker 2: of the report, you know listeners can can look at
23:17
Speaker 2: what markets are cheap and what markets are expensive.
23:19
Speaker 1: Okay, So for those who really want to know, right now,
23:21
Speaker 1: I can tell you that up at the expensive end,
23:24
Speaker 1: you've got the US, India and New Zealand, Taiwan, what what's
23:27
Speaker 1: called Greece up there expensive all of a sudden, in Canada, Netherlands, etc.
23:33
Speaker 1: And if you want the cheap end, you've got Israel, Turkey, Austria, Columbia, Brazil, Argentina, Hungary.
23:40
Speaker 1: And you go to the UK about a third in
23:42
Speaker 1: sandwiched between China and Malaysia. And then if you look
23:46
Speaker 1: at dividend yield again, I would have thought the UK
23:49
Speaker 1: would be much more towards the cheaper end, but it's not. Actually,
23:52
Speaker 1: if you look at dividend yields in particular, down at
23:54
Speaker 1: the cheap end, you've got oh no, hang on, I'm
23:58
Speaker 1: reading this one the wrong way around. If you look
23:59
Speaker 1: at high dividends, we're up at Columbia, Nigeria, Brazil. Can
24:04
Speaker 1: you pack us down in their? UK is only halfway
24:06
Speaker 1: through sandwiched there again, right, next to Singapore, sandwich between
24:10
Speaker 1: Singapore and Australia.
24:12
Speaker 2: Yeah, but look, there isn't an emerging market bias to
24:14
Speaker 2: the cheaper end of the spectrum. And I think you know,
24:18
Speaker 2: people can take a kind of a again an overlay
24:21
Speaker 2: if they do only want to have developed markets, they
24:22
Speaker 2: could probably look at this and see which are the
24:24
Speaker 2: cheapest developed markets, which are the most expensive, et cetera.
24:29
Speaker 1: Yeah, and then you have some markets that don't have
24:31
Speaker 1: long enough data to give you the CAPE data, right.
24:34
Speaker 2: Yep, So there's and we just do the PE for that.
24:37
Speaker 2: But the one thing I would say is that again
24:38
Speaker 2: in the report, we look at demographics and the interesting
24:42
Speaker 2: thing about the next twenty five years is that we've
24:45
Speaker 2: never really had a period before where so many countries
24:48
Speaker 2: are going to have lower working age population. And you know,
24:54
Speaker 2: if you look at how that's split between DM and
24:56
Speaker 2: EM world, you know it's more biased towards the DM
24:59
Speaker 2: world is going to see less workers in the next
25:01
Speaker 2: twenty five years. So although it may look a little
25:04
Speaker 2: bit scary sometimes to see some of the emerging market
25:07
Speaker 2: countries being the cheapest, in some ways they've got the
25:10
Speaker 2: best demographics. And you know, we showed up on page twelve,
25:14
Speaker 2: rank in the same countries by demographic for the next
25:16
Speaker 2: twenty five years.
25:17
Speaker 1: And what difference do we think those demographics are going
25:19
Speaker 1: to make. I mean, there's perfectly good argument to be
25:21
Speaker 1: made that it doesn't matter if you have fewer workers
25:23
Speaker 1: now because you have AI, so developed economies will be
25:27
Speaker 1: able to shift all the work that may be middle rankers.
25:30
Speaker 1: Middle ranking workers might have done off onto robots of
25:34
Speaker 1: one sort or another and generative AI, and so it's
25:36
Speaker 1: not necessarily the case that demographics will affect economies and
25:40
Speaker 1: maybe markets in the same way they would have if
25:42
Speaker 1: we were in this situation thirty years ago.
25:44
Speaker 2: Yeah, I mean, it's a very valid point and one
25:47
Speaker 2: that is gathering a bit of steam. I would probably say,
25:50
Speaker 2: even as a minimum, I would say the rankings of
25:53
Speaker 2: the country's matter. So if and when AI becomes successful,
25:56
Speaker 2: it's probably a price point that a lot of countries
25:59
Speaker 2: will be able to use it, and therefore the relative
26:03
Speaker 2: ranking of demographics probably still matter. It just might lift
26:06
Speaker 2: all the boats higher, if that makes sense. You know,
26:10
Speaker 2: one maybe more controversial thing to say is that, you know,
26:14
Speaker 2: if you look at history, ever since the Industrial Revolution,
26:19
Speaker 2: we have constantly been worried about new technologies destroying jobs
26:24
Speaker 2: or replacing jobs. I know your question slightly framed, slightly different,
26:27
Speaker 2: but what economic history tells us is that innovation probably
26:31
Speaker 2: creates jobs, if it improves productivity, if it improves growth,
26:34
Speaker 2: and therefore the labor market in aggregate might not look
26:39
Speaker 2: too different in the longer term. But it just might
26:42
Speaker 2: be a compositional change, where you know, instead of having
26:46
Speaker 2: lots of people doing data entry stuff, that they're doing
26:50
Speaker 2: more lifestyle things. I don't know. I wish I knew
26:52
Speaker 2: the industries of tomorrow, but as an economic history I'm
26:55
Speaker 2: less concerned about AI destroying jobs. Yeah.
26:58
Speaker 1: Well, as we always say, if she looked back twenty years,
27:00
Speaker 1: you wouldn't have believed that half the jobs that exist
27:03
Speaker 1: today could possibly have xed them. I give mine as
27:06
Speaker 1: a classic cample. Who could possibly have known? Who could
27:09
Speaker 1: possibly have known? Podcasting influencing online yoga teachers, et cetera,
27:13
Speaker 1: et cetera, who could have guessed?
27:15
Speaker 2: Absolutely. I'm not sure I'm ready to be an online
27:18
Speaker 2: yoga teacher yet, though, so hopefully there's still a market
27:21
Speaker 2: for me.
27:23
Speaker 1: I think you'd be extremely good at a gen well
27:26
Speaker 1: for macro economists. I think that macro strategists. What do
27:28
Speaker 1: we call you a macro strategist, don't we Really?
27:30
Speaker 2: As long as there's a market for it, I'm happy
27:32
Speaker 2: to be called it.
27:33
Speaker 1: And now listen, I mean, I know that we're obsessed
27:35
Speaker 1: with page twenty three at the moment, but I'm personally
27:37
Speaker 1: obsessed with the page thirty six, which is the maximum
27:42
Speaker 1: maximum draw down page. So how much you've actually lost
27:47
Speaker 1: in markets, particular markets, and how long it's taken for
27:51
Speaker 1: them to get back to that nominal level. And it's
27:55
Speaker 1: mainly Italy seems to suffer a lot from this down
27:58
Speaker 1: ninety one percent in nineteen oh six, again in nineteen twelve,
28:03
Speaker 1: again in nineteen thirteen. France has suffered from it, Italy
28:06
Speaker 1: again in the sixties, Sweden seems to have some troubles
28:09
Speaker 1: in this area. Kenya just pops up all the time.
28:12
Speaker 1: And then of course there was Japan, which is interesting
28:15
Speaker 1: because you know, very recent, very developed market, one of
28:19
Speaker 1: the greatest bubbles of all time, and your draw down
28:22
Speaker 1: there was seventy percent and you didn't make your money
28:26
Speaker 1: back in nominal times well and about a week ago
28:28
Speaker 1: actually very recently.
28:30
Speaker 2: Yeah, I think it's a bit longer than that three weeks,
28:33
Speaker 2: but relatively Yeah.
28:35
Speaker 1: So you know, when we talk about when we talk
28:36
Speaker 1: about cheap markets and looking at them, sometimes sometimes cheap
28:39
Speaker 1: for a reason and your money won't come back for
28:41
Speaker 1: a long time. Thirty thirty three years, you say, have
28:44
Speaker 1: negative real returns from Japan secuity slump.
28:47
Speaker 2: Yeap And obviously, as you pointed out earlier, that was
28:51
Speaker 2: a very expensive market at the time, which is why
28:54
Speaker 2: it took so long. I suppose this list of drawdown
28:58
Speaker 2: here in some ways a bit of comfort, though, because
29:02
Speaker 2: a lot of these have occurred in countries that have
29:08
Speaker 2: had a you know, a once in a century, once
29:10
Speaker 2: in a maybe a two century event like a World war.
29:15
Speaker 2: And actually the list is relatively small relative to the
29:19
Speaker 2: amount of data we have. But the point we're trying
29:23
Speaker 2: to make is that you know that you can have
29:25
Speaker 2: these long drawdowns and you know, trying to identify what
29:30
Speaker 2: causes them. You know, something like Italy has probably been
29:33
Speaker 2: the least stable country politically in our database in terms
29:37
Speaker 2: of the amount of governments it's had in the period
29:39
Speaker 2: of our study. Two of the countries with the highest returns,
29:43
Speaker 2: almost stealth you don't really notice them, are kind of Denmark,
29:46
Speaker 2: and Sweden, And these are two countries that have actually
29:49
Speaker 2: had a long, long period of political stability. They've they've
29:53
Speaker 2: managed to kind of size step major conflicts and they've
29:57
Speaker 2: been fairly stable countries. So it's an interesting country between Italy,
30:01
Speaker 2: which has until recently, I mean, actually the last few
30:03
Speaker 2: years have been one of the most stable for Italy
30:05
Speaker 2: in terms of politics. You know, for a cent you know,
30:09
Speaker 2: maybe centuries, maybe a little bit over the states in it,
30:11
Speaker 2: but decades at least, And you know, the political instability
30:16
Speaker 2: we've had in the past has actually weighed on Italy
30:19
Speaker 2: longer term, whereas the political stability we've had in a
30:22
Speaker 2: place like Denmark and Sweden have actually meant that their
30:25
Speaker 2: returns have been reasonably good.
30:28
Speaker 1: Yeah, I speak clear and say the drawdowns we were
30:30
Speaker 1: talking about hero was mentioning in Sweden earlier were all
30:32
Speaker 1: in the nineteen tens. Can we talk about more recent stuff.
30:36
Speaker 1: You said earlier that one of the most stressful parts
30:38
Speaker 1: of your day job was telling people what they should
30:41
Speaker 1: invest in the short term, whether they should go over
30:43
Speaker 1: a three month period. What are you telling them now,
30:46
Speaker 1: ha ha.
30:48
Speaker 2: It is challenging because I think the biggest topic in
30:50
Speaker 2: the market at the moment is AI in a bubble,
30:54
Speaker 2: and that unfortunately dictates a lot of different asset classes
30:59
Speaker 2: because these companies now are so big that they are
31:04
Speaker 2: countries in terms of their influence on the global financial market.
31:08
Speaker 2: So I was having a chat with our rate strategist
31:11
Speaker 2: this morning and he's got a very very well defined
31:15
Speaker 2: framework of predicting where rates will go interest rates go,
31:19
Speaker 2: and he said, look, the biggest risk is the AI story.
31:23
Speaker 2: It's not you know, is inflation going to be higher
31:25
Speaker 2: or lower? Is it not that supply of government bonds
31:28
Speaker 2: is going to be hire and lower. The biggest risk
31:30
Speaker 2: to him is the AI story. So I think the
31:32
Speaker 2: AI story dominates everything. And within Deutsche Bank we have
31:36
Speaker 2: different views on this. So I don't really want to
31:38
Speaker 2: kind of be too aggressive on my view because there
31:42
Speaker 2: I can find you other views.
31:43
Speaker 1: Okay, what is your view?
31:46
Speaker 2: Well, coming back to this long term study and trying
31:48
Speaker 2: to be a politician here, give you a politicians answer,
31:52
Speaker 2: as I.
31:53
Speaker 1: Won't accept a politician answer. I can't do that. It's
31:58
Speaker 1: not that kind of show that you have the BBC
32:00
Speaker 1: for that.
32:01
Speaker 2: No comment I would say I prefer cheap markets would
32:06
Speaker 2: be my comment. But look, over the short term that
32:10
Speaker 2: that can can iron out. I do think that if
32:12
Speaker 2: this is a bubble in AI, if the FED is
32:15
Speaker 2: cut in rates that could be blown up further, if
32:19
Speaker 2: that makes sense, So.
32:21
Speaker 1: There could be a melt up in the AI story
32:24
Speaker 1: as rates to cut further.
32:26
Speaker 2: Yeah, I mean, if you look at the history of
32:27
Speaker 2: rate cutting cycles, equities in the US do phenomenally well.
32:33
Speaker 2: So I think in every rate cutting cycle in the
32:36
Speaker 2: last seventy years from the first cut in the cycle,
32:40
Speaker 2: equities on average do about fifty percent up and they're
32:43
Speaker 2: probably already thirty let's say thirty percent up since So
32:46
Speaker 2: if this was if this rate cutting cycle is a
32:49
Speaker 2: kind of a template for well history is a template
32:52
Speaker 2: for this one, then there could still be a bit
32:55
Speaker 2: of a melt up. I suppose. The interesting thing would be,
32:58
Speaker 2: what you know, with the government shut down now coming
33:01
Speaker 2: to a close and you get all the data, we're
33:03
Speaker 2: going to have a lot of macro information to work
33:05
Speaker 2: out whether the FED should be cut in. And maybe
33:08
Speaker 2: the risk scenario for the AI story is that the
33:11
Speaker 2: data is stronger and suddenly you get a load of
33:14
Speaker 2: cuts that just get priced out of the market.
33:16
Speaker 1: Okay, so there's expected cuts once baee, the data may
33:20
Speaker 1: look less likely and that would have an impact on
33:23
Speaker 1: the US market.
33:25
Speaker 2: Yeah. I think the presumption at the moment is that
33:27
Speaker 2: the FED will continue to ease a reasonable mount internet
33:32
Speaker 2: year and that supports probably the risk environment. I think
33:34
Speaker 2: that's the default market assumption.
33:37
Speaker 1: Okay, and let's look go back to the UK market briefly,
33:40
Speaker 1: which we've been talking about is being cheap for ages
33:42
Speaker 1: and I think last time year on we talked about
33:43
Speaker 1: the UK market and the foot to one hundred really
33:46
Speaker 1: looks like it would like to go through ten thousand now,
33:48
Speaker 1: doesn't it.
33:49
Speaker 2: It seems to be fairly immune to kind of negative
33:52
Speaker 2: domestic news, which to be fair, as we know, is
33:55
Speaker 2: fair because it's not a domestic focused constituencys within THEI
34:01
Speaker 2: in debt. So it does seem to be momentum. I
34:04
Speaker 2: suppose in my travels I just see an incremental increase
34:08
Speaker 2: from overseas of people at least looking at them at
34:11
Speaker 2: the market, whereas maybe twelve eighteen months ago that they weren't.
34:15
Speaker 1: Yeah, should we be nervous about the UK? The sovereign
34:22
Speaker 1: bond market and also the sovereign bond markets are very
34:25
Speaker 1: highly indebted countries and it does slightly feel like we're
34:29
Speaker 1: nearing a public debt tipping point in some developed economies.
34:34
Speaker 2: I think we all know that the debt profile of
34:37
Speaker 2: a lot of developed market countries is totally unsustainable. The
34:41
Speaker 2: problem the UK has is that it has a higher
34:45
Speaker 2: proportion of overseas investors than many other developed markets, so
34:48
Speaker 2: it's more difficult to control, if that makes sense. If
34:52
Speaker 2: the overall global bond market is having a bad period,
34:56
Speaker 2: the UK often joins it because it's owned by a
35:00
Speaker 2: lot of high proportion of it is owned by overseas investors.
35:05
Speaker 2: There are some European countries that obviously also got unsustainable
35:08
Speaker 2: debt profiles, but they're probably a slightly more domestic owned,
35:13
Speaker 2: so a you've got a bit more control over your
35:16
Speaker 2: domestic owners, and also you've got the ECB that may
35:20
Speaker 2: be there to backstop it. So the UK is vulnerable,
35:24
Speaker 2: but I don't think that's an imminent thing. I think
35:27
Speaker 2: it's something that if you left it left, the debt
35:30
Speaker 2: rising year after year at some point there would be
35:33
Speaker 2: a real real issue.
35:36
Speaker 1: It feels like it is going to rise year after year.
35:39
Speaker 2: I mean, look at everything points in that direction in
35:41
Speaker 2: most developed market countries, so I think the day of
35:44
Speaker 2: reckoning will come, but it's just it's not clear when
35:48
Speaker 2: that is really.
35:49
Speaker 1: Do you think there's anything that Rachel Ribs could do
35:51
Speaker 1: in her upcoming budget to prevent that day of reckoning coming?
35:54
Speaker 2: Without going into specific policies, I think we desperately need
35:57
Speaker 2: growth everywhere, and I think whatever country you're looking at,
36:02
Speaker 2: I do think there should be more priority on how
36:04
Speaker 2: can you maximize economic growth? And I think that would
36:06
Speaker 2: be for the betterment of everybody, what end of the
36:09
Speaker 2: kind of income spectrum they are, because the end of
36:12
Speaker 2: the day, growth is what funds most of our lifestyle.
36:17
Speaker 2: So I think, you know, if to be glib, I
36:20
Speaker 2: think any country at the moment, I would look to
36:24
Speaker 2: try to get as higher economic growth as possible.
36:27
Speaker 1: Easier said than done, I guess, Jem. Sorry I went
36:30
Speaker 1: off topic a bit. There is there anything in the
36:33
Speaker 1: report we haven't talked about that you'd like to talk about?
36:36
Speaker 2: No, I think the main thing is that valuations matter. Clearly,
36:41
Speaker 2: valuations are the most important thing. And I you know,
36:43
Speaker 2: without wanting to give away my secret message for free,
36:48
Speaker 2: the kind of secret thing in financial markets is by
36:51
Speaker 2: low so high. That is the kind of secret source
36:55
Speaker 2: of financial markets. The one thing I would say is
36:58
Speaker 2: that nominal GDP is the speed limit for a global
37:01
Speaker 2: for global equity. So if you told me for the
37:04
Speaker 2: next five, ten, fifteen, twenty years, nominal GDP would be
37:07
Speaker 2: two percent, I would tell you that equity returns are
37:10
Speaker 2: going to be very low, very low.
37:13
Speaker 1: Because the valuation starting point combined with the low growth. Yeah.
37:16
Speaker 2: I look, I think global equities are probably neutral valuations
37:20
Speaker 2: if I had to aggregate them in total. So I
37:22
Speaker 2: don't have a big problem with the kind of the
37:25
Speaker 2: median country in the world. But if you're if your
37:27
Speaker 2: next you know, ten twenty years is two percent norminal
37:30
Speaker 2: GDP growth, you're not going to get much more than
37:33
Speaker 2: you know, two percent from nominal from equities. But I
37:37
Speaker 2: do think we're in a financial system where, because of
37:40
Speaker 2: how much debt we have, the authorities are almost incentivized
37:43
Speaker 2: to keep nominal GDP high, if not high, at a
37:46
Speaker 2: level which can at least celiate the debt. Yeah, so
37:50
Speaker 2: I don't think there's any danger of nominal GDP collapsing
37:53
Speaker 2: when you've got feit money and authorities able to manipulate
37:58
Speaker 2: money supply.
37:59
Speaker 1: But it's real gd keep ahead we care about, isn't
38:01
Speaker 1: it In the end, the end game of everything is
38:05
Speaker 1: supposed to be improved living standards for each and every person,
38:09
Speaker 1: not some random nominal number.
38:12
Speaker 2: Yeah, it is for you know, the economy. But I
38:14
Speaker 2: suppose if you're making a decision do I hold my
38:17
Speaker 2: money in cash or do I invest in the equity market,
38:20
Speaker 2: then nominal GDP matters? Is it matters? Yeah?
38:26
Speaker 1: I wanted to end on a more upbeat note than that,
38:29
Speaker 1: but it failed.
38:32
Speaker 2: On a scale of naught to ten, this is near
38:34
Speaker 2: ten of my upbeatness. So I'm sorry.
38:37
Speaker 1: Okay, so we can take it no further than this.
38:39
Speaker 2: I have out upbeat myself, so I don't think I
38:42
Speaker 2: can go any further.
38:43
Speaker 1: Oh okay, all right, brilliant. I'll accept that. If that's
38:45
Speaker 1: as good as it gets. It was pretty good. Let
38:47
Speaker 1: me ask you another question, then, are you reading anything
38:50
Speaker 1: uplifting at the moment?
38:51
Speaker 2: What's besides your bad The problem is because I like
38:54
Speaker 2: to think, I work long hours when I read, I
38:57
Speaker 2: tend to read non financial books these days.
38:59
Speaker 1: That's okay, I'll take that. Recommend a nice crime novel
39:03
Speaker 1: to us. We like that. Well.
39:05
Speaker 2: I'm always a big fan of the strike books.
39:07
Speaker 1: Oh yeah, I've just finished the latest one.
39:10
Speaker 2: Yep, I finished that too, so I won't give any spoilers.
39:14
Speaker 1: Oh, I'm hanging on a thread. I mean, how long
39:16
Speaker 1: is it going to take it to write.
39:17
Speaker 2: The next one? I hope not too long. But yeah,
39:20
Speaker 2: that's been my favorite book in recent times.
39:23
Speaker 1: I see I made the mistake if I haven't read
39:24
Speaker 1: them all, and now the way that the plot develops,
39:27
Speaker 1: I can't go back and read the earlier ones. It
39:29
Speaker 1: won't work. So I'm now start hanging off the next one.
39:32
Speaker 1: I feel like I've wasted a lot of my reading time.
39:34
Speaker 2: Yeah, I can't help you with that, but sorry.
39:38
Speaker 1: Thank you very much, Jim. Thank you so much for
39:41
Speaker 1: coming on today. It's been super interesting pleasure.
39:43
Speaker 2: Thank you very much. And obviously remember people can go
39:46
Speaker 2: on the Deutsche Bank Research Institute and look at this
39:49
Speaker 2: study for themselves. So thank you very much for having
39:51
Speaker 2: me on.
40:02
Speaker 1: Thanks for listening to this week's Marin Talks Money. If
40:04
Speaker 1: you like our show, rate review, and subscribe wherever you
40:06
Speaker 1: listen to podcasts. I keep sending questions or comments to
40:09
Speaker 1: Merron Money at Blueberg dot net. You can also follow
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40:14
Speaker 1: w and John is John Underscore Step Back. This episode
40:17
Speaker 1: was hosted by me Maren. Sunset were both produced by
40:20
Speaker 1: Summersadi and Moses, and it sound designed by Blake Maples
40:23
Speaker 1: and Aaron Casper. Special thanks, of course to Jim Red