Other[Music][Music][Applause][Applause][Applause][Applause]
Questioneris about two percentis about two percentis about two percent
Otherokay last year you know Manish got alongokay last year you know Manish got alongokay last year you know Manish got along with him a few darshana scholar they waswith him a few darshana scholar they waswith him a few darshana scholar they was sitting over there at the end of thesitting over there at the end of thesitting over there at the end of the room androom androom and his presencehis presencehis presence is absolutely electrified the audienceis absolutely electrified the audienceis absolutely electrified the audience because they spoke about their journeybecause they spoke about their journeybecause they spoke about their journey through dashara and through itthrough dashara and through itthrough dashara and through it umumum and how their own lives and their theand how their own lives and their theand how their own lives and their the likes of their family have beenlikes of their family have beenlikes of their family have been transformed thanks to the dasharatransformed thanks to the dasharatransformed thanks to the dashara foundationfoundationfoundation most of these Scholars I can guaranteemost of these Scholars I can guaranteemost of these Scholars I can guarantee wouldn't have finished you in highwouldn't have finished you in highwouldn't have finished you in high school or Nationalsschool or Nationalsschool or Nationals it's like everything else in life monishit's like everything else in life monishit's like everything else in life monish explained how he approached darshanaexplained how he approached darshanaexplained how he approached darshana Foundation as an investorFoundation as an investorFoundation as an investor one who wants to get the best bang forone who wants to get the best bang forone who wants to get the best bang for his truck will the bank for the book inhis truck will the bank for the book inhis truck will the bank for the book in the context of the Krishna it means thethe context of the Krishna it means thethe context of the Krishna it means the social impact of the Universitysocial impact of the Universitysocial impact of the University that's one of the most unboxful talksthat's one of the most unboxful talksthat's one of the most unboxful talks like ever hosted in this in this in thislike ever hosted in this in this in this
Otherlike ever hosted in this in this in this roomroomroom you also had with uswho will also speak to you um he is CIOwho will also speak to you um he is CIOwho will also speak to you um he is CIO of a very famous endowment of UCLA I'mof a very famous endowment of UCLA I'mof a very famous endowment of UCLA I'm sure you've all heard about UCLA uh ifsure you've all heard about UCLA uh ifsure you've all heard about UCLA uh if you need a CIO and president ofyou need a CIO and president ofyou need a CIO and president of after the foundation so he manages theirafter the foundation so he manages theirafter the foundation so he manages their moneymoneymoney both of them will speak to you aboutboth of them will speak to you aboutboth of them will speak to you about our topic which I haven't told you Iour topic which I haven't told you Iour topic which I haven't told you I want to keep the suspensewant to keep the suspensewant to keep the suspense
Other[Music]ladies and Gentlemen please welcomeladies and Gentlemen please welcomeladies and Gentlemen please welcome Monashthere are very few places on the planetthere are very few places on the planetthere are very few places on the planet as well as graduate MBA programs wellas well as graduate MBA programs wellas well as graduate MBA programs well which I actually have focused on valuewhich I actually have focused on valuewhich I actually have focused on value investing and it is it is quite ainvesting and it is it is quite ainvesting and it is it is quite a blessing for MBI and India to have suchblessing for MBI and India to have suchblessing for MBI and India to have such a place I think the threat goes toa place I think the threat goes toa place I think the threat goes to Sunday so a lot of what[Applause]what do you love if I can go to one handwhat do you love if I can go to one handwhat do you love if I can go to one hand in terms of the number of schools thatin terms of the number of schools thatin terms of the number of schools that focus on this area so when whenfocus on this area so when whenfocus on this area so when when professors decide to focus on what theyprofessors decide to focus on what theyprofessors decide to focus on what they will specialize in they generally wantwill specialize in they generally wantwill specialize in they generally want to focus on things where they attractto focus on things where they attract
Otherto focus on things where they attract sponsors and they attracts a lot of you know money and grants and Consulting and so on and that doesn't happen with value investment so then there's no natural responses which is why you don't have that much in Academia it's the same reason why entrepreneurship also doesn't talk much in the NBA program so so the few places that you have and what Sundays come together is quite unique and so I'll be here I think the quality of students is world class all right so you know it's because line so sometimes it's kind of to go through some history and in the 1920s like 1922 is that there was a big government version of the motors problem so at that time in 1921-22 we had hundreds and hundreds of car companies and and basically if you if you looked at the United States at that time so you would see like you know the trend in terms of the number of cars being sold
Questionerterms of the number of cars being sold it could be modified going through industrialization the highways are going to get rid of the population is going to be rapidly and you can see that 1990 you have 1.3 million cars and especially from 21 to 22 you see that 50 jump basically investors basically had a certain perspective right so they they felt that Autos were going to grow obviously the country was going to grow the population will grow up the the countries investors are absolutely right and what ended up happening is that nearly more than 1921 investors in the industry lost anti-investment so even though they were right on all the macro trends you still couldn't make money it was a difficult time to make money even though every every part of their forecast is correct and you know this is a listing of rather complete list of partial list of some of the companies that they were
Questionerof some of the companies that they were literally hundreds of other companies at the time and and they basically so you see the name and you see the start and then they existed over the years and you can just see that they pretty much you know most of them just disappeared and we haven't even heard of them over that period and and then you know about 38 years after that Bubble Burst there was another problem because the products possible and at that time basically the expectation was that that electronics and some of inductors and all the miniaturization of stuff that was going to happen it was only huge and people were correct it was absolutely correct what is also the right that it was really transformationall the silver non-chips and the rapid you know growth in in brain power I mean everything laid out in fact from 59 to 2015. it's still pretty you know and and
Other2015. it's still pretty you know and and that's like a 55-year run 50 60 a run but even then what ended up happening is the 1959 investors in these Tronics type companies lost their entire event so what people did is they they floated companies which either end in the term fraud at the end or Onyx at the end you know so you're like abstra on Neutron alcatron and then you know Circle product super product in the one with four you know powertron Ultrasonics you know how could you lose the power from another person and and of course it didn't go so well and we ended up with a complete loss of the land you know about 40 40 years after that we had the.com bubble and since it's been about 15 years I think many of you wouldn't have been you know allowed since I did probably the new lesson 10 years old and Trini and I old enough to remember this
QuestionerTrini and I old enough to remember this and it's weird on Sunday which would of course so this is one we won't forget for a while and so basically when we had the we had the.com bubble you know the internet was gonna be a game changer it happened radically change people's lives still continue to do that so that's absolutely correct and reconfigure the economy these were things that people believe in order to do and it has done all those things and again almost over the 1999 investors lost their entire world in fact and you end up so not so good results even though even though you had all the factors matter of factors behind you and you know so some of these companies google.com you know web band and and so on we had all these different companies that the team of Voters at that time and we got some pretty spectacular valuations so like for example we will get some of the
Questionerlike for example we will get some of the deals that were done at the time yeah so
Questioneryou see some of these yields you know something interesting ones uh you know you see all these issues going on Yahoo right now you know they bought broadcast.com for 5.7 billion that's pretty
Questionerso Mark Cuban sold uh broadcast.com to Yahoo and the only smart thing he did after the sale and he insisted on doing this after the sale was being allowed to hedge 100 of Yahoo stock because all these deals happened in Chinese money you know and so when when he got Yahoo stock also known as Chinese money he gets the entire position and and the funny thing is so so his network over 5 billion because completely hedged and his Network now is I think 2.3 billion so somehow over the last 15 years with all his adventures he didn't add to his network but you know that one decision probably saved him a
Questionerthat one decision probably saved him a few billion dollars a lot of private jetfew billion dollars a lot of private jetfew billion dollars a lot of private jet for the Dallas Mavericks and the bottomfor the Dallas Mavericks and the bottomfor the Dallas Mavericks and the bottom uh spot on the Shark Tank how many ofuh spot on the Shark Tank how many ofuh spot on the Shark Tank how many of you watch Shark Tankyou watch Shark Tankyou watch Shark Tank sureyeahso any type of entrepreneur so there'sso any type of entrepreneur so there'sso any type of entrepreneur so there's no Indian version of shop thenno Indian version of shop thenno Indian version of shop then right so so you had all these uh youright so so you had all these uh youright so so you had all these uh you know crazy things going on you knowknow crazy things going on you knowknow crazy things going on you know interactive 1.9 billioninteractive 1.9 billioninteractive 1.9 billion I don't even know what is theI don't even know what is theI don't even know what is the interactive current market Capital butinteractive current market Capital butinteractive current market Capital but that's a huge portion that it gave atthat's a huge portion that it gave atthat's a huge portion that it gave at that time for this and so you had youthat time for this and so you had youthat time for this and so you had you had some pretty crazy behaviorhad some pretty crazy behaviorhad some pretty crazy behavior and so you know if you look at theseand so you know if you look at theseand so you know if you look at these three bubbles the interesting thing isthree bubbles the interesting thing isthree bubbles the interesting thing is they are all about 38 to 40 years apartthey are all about 38 to 40 years apartthey are all about 38 to 40 years apart they're very similar to each other youthey're very similar to each other youthey're very similar to each other you know and so those those two things areknow and so those those two things areknow and so those those two things are not coincidences so the reason why wenot coincidences so the reason why wenot coincidences so the reason why we bubbles are that far apart is becausebubbles are that far apart is becausebubbles are that far apart is because like Sunday and I or Sweeney and I welike Sunday and I or Sweeney and I welike Sunday and I or Sweeney and I we know what happenedknow what happened
Questionerknow what happened and so if there's another problem like that we would you know found the table and behave guys we've seen this movement before but I remember that in in early 2000 I think January 2000 I was living in Chicago and I got into the staff and most of the campgrounds is the Sikh of Pakistan so this Pakistani cab driver from the whole he says to me and that's when you knew like the you know 1929 the shoe shine boy and Wall Street giving his doctor we pretty much knew there was a cab driver in from Lahore in Chicago and you know getting back to one you should buy that you know you were taking a top and and so the reason that these things take about this much time to happen is because the set of investors who saw it I need to have left the scene so if you think of human lifetimes inside so if we looked at the .com bubble happening in 2000 and let's say the next
Otherhappening in 2000 and let's say the next problem was coming in 2040. so a person who was 30 years old for example like 2000 would be about 70. and whatever is the cause of the 2040 bubble maybe you know fast forward to Mars we don't know we don't know they're not in the picture and so that the participants the the issue with the The Mortals powers so bubbles need that kind of 40 year period for the skin type things but the thing is Bubbles are very common they actually happened all the time and almost all the time more than one model is building up that's that's it actually surprised you how common is the bubble club and you know we have a little different sort of bubble there's two place just about 40 years and you know in the late 60s early 70s there was this concept you're the console of nifty fifty in in India which is not the same city this is this is your grandmother's
Questionercity this is this is your grandmother's 1950 so in the 19 late 60s early 70s the1950 so in the 19 late 60s early 70s the1950 so in the 19 late 60s early 70s the idea was that the view could buy youidea was that the view could buy youidea was that the view could buy you could buy these very high quality Bluecould buy these very high quality Bluecould buy these very high quality Blue Chip namesChip namesChip names and the price didn't matterand the price didn't matterand the price didn't matter so basically the idea was to buy theseso basically the idea was to buy theseso basically the idea was to buy these companies and you hold them because itcompanies and you hold them because itcompanies and you hold them because it was so good and they were so entrenchedwas so good and they were so entrenchedwas so good and they were so entrenched in their positions that the fight inin their positions that the fight inin their positions that the fight in that so you have things like you know sothat so you have things like you know sothat so you have things like you know so if you think about 1971if you think about 1971if you think about 1971 and you think about the amount ofand you think about the amount ofand you think about the amount of dollarsdollarsdollars and you look at it 45 years agoand you look at it 45 years agoand you look at it 45 years ago that's absolutely true you knowthat's absolutely true you knowthat's absolutely true you know McDonald's has dramatically increasedMcDonald's has dramatically increasedMcDonald's has dramatically increased the Scientifics more of the side of thethe Scientifics more of the side of thethe Scientifics more of the side of the salessalessales products all these offerings over thatproducts all these offerings over thatproducts all these offerings over that period McDonald's trading at those 1991period McDonald's trading at those 1991period McDonald's trading at those 1991 in you were Disney at 80 times runningin you were Disney at 80 times runningin you were Disney at 80 times running with you know Coke at the massive speedwith you know Coke at the massive speedwith you know Coke at the massive speed was just huge you know 1780 90 the ideawas just huge you know 1780 90 the ideawas just huge you know 1780 90 the idea was and since everyone was being givenwas and since everyone was being givenwas and since everyone was being given this advice so you're basically had a
Questionerthis advice so you're basically had a bipolar Market you're the new people be creating a very high evaluations and then everything else trading at you know who cares and and then we have basically we had a crash in slow motion in U.S golf but it wasn't like 1929 where you got one day or actually December if you didn't have a single day when you were kind of over two year period something like 40 50 of market value was gone and so when you looked at the price drop on the peak of 72 to the bottom of 74 and of course what happened what happened in the U.S in 73 and 74 was that was all Bloom and doom so for the first time we had the impeachment and the resignation of investors for the first time you had the oil about the first time in the U.S Americans had to fuel up you know miles long lines on their gas stations and they couldn't get gas and then you have a president who owns
Otherand then you have a president who owns all the wisdom enforced price confidence so yeah this whole bunch of kind of at least all these things are coming together and basically so what happened is that when the market started Twitter in 73 the Nifty stayed intact but then they were taken out back one by one on shocked and the private value ended in the end of 74 you had a blood and and that took place about 30 what's up when it's in 38 about 38 years ago 37 38 years ago and and so if you if you look at the situation today we have some some behavior and some things going on at least in U.S markets which are similar to The nifty 50 87374 it's not the same because it's never the same but it's it's similar so we have these companies which are very high quality numbers McDonald's ridiculous valuations right so Amazon has a 600 times running the Netflix is
Questionerhas a 600 times running the Netflix is at 240 times learning because the Netflix CEO of when he asked about the stock prices as the mystery to me you know explain the supermarket here and you know the solar system I made money they would be at some really good time Facebook was a 95 times what Uber's market cap will do when it goes public and you have some of that going on in India as well cards and I think cousins of some of these companies if you will again you know you have the same frenzy going on where people are trying to invest in in the equivalence in the Indian space as well and and so if you look at if you look at a company like Tesla for example you know they they have about four billion they're losing about 400 billion a year and even if they made money you know they're at eight percent you know margin would be the best of BMW by Martins even
Otherwould be the best of BMW by Martins even then you'll get over 100 times earnings of that and then go near those volumes and such and no idea when they'll make money and if you look at uh for example a company like General Motors okay so look at GM for example so people say that Tesla is the future right because what is the future right because what electric guitars and all these things so electric guitars and all these things so GM has a all electric they already have electric file on the road but they have it all electric tool and the mile rooms are coming out next year two years ahead of testimony thirty thousand dollars so there's nothing kind of spectacular about electrification that gives if there's any kind of help you look at something with their Motors and back up some of the cash and such it's actually cheaper than Tesla one is the important 100 people in revenue and GM's cash flows are on their way to 10 billion and
Questionerflows are on their way to 10 billion and probably all the way to 13 or 14 billion and if you look at a couple like GM they have two businesses so one is their Auto Finance business which is not even heavy capex or anything it's a very it's a Capital Bank if you will that business takes a billionaired so if you take a business like that you know probably work pretty well and then we have the China business which makes you believe so you have the largest of the market with the number one market share and so just took those students this is a VM and took out everything else you know so you have I mean distortions that that happen before and you know I took this quote from David Heine on to level recently without asking David so I hope he doesn't mind but you know he talked about a gay on Micron Technology which is now one and number two after Samsung and so you know Micron basically X goes to 4 billion in in free tax
QuestionerX goes to 4 billion in in free tax earnings and actually after that something then Netflix is making 240 million and of course Netflix actually the market cap will work with people here now and the microphone keeps popping I think they're like 13 14 billion now let's go the other way so yeah it's kind of huge variance in the two but Netflix again Netflix in India player another operation so so the thing about Netflix is in some time right internally is irrelevant it really does the fight but the thing is New York methods 9.99 all agree yeah so so ten dollars a month all you believe or what but each time of a watching this movie is their royalty payments that needs to be made to the contender and so when you look at Netflix Netflix and so even if you assume that the distribution types of three you still have to pay for the content and so it's not clear I mean that will
Questionerand so it's not clear I mean that will feel fantastic business run by a great CEO great team everything fantastic but it's not clear one of the long-term economics what portion of the ten dollars providers versus a pipe and we had this battle layout in the Cable business in the US and the content diets have a lot of love so so it's what I would say is that at desk it's more you know it's not obvious that certain things so the markets have a kind of people we are looking at things and and then you know this is the chart which shows like a number of companies trading at any given time in the US with the EU over 100 degree so in the.com Era we crossed we have like 120 companies to go to 100 so so you're seeing this polarization in the market just like you saw in the Nifty Fifty at that time and now and of course you know what we saw in 2000 was the data that has that Peak over 5000 same day the Berkshire
Questionerover 5000 same day the Berkshire I mean both both literally see the money getting pulled out of culture and those people taking their fine job in fact we launched in July 99 of the internet bubble actually worked out really well the first year he would have 70 because the side stepped all the really so you know you something like 30 of the value or 2200 companies in the top 10 main into the top 100 names are like 70 plus percentage so you know a huge portion is sitting in in those Netflix type names and you know so these things are kind of hard to forecast it was hard to hard to see kind of what events layout which causes any of this to change with the flat line that will drop a lot these are kind of things that are hard to hard to forecast but the simple thing I think may make sense is to avoid the avoid the same you know because you don't need to have exposure to all factors or something
Otherexposure to all factors or something crazy you can just do other things and why people are looking to might look stupid in the short term but that's what Sunday teaches you to look stupid in the short term
Othervaluations and and then they are in effect basically being taken out back and shot so in 73 74 what popped the nifty 50 was backwards it was unrelated
Otherwhat we're seeing now is the markets uh so at one point probably a few familiar with boxer oh it's a lot it's sold in India it's popular not popular expensive okay so it's great for videos it's a camera it's a camera with a waterproof case case you know which could be done and it has some software none of those pieces I believe are often sizes but the market at one point for the 9 billion values now we don't know where it's going from here but so it may be that it's about pops or one company at a time as you know some now you know workflow is a little bit
Questionernow you know workflow is a little bit easier to see Netflix can be harder you know so we'd love to see kind of all that other plays out and just kind of Watch What Happens there so yeah we've seen some of this happening already that you see in Twitter you know basically 48 billion of battery will go on getting so much for 2500 to 800 people a lot of these families below the last Venture round you know the last couple of enter around so they're going now below what the and another thing that I think happens is that when uh when companies get into Capital you know the Venture capitalists are getting participating before and such so they are pretty much almost done with the money back before Uber even at 100 languages because the valuation comes in eventually at 20 billion then the investors indicator will be paid off all the Venture investors so
Questionerpaid off all the Venture investors so they're not really going to do which isthey're not really going to do which isthey're not really going to do which is why they're willing to kind of get thesewhy they're willing to kind of get thesewhy they're willing to kind of get these things up to crazy numbers but they'rethings up to crazy numbers but they'rethings up to crazy numbers but they're not going to make money because you knownot going to make money because you knownot going to make money because you know how to get their money back like this uhhow to get their money back like this uhhow to get their money back like this uh and so now we have all these unicornsand so now we have all these unicornsand so now we have all these unicorns which is you know companies or a billionwhich is you know companies or a billionwhich is you know companies or a billion dollar valuation that's still privatedollar valuation that's still privatedollar valuation that's still private and there's 141 of them with a combinedand there's 141 of them with a combinedand there's 141 of them with a combined value over 500 billion and so the markvalue over 500 billion and so the markvalue over 500 billion and so the mark of the bubble is not just in the publicof the bubble is not just in the publicof the bubble is not just in the public equitiesbecause again like 7374 these are realbecause again like 7374 these are realbecause again like 7374 these are real companies and they are World classes youcompanies and they are World classes youcompanies and they are World classes you know say Amazon is absolutelyknow say Amazon is absolutelyknow say Amazon is absolutely operateoperateoperate Netflix so soNetflix so soNetflix so so real companies real customers doing areal companies real customers doing areal companies real customers doing a great job but valuations don't matterand I think that with that we'll haveand I think that with that we'll haveand I think that with that we'll have Sweeney come inSweeney come inSweeney come in and then afterand then afterand then after afterwards one thing I would just say isafterwards one thing I would just say isafterwards one thing I would just say is that there's athat there's athat there's a there's a book there are a few booksthere's a book there are a few booksthere's a book there are a few books there's one one book called Trendthere's one one book called Trend
Otherthere's one one book called Trend watching it was written by a former TVwatching it was written by a former TVwatching it was written by a former TV newspaper too much confidence in booksnewspaper too much confidence in booksnewspaper too much confidence in books by TV news anchorsby TV news anchorsby TV news anchors and if you read the end watching it willand if you read the end watching it willand if you read the end watching it will show you thatshow you thatshow you that there's almost all the time there arethere's almost all the time there arethere's almost all the time there are problems going on around us it's aproblems going on around us it's aproblems going on around us it's a nature as long as humans are involved innature as long as humans are involved innature as long as humans are involved in marketsmarketsmarkets because it's justbecause it's justbecause it's just and I think it's quite a treat to haveand I think it's quite a treat to haveand I think it's quite a treat to have any here soany here soany here so uh you know recently weenie had a dinneruh you know recently weenie had a dinneruh you know recently weenie had a dinner with Charlie you know a few months backwith Charlie you know a few months backwith Charlie you know a few months back and then and I think the next dayand then and I think the next dayand then and I think the next day challengechallengechallenge and he brought up the universityand he brought up the universityand he brought up the university for the meeting people and he said thatfor the meeting people and he said thatfor the meeting people and he said that because that this Indian money managerbecause that this Indian money managerbecause that this Indian money manager had a fat school on right and and alsohad a fat school on right and and alsohad a fat school on right and and also that the wage meaning has approachedthat the wage meaning has approachedthat the wage meaning has approached allocatingallocatingallocating like the 2 billion lots of capital UCLAlike the 2 billion lots of capital UCLAlike the 2 billion lots of capital UCLA is probably a model for a lot ofis probably a model for a lot ofis probably a model for a lot of analysis
Otherhello good afternoonit's a very tough act to follow peopleit's a very tough act to follow peopleit's a very tough act to follow people like monishlike monish
Questionerlike monish but I will try to give you a perspectivebut I will try to give you a perspectivebut I will try to give you a perspective from an asset allocatorfrom an asset allocatorfrom an asset allocator so very briefly uh in the U.S we hadso very briefly uh in the U.S we hadso very briefly uh in the U.S we had this phenomena where students like youthis phenomena where students like youthis phenomena where students like you become very successfulbecome very successfulbecome very successful deep and will be confidence and give adeep and will be confidence and give adeep and will be confidence and give a lot of money back to their schoolslot of money back to their schoolslot of money back to their schools and I hope that you'll all do thisand I hope that you'll all do thisand I hope that you'll all do this and next time when I come I hope thereand next time when I come I hope thereand next time when I come I hope there is a hundred million dollarsthis is a very unique question afterthis is a very unique question afterthis is a very unique question after that unique to us but I think is a verythat unique to us but I think is a verythat unique to us but I think is a very important enough right it's all aboutimportant enough right it's all aboutimportant enough right it's all about ranking Columbiastudents are given moneystudents are given moneystudents are given money billions of dollarsbillions of dollarsbillions of dollars why do kids give moneywhy do kids give moneywhy do kids give money it is part of ranchit is part of ranchit is part of ranch right the universities in the US areright the universities in the US areright the universities in the US are very good friendsvery good friendsvery good friends schools are very good at friends I am aschools are very good at friends I am aschools are very good at friends I am a 12 year old boy only shares two girls so12 year old boy only shares two girls so12 year old boy only shares two girls so from the time he was five years old isfrom the time he was five years old isfrom the time he was five years old is to come back with the flag of his teamso you know the one thing that I wishso you know the one thing that I wishso you know the one thing that I wish that institutions here do a better jobthat institutions here do a better jobthat institutions here do a better job is branding and try to keep the kidsis branding and try to keep the kids
Otheris branding and try to keep the kids after they leave the school studentsafter they leave the school studentsafter they leave the school students leave engaged because the engagement isleave engaged because the engagement isleave engaged because the engagement is what returnswhat returnswhat returns uh to school and that's how you createuh to school and that's how you createuh to school and that's how you create endurance populationendurance populationendurance population Okay soOkay soOkay so bubble so I heard that your body isbubble so I heard that your body isbubble so I heard that your body is mentioned to me that he's going to talkmentioned to me that he's going to talkmentioned to me that he's going to talk about bubblesabout bubblesabout bubbles so I lecture as you see on a frequentlyso I lecture as you see on a frequentlyso I lecture as you see on a frequently at the Anderson business school and oneat the Anderson business school and oneat the Anderson business school and one of the topics I covered in Behaviorof the topics I covered in Behaviorof the topics I covered in Behavior plansplansplans and so part of that course I cover someand so part of that course I cover someand so part of that course I cover some aspect of problems right so here I'm notaspect of problems right so here I'm notaspect of problems right so here I'm not going to go through every couple but asgoing to go through every couple but asgoing to go through every couple but as Moni said earlier the world is notMoni said earlier the world is notMoni said earlier the world is not new to powernew to powernew to power human behavior uhinnovationinnovationinnovation so my job as an accelerator is to try toso my job as an accelerator is to try toso my job as an accelerator is to try to understand what make us and if we canunderstand what make us and if we canunderstand what make us and if we can get that right because our job ultimateget that right because our job ultimateget that right because our job ultimate goal is to make fungoal is to make fungoal is to make fun and so to get inside into why we createand so to get inside into why we createand so to get inside into why we create problems why bubbles this way and whatproblems why bubbles this way and whatproblems why bubbles this way and what causes the bubbles to deflate many ofcauses the bubbles to deflate many ofcauses the bubbles to deflate many of those things are very common sense
Questionerthose things are very common sense questions right and because the answers to be raw so very competition s but even if you can never underestimate human stupidity why is GoPro as money said it's a camera and my son has one like it is 400 and he I think blew the camera out the second time he went up I wanted to go scuba diving and you need to clean underwater and he's 12 years old he didn't put the seal properly but why should it cost 9 billion but it defies common sense and so these bubbles are all around them and most of them are you know one bubble those and then it creates the pathway to the next process right and so there is always a continues in how uh and as I tell by team and by students is that you know the uh there are two aspects to foreign so I thought that I will take you through one recent part that we all are part of right and it is right in front
Questionerpart of right and it is right in front of us but sometimes there is not much you can do so if you are an economist I worked as an economist for five years before I got into money management right the University of Chicago has a very simple identity it's called the Chicago treatment and the identity is if you multiply if you have a chalk yeah so it's uh the product of money thanks velocity of money should approximate what we are doing so what does the Federal Federal Reserve do in the U.S right after the global financial crisis they inject a lot of liquidity so we put around 4 billion into the market so the idea was the economy had slowed down we were in a crisis mode we lost to our country gets back living at best terms so clearly the world was on fire so the Federal Reserve how many of you know the history of trying to lose them so I will Reserve was created in 1913 we had a panic in 1907 so when the Panic
Questionerwe had a panic in 1907 so when the Panic of 1907 soof 1907 soof 1907 so I think money slowed you a slide whenI think money slowed you a slide whenI think money slowed you a slide when the first problem was 1921the first problem was 1921the first problem was 1921 so between 1893 and 1907 the U.S Marketso between 1893 and 1907 the U.S Marketso between 1893 and 1907 the U.S Market clearance party we had many financialclearance party we had many financialclearance party we had many financial crisisthe result of that they created athe result of that they created athe result of that they created a committee at their job was to come upcommittee at their job was to come upcommittee at their job was to come up with the idea of secular time most otherwith the idea of secular time most otherwith the idea of secular time most other European countries alreadyso it looked at six years of handlingso it looked at six years of handlingso it looked at six years of handling and Woodrow Wilson sign the presence ofand Woodrow Wilson sign the presence ofand Woodrow Wilson sign the presence of acting 1930s so their job was to breakacting 1930s so their job was to breakacting 1930s so their job was to break something sosomething sosomething so in the last 100 years you have had manyin the last 100 years you have had manyin the last 100 years you have had many crisis but 2008 was a good one but aftercrisis but 2008 was a good one but aftercrisis but 2008 was a good one but after 20 90 this is the next big one20 90 this is the next big one20 90 this is the next big one so what do they do they inject it withso what do they do they inject it withso what do they do they inject it with youyouyou so what happensso what happensso what happens right so they injected liquidity and inright so they injected liquidity and inright so they injected liquidity and in the history this is that this goes backthe history this is that this goes backthe history this is that this goes back to 1955to 1955to 1955 so in the last 50 odd years we haveso in the last 50 odd years we haveso in the last 50 odd years we have never had the cost of capitalnever had the cost of capitalnever had the cost of capital as low for as long aslots of money in the US will seelots of money in the US will seelots of money in the US will see until last weekuntil last weekuntil last week March 21stMarch 21stMarch 21st and so all that money that came into the
Otherand so all that money that came into the system and with the cost of capital being as low as it is this is the same chart showing you how the money supply increased I don't need to explain to you this graph but then what happened to the velocity account so velocity so this equation was no longer back the FED can only control the front window so they injected the liquidity so if the velocity of money is stayed constant then you would have seen growth but the velocity of money crash so we didn't have the growth that the Federal Reserve thought that they came influence and so the only two they had at that time was put into play that is not good so this is a very powerful graph how many of you know Tom Pikachu yeah right so if you write Tom pick a disco he covers this concept of inequality quality income inequality quite vividly right so this graph is the perfect
Otherright so this graph is the perfect example to explain the idea of any problem because when the velocity of money drops what it is suggesting is the amount of money in circulation is reducing why is it reducing when there was so much liquidity injected into the system all that money went into the top five percent so he didn't go to the people that was meant to go to but it went through the conference what does that mean what it means is who has the money rich people who have the assets the rich people so when rich people get more money what happens today by more assets then you create an acid form and so what are the assets that you can inflict stocks and this is pregnant in the US so this is how Bubbles are formed so who instigated this law the federalism so I have this lecture that I give on institutions inclusive institutions and extracted institutions
Questionerinstitutions if you read this book called why Nationsif you read this book called why Nationsif you read this book called why Nations fail to a mighty Economist becauseand so what do they talk about they talkand so what do they talk about they talkand so what do they talk about they talk about institutions that can be deemedabout institutions that can be deemedabout institutions that can be deemed inclusive or extractedinclusive or extractedinclusive or extracted so in this and it is an extremelyso in this and it is an extremelyso in this and it is an extremely profoundly difficult answer to answerprofoundly difficult answer to answerprofoundly difficult answer to answer that question whether an institution isthat question whether an institution isthat question whether an institution is inclusive or in fact the Federal Reserveinclusive or in fact the Federal Reserveinclusive or in fact the Federal Reserve was meant to be an inclusive Institutionwas meant to be an inclusive Institutionwas meant to be an inclusive Institution but over the last seven years we canbut over the last seven years we canbut over the last seven years we can argue that it behaved like an extractiveargue that it behaved like an extractiveargue that it behaved like an extractive what is the difference inclusivewhat is the difference inclusivewhat is the difference inclusive institutions are institutions that areinstitutions are institutions that areinstitutions are institutions that are going to benefit Society at Largegoing to benefit Society at Largegoing to benefit Society at Large extractive institutions are those thatextractive institutions are those thatextractive institutions are those that extract value out of society like ofextract value out of society like ofextract value out of society like of coursecoursecourse and so in this case by Federal Reserveand so in this case by Federal Reserveand so in this case by Federal Reserve keeping the cost of capital as low as itkeeping the cost of capital as low as itkeeping the cost of capital as low as it has kept it benefited very few people athas kept it benefited very few people athas kept it benefited very few people at the expense ofthe expense ofthe expense of all the artistsall the artistsall the artists and soand soand so I just wanted to give you a sense of howI just wanted to give you a sense of howI just wanted to give you a sense of how policy developments policy boost by
Otherpolicy developments policy boost by large institutions
OtherSociety
Otherand so as an economist all of you are very familiar with distortions cost of capital at zero is a distortion
Otherand this is the chart that shows you European factories issuing debt and negative it will switch
Otherit defines common sense
Otherwhy would Germany raise a 5 billion dollar Bond and ask you to pay the money to keep them
Otherbut this is understand these are all signals
Otherso you know what is happening to uh you know countries where you have negative interest rates
Otherwhere you have get to GDP um you know in the red boxes
Othera way to distort almost all aspects of animals
Otherand I'll come back to this
Otherand so the debt to GDP is at the highest level in the U.S right and the Shaded part is the recession that we experience in the U.S
Otherso the question now of the most diverse investors is we have had the U.S stock market delivered at 20 annualized over
Questionermarket delivered at 20 annualized over the last six yearsand part of that is the asset bubble toand part of that is the asset bubble toand part of that is the asset bubble to be inflated in this case the stockbe inflated in this case the stockbe inflated in this case the stock marketmarketmarket so the question is whether there is aso the question is whether there is aso the question is whether there is a disconnect betweendisconnect betweendisconnect between what is happening in the equity marketwhat is happening in the equity marketwhat is happening in the equity market and in the real accountand in the real accountand in the real account so these areso these areso these are the uhthe uhthe uh so the next few slides are just tryingso the next few slides are just tryingso the next few slides are just trying to delve up to one sector what isto delve up to one sector what isto delve up to one sector what is happening in the energy sectorhappening in the energy sectorhappening in the energy sector so the energy sector this is that youso the energy sector this is that youso the energy sector this is that you know I'm sure all of you are familiarknow I'm sure all of you are familiarknow I'm sure all of you are familiar that with the fact that the type of oilthat with the fact that the type of oilthat with the fact that the type of oil is now at its lowest probably 15 yearsand if you look atand if you look atand if you look at the oil production it is at an all timethe oil production it is at an all timethe oil production it is at an all time nownownow so this is a commodityso this is a commodityso this is a commodity that the whole world uses right thethat the whole world uses right thethat the whole world uses right the demand for the commodity has not reallydemand for the commodity has not reallydemand for the commodity has not really slashed it downslashed it downslashed it down but the price has happenedbut the price has happenedbut the price has happened so it's uhso it's uhso it's uh I go through the next few slides veryI go through the next few slides veryI go through the next few slides very quickly so thatquickly so thatquickly so that you extend this these are the examplesyou extend this these are the examplesyou extend this these are the examples of the deflating of the powerof the deflating of the powerof the deflating of the power so in this case it is days of always
Otherso in this case it is days of always so in this case it is days of always so you look at the rate now it is just so you look at the rate now it is just so you look at the rate now it is just collapse collapse collapse it is a directly related to it is a directly related to it is a directly related to by example by example by example it is not economical in the U.S to drill it is not economical in the U.S to drill it is not economical in the U.S to drill for oil for oil for oil at these rates and so this is natural gas this is natural gas this is natural gas yesterday I had yesterday I had yesterday I had dinner with a gentleman who was dinner with a gentleman who was dinner with a gentleman who was invested in energy in India invested in energy in India invested in energy in India and and and so he was promised so he was promised so he was promised uh nine dollars uh nine dollars uh nine dollars uh for the natural gas for one BTU of uh for the natural gas for one BTU of uh for the natural gas for one BTU of natural gas but then body changes well I natural gas but then body changes well I natural gas but then body changes well I mean the genetic dog is profits and now mean the genetic dog is profits and now mean the genetic dog is profits and now he wants to pay the product about he wants to pay the product about he wants to pay the product about but the import price that they are but the import price that they are but the import price that they are paying designed out paying designed out paying designed out so this Consortium is asking them to pay so this Consortium is asking them to pay so this Consortium is asking them to pay at least the importance at least the importance at least the importance for political reasons they don't want to for political reasons they don't want to for political reasons they don't want to so these guys talk to it so these guys talk to it so these guys talk to it so the implications of what is happening so the implications of what is happening so the implications of what is happening in the and all the rigs around stake in the and all the rigs around stake in the and all the rigs around stake Island Island Island because they are saying that we would because they are saying that we would because they are saying that we would rather lose then go and pump if you are rather lose then go and pump if you are rather lose then go and pump if you are receiving half of water cost is it and it and it and we can't solve these bubbles
Questionerwe can't solve these bubbles with more debt with more debt with more debt so in the U.S so if you are a value so in the U.S so if you are a value so in the U.S so if you are a value investor I will always thought investor I will always thought investor I will always thought that you should always try to buy a that you should always try to buy a that you should always try to buy a dollar for fifty cents if you get by an asset for 50 cents and if you get by an asset for 50 cents and if you get by an asset for 50 cents and you hold it for 500. and if you analyze you hold it for 500. and if you analyze you hold it for 500. and if you analyze it at 15 to government it at 15 to government it at 15 to government and so for the first time in the last and so for the first time in the last and so for the first time in the last seven years we are seeing at this seven years we are seeing at this seven years we are seeing at this location in the net Market will be good location in the net Market will be good location in the net Market will be good we can now buy certain assets at 60 we can now buy certain assets at 60 we can now buy certain assets at 60 cents cents cents maybe 50 cents if we are really careful maybe 50 cents if we are really careful maybe 50 cents if we are really careful and if we speak and are not worried and if we speak and are not worried and if we speak and are not worried about putting massive position of God so about putting massive position of God so about putting massive position of God so the the the yeah yeah yeah with that bubble that I showed you is at with that bubble that I showed you is at with that bubble that I showed you is at the cost we don't know whether it is the cost we don't know whether it is the cost we don't know whether it is going to be substantial but in all going to be substantial but in all going to be substantial but in all likelihood we will have our opportunities to buy we will have our opportunities to buy we will have our opportunities to buy assets assets assets I went through this slide very quickly I went through this slide very quickly I went through this slide very quickly because I want you to have a chance to because I want you to have a chance to because I want you to have a chance to ask questions ask questions ask questions a police because you don't get to see it a police because you don't get to see it a police because you don't get to see it more often than his annual trip here but
Othermore often than his annual trip here but if you have any questions on what an acidology secret does or a CI knows that how we come up with strategy I can answer any questions return the tools of investment can be money time energy from a social impact what okay so it's a very complicated question but I'll try um you know Monisha and I know uh two gentleman uh because sleep and ties a carrier and they used to run several billion maybe three to four billion and they had a third of their allocation to one stop uh and desktop of Amazon and they had it for 15 years and I'm a battery investor I never understood how somebody could put one and a half billion in Amazon not today going back 10 years ago so I spent a lot of time with just study I like money which I believe is a one-man investment so I make all the decisions and I spent a lot of time so if you came to my house 10 years ago
Questionerso if you came to my house 10 years ago and told me that I would give my trading card information and I have buying stuff for internet I would love you because I wouldn't do that at that time but today if you came to our house 95 of everything requires they're on Amazon Prime everything is delivered we rarely ever goes up we just don't so why I heard this morning before we came here several of you were in the room where we were discussing his part in Amazon but it took me a long time to get around to understand why True Value investors who are very perfect love in their investment approach and their other whole deals are very important like like Costco and yeah identified why Amazon so I used to go to London just to see them and spend a lot of time thinking and asking about why is it called Amazon it is a very risky decision to put 35 of your money in one stock anyway
Otherput 35 of your money in one stock anyway
Otherlike what it says that you are pregnant
Otherwith that
Othersometimes
Otherand so then you know they change by now
Otherand
Otherthe lesson I learned from understanding
Otherwhy disasters invest in Amazon
Otheror I know Flipkart I know tiger I
Otherthought she is more than very well the
Otherwhole tiger family
Otherso
Otherthe value in Amazon I'll come to your
Otherquestion I'm just trying to put the
Othercontents you know
Otherso Amazon or Netflix or any of these
Othercompanies right our companies that can
Otherchange behavior and change Behavior
Otheracross three years of people
Otherhow do you assign value to a company's
Otherability to change fashion
Otherso what Flipkart is going through today
Otherhere is they're trying to change vast
Otherbehavior of a billion people
Othercan you change the behavior of a billion
Otherpeople without cost
Otherprobably you can but with cost you can
Otherchange it properly faster
Otherso Amazon so I have I don't have that
Otherso Amazon so I have I don't have that slide here I have a slide that shows you just updates like FedEx yeah Amazon UPS Microsoft Google what do all these companies do they change our Behavior without even realizing I've been in the US now almost 30 years only shall get there for as long I can tell you that when we were in the U.S if the way to go on vacation was sit in a car and Thrice for things Nobody Does it my son would strangle me if I decided the car for 20 minutes Southwest Airlines just change that related let other copycats come JetBlue comes a Ryanair in Europe I'm sure every year by in India is there similar to Southwest how many Indian Starfire it's time to think in 10 years they change the way we give behave so the ability to change behavior is a very powerful agent and that is valuable and so if you look at the next 10 years or why is Netflix
Otherthe next 10 years or why is Netflix value the way it is Amazon do I use thevalue the way it is Amazon do I use thevalue the way it is Amazon do I use the way it is I think it is not because ofway it is I think it is not because ofway it is I think it is not because of the advantagethe advantagethe advantage or I think it is in their ability toor I think it is in their ability toor I think it is in their ability to change plasticand I think that we have to as a valueand I think that we have to as a valueand I think that we have to as a value investor I would never buy Amazoninvestor I would never buy Amazoninvestor I would never buy Amazon right so my job as an as an advocator Iright so my job as an as an advocator Iright so my job as an as an advocator I don't have the luxury to do what monishdon't have the luxury to do what monishdon't have the luxury to do what monish doesdoesdoes right what is if you were if you manageright what is if you were if you manageright what is if you were if you manage this he manages money for moneythis he manages money for moneythis he manages money for money institutions he probably would manageinstitutions he probably would manageinstitutions he probably would manage five percent of somebody's moneyfive percent of somebody's moneyfive percent of somebody's money I manageand so I had to have by definitionand so I had to have by definitionand so I had to have by definition so in the asset liabilityso in the asset liabilityso in the asset liability model there are four basic quantitiesmodel there are four basic quantitiesmodel there are four basic quantities right there are there's insuranceright there are there's insuranceright there are there's insurance companiescompaniescompanies like that though and then you havelike that though and then you havelike that though and then you have Pension fundsPension fundsPension funds yesterday I had dinneryesterday I had dinneryesterday I had dinner who's your minister of classwho's your minister of classwho's your minister of class and he was telling me that the writtenand he was telling me that the writtenand he was telling me that the written assumptions of the ETF here are 15 Iassumptions of the ETF here are 15 Iassumptions of the ETF here are 15 I said how are you going to get itsaid how are you going to get itsaid how are you going to get it right they guarantee 8.75 to all theright they guarantee 8.75 to all the
Otherright they guarantee 8.75 to all the timetimetime even highereven highereven higher in the US all pencil monsters are brokenin the US all pencil monsters are brokenin the US all pencil monsters are broken PTO pension benefit obligations that's aPTO pension benefit obligations that's aPTO pension benefit obligations that's a very good obligationsso there's a huge mismatch betweenso there's a huge mismatch betweenso there's a huge mismatch between assetsanyway I'd stop here with respected whyanyway I'd stop here with respected whyanyway I'd stop here with respected why I'm working 20 straight if you come makeI'm working 20 straight if you come makeI'm working 20 straight if you come make sure there's some questions anymoresure there's some questions anymoresure there's some questions anymore do you have any you haven't answereddo you have any you haven't answereddo you have any you haven't answered these questionsthe foundation that you have so so uh Ithe foundation that you have so so uh Ithe foundation that you have so so uh I was a student of an organization forwas a student of an organization forwas a student of an organization for super 13 doctor you're also trainingsuper 13 doctor you're also trainingsuper 13 doctor you're also training students for IIT they have pretty highstudents for IIT they have pretty highstudents for IIT they have pretty high conversion people andconversion people andconversion people and mind learningmind learningmind learning your mind learning from there uh hasyour mind learning from there uh hasyour mind learning from there uh has changed me and I would like to know ischanged me and I would like to know ischanged me and I would like to know is the what's One Core idea on which youthe what's One Core idea on which youthe what's One Core idea on which you train yourselftrain yourselftrain yourself
Questionerwell first of all you know if therewell first of all you know if therewell first of all you know if there wasn'twasn'twasn't Anand KumarAnand KumarAnand Kumar or a super 30 there wouldn't be aor a super 30 there wouldn't be aor a super 30 there wouldn't be a dakshanadakshanadakshana sososo we have proved them onwe have proved them onwe have proved them on so thank you Anna good morning I want toso thank you Anna good morning I want toso thank you Anna good morning I want to tell people when people have totell people when people have to
Othertell people when people have to assumption when they start hearing someassumption when they start hearing someassumption when they start hearing some of theof theof the reasons andreasons andreasons and dramaticso so at the risk of making that faultso so at the risk of making that faultso so at the risk of making that fault and Humanity the first of all thatand Humanity the first of all thatand Humanity the first of all that right we looked at what Anand Kumar andright we looked at what Anand Kumar andright we looked at what Anand Kumar and super thought he was doing it soundedsuper thought he was doing it soundedsuper thought he was doing it sounded quite sensible to us it's great to see aquite sensible to us it's great to see aquite sensible to us it's great to see a super heavy product in the room sosuper heavy product in the room sosuper heavy product in the room so that's wonderful and and you know I Ithat's wonderful and and you know I Ithat's wonderful and and you know I I visited Anandvisited Anandvisited Anand actually I I emailed him in in 2006. Iactually I I emailed him in in 2006. Iactually I I emailed him in in 2006. I wrote an article in business week that'swrote an article in business week that'swrote an article in business week that's just randomly reading a business at thatjust randomly reading a business at thatjust randomly reading a business at that time I was trying to figure out I knew Itime I was trying to figure out I knew Itime I was trying to figure out I knew I wanted to give our money away but I waswanted to give our money away but I waswanted to give our money away but I was trying to figure out a model that wouldtrying to figure out a model that wouldtrying to figure out a model that would make sense so the super this articlemake sense so the super this articlemake sense so the super this article this is we talked about super thirtiesthis is we talked about super thirtiesthis is we talked about super thirties the first time I ever heard about it andthe first time I ever heard about it andthe first time I ever heard about it and it dawned on me that it was a incrediblyit dawned on me that it was a incrediblyit dawned on me that it was a incredibly powerful model because you know if youpowerful model because you know if youpowerful model because you know if you if you take a population of over aif you take a population of over aif you take a population of over a billion
Questionerbillion and you were to let's say think about and you were to let's say think about and you were to let's say think about family communicating that population family communicating that population family communicating that population are you know top one or two percent are you know top one or two percent are you know top one or two percent intelligence you know it's very high IQ intelligence you know it's very high IQ intelligence you know it's very high IQ is that number of the whole approach is that number of the whole approach is that number of the whole approach Infinity all gradual purpose because Infinity all gradual purpose because Infinity all gradual purpose because they're starting with such a huge they're starting with such a huge they're starting with such a huge population and then what portion of population and then what portion of population and then what portion of those infinite number of high quality those infinite number of high quality those infinite number of high quality grains get wasted grains get wasted grains get wasted that number is also interested because that number is also interested because that number is also interested because almost all of it doesn't get converted almost all of it doesn't get converted almost all of it doesn't get converted and so what Anand was doing was he was and so what Anand was doing was he was and so what Anand was doing was he was tapping into a pool tapping into a pool tapping into a pool of very high quality brains of very high quality brains of very high quality brains and harnessing the power of them and harnessing the power of them and harnessing the power of them right at a very low cost and so anytime right at a very low cost and so anytime right at a very low cost and so anytime you know there's a there's a you know there's a there's a you know there's a there's a was [Music] a mind is a terrible thing to waste a mind is a terrible thing to waste a mind is a terrible thing to waste okay and in India we have millions upon okay and in India we have millions upon okay and in India we have millions upon Millions upon billions of Mines that get Millions upon billions of Mines that get Millions upon billions of Mines that get wasted because of just the logistics and wasted because of just the logistics and wasted because of just the logistics and the way you know where you're born and the way you know where you're born and the way you know where you're born and who your parents are and all that okay
Otherwho your parents are and all that okay
Otherso so what I will do is it was
Otherhardnessing these very high IQ buildings and quite frankly if you took an average during and took a high ID brain and inject the same amount of resource on it
Otherso if you have a limited amount of resources you have to make choices until the choice should be to put it at the return to society in the hearts so for many reasons whenever article super heavy made a lot of sense and and he was converting high potential grains into Global Talent at 700 a person
Otherright I mean um super 30 so basically you know
Othermother was cooking for the kids he he rented a fairly low cost housing and you know he thought and other sorts so the cost of the program was very and very efficient we will do that so I contacted Anand for the email address contacted him and you know said I wanted to kind of help him scale and so on and he
Questionerof help him scale and so on and he responded saying thanks but no thanks
Questionerso I said okay
Questionerso yeah what year did you finish
Questionerokay so were you there
Questioneryes so I was there just before you guys can pick that March 2017. and uh security
Questionerbut anyway I met I and again talk to in person again
Questionertaking outside money or taking donations doing this whole thing with the way he was doing so I said okay did you mind uh substituting your model and scaling it
Questionerand he said no no you don't mind I'll help you in any way I can which you've always done you've always been really uh in fact he trained seven of our induction alarms to become faculty who are now teaching scholar so it's come full circle where we had kids who were in our program we're into IIT finished night we went to Ireland and now they are some of our faculty which is great
Questionerso that's not the idea is very simple that is if you want the model which I
Otherthat is if you want the model which I thought made sense and it still makesthought made sense and it still makesthought made sense and it still makes sense probably it makes sense for a longsense probably it makes sense for a longsense probably it makes sense for a long time the second is that I wanted to findtime the second is that I wanted to findtime the second is that I wanted to find a way because efficient and high returnsa way because efficient and high returnsa way because efficient and high returns of society in terms of recyclingyou know my dad used to say like we'reyou know my dad used to say like we'reyou know my dad used to say like we're not going to take anything with us andnot going to take anything with us andnot going to take anything with us and the second thing is that the largethe second thing is that the largethe second thing is that the large inheritancesinheritancesinheritances are a disservice to your kidsare a disservice to your kidsare a disservice to your kids sososo you know likeyou know likeyou know like like Buffett says that you know if youlike Buffett says that you know if youlike Buffett says that you know if you are yes your own son or the Sprinterare yes your own son or the Sprinterare yes your own son or the Sprinter it's not going to help kids son to putit's not going to help kids son to putit's not going to help kids son to put him on the 50 meter line in the 100him on the 50 meter line in the 100him on the 50 meter line in the 100 meter race with everyone else is at zerometer race with everyone else is at zerometer race with everyone else is at zero leftso you can help your kids but if youso you can help your kids but if youso you can help your kids but if you have your kids a lot and then what'shave your kids a lot and then what'shave your kids a lot and then what's going to end up happening is they willgoing to end up happening is they willgoing to end up happening is they will never reach their attentionnever reach their attentionnever reach their attentionnever reach their attention [Music]I was very comfortable with the outcomeI was very comfortable with the outcomeI was very comfortable with the outcome being reviewed so some of the principlesbeing reviewed so some of the principlesbeing reviewed so some of the principles that he was production was that didn'tthat he was production was that didn'tthat he was production was that didn't care about
Othercare about care about you know I would say any positive or you know I would say any positive or you know I would say any positive or negative impact negative impact negative impact to my reputation I didn't care about to my reputation I didn't care about to my reputation I didn't care about that at all if I didn't care that we that at all if I didn't care that we that at all if I didn't care that we want to complete failure the other thing want to complete failure the other thing want to complete failure the other thing that you have to do embark on a that you have to do embark on a that you have to do embark on a charitable problem Endeavor so charity charitable problem Endeavor so charity charitable problem Endeavor so charity is much harder than making money again is much harder than making money again is much harder than making money again is swing for the fences so is swing for the fences so is swing for the fences so or I think in the Indian will go just go or I think in the Indian will go just go or I think in the Indian will go just go for six years you know it doesn't matter for six years you know it doesn't matter for six years you know it doesn't matter if your middle stuff is gone but go for if your middle stuff is gone but go for if your middle stuff is gone but go for a fixer because the Sixers are the only a fixer because the Sixers are the only a fixer because the Sixers are the only way to move the needle way to move the needle way to move the needle you know if you are going to be careful you know if you are going to be careful you know if you are going to be careful then the moving on the needle is hard so then the moving on the needle is hard so then the moving on the needle is hard so daksha is very relaying to make bold daksha is very relaying to make bold daksha is very relaying to make bold deaths whether or not they work and what deaths whether or not they work and what deaths whether or not they work and what has happened with us thankfully is that has happened with us thankfully is that has happened with us thankfully is that we just a lot of Tailwinds and I don't we just a lot of Tailwinds and I don't we just a lot of Tailwinds and I don't think much of our assets have gotten in think much of our assets have gotten in think much of our assets have gotten in a negative way but we don't have brand a negative way but we don't have brand a negative way but we don't have brand plans so our kids the kids in the
plans so our kids the kids in theplans so our kids the kids in the adoption program we don't really spendadoption program we don't really spendadoption program we don't really spend time telling them how they should livetime telling them how they should livetime telling them how they should live there that's really not a focused whenthere that's really not a focused whenthere that's really not a focused when we first started we had this stupid ideawe first started we had this stupid ideawe first started we had this stupid idea that we should tell them give 10 ofthat we should tell them give 10 ofthat we should tell them give 10 of their earnings back lifetime back totheir earnings back lifetime back totheir earnings back lifetime back to society not functional practice Societysociety not functional practice Societysociety not functional practice Society we don't even do that right now now mywe don't even do that right now now mywe don't even do that right now now my model is the UCLA model so the way itmodel is the UCLA model so the way itmodel is the UCLA model so the way it goes to the Harvard Mall which is thatGreat Schools in a decade or twoGreat Schools in a decade or twoGreat Schools in a decade or two we will have we will have severalwe will have we will have severalwe will have we will have several darshan beginners and maybe evendarshan beginners and maybe evendarshan beginners and maybe even billionairesbillionairesbillionaires so we'll just have those guys on theso we'll just have those guys on theso we'll just have those guys on the showshowshow in 10-15 years and you know then we canin 10-15 years and you know then we canin 10-15 years and you know then we can talk them and say hey you want to dotalk them and say hey you want to dotalk them and say hey you want to do somethingsomethingsomething and the rest of them you don't need toand the rest of them you don't need toand the rest of them you don't need to apologize right is that your modelapologize right is that your modelapologize right is that your model training absolutely right so you knowtraining absolutely right so you knowtraining absolutely right so you know the efficient model right again close itthe efficient model right again close itthe efficient model right again close it close it from UCLA right so the idea isclose it from UCLA right so the idea isclose it from UCLA right so the idea is not to try to
Othernot to try to you know brainwash people or put you know brainwash people or put you know brainwash people or put ideologies into them I think what I have ideologies into them I think what I have ideologies into them I think what I have noticed is that the scholars we have are noticed is that the scholars we have are noticed is that the scholars we have are deeply interested in giving back train station train station train station which never happened right and that which never happened right and that which never happened right and that whole system got put in place because of whole system got put in place because of whole system got put in place because of all the volunteers and they have a whole all the volunteers and they have a whole all the volunteers and they have a whole program of mentoring in all the program of mentoring in all the program of mentoring in all the different streams they help them you different streams they help them you different streams they help them you know get their way around campus you know get their way around campus you know get their way around campus you know what to focus on how to do well if know what to focus on how to do well if know what to focus on how to do well if their problems so there's now their problems so there's now their problems so there's now significant support systems at all the significant support systems at all the significant support systems at all the IIT and ideas foreign
Questionerwell that's a good question so the good well that's a good question so the good well that's a good question so the good news is that there is the two hard part news is that there is the two hard part news is that there is the two hard part so you know when I one time I visited so you know when I one time I visited so you know when I one time I visited Oman or one gave me a tour of his office Oman or one gave me a tour of his office Oman or one gave me a tour of his office and I saw that on his guest there's a and I saw that on his guest there's a and I saw that on his guest there's a there's a box which is labeled too hard there's a box which is labeled too hard there's a box which is labeled too hard right so I told Warren that the box is right so I told Warren that the box is right so I told Warren that the box is empty you know I said there's nothing in empty you know I said there's nothing in empty you know I said there's nothing in the box you know how can we have a piece
Otherthe box you know how can we have a piece of we'll take care of that and I'll give you a whole bunch of stuff on in the Box you know so the thing is that the 99 percent of things that are happening in terms of assets and whatever's going on they want to go into a too hard part so the good news is we can become extremely wealthy without ever predicting when abounds were approached if you are if you just have enough knowledge to know that something may be about not even like I don't know if Amazon is or is not about it right but the good news is we don't need to answer that question it's irrelevant so so the key thing is you don't need to try to forecast when a bubble is going to start and then it's going to end or any of those things you can sidestep most of it because what ought to happen in investing value investing is it is hard enough when you
Questionerinvesting is it is hard enough when you focus on the low breakups okay so I always try to at the end of the day before I finally make an investment I always try to ask myself this is okay and then of course we invested the no-brainer and even then we gotta have a happy place okay so so when when this is already so much trouble with no-brainers why go into an area which is slightly off completely so the other thing to answer your question in a little different being is
Questionerand the only thing he has ever invested in in his entire career is real estate within two miles of the Stanford campus he is not investment anything else ever right and and so what is John elieager's Circle of confidence it's like this small right it's not even realistic it's not even real estate in California it's not interested in Northern California it's not even real estate in Bay Area okay it is very very specific
QuestionerBay Area okay it is very very specific to a particular area and and so the importance is not the size of yourself the importance is knowing the balance right so knowing the boundaries and I mean also says that if you you know just you're living in a small town you just own the best apartment building in town in town the best office building in town the McDonald's franchise and the Ford dealership you don't need anything so you know four in effect for stocks is that the compounding is that the compounding is an amazing it's an incredibly amazing concept my daughter is at NYU and she was just she was just coming home for the holiday so I went to LAX she picked her up for a 50 mile drive so when I was coming back home with her I I knew this would get her attention because she was a little sleepy and all that but I said okay no I just want to say that she had worked in the summer and she had made four thousand eight
Ted Weschlerand she had made four thousand eight hundred dollars so let's say five thousand dollars and uh in the U.S we have the deliverable retirement accounts we put the money in and it's not taxed so whatever you invest in is not actually as long as it stays in the account and that's why I I thought I opened something known as a Roth Island which she had signed on this paper she had no idea what she was saying but anyway so she had this small diary account which is the Roth IRA is one where it's after tax money that goes in but not least right so I told her that the 4800 went into this Roth IRA and I asked her I said that let's say it's five thousand dollars and I said you're 18 years old right now let's say you don't touch this five thousand dollars give your 78 years right so 60 years let's say this is and I said let's say it grows at 15.
Otherand I said let's say it grows at 15. right soright soright so so I said what would it become whenso I said what would it become whenso I said what would it become when you're 78 years oldyou're 78 years oldyou're 78 years old so I helped Robert I said no I'm fiveso I helped Robert I said no I'm fiveso I helped Robert I said no I'm five yearsyearsyears so five thousand become 10 times thatso five thousand become 10 times thatso five thousand become 10 times that next fight is again and 60 years is hownext fight is again and 60 years is hownext fight is again and 60 years is how muchis how muchso I told herso I told herso I told her you'll have 20 million dollars andyou'll have 20 million dollars andyou'll have 20 million dollars and that's itthat's itthat's it she woke up okay wide awake okay so Ishe woke up okay wide awake okay so Ishe woke up okay wide awake okay so I said yeah you know you when you're 78said yeah you know you when you're 78said yeah you know you when you're 78 years old you have 20 million and that'syears old you have 20 million and that'syears old you have 20 million and that's assumingassumingassuming that from 19 till 78 you never seem tothat from 19 till 78 you never seem tothat from 19 till 78 you never seem to diediedie never put any more money in just onenever put any more money in just onenever put any more money in just one summer when you were not even in collegesummer when you were not even in collegesummer when you were not even in college before you went to college you put thebefore you went to college you put thebefore you went to college you put the money in and so then I tried to place amoney in and so then I tried to place amoney in and so then I tried to place a mind game right so I said so let's saymind game right so I said so let's saymind game right so I said so let's say after college you're making eightyafter college you're making eightyafter college you're making eighty thousand let's see put away you know 15thousand let's see put away you know 15thousand let's see put away you know 15 percentpercentpercent and let's say after five years we'reand let's say after five years we'reand let's say after five years we're making 150 so I I said I can't it's toomaking 150 so I I said I can't it's toomaking 150 so I I said I can't it's too bigbigbig the numbers are too big right so thethe numbers are too big right so thethe numbers are too big right so the thing is that so
Otherthing is that sothing is that so that is the magic of compounding rightthat is the magic of compounding rightthat is the magic of compounding right so the thing isso the thing isso the thing is what does Warren Buffett want more thanwhat does Warren Buffett want more thanwhat does Warren Buffett want more than anythingare you gonna answer that if you ask oneare you gonna answer that if you ask oneare you gonna answer that if you ask one pocket you know the genie comes to youpocket you know the genie comes to youpocket you know the genie comes to you Genie what you don't have anything youGenie what you don't have anything youGenie what you don't have anything you want what do you thinkexactly you know it's like you know heexactly you know it's like you know heexactly you know it's like you know he he when people ask him you know what dohe when people ask him you know what dohe when people ask him you know what do you want people to say to your funeralyou want people to say to your funeralyou want people to say to your funeral he said just happens in man he was oldhe said just happens in man he was oldhe said just happens in man he was old so the thing is actually a long time youso the thing is actually a long time youso the thing is actually a long time you know you're not really moment and andknow you're not really moment and andknow you're not really moment and and the second thing was I try to impress onthe second thing was I try to impress onthe second thing was I try to impress on my daughter is that if the python didn'tmy daughter is that if the python didn'tmy daughter is that if the python didn't go on at the age of 18go on at the age of 18go on at the age of 18 if it went into the age of 38if it went into the age of 38if it went into the age of 38 you knowyou knowyou know we justwe justwe just fall off right and so so you need thefall off right and so so you need thefall off right and so so you need the long Runway and the second is you don'tlong Runway and the second is you don'tlong Runway and the second is you don't need heroicsneed heroicsneed heroics you know we don't need to kind of findyou know we don't need to kind of findyou know we don't need to kind of find the next Amazon or find the next Googlethe next Amazon or find the next Googlethe next Amazon or find the next Google or find the next desktop or whatever youor find the next desktop or whatever you
Otheror find the next desktop or whatever you don't need zeroids what you need to dodon't need zeroids what you need to dodon't need zeroids what you need to do is make sure follow the two rules andis make sure follow the two rules andis make sure follow the two rules and you want to express not the two rulesthere you go that's it so you just needthere you go that's it so you just needthere you go that's it so you just need to know those two rules and and you knowto know those two rules and and you knowto know those two rules and and you know she doesn't need component 15 what is itshe doesn't need component 15 what is itshe doesn't need component 15 what is it at 10 to be near every seven years yeahat 10 to be near every seven years yeahat 10 to be near every seven years yeah you know in 1986 and less than twoyou know in 1986 and less than twoyou know in 1986 and less than two billion today they have over 20 plusbillion today they have over 20 plusbillion today they have over 20 plus women they just double the greatwomen they just double the greatwomen they just double the great servicesforeign[Music]that's the most important how many timesthat's the most important how many timesthat's the most important how many times and and quite frankly it doesn't matterand and quite frankly it doesn't matterand and quite frankly it doesn't matter and you know someday makes you read alland you know someday makes you read alland you know someday makes you read all the profit levels right you make thethe profit levels right you make thethe profit levels right you make the read album right so you see in the earlyread album right so you see in the earlyread album right so you see in the early buffer letters he talks about the salebuffer letters he talks about the salebuffer letters he talks about the sale of Manhattanof Manhattanof Manhattan foreignthat's rightthat's rightthat's right but you know he he talked about thebut you know he he talked about thebut you know he he talked about the purpose of Manhattan from the Indianspurpose of Manhattan from the Indianspurpose of Manhattan from the Indians for twenty dollars now that was a badfor twenty dollars now that was a badfor twenty dollars now that was a bad deal because you know you would havedeal because you know you would havedeal because you know you would have done better with a small good morningdone better with a small good morning
done better with a small good morning and you know that and also how Spainand you know that and also how Spainand you know that and also how Spain what is spent on the conquest of whatwhat is spent on the conquest of whatwhat is spent on the conquest of what we've made the territories actually werewe've made the territories actually werewe've made the territories actually were the bad news and looked at what thatthe bad news and looked at what thatthe bad news and looked at what that money we were today so it's it's reallymoney we were today so it's it's reallymoney we were today so it's it's really really what Einstein says it's a greatreally what Einstein says it's a greatreally what Einstein says it's a great wonder is isvery long termvery long termvery long term and not trying to get into heroics andand not trying to get into heroics andand not trying to get into heroics and remembering lariegaremembering lariegaremembering lariega you know you don't need to know a wholeyou know you don't need to know a wholeyou know you don't need to know a whole lot about many things it's better to belot about many things it's better to belot about many things it's better to be an inch wide in a mile deepan inch wide in a mile deepan inch wide in a mile deep than a mile while underneaththan a mile while underneaththan a mile while underneath and that's itand that's itand that's it other questionsyou had the question of Tesla I thinkyou had the question of Tesla I thinkyou had the question of Tesla I think Peter shorting is Bad Karmapersonalhe said let's say you had fifty dollarshe said let's say you had fifty dollarshe said let's say you had fifty dollars in 1970.in 1970.in 1970. and you put it in the SMD file okay thatand you put it in the SMD file okay thatand you put it in the SMD file okay that fifty dollars today is about twentyfifty dollars today is about twentyfifty dollars today is about twenty eight hundred dollars that's how much iseight hundred dollars that's how much iseight hundred dollars that's how much is growing okay now he says let's say yougrowing okay now he says let's say yougrowing okay now he says let's say you took one dollar on each othertook one dollar on each othertook one dollar on each other and you put it into the Nifty Fifty atand you put it into the Nifty Fifty atand you put it into the Nifty Fifty at the peakthe peakthe peak and then he says now let's say you
Questionerand then he says now let's say you assume which has 47 out of fifty dollars 47 companies disappeared which didn't happen three companies where you put three dollars the value today is and of course I have a little bit of a issue with that with Tom and talk to a lot of the same neck is one of the three companies that he assumed is part of an electricity is one the second thing he said is that you know we all hear about doctorates big bet on American Express in the 60s 40 percent of the assets into MX position when they drop them on the federal government says let's say he was a schmuck you bought Amex one day before the federal crisis at the peak so you bought for example that hundred dollars and profit for let's say six months for example and both you and Warren held the position throughout from their children they would be basically no difference in those two numbers or analyte bases when you look
Questionernumbers or analyte bases when you look at it
Otherat it so even though the entry price was very different so what does that tell you what that tells you is that compounding machines great consistent long run compounding machines is where the name and that's why someone like Charlie Munger is willing to pay us so the key is is that's where I think the the you know rather than focus on Chief assets what you're better off doing this focusing on assets which I do that's where the game becomes complicated is can you identify durable franchise now you know it will be like one identified Google franchises and then keep them in the world also will tell you we were not smart enough to hang out with this and he was not smart enough to hang on the music he walked with me in the 60s work so inactivity is a great skill for an investor you know spend your time talking to students instead of trading
Othertalking to students instead of trading is very good for you and patience is anis very good for you and patience is anis very good for you and patience is an amazing skill programamazing skill programamazing skill program inactively and Patienceinactively and Patienceinactively and Patience are on the essence the core of the coreare on the essence the core of the coreare on the essence the core of the core of everythingbutif you really wanted a lot of you knowif you really wanted a lot of you knowif you really wanted a lot of you know sort of a multiplier then you wouldsort of a multiplier then you wouldsort of a multiplier then you would probably want to enter into a companyprobably want to enter into a companyprobably want to enter into a company which is fairly small with a huge runwaywhich is fairly small with a huge runwaywhich is fairly small with a huge runway in front does that sort of reply thatin front does that sort of reply thatin front does that sort of reply that you know micro micro cab well I don'tyou know micro micro cab well I don'tyou know micro micro cab well I don't think it's so much microgram I think thethink it's so much microgram I think thethink it's so much microgram I think the thing is that if you can identify longthing is that if you can identify longthing is that if you can identify long language one of the difficulties is thatlanguage one of the difficulties is thatlanguage one of the difficulties is that capitalismcapitalismcapitalism you know creative discussion right so ifyou know creative discussion right so ifyou know creative discussion right so if you have a boatyou have a boatyou have a boat everyone will come back to this programeveryone will come back to this programeveryone will come back to this program right so and the nature of capitalism isright so and the nature of capitalism isright so and the nature of capitalism is the number of renewing modes are verythe number of renewing modes are verythe number of renewing modes are very rare and in people I mean they just paidrare and in people I mean they just paidrare and in people I mean they just paid at home so the difficulty is in theat home so the difficulty is in theat home so the difficulty is in the identification of long-term goals so ifidentification of long-term goals so ifidentification of long-term goals so if you have identified something that is ayou have identified something that is a
Questioneryou have identified something that is a great quote for a long long period sure you know and the good news is we don't even know like around one left if you can make a you know like the 350 case you could put 10 into that one and you still have the other 90 that you need to understand but I think that's the key India so in fact through most of life and history we have not requested in very large confidence he ended up recently there but we end up there because that's where we find the opportunity I'm not I'm never specifically looking for certain market capitalism now one of the advantages the small investor has you know this kind of the shop Capital that way it doesn't work for me so so I have to have businesses and at least a certain size to invest so the small investor this is the industry with a small investor has a huge advantage over the institutions because a small investors can make an
Questionerbecause a small investors can make an individual to get like a hundred thousand dollars one lap would be bad and that will be significant for them and so the universe of opportunity that opens up is much wider but that's sometimes that can be a problem because you have too many things to look at you know so you need to hone in and take it from their windows you know in the US there is a saying that the best large cap investor is a recap starting investment ideally you want to buy a good cat company said that they can take a class but you know your micro cap storage so monish mentioned earlier that in the 20s there are 3300 only three survive how do you know which three would have survived that would happen of course yes yes so you know it's a very hard uh way to uh Vector micro Canada and if you're a value investor here it's hard for you to understand what the you know brand
Questionerto understand what the you know brand new is you know something that is two years old uh you did a lot more information everybody huh
Questionerso Amazon surviving we still don't know who's going to be the Survivor Ola or Uber or I don't even know the other names so somebody will survive but how are you going to do that
Questionerso it's much harder to back up micro cap range then identify very good businesses things companies have a long history but it's not you know big in size you can share the name so we're looking for topical knowledge so I relax with the name I mean it says four or five years I might actually be smart enough to buy this stuff how's your life so good okay
Questionerso my English you have companies where you can see the history but they're not scale upon the size and for some reason you know if you have a special Insight you can sense that this is the kind of time that the transition is sure yeah
Questionertime that the transition is sure yeah there are always stories but for everythere are always stories but for everythere are always stories but for every good story there are 100 disaster and sogood story there are 100 disaster and sogood story there are 100 disaster and so and you will never ever want to talk forand you will never ever want to talk forand you will never ever want to talk for four right so if you had a 25 microfour right so if you had a 25 microfour right so if you had a 25 micro capsular performance then I would likecapsular performance then I would likecapsular performance then I would like to see the success in the failure thento see the success in the failure thento see the success in the failure then the ingredientsthe ingredientsthe ingredients it's very hard for me it's notit's very hard for me it's notit's very hard for me it's not impossible it's just very hotI'm not a micro guysstay low forever then this makes sensestay low forever then this makes sensestay low forever then this makes sense and that job of fascinating with youand that job of fascinating with youand that job of fascinating with you know does it affect how each of youknow does it affect how each of youknow does it affect how each of you think you have to make a call when itthink you have to make a call when itthink you have to make a call when it will be 10 years from now and I have nowill be 10 years from now and I have nowill be 10 years from now and I have no reason to other things but for the firstreason to other things but for the firstreason to other things but for the first time do we need to worry that India istime do we need to worry that India istime do we need to worry that India is actually affect the worldactually affect the worldactually affect the world I thought the US can be at one percentI thought the US can be at one percentI thought the US can be at one percent forever and how does one thing of feesforever and how does one thing of feesforever and how does one thing of fees and asset evaluations in that contextumbasically you start your investmentbasically you start your investmentbasically you start your investment career you rarely spend time on thecareer you rarely spend time on thecareer you rarely spend time on the macro aspects so when I was a boardmacro aspects so when I was a boardmacro aspects so when I was a board manager 10 years used to be a CS
Questioneraround 20 years at that time I thought six and a half was too long and shut down fast forward 20 years and I think Buddhism this morning after breakfast I think we had this very brief exchange you know the way U.S is today IB cannot conceive of race much higher than we are in a low rate environment and if you just use back of the envelope calculations on white macro is important to this extent that we know what our total can be we know that pattern most of the U.S borrowing is shorter for the foreign so we know what happens to the cost of managing the debt to this debt and what we think is one of the taxes in the future it will be prohibitively expensive from the cost of carrying the tech uh you know first action and you know we know that the growth is not materialized that there is one thing that we do very well in the USA that is
Otherwell in the USA that is of every type of economy and so we knowof every type of economy and so we knowof every type of economy and so we know thatthatthat the other issue we spoke at in the U.Sthe other issue we spoke at in the U.Sthe other issue we spoke at in the U.S we have veryand the median per capita householdand the median per capita householdand the median per capita household income has been around fifty thousandincome has been around fifty thousandincome has been around fifty thousand dollarsdollarsdollars let's do the word China and India Unitedlet's do the word China and India Unitedlet's do the word China and India United exposureexposureexposure which is the education sector but in thewhich is the education sector but in thewhich is the education sector but in the U.S period household has beenU.S period household has beenU.S period household has been uhuhuh and with the oiland with the oiland with the oil price there it is today that is a taxprice there it is today that is a taxprice there it is today that is a tax break for most Americansbreak for most Americansbreak for most Americans so if you put all these things togetherso if you put all these things togetherso if you put all these things together it's hard to seeit's hard to seeit's hard to see uh rates going up because as I saiduh rates going up because as I saiduh rates going up because as I said earlier we don't have a problem of CPRearlier we don't have a problem of CPRearlier we don't have a problem of CPR anymoreanymoreanymore we don't have a problem if you adjustwe don't have a problem if you adjustwe don't have a problem if you adjust for inflation and look at the famousfor inflation and look at the famousfor inflation and look at the famous McDonald's burger Index right if theMcDonald's burger Index right if theMcDonald's burger Index right if the McDonald's burger company costs the sameMcDonald's burger company costs the sameMcDonald's burger company costs the same 30 years ago30 years ago30 years ago U.S has abundance of foodU.S has abundance of foodU.S has abundance of food food is not our problemfood is not our problemfood is not our problem and the question is what happens withand the question is what happens withand the question is what happens with Innovation the types of jobs we createInnovation the types of jobs we createInnovation the types of jobs we create under employment that we today we were
Questionerunder employment that we today we were an override and in all these young people they are comfortably smart you can see the energy the hunger the hustle and the faces of these people right and so you but you can also see there are another approach they could probably be doing hundred you know sponsor Innovative things if you give them the opportunity but you can see the same thing in the U.S most of the young people that come to our office are a million times smarter than I am but they all can't do there's only one CI overdraw and it is a pyramid structure everywhere and so the underemployment is a big issue and so with the number of young people in the ecosystem growing dramatically with the creation of middle class and all very bright people like you our challenge is to give you to the fullest extent discount rate and they'll be something kind of stupid
Otherand they'll be something kind of stupid in this environment but uh hopefully keeping our problems in Dubai yeah you know I've never taken approach where I don't want to spend too much time on the macro I I think we're better off understanding business so better and and available because I added in a wide range of outcomes if you will and I think that maybe more robust kind of take the John Legend and understand the confidence and focus on those things and get some diversification so that you're not always
Otherso that's good we might get some Tailwind but we're not banging it we are relaxed we are attached to Italian yeah
Questioneryou mentioned here every seven years it makes a big difference
Otherso before I answer that just to give you a set the S P 500 Maurice uh knows that index very well these days because he's working on it has analyzed it over 10 to the last time
Otherso I think it goes to the other question
Otherso I think it goes to the other question that you asked so 90 of returns that people that break is actually better right and if Market is giving you 10 and if we can add one or two percent that is humongously you know impactful over 30 years a two percent differential can translate into a brilliant if you are dealing with billion dollars so the markets have been very near operative and very rewarding over the last 50 to 75 years but in spite of 2008 the uh my portfolio generated over ten percent so we doubled in seven years in spite of 2008 and so the the saying is that it's very important to be in the right place even if it is with an average man if you have to be in the last seven years and simply doubled I would analyzed around 2100 so whether you were with the top design manager or an average manager but the fact that you had to be in the U.S was more important
OtherU.S was more important and so you can take that to Korea so in the last three years for example we thought that Europe was coming to an end world was coming to an end because Greece and literally in Spain and the Eurozone what was happening uh Belgium the Brazos but Europe did fabulously so we are learning that acid adaptation is as important as stock selection and so if you want to be in the value stop first you have to be the right so the decision to be if the value stopped is actively so that is
Otheryeah so you know and so this is what usually I start my lecture with an actual framework right there are only three things that we do what Monisha you want to do things so in our case we have a global movement any action with anybody and so we have to come up with some starting point okay where are you going to request and study is it in the U.S or India or China
Othernobody has it nobody has it nobody has it is very hard it's not easy is very hard it's not easy is very hard it's not easy and so when you have and so when you have and so when you have the third one is bit soft if you get the the third one is bit soft if you get the the third one is bit soft if you get the market right and if you know with stock market right and if you know with stock market right and if you know with stock you want to invest in then the third is you want to invest in then the third is you want to invest in then the third is look at how much it's profoundly look at how much it's profoundly look at how much it's profoundly difficult difficult difficult it is the hardest thing being it is the hardest thing being it is the hardest thing being so right now for example uh this is the so right now for example uh this is the so right now for example uh this is the real example we know that the U.S real example we know that the U.S real example we know that the U.S student Market is dislocation right my student Market is dislocation right my student Market is dislocation right my team has prices on every bond that we team has prices on every bond that we team has prices on every bond that we would potentially invest in and how it would potentially invest in and how it would potentially invest in and how it is corrected right we have been studying is corrected right we have been studying is corrected right we have been studying this for the last two years because we this for the last two years because we this for the last two years because we anticipated anticipated anticipated Us bubble so we know the space we want Us bubble so we know the space we want Us bubble so we know the space we want to be we know the names that we want to to be we know the names that we want to to be we know the names that we want to but there are technical issues in the but there are technical issues in the but there are technical issues in the U.S about difficulties or inside of the U.S about difficulties or inside of the U.S about difficulties or inside of the issue how much you want 10 of the portfolio 10 of the portfolio 10 of the portfolio 20 why 20 why 20 why so it's a very difficult question so so it's a very difficult question so so it's a very difficult question so that's why it's very impressive to see that's why it's very impressive to see that's why it's very impressive to see what people like they will write on only
Otherwhat people like they will write on only Asia okay who can put 35 percent of your name okay who can put 35 percent of your name okay who can put 35 percent of your name in one in one in one yeah in one day 35 yeah in one day 35 yeah in one day 35 minutes you have to have a conviction levels you have to have a conviction levels you have to have a conviction levels that are unbelievably but that will be a goal in your own money yes so how do you that are unbelievably but that will be a goal in your own money yes so how do you that are unbelievably but that will be a goal in your own money yes so how do you know so what we do is because we manage know so what we do is because we manage know so what we do is because we manage uh we are so focused on not losing uh we are so focused on not losing uh we are so focused on not losing happening because we are living being a happening because we are living being a happening because we are living being a dominant living beings because there are dominant living beings because there are dominant living beings because there are real people who depend on chaos every real people who depend on chaos every real people who depend on chaos every month research a salaries for a program month research a salaries for a program month research a salaries for a program that we don't have the liberty of having that we don't have the liberty of having that we don't have the liberty of having a 30 product great ideas and put five percent in each great ideas and put five percent in each great ideas and put five percent in each other it's not rocket science but by other it's not rocket science but by other it's not rocket science but by what we are also that saying is we could what we are also that saying is we could what we are also that saying is we could lose some of the ideas to zero and it's lose some of the ideas to zero and it's lose some of the ideas to zero and it's not going to kill us but if I put three not going to kill us but if I put three not going to kill us but if I put three ideas of 33 before one idea goes down ideas of 33 before one idea goes down ideas of 33 before one idea goes down then the institution will be on top from then the institution will be on top from then the institution will be on top from many perspectives we have constituted many perspectives we have constituted many perspectives we have constituted alumni and so if I lose 33 of my money I
Questioneralumni and so if I lose 33 of my money Ialumni and so if I lose 33 of my money I have your nonsenseand there's a cost to it not just losingand there's a cost to it not just losingand there's a cost to it not just losing their damage but we are telegraphing totheir damage but we are telegraphing totheir damage but we are telegraphing to the market many more things than justthe market many more things than justthe market many more things than just the awesomeso there are various others but three toso there are various others but three toso there are various others but three to five percent is you have to believe thatfive percent is you have to believe thatfive percent is you have to believe that if you are a globalif you are a globalif you are a global manager that you can find two threemanager that you can find two threemanager that you can find two three great ideas in the US two three great ingreat ideas in the US two three great ingreat ideas in the US two three great in Asia to be greatly programs in equityAsia to be greatly programs in equityAsia to be greatly programs in equity and debt on some otherand debt on some otherand debt on some other we can find 20 ideas to populate thatwe can find 20 ideas to populate thatwe can find 20 ideas to populate that piece of practices so that's how wepiece of practices so that's how wepiece of practices so that's how we position itposition itposition it isforeign
Otherthank you