The Madness of Markets (Alex Edmans) | #431

Introduction with Alex Edmans

0:00After a country is knocked out of the World Cup, the market falls by about a half a percent the next day. It makes you really think that people are just not well-equipped to make important financial decisions. Sometimes you don't need unique information. All you need is patience and a longer horizon.

0:20Welcome to episode 431 of the Rational Reminder podcast. I'm Ben Felix, Chief Investment Officer at PWL Capital. And I'm Cameron Passmore, Chief Executive Officer at PWL Capital. Today we are joined by Alex Edmonds, Professor of Finance at London Business School, who has previously appeared on this podcast in episodes 192 and 361. And in addition to being such a great guest, Alex is also the author of the books, Grow the Pie, May Contain Lies, and his new book, The Madness of Markets, came out last month.

0:55And in this conversation, we talk about why a football loss can sink a nation's stock market, why identical assets can trade at different prices, and the habits that help investors avoid the common mistakes that many of us make. Stick around to the end to hear our thoughts on the conversation. But for now, let's go ahead to our talk with Alex.

1:18Alex Edmonds, welcome back to the Rational Reminder podcast. Thanks so much, Ben. It's great to be back. Glad to have you back. You've got a new book out. You write a lot of books. I got to say, that's quite impressive. Well, there's lots of exciting research, not just by me, but by lots of other people that I love to make this accessible to a general audience. So it's a huge pleasure and a lot of fun to write then. Love it. Yeah, and you do. You make the research and the information very accessible, which is really cool to see.

Football results and market sentiment

1:44Alex, how can a football game's outcome affect a nation's stock market? This is a great question because it should not. So what you learn in any finance class is that the market is affected by fundamentals. So what should affect your stock prices, dividends and profits and sales growth. But what research actually finds is that sentiment and emotions make a difference. And so this is why I chose to look at the effect of football or soccer results, is that this is something which affects investor mood.

2:14And so what my co-authors and I found is that if you study over 1,000 soccer games after a country is knocked out of the World Cup, the market falls by about a half a percent the next day, which is 15 billion pounds when applied to the UK stock market. And this is because of the effect that it has on your emotions. Now, some listeners might think, yeah, my mood is affected by my emotions, but I'm a professional. So when I go and trade, I will put my game face on. I will block out my emotions and I will get back to rationality.

2:44But what this research suggests is that's not possible. You are human. And if you're a human, then you are susceptible to your emotions. And something like this does affect how you trade or maybe how you assess a company. Can you talk about some other unlikely things that seem to move the market? Absolutely. So weather also affects the market. And again, you might think, OK, weather will affect me if I'm on holiday or if I'm a farmer when I'm working outside. But actually, this was a study which was done not only in the US, but around the world, is

3:16that if it was sunnier than expected for that time of the year, then the market was more positive. And when it was cloudier, the market went down. So a lot of these external factors, why I call them external, is there should not really be any effect on profits and dividends. Unless weather becomes extreme, such as a floor or really sunny conditions, this shouldn't have any effect on productivity, but it does have an effect on your emotions. I've got a statistical question. When this stuff is studied, how do we know that it's an actual effect versus just a statistical

3:47anomaly? This is really important. You might worry that this is spurious correlation or even worse, data mining. So what is spurious correlation? It's something which just happens to be a chance pattern in the data. Data mining is if researchers go and fish for spurious correlations because you want to find something significant because then you can publish a paper around it. And you might think, well, maybe the weather people looked at loads of measures of weather. They could look at temperature and rainfall and snowfall and cloud cover.

4:17But what was interesting is that the people who wrote this paper, they started with an existing paper which looked at just the US and they expanded it to 20, 30 countries around the world. So they made sure that it held out of sample. And similarly for my football paper, we didn't just look at football. We looked at other international sports such as cricket and rugby and basketball. So the robustness of the finding is really important. And there's contrast with some findings in social science where they were not found to

4:48be robust. For example, I think the second most viewed TED talk of all time by Amy Cuddy is on the effect of power poses. If you stand with your arms aloft in a victory salute, then this apparently improves your public speaking and interview performance. But that was not replicated in other settings. So I think replication is important. Another thing is just basic common sense. So does it make sense for football to affect the stock market? And this is why I wrote the paper, because I saw the weather papers. I thought, yes, weather does affect your emotions. But an issue with weather is it's not correlated across the country.

5:22So maybe it's sunny in Boston and it's cloudy in New York, and it's not clear who's making the trades. But when England lose, the whole of England is upset. So one thing which matters is also just economic logic. A lot of the spurious correlations that you see, such as which team wins the Super Bowl affects the stock market, that is not something where there is a logical argument. Interesting. I remember we had Professor Robert Novy Marks on years ago now. He has that paper on global warming sunspots in the stars with respect to stock market performance. And he's kind of cautioning about overinterpreting, I guess, statistics.

5:55That was a great paper where he deliberately satirized. And I don't mean satirized in a negative way. I think it was a very useful contribution by looking at things that should not matter for the stock market, and it should not even matter for emotions. And he showed that it was correlated. And so this is why you have to be very careful about data mining. And that was the motivation for the football paper. There were psychological studies that show that actually football causes deaths. People have heart attacks when their team loses. In Canada, suicides go up when the Montreal Canadiens are eliminated from the Stanley Cup.

6:26So given that prior evidence had found that sports results do affect life and death, I thought it was plausible to look at the effect on the stock market.

The wisdom and madness of crowds

6:35Yeah, that's super interesting. Can you talk about what the wisdom of crowds logic suggests about market prices? The main book that mine goes against is a famous one called The Wisdom of Crowds by James Suriwikin. What he argued is that crowds actually do get to the right price. Why? Because while people might make mistakes, it argued that these mistakes might go in opposite directions. So let's say I was an Elon Musk fanboy. I'm going to be buying too much Tesla, and maybe you don't like his politics, and so you're

7:07going to be selling too much. We'll cancel each other out, and Tesla will be fairly priced. However, when you look at the stock market, often people will be reacting in the same direction. Why? Because human emotion goes in the same way. Lots of people might get really excited right now in artificial intelligence, fear of missing out. Maybe when crypto came on the scene, people got overly excited about that. Before that, we have the tech bubble. And so what we have is herd behavior, and that I think leads to the madness of crowds rather than the wisdom of crowds, is when you have something where there is some psychological

7:42sentiment which might be driving it, then often the crowd will all react in one way, rather than cancelling each other out. So interesting. So we've done experiments with groups of people in the past to test the wisdom of crowds idea. We've given them a big jar of jelly beans in a room, and we have, I don't know, maybe 50 to 100 people. Everyone casts a guess at how many jelly beans are in the jar, and it's been remarkably consistent how close the average guess is. Why do you think wisdom of crowds works with jelly beans, but not in financial markets? Really good point.

8:12It's because nobody really gets emotionally attached to the number of jelly beans in a jar. So some people will guess too high, and some people will guess too low, and this will even out. But when we think about the stock market, these are things which are affected by emotion. So lots of people will get excited by AI. There will be fear of missing out in cryptocurrency and non-fungible tokens. And so when you have something where there will be sentiment, often that sentiment will be reacting in the same way. Also, when you guess about jelly beans, you will often guess in secret, whereas with trading,

8:45you know what other people are doing. Maybe your friends are telling you they've got into crypto. Maybe you log on to Reddit, the WallStreetBet sub forum. You see lots of other people getting into crypto, and therefore you think, if I'm missing out, then I'm going to be looking foolish for not being into this new asset. And so I think that is really key. There's experiments by Solomon Asch on conformity, where he takes a standard line, and it gives you three lines, and asks which of those three lines is similar in length to this standard line.

9:16And what he did is he put some fake people in the audience to clearly give the wrong answer, and people would follow that answer, even though it should have been clear to their own eyes what the right answer is. And so this is why listening to other people conformity can be very powerful. And this is what you might get on a Reddit subforum. Interesting. We have made the guesses private when we've done that experiment.

Overreaction and underreaction in markets

9:39So what types of errors do investors make? Unfortunately, too many. But let me just go with a couple. So one of them will be overreaction. That is the example that I gave with football, is you react to something which should not really have any effect on stock prices. Now, not only can you react to something which is irrelevant, it could be that there is something which is relevant, but you still respond to it too much. For example, in the pandemic, Zoom went up by 700%.

10:11And clearly, the pandemic was good for Zoom. But to go up 700%, well, people did not realise that maybe Microsoft Teams and Google Meet would catch up. Maybe the world would open up in a couple of years' time, and people would realise that they like human interaction, and they don't want to have any more online conferences. But because people are just sitting in their lockdown offices, they might not have been able to see the world going back to normal. And so they overreacted in those cases. Sometimes what you might have is overreaction to something which is pure spin and no substance.

10:44So back in April, New Allbirds, the sneaker company, rebranded themselves as New Bird AI by claiming that they're going to pivot into AI. And this is crazy, because they have no expertise in moving into AI. Yet the stock price went up by 582%, because anything which has an AI label attached to it was heavily lauded. And so here was, again, another example where people react to something which is flashy and attention-grabbing, not really seeing, does the company have the ability to actually execute

11:19this new strategy? And why I think overreaction is so pervasive, and why I think this is the headline example I'm going to give, even though there's lots of errors that investors make, is we see this in so many other areas of life. So if you go to any football stadium at the weekend, if the manager's lost three games in a row, people will call for him to be fired, even if he's had four great seasons. Maybe at work, if you get missed off an email or excluded from a meeting, you think, let me try and quit this company. Or if you go on a date, your date doesn't show up, you might think dating is pointless.

11:50So in all of these situations, we might react to small bits of information. And that's why it's very difficult to shake when you get to the stock market. You gave examples of sort of overreaction to positive information where people are getting really excited. What about the other direction? So people could overreact to negative information as well. So you have overreaction, both the upside and the downside, just like I gave the example of not being included on an email or being excluded from a meeting. In both directions, we will have overreaction. And so this is why then this gives rise to a contrarian investment strategy, is that if

12:25we were to sort all stocks by how they did over the last three years, look at the ones that did really well and call them the winners. Look at the ones that did really badly and call them the losers. If we buy the past losers and sell the past winners and hold them for another three years, then what we see is that there is a reversal. Past losers become winners and past winners become losers. So we see the overreaction in both directions. What about underreaction? Do investors ever underreact? They do. So they underreact to different types of information.

12:56So we see overreaction to some salient, flashy news, such as an AI rebrand or the fact that we're in a lockdown. Underreaction might be to some quieter things that really affect long-term value, but which the market might not realize. So one of my own studies looks at corporate culture. Many people will think it's quite logical that corporate culture matters because human capital is your most important asset. However, there is no big announcement saying, oh, my employees are really engaged.

13:28You just can't have a press release like this. So what I looked at was the list of the hundred best companies to work for in America. Those are companies that go above and beyond in how they treat their employees. And over a 28-year period, these companies beat their peers by 2.3% to 3.8% per year. That's 89% to 184% compounded. Now, this is public information. So it should be that as soon as you get added to the list, the stock price should jump.

13:59But the market didn't. It ignored information hiding in plain sight. Why? Number one is that there's not a big, huge public announcement like there is with earnings. And number two, it may be that some people believe that if a company is employee-friendly, it is woke or tree-huggy, it's not focused on the bottom line, which is generating profits and dividends. The third reason is even if you knew that employees are happy and you know that that is a good thing, you might not know what to do with that information.

14:30So with quantitative information, you know what to do about it. If indeed earnings are 5% higher than previously, maybe you can increase every cell in your spreadsheet by 5%. But if you know that your employees are happy, it's hard to know how to change cell C23 in your spreadsheet. So maybe people might just actually not do anything about it. They overreact sometimes. They underreact sometimes. Do investors ever just react incorrectly to information? Yeah. So also investors will misreact. So they will make mistakes which have no direction attached to them.

15:03So one example is they will anchor too much on the purchase price, even though that's not relevant. So what determines how you should trade now is the current price of the stock versus what you think the current value is. But instead, people will think about what they bought it at, and that will be an anchor. So it may be that if you bought the stock at $100, and it's at $120 now, then you're in profit. People want to take profit, so they're more likely to sell. In contrast, if they bought it at $100 and it went down to $80, then they're sitting on

15:37a loss, and they don't want to sell because it's really difficult to take a loss. And so what we find is this problem where people are willing to take right to cash in their winners, but to hold on to and ride their losers. Even though you should actually do the opposite, because in the short term, what you typically see is underreaction. And so a stock which has done well recently continues to do well. A stock that has done badly recently continues to do badly. But if we anchor too much on the purchase price and focus too much on how is it done since

16:09we bought it, then we're actually anchoring on something which is not relevant. What drives investors' swings from exuberance to panic? So again, this will be overreaction. So it will be that if you have a lot of, say, excitement about tech, and then you see, oh, well, actually, we believe that tech is problematic now, or there could be some issue with people overspending, then it maybe will be that people overreact. So just as we discussed overreaction and many other areas, overreaction will cause people

16:41to latch on to small bits of information and make much more of this than they actually should. How does value investing exploit the same overreaction? This is interesting because this is another way into exploiting overreaction. So what I discussed earlier is looking at the past three-year stock price performance, buying the losers and selling the winners. But the other thing that you can do is you can look at a valuation multiple, and that is what value investing is about. So what is a valuation multiple? For example, let's think about how you value a house.

17:12You might compare the price of a house to the size. So you look at the price per square metre. And you might compare that to other houses in the same neighbourhood. And if one house is a much higher price per square metre than the others, then it may well be overpriced unless it happens to be in a much better condition. And so this is what you will do with stocks. So rather than price per square metre, what you might look at is the price to earnings ratio. So this is the price of a stock compared to the earnings per share. That is the fundamental value of a company.

17:45And if you have firms in the same industry or at the same stage of maturity, but one has a much higher P ratio than the other, then you may well think it's overpriced. Let's give an example. In 2000, Cisco had a price earnings multiple of 190, and this was three times what Microsoft was and four times what Intel was. So yes, that was a great year for tech. But even so, it shouldn't be that Cisco is way higher than its peers. And so the idea of value investing is to look at the price earnings ratio or other types of

18:18valuation multiples, buy what is cheap and sell what is expensive and hold this for another few years, and that has been systematically shown to work. Now, in the last couple of years, actually, value investing has been problematic. Actually, growth has outperformed value. For example, the Magnificent Seven has soared. However, value has been resurrected because if you look at the value of a company as not just its earnings, but also its intangible assets, companies with strong brands or strong

18:52corporate culture, then actually, some of the Magnificent Seven would be seen as value companies. Why? Because they have such great brands and such great products. And if you were to redefine value based on some of those intangibles, actually, the value strategy would work even in recent years when people have been proclaiming that value is dead. On that, we talked years ago, the first time you were on this podcast, about a value fund that I think was doing some of those things. Has it continued to perform well? So, this may be the Parnassus Endeavor Fund.

19:24So, that was initially the Parnassus Workplace Fund, which was based on corporate cultures. And I think when we discussed this many years ago, this was the best performing fund in the past one, three, five, and ten years. This was the biggest position in my personal portfolio when I was in the US. Now, for some reason, it changed its strategy. So, rather than being just a workplace fund, it is now the Parnassus, I think, Core Equity Fund. So, it's now just a general core equity company. And I've actually sold out of it.

19:54I don't hold it anymore because I wondered why it moved away from such a strong strategy. I have not seen much media about it. So, I don't think it's retained its number one position as it had in the past. And I think, in general, value investing has not been successful in recent years, in part because some people have been using the old valuation multiples, where you look at price just compared to earnings or tangible assets, not realizing that intangibles is what really is driving performance.

20:24In the US, it's struggled for sure. In Canada, value's been crazy in a good way, for whatever reason. I don't know. Maybe there's fewer intangible assets in Canada. I don't know. But it's been a very different experience for value investors over here. I wonder if it's because you have the same in terms of big tech. So, like in the UK, I don't think you've had value as dying as much because what has carried the US is just big tech, as mean that growth has been heavily outperforming. So, it may well be that people who claim that value is dead, they have a very US lens on them. And unfortunately, what you see is that many people make statements based on US data and

20:58claim that this applies to everywhere around the world. But actually, that's reassuring to know that in Canada, value is still going strong. Why do reversal and value work better together? Because what you're using is two different types of indicators. So, what reversal looks at is it looks at whether a stock has good value by seeing what it's done over the past three years. And in general, if a stock has done badly over the past three years, then it might seem to be too cheap. But just looking at that one thing is a bit narrow because it could be the stock's done

21:33badly over the last three years just because it's been underperforming. And so, that's why to use another benchmark such as intangible assets or earnings is useful to look at has the fall been justified or is this an over-exaggeration? The answer to this question is probably the stuff we talked about earlier, but I want to ask it anyway. Why don't strategies like this that we're talking about value and reversal and some other ones we'll talk about later? Why don't they stop working once they're published?

Limits of arbitrage for investors

22:02This is really important because what I seem to have described is such an easy strategy for investors. You just buy past losers or you buy stocks with low price earnings ratios and you magically sit back and then wait for the money to roll in. So, if this was so easy, why don't smart investors do it? And the reason is that there can be problems in the real world. So, let's illustrate an example. So, in late 1999, many people thought there was a tech bubble based on the multiples, like 190 for Cisco.

22:34This seems crazy. And so, Julian Robertson was a very smart investor. He ran Tiger Asset Management and he thought, well, let's short this tech bubble. And so, he did. But then whatever craziness led to it being overvalued to begin with, that craziness got even worse. And so, the bubble kept inflating. And so, his fund was bleeding losses. And then his rivals were doing well because his rival was still heavily in tech. Now, he would have tried to plea to his investors and said, stick with me.

23:04I will come for good in the long term. But his investors just didn't believe him because they thought, well, maybe this guy's lost it. He's just losing when everybody else is gaining. So, they withdrew money from him and liquidated him in March 2000. And then almost right on cue, the tech bubble collapsed. But Robertson was not around to enjoy the victory because his fund had already been liquidated. And so, this is one of the problems, is that if you're a professional money manager with flighty capital, which could be withdrawn at any point in time, then even if a trade

23:38is going to do well in the long term, maybe your horizon might be short term, and so you might not be able to exploit this. But what is interesting is if you're a household investor who's investing your own family's money for the next 30 years until you retire, you might actually have an edge over the professionals. So, often people think, well, investing is a rigged game. Me, as an individual investor, I don't have inside information that the professionals do. But sometimes you don't need unique information.

24:09All you need is patience and a longer horizon. You might be somebody who could exploit reversal and value investing, even though a professional might not be able to. Is it a limits of arbitrage argument? Exactly, yeah. So, what is arbitrage? That's the idea that if something is mispriced, there should be a clear trading strategy. But that arbitrage will only work in the long term. In the short term, your ability to profit on it may be limited. Why? Because whatever mispricing you see could get even worse in the short term before it gets

24:40better. Professional investors are constrained to basically benchmark relative to performance, but individuals who can stick with it, which is, I mean, that's a whole other question, there may be in a position to benefit from what the larger institutional investors cannot do. Yeah, and this is something that I actually did in early 2009. So, I sent an email to my students, which probably today would have got me fired. But what I sent back then was some investment advice. So, I said, look, in a class, we've learned about the limits to arbitrage. Now, we've seen a terrible 2008 where markets have just gone through the floor.

25:14I am increasing my equity rating by 20 percentage points. Why? Because my investment horizon is 40 years. Now, I have no idea that we've hit bottom. It could get even worse before I get better. But I don't mind this. And I'm going to be applying the principles of my class and deciding to go into equities. And it wasn't just me. There was Clare College Cambridge University, which invested in what they call the 2048 fund. They were investing on a 40-year horizon.

25:46They put 15 million pounds into equity markets because they knew that even if bottom hadn't been reached, stocks were still cheap. And so, now is the time to go in. What do you think about, there's a recent paper, I don't know if you've seen it yet, from Dmitry Moraviev on post-publication. He basically replicates a bunch of papers and finds that premiums, even if they replicate, premiums reduce out of sample. So, if we have the limits of arbitrage going on, why do you think out-of-sample performance of published premiums still declines?

26:17I'm not familiar with this paper, but this seems consistent with a paper by McLean and Pontiff. Same idea, yeah. Which won the Journal of Finance Best Paper Award in 2016. And so, what they found is that, exactly as you're saying, after a paper is published, the returns go down. But they only go down by a third. So, if markets were efficient, they should completely disappear, because people will see this free money on the table. I do think this is where, because limits to arbitrage are important, is that people are just scared about, let's say right now, exiting from tech and AI.

26:51Because if they end up being right, but early, then they end up being wrong. And also, there's a second behavioral reason. It's what do you want to invest in if you are a fund manager? Do you want to invest in genomics and artificial intelligence and green hydrogen? That is exciting. Or do you want to invest in alkyd resins and surfactants? So, when I was an investment banker, I was put into the chemicals department. I remember my training, where we were given the assignments, and then my colleagues were just all making fun of me, because they were just put on my desk before I started, like

27:21Financial Times articles about the chemicals industry. It's just boring. So, you were learning about boring stuff, and where everybody wanted to be in tech and telecoms back then. And this is your career. So, do you want your career to be just looking at resins, or to be on the next frontier, be this genomics or gene editing? I do think these behavioral psychological factors matter, because for you to really believe in reversal, you're going to have to be investing in what seems to be yesterday's stocks and yesterday's industries.

Salience and reaction to old news

27:51Why do markets react to old news? This is important. And this is a phenomenon known as the illusory truth effect, where if you hear something enough times, you start to believe it, even if you've heard it before. So, there's many urban myths, such as you lose 90% of your temperature through your head. We only use 10% of our brains. But if we hear this repeated enough times, we start to believe it. And this is also the same with reaction to information.

28:22So, there were cases in which the market responded to news that it already knew before, but just because repetition makes it salient. Maybe the most stark example of this is a company called Entramed, which made a drug called angiostatin. You might think, who? And what? So, let me explain. So, angiostatin was a drug which was found to reduce tumors in mice. People thought, well, that could then be a cure for cancer if it works in humans.

28:52And so, there was a New York Times article in May 1998, which announced this, and it sent the stock price of Entramed up seven times. Now, you might think, well, this is not an overreaction. That is actually fair, because if the drug successfully works in humans, then this will be a game changer. But what was interesting was that that story had been reported in the same newspaper six months ago, the very same New York Times. But just because back then it was on page, I think, 23, and this time it was on the front page, it became more salient and people just noticed it.

29:23So, whenever something is more prominent, then even if we already know it, then we're more likely to be latching onto this. And this is the whole point of advertising. So, sometimes just to see the name of a company blazoned on a football shirt or on the side of a billboard, even if it doesn't tell you anything, we know the name of the company previously, repetition does mean it's going to be more sticky and might mean we react to it, even though there's no new information content, because we already knew the company existed. Is salience it, or are there other reasons that markets are slow to react to news?

29:56In addition to salience, it could be confirmation bias, which I think is the last conversation we had a couple of years ago about my prior book. So, what is confirmation bias? We have a view of the world, and even if we see the news, because it's salient and it's front page news, if that view contradicts our existing perspectives, then we might ignore it. So, let's give an example. So, when Amazon first released, I think it was S3 and EC2 in 2006, which were the precursors

30:30to Amazon Web Services, the market just did not care. Why the market viewed Amazon as an online seller of books and CDs, they had no idea what cloud computing was, or that Amazon would be successful in it. And so, it wasn't until nine years later in 2015 that these line items got separately reported in Amazon's accounts that the market started pricing this in. But back then, people just ignored it because they thought, well, this is not something which Amazon will be able to do. So, if it contradicts your view of a company, it may well be that there's not much reaction

31:04to this. And similarly, on the flip side, if there is bad news about a legendary company, people might not be willing to listen to this. In a similar way to, say, Silicon Valley Bank, when they saw some models suggesting that their company was going to go under, they ignored it because they thought, oh, we've been successful for many decades, we're not going to be affected by a small rise in treasury yields. Just to come back to what we were talking about a minute ago with the boring companies performing

31:34well, Hank Bessenbender had a paper that we talked to him about a while ago, and I just pulled it up. Some of the best performing stocks in the U.S. market, Altria, Philip Morris, like Tobacco Company, Vulcan Materials, Kansas City Southern Railway, General Dynamics Corp, and Boeing. Not the most exciting companies. That's really important. And this is actually linked to a very important paper by Hank, which I also cover. So, his paper was whether stocks beat treasury bills. And you might think, well, that's a bizarre question.

32:05Don't we know, Finance 101, that stocks do better over any horizon? But what he looked at was, rather than the aggregate stock market, is he looked at individual stocks. And what he found was that fewer than three stocks in seven beat treasuries. So, let me repeat this again. The median stock does worse than treasuries. And if you rounded the return of a stock to the nearest 5%, the most frequent return is minus 100. It's basically going bankrupt. That is the most frequent outcome for a stock if you round it to the nearest 5%.

32:39So, how, therefore, can it be that the market as a whole outperforms when individual stocks are more likely to underperform? It is because of skewness. Is that the stocks that outperform will do really, really well, Magnificent Seven being an example. So, in 2023, the other 493 companies in the S&P 500 went up by 12.5%. But the Mag 7 went up by over 100%. So, when you added them together, you got to 26%. So, by not being in the Mag 7, your returns would have been half as much.

33:13And so, this is linked to the point that you just made, is that you don't know what the really good performance will be in any given year. So, in some years, it's the Mag 7, but in other years, it'll be Altria. And if you're just out of particular stocks, sometimes the really boring companies, you might be really underperforming the market.

Momentum across stocks and sectors

33:32One of the other effects or anomalies, I guess, in the market is momentum. Can you talk about how momentum at the individual stock level compares to momentum at the sector or market level? Absolutely. So, what is momentum? This is linked to the idea of underreaction that we discussed earlier. So, in the long term, the market tends to overreact, which is why we have the reversal strategy. But in the short term, the market tends to underreact. Why? A company might have some good news, but either it's not salient, so there's underreaction,

34:04or it is salient. But if it goes against people's beliefs, like EC2 and S3 for Amazon Web Services, then people will just not fully cotton on to it. And so, what this means is that if we were to sort stocks on the basis of the past six month performance, not the past three years, you now actually want to buy the winners and sell the losers, because short-term winners keep rising and short-term losers continue to sink. And so, what this means is that at the individual stock level, you want to buy recent winners.

34:37Now, where does momentum also exist? It's at the sector level. So, if you just do momentum on a sector level, just buy the industries that did well over the past six months and sell the industries that did poorly, you would get most of the momentum profits at the individual company level. And so, that is quite powerful, because what that suggests is that you don't need to analyse each individual stock. You can just play this at the level of industries. And as you're suggesting in your question, you could play this at the country level.

35:08So, to buy countries that have done well recently and sell countries that have done poorly recently, that simple strategy has been found to earn returns over a long-time horizon. And so, the fact that we see this at the stock level, at the country level, and at the sector level, suggests there is some common psychological factors behind it, which may well be salience or inattention, and also stubborn, strong beliefs. So, maybe when India started to do well, many people might think, oh, no, India is not a

35:39place to put your money. You want to put it in the US, where there's all of this great tech. And so, if people have this view, then they might not be responding fully to information that the Indian stock market is now being reformed, and therefore, they may be missing the future profits on this. So, Alex, where is the momentum effect strongest? So, it will be strongest in cases in which you think there's most likely to be underreaction. And so, where is that? So, that will be typically small stocks and stocks with little analyst coverage.

36:13So, why is this? Well, if a stock is small, then you might not be seeing the news. So, every second week, I think it is in November, there is a week in which all the big tech companies are announcing their earnings. And so, if you're a small logistics company, even if your earnings numbers are knockout, you're going to be missed by the market because they're just focusing on what is Amazon and Meta and Tesla doing. If you're focusing on small companies or companies which are less covered, then there's more likely to be underreaction.

36:43Also, if you're willing to look internationally, outside the US, momentum will typically be stronger, again, because we have less news about many of these companies. When does momentum fail as an investment strategy? This is a very important question because all of the strategies that I describe in the book, they make money on average, but they're not going to make money in every particular circumstance. So, momentum does do well in most times, but when it fails, it fails really badly.

37:15What is nice about this is that you can actually predict when momentum is going to fail, and it typically does badly in times of market stress. And you can measure market stress by, number one, just a big fall in the overall S&P 500, or number two, by the VIX being high. And the VIX is the volatility index. When stocks are really, really volatile, then momentum typically fails. Why is this? So, in times of market stress, then a lot of things are going down, and after things have gone down, then it's going to be likely that there will be a rebound.

37:46So, who will do well in a rebound? It will be very cyclical companies. But a cyclical company is one that did badly in the downturn, and if momentum avoids the companies that have done badly recently, then you're not going to be in the companies that are also poised to do well in the upswing. And so, this is why you want to get out of momentum strategy in a time where the market is stressed, or it has gone down significantly recently. Sounds kind of stressful. Well, it's stressful, but because you can predict it, it's less stressful than if there were just

38:20some random shocks to momentum. Super interesting. Are there any products or strategies you know that are doing that, that are kind of timing momentum exposure based on the VIX? I don't know of a strategy. I know of a paper. I think it was called Momentum Crashes by Kent Daniel, who was at Goldman Sachs Asset Management. He's now a professor at Columbia, but was in the private sector. And Toby Moskovitz, who's a professor at Yale, who also spent time at, he's, I think, still a partner at AQR. So, I don't know whether they've developed products at Goldman Sachs or AQR, but certainly

38:51this research suggests that you can have this enhanced momentum strategy where you're in it, but you tilt out of it when market is in a decline.

Breakdowns in the law of one price

38:59When does the law of one price break down? What is the law of one price to begin with? This will suggest that the whole is the sum of its part, that if there are two assets which are identical, then they should be trading at the same price. And this seems to be really basic. This is what you might learn in chapter one of a finance textbook. But even this simple statistic may actually not hold. So, one example was 3Com and PARM.

39:29So, what is PARM? So, PARM made the PARM pilot. When I was a junior investment banker a long, long time ago, PARM pilots were the next big thing. You had them on your desk and that. It was a status symbol. And because PARM pilots were so in vogue, when 3Com, the conglomerate that made them, floated PARM, the division that made them, the price of PARM went up so much that the value of PARM was bigger than the value of 3Com as a whole. So, this actually made no sense.

39:59Why? Because one part of 3Com was worth greater than the whole. Or, if you wanted to buy PARM, the best way of doing this is not to buy PARM itself, but to buy 3Com, which owned PARM, and then you're getting all of the other businesses for free. And that is one case where we have basically a stub, which is some subsidiary being worth more than the parent. So, another example where the law of one price will break down is the off-the-run, on-the-run treasury phenomenon. So, if I was to issue a new 10-year treasury bill right now, then that's going to be something

40:34which is going to be in huge demand because it's a new, shiny issue. However, a 30-year treasury bill issued 20 years ago, today would also be 10 years till maturity, it's got 10 years left to run. But because that was not a new one, that was issued 20 years ago, that is just not seen as fashionable, it is not as liquid. And so, people will pay more for something which is liquid, which we know that other people are trading, which people are excited about. So, even though the cash flows on those two treasury bills are exactly the same, the one

41:09which has been recently issued is going to be the one which is going to be more expensive than the one that was issued 20 years ago. There's a paper, too, from James Choi. I remember reading about how you can even have index mutual funds with materially different fees, and people won't necessarily choose the lowest fee fund. Is that another example of the law of one price breaking down? Yes, exactly. Also, you might say, well, there's just different bank accounts with different interest rates, and people are not always going to go for the highest yielding bank account, even though in today's world, you've got all of these price comparison sites, which should drive you

41:44to the cheapest. And actually, also, just for regular purchasing, you would be able to say, well, I can buy this book somewhere cheaper. And it may be people say, I don't want to go to Amazon, even though it's cheaper. I want to support my local independent bookstore. So sometimes it could be for rational reasons. You've got objectives other than financial returns, but sometimes it may well be that you're just not aware of this, or you don't bother doing the search. Or the wrong information is salient. I think in that paper, if I remember correctly, people would choose a higher fee fund based on its past performance, but it was just based on a different past performance date.

42:17But they're both S&P index funds. But whatever, one showing eight years of returns and one showing six, and the eight year happens to be better, people will allocate to the one with a better historical return without realizing. Good point. That also just means that salience is really important. So whatever return you happen to advertise, people will latch onto that. And also, there's different salience in terms of fees. So often, if the fund says no initial charge, then that is attractive, even if the annual management charge is high, in the same way that if you're buying printers, people will go from the sticker

42:49price of the printer and not think the toner into account, that's the recurring charge, a bit like the analogy of the annual management fee on a fund. So funny to talk about this stuff. It makes you really think that people are just not well-equipped to make important financial decisions. This is why I wanted to write the book, is even smart people make these mistakes. And it's not because they're just deliberately being foolish, but because it's just human. It's just human to cotton on to whatever we see, which is really, really salient. And we see there's not just investing. While the book is about investing, that is only the laboratory for studying human behavior

43:23in general. We see this in so many other fields, such as buying printers and toners, or as I mentioned earlier, overreacting to being missed off an email at work or being excluded from a meeting. Can you talk about the big market delusion? The big market delusion is, again, interesting because it's another example of this adding up phenomenon. So what I talked about earlier is that if you were to add up the different divisions in a company, it should sum to the value of the conglomerate as a whole, which was not the case in Palm and 3Com, because Palm was worth more than the entire company.

43:55The big market delusion is the adding up on an industry level. So at the start of 2020s, we had the electric vehicle sector was so popular that if you were to add up all the EV companies together, you had a value of the total EV market, which was even higher than the traditional car industry. Now, that made no sense because back then, the EV industry was in its infancy. It was generating a fraction of the revenues of the traditional car market.

44:26But people often forget this adding up constraint. They might be so excited about EVs that they think, well, I need to buy every company in this sector because I don't know who the eventual winner might be. Tesla, it might be NIO, it might be Xiaoping, it might be BYD, and let me buy this just to ensure that I'm not missing out the same fear of missing out that we discussed at the start of the conversation. But what people don't realize is that the market cannot end up supporting 10 winners. Not everybody can get a gold medal. When this industry finally shakes out, it may well be there's one or two dominant players,

44:59but the industry was priced as if every company would end up succeeding, which is why the total value of all of these companies led to an implausibly high value for the industry.

Diversification and index funds

45:10How important is diversification to investor outcomes? Diversification is really important, but for different reasons to what people think. So often people think, well, we diversify because we are risk averse. We're chickens. We want to not put all our eggs into one basket because this company may end up going bust. And so this is what puts people off diversification. They say, no, I want to really get rich. I don't really care about the downside. I want to go for the upside. If I've identified the next NVIDIA, I want to invest all my money in NVIDIA and not dilute

45:45it with some sort of more mediocre companies. But there's a number of problems with that argument. Number one is you don't know who the next NVIDIA will be, is that identifying future winners is notoriously difficult. As Ben, you said earlier, in the past, some of these big winners have been Altria. And that's linked to the second problem. The second reason why you want diversification is not so much downside protection, but upside potential. The value of diversification is to make sure that you are invested in whoever the next

46:17big winners are. Yes, in the past few years, it's been the Magnificent Seven, but we have no idea who it's going to be in the future. It could be an old economy company like Altria or Boeing. But unless we are in all of these companies, we might be missing out on the next big winners. And so I think diversification is really valuable, not only to avoid investing in the next Enron or Tyco, but to make sure that we're investing in the NVIDIAs of the future. And this is actually one way in which my own investing behavior has changed while writing

46:50this book and learning on this academic research, is how Messer Mindless papers, I think, are really important and have changed my way of thinking. I invest significantly more in index funds than I did in the past, particularly in developed markets like the US, where it might be difficult to identify significant mispricings. I think it's in frontier markets and emerging markets, there is much more potential for active management to create value, but I think it's more difficult in the US. I don't think I own any active funds in the US.

47:23I own a lot of active funds, but I don't think any of them are in the US because I believe the US is the most efficient market that we have. There's a quote from Warren Buffett related to, I don't remember exactly what the quote is, but it's related to diversification. It's something along the lines of diversification is for the know-nothing investor, and that occasionally gets used by folks who want to justify picking stocks. What do you think that quote gets wrong? So I think actually it gets quite a bit right. I know that Charlie Munger said diversification is for people who just don't know what they're doing, and actually, I'm going to invoke Socrates here, who said, I know that I know

47:56nothing. Actually, to recognize that you know nothing is actually a great state of enlightenment. Why? Because when you are trading, you are trading against other professional investors. So I might think, oh, I'm a finance professor. I should be able to trade individual stocks. But I know that I'd be trading against both of you. And you do this for a job. It's that maybe my day job is research and teaching and writing books. But I do not have all the contacts with CEOs that you have or a team of analysts looking at the competitors of a company and what's in the pipeline.

48:27So yes, given some numbers, I could probably put them into a valuation model and come up with some competent valuation. But I don't have the inputs to put into my model because I don't have the access to information. So to realize by saying, no, I know nothing, it's more a relative statement. If I know nothing compared to the average professional who's trading the stock, then actually it's very sensible for you to put your money into an index fund or to put it with an active fund manager who you trust in the same way that I'm reasonably smart and I could probably

49:00use AI to try to diagnose whatever illness I have. But it's better for me to go to a doctor and for me to recognize that actually I want professional advice of a doctor. Nobody would be ashamed of doing this. And so if you're investing to say, no, I want to put this with a professional money manager who does this for a living, there should be no shame in that either. How do round numbers affect stock prices? Much more than they should. So we love round numbers. It may well be that I bought the stock at 72 and it's now at 96, but I won't sell until

49:32it gets to 100. And this is an issue because if everybody else wants to sell at 100, then maybe it might not already ever reach there because they could be selling pressure when it starts to approach 100. So when I now put in my limit orders, I might put them in at 99.9 or 99.8 to make sure that I am not beholden to this round number fallacy. So if indeed the stock is trading for 99 right now, and I think it's a sell, it's a good sell now. There's no sort of magic line which is crossed when it goes to 100 rather than just waiting

50:03for a round number to be crossed before taking a profit, which you might never do. Then just if you think that the stock is good value, then just to sell it. I said earlier that it sounds like people are just not well suited to making important financial decisions. What tools or how can people address all of the issues we've talked about to avoid making some of these investment mistakes or just decision making mistakes in general? I think what we just touched on is really important, which is to know your edge. If I am going to be investing in anything other than an index fund, I need to have better information

50:42than the professional investors out there. So I don't trade individual stocks. Why? Because I don't think I have an edge on any company, even if it's an industry that I used to work in. So the chemicals industry where I started my career at Morgan Stanley, I do not have the team of analysts to look at what's the latest trends in surfactants and alkyd resins. So this is not something where I think I should be making any individual calls. What about to invest in actively managed funds? Yes, there are many actively managed funds that do well and beat the market, but actually

51:14identifying them is notoriously difficult. As you were alluding to earlier, people often look at past performance, even though the phrase past performance is not a guide to the future is more than just a regulatory term. It is something which has been found in the data. It's very difficult to predict future performance of fund managers just through looking at past performance. So if you don't think you can even identify active funds, maybe the best thing to do is just to hold the market portfolio, just to be in the market and stay in it through the

51:46peaks and troughs and to use the patience that you have, which some professional fund managers don't have. Now, maybe you think I have more information than that. I am able to identify mutual fund managers. So for me, my largest part of my personal portfolio is an active fund where I've known the fund manager for over 15 years now, and I knew their strategy. It was actually based on Intangible's, my first book, Grow the Pie. And so that's why I've entrusted a large part of my portfolio to this company. But in the absence of knowing the process of the investment, not just the investment

52:18outcomes, it might be difficult for you to predict and to identify a great fund manager. So I think before we are going to do anything other than deviating from the market, we need to know what is our competitive advantage to justify us taking a different position. That's a really interesting point.

Manager skill and market efficiency

52:34What do you think about the, John, at Birkin Green, really finding about the efficient market for manager skill, where if a skilled manager shows that they're skilled through their returns, capital will flow to them to the point where they can no longer use their skill to benefit their investors, but they themselves collect the rents. I think it's a really important insight, which I cover in the book. It's a beautiful paper and one that's been quite rightly highly influential. Here is the key punchline is that no persistence in performance does not mean there is no skill. So when people have said, oh, well, you can't predict future performance and past performance,

53:06some fund managers have said, well, I object to this because I spend so much of my efforts identifying companies. I do have a unique skill. But the problem is, is that as soon as a fund manager has a unique skill, then people want to go into his or her fund and this dilutes the fund. Why? Because you now have such a large fund that you can't put all of your money in your 10 best ideas. You need to spread them over more and more companies and then you're going to have to go into worse ideas because of diminishing returns. So even if skill were really predictable, then if other investors are able to identify

53:43that skill, then either the fund becomes so large that it doesn't outperform or the fund manager just increases their fees. So why am I confident investing in this fund that I've chosen? Because it's just not as known. It invests in emerging markets and frontier markets. And I happen to know the fund manager. So I was able to get in on a quite good deal. But if I was a regular investor, then maybe I'd have to pay a much, much higher fee here. So I'm quite lucky in being able to invest at preferential terms.

54:13Yeah, super interesting. I think there was another paper that found that fund managers with foreign sounding names or foreign names did have persistent performance for the same kind of reason, because the market did not recognize their skill in the same way that they did other managers. This rings a bell. I think there's foreign sounding names. I think there might have also been a paper on minority fund managers be this both gender and ethnicity, is that because people just still discounted them, even if their performance had been good. And again, this is the general theme of our conversation, which is to go where others don't

54:48go. So to Cameron's earlier question, where is momentum most profitable? It will be in the small stocks, the stocks with little analyst coverage, the stocks outside the US, where might be their skill in fund managers. It might be in the frontier market funds like the one I invest in or fund managers, which for some irrational reason are discriminated against. Yeah, the manager selection. It's so interesting because you have to have a manager with a strategy that you think makes sense. But then on top of that, you have to make sure that the manager themselves has not been flooded with capital.

55:19So you've got like two different levels of thinking to identify a strategy and identify a manager that the market has not identified yet. This is the general principle of investing. So if you want to invest in a company, it's a company that is great, but the market doesn't yet know it's great. So the idea of investing in Tesla because electric cars are the future, well, that's probably been priced in. And it's the same with a fund manager. So while the fund manager you might think doesn't have the equivalent of a stock price, there the response will either be them upping their fees or other investors flooding in and diluting them.

55:49In the same way, I think it's Kathy Wood's ARC fund went up about 15 times from 4 billion to 60 billion when she had that one really good year and this diluted all of a good idea. So to go where other people don't go, this is again why understanding the psychology of financial markets and the psychology of other investor behavior is so valuable because we want to be something contrarian and go against where other people are getting overly excited. Super interesting. And also, I think, interested in your thoughts, a pretty good argument for someone who doesn't want to spend too much time thinking about this, you did already say this, to just invest

56:23in index funds. Yeah. And if you do this, there is no shame at all. Then you're benefiting from two of the most powerful things in finance. One of them is diversification, as you've discussed. And the second is compounding. So people are really attracted, but I want to be in the next Nvidia, which earned 3000% over this five-year period. But to earn just 10% per year in the market, diversified, if I did this for 10 years, then that's not 10 times 10, 100%. That's 160% because of the power of compounding.

56:55And so at the end of the book, we'll have 20 tips on how to put the ideas into practice. One of them is know your edge, as we've discussed. But the second is just to play the game. And what I mean by this is just by being in the market, you will significantly outperform cash and treasury bills and corporate bonds. Why? Because of another phenomenon known as the equity premium puzzle, which is the extra return that stocks have over treasury bills or cash is so much higher than what it should be given the level of risk aversion that people have.

57:27And this is another reason for diversification. Because if I know that I am in a squared out portfolio and I don't have all my eggs in one basket, then I can actually put more of my portfolio into equity. So maybe if I were just to invest in a single stock, I would not put more than 50% of my portfolio in that stock. But if I'm holding a diversified portfolio, maybe I could put 80% or 90% of my portfolio into equities, knowing that I'm diversified. In the same way that if you were to have good brakes on your car, people shouldn't say, oh, you're a chicken for having good brakes.

57:58Instead, good brakes allow you to drive faster because then you can slam on the brakes if, say, a car crosses in front of you. And that's the same idea of diversification. By spreading out individual company risk, you're able to take more equity market risk as a whole. That last point on just playing the game is so important. Whereas if you're not investing in stocks, you're giving up so much relative to what you might be able to get from an active manager over the equity risk premium. That's a great point. Probably a great place to finish on, Alex. Well, thank you so much for having me back. It's been really good to have all three conversations with you.

58:31Everyone has been very interesting and also highly practical and relevant. So I really appreciate you bringing your practitioner lens to my academic research. Awesome. Thanks, Alex. Thanks, Alex.

Post-interview reflections and takeaways

58:41Thanks.

Post-interview reflections and takeaways

58:42That, Ben, to me represents kind of what this podcast represents, which is basically holding up what great work has been done by academia to call out the foibles of humans. And I think back to something, I believe David Booth said when he was on with us, we don't have necessarily investors with investment problems. We have investments with investor problems.

59:13And it's just so true. And Alex is just so on top of the research, obviously. And it was kind of great to hear you and him riff on a bunch of papers that many we've talked about on the podcast. But he's just so good at making it so understandable and so relatable and he brings the energy to it. So he's just such a great guy, great guest. His recall of academic literature is intimidating. You can say something and he knows the paper, he knows when it was published, and he knows exactly what the paper said.

59:44And it's just like, man, that's very impressive. It makes it a lot of fun to have a conversation with him about this stuff. I think back to, I listened to David Chilton's podcast, You Know Wealthy Barber, and he talks about his dad being one of the greatest investors that he's ever known. And he said his dad, I believe he says, knows nothing, has done nothing, never looks at it. And as David says, has probably had the best performance of anybody that he knows. And this is the great irony of all this, right? You can do all this work and understand and learn all this stuff, but the know-nothing

1:00:14investor has just as good a chance of having a great outcome than someone who studies this. It's just such an interesting paradox about this whole subject matter. And then you mix into it, like the fact that being human is hard, being human and making financial decisions is really hard. We're not built for that. I love the nuance in the conversation where it's like, these anomalies exist, here's why they exist. There are active managers that may be able to exploit them. You may be able to exploit them, but there are obviously problems with doing that.

1:00:47And so it kind of arrives back to the same place where it's like, yeah, maybe you could try to do this. And Alex, as he said, he himself does try, at least in some markets, to outperform the market. But the message that just being an index fund investor, being a know-nothing investor, which has a lot of power to it, as Alex explained, invoking Socrates, is itself a very powerful position to take. But it is also interesting that there are evidence-based strategies and approaches to try and outperform the market. Some of them might work. We technically are using actively managed funds with clients through Dimensional, which

1:01:22are index fund adjacent, but they are explicitly not index funds. And they are trying to exploit some of the stuff that Alex talked about in the episode. It's just such a nuanced conversation. It comes back to even what is active management. At what point have we violated the benefits of indexing? And I think, as Alex talked about, if you have diversification, if you're pursuing some of this stuff in the right way, with the right product, with the right manager, and you don't think that they've reached their capacity, which, I mean, those are a lot of ifs, it can make sense to try and not perform.

1:01:52But there's a lot of power to just indexing is what I was going to say. But I think, I mean, talking our book for a second here, I think Dimensional sits kind of in between that, where it's like they're doing a little bit of stuff to try and be different. And they do think that it's going to be beneficial in the long run. It's not crazy. They're not so different from the market that if what they believe is going to do well doesn't, you're not going to lose a huge amount relative to the market. It's just going to be a slight performance difference. But so much of what we say here daily inside the team, you know, three very simple statements,

1:02:26markets work, diversification is your buddy, and costs matter. We say that here all the time. And that's the common thread through this conversation. Even Alex talked about the cost advantage he has in one of his strategies, right? Yeah. Talked with the fund that he's in. We looked it up afterwards. It's capped. They won't take any more money. And Alex talked about that when we were talking about Burke and Green or Burke and Ben Binsbergen, where a fund can either cap the assets and raise the prices, or they can keep

1:02:57taking money. And so it does speak to like, again, I don't know if you'd call that a market inefficiency or just a structural advantage, but the only reason Alex is able to benefit from that strategy is that he has basically preferential pricing for a fund. So if those managers truly are skilled and there is true benefit from that skill to go to investors, Alex is able to benefit because he's got a lower fee than everybody else in the bucket. It applies to private equity too. Like if you look at private equity returns, gross of fees, they've been incredible, but very few people get gross of fee private equity returns.

1:03:28You've got to pay whatever it is, five or 6% and net of that, there's no outperformance. And all that chatter a few years ago around renaissance technologies. Great. Good. If you can get into it, you can't get in. That's what Cliff jokes about. We asked Cliff about that when he was on this podcast. He was like, yeah, they're incredible, but they won't take your money. We will. Great conversation. Love having him on. Third time on, which is pretty cool. Yeah, he's brilliant. Alex is, for people who don't know, he's a professor of finance at the Lund Business School,

1:04:00as we said in the intro. He's a fellow of the British Academy. He's got his PhD from MIT as a Fulbright scholar. He was previously a tenured professor at Wharton and an investment banker at Morgan Stanley. He's spoken at the World Economic Forum in Davos, testified in the UK Parliament, which we talked to him about in one of our episodes, and given the TED Talk, What to Trust in a Post-Truth World, and the TEDx Talk, The Social Responsibility of Business, with combined millions of views. And as you mentioned earlier, Cameron, he's the author of three books now, Grow the Pie,

1:04:31May Contain Lies, and the book that we talked about today, Madness of Markets. So we've talked about all three of his books, and I think each conversation has been really interesting. I love how he's an academic, so he's drawing on his own research, but his command of all the other research is just so impressive, which I think makes for a really good conversation. I agree. As always, everybody, thanks for listening and watching, and we'll see you next week. Yep. Thanks, everyone. Hope you enjoyed the conversation. We'll see you next week.

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1:06:36or opinions in the event of changed circumstances. ה mies なん £1.000 nd iona !!!! íss 和 km