YouSaid · the spoken record

Laurence Siegel

lines on the record: 62
first: 2020-05-11
most recent: 2020-05-11
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I am not a rabbi or priest or minister. I would say make sure you're having fun. That is sometimes misinterpreted as follow your dreams. You may be able to follow your dreams all the way to the poor house. It's no fun to be poor. Learn to do something that enriches other people's lives so that they'll pay you. And it is also fun because you're going to be doing it a lot for a long time.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“People who pick individual stocks without knowing anything about them. Other than what everyone else knows, which is that they make cool products like Apple or that they are going up The word going is in the present tense, but they mean it's they went up I tell them, shut up and index.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“I play three instruments piano, guitar, and violin. I also like to walk on the beach for exercise, and because the beach is beautiful. And as in my middle 60s, I can't do all the stuff I used to do. So I want to make sure I can do the things that I used to do that I will be able to do for another 20 years if I'm still alive. And so those are them. I've been playing all three instruments at some level of skill, larger, smaller for 50 years. So maybe I'll put together a band.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“I believe equities have had a great run. It's hard to be bullish about something that's gone up that much, but after a period of adjustment like we've just had, I'm more optimistic about the future. The point is to participate as an investor in this continuing betterment of living standards around the world. And the way that the system lets you do that is through really three kinds of equity. Publicly traded stocks. Private equity of various kinds, including things like infrastructure deals. And real estate. So that would be my focus.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“International Diversification and a focus on equities. First of all, the market conditions make it hard to focus on anything but equities. You can't make any money at negative 0.32%. That's not the US rate, but the U.S. rate seems to be headed that direction. There's going to be more wealth creation in the future than there was in the last 250 years. You may have to wait 250 years to get it, but Fort Foundation intends to be there in 250 years. And the first 30 of those are within the time horizons of people now living and working in organizations.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Changes in the labor market, the effect of elimination of slavery, that's where you had to pay people and then they could get paid for increasing the amount of human capital they had. And then large. Organizations can accomplish things that small ones can't. So Edison and Westinghouse and Ford. Rockefeller Gates”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Bubbles of achievement, ancient Greece, ancient Rome, Italy in the fifteenth century, you had a first great divergence where Europe pulled away from the, you know, China was actually the dominant economy in the world in 1400. And then Europe began to pull out of the Middle Ages, had the Renaissance. The Renaissance improved living conditions for many people, but not most. And in 1750, there were people who were just as poor as they had been in 750. Then things change very fast. And what the usual explanation is Capitalism, property rights, the Declaration of Independence, The fact that England became a parliamentary democracy instead of an absolute monarchy, the discovery of ways to tame and use Various kinds of energy.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“The richer part because I'm trained as a financial economist and I know more. Causes of the Great Betterment. Made people start to be able to accumulate assets and the ability to generate income, which is human capital. Starting about 250 years ago in the northwestern corner of Europe, England, Scotland, the Netherlands. And then spreading to the rest of Europe and the Americas, mostly North America and Japan, in the 19th century, and then spreading to. Much larger parts of the world than the later part of the 20th century. What is this? People have been around for tens of thousands of years, hundreds of thousands, if you take a more anthropological view. They never Created wealth in a way that was self sustaining and enduring. You've got these little”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Climate change is an issue that I try to tread on lightly in the book because it makes everybody angry. They either believe that it is a catastrophe that cannot be avoided or that it's not a problem that we just have to adapt to it and live with it. I come exactly right down the middle. I'm kind of a lukewarmist. I believe that we will mostly have to adapt, but that it's a real phenomenon and that there are things we can do to mitigate it and that we should be prepared to do more to mitigate it in case it becomes more of a problem than it is now.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“And now India, we're seeing some in Africa. So they're going through their dirty phase, but cleaning it up much faster than we ever did. And the amount of forest in the world is going up, not down. The amount of recreational land available to people in cities is going up, not down. And the amount of dangerous pollution, toxic chemicals and so forth is much more under control than it was two generations ago.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, the environment is getting better. If you look back at 1960 or 1970, our industrial cities here in the United States were just disgusting. I was 15, the Cuyahoga River, which is the main river in Cleveland, Ohio, caught on fire and almost set one of the bridges above it on fire. Now you can swim in Lake Erie, and people do. That's the lake that river drains into. Two things happened. One is regulation, the Clean Air Act, and Clean Water Act, which were long overdue. Now countries bring in environmental laws at a much lower level of income than we waited for. And they learn from our mistakes. And then the other is the deindustrialization of the United States, moving it to China and other places, Mexico, parts of East Asia.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“And the fact that the whole world now lives on average at a standard that the United States had only 70 years ago. Is the greatest accomplishment of mankind in economic terms? We have brought modest amounts of comfort and wealth To about 4 billion of the 8 billion people in the world. Both of those numbers are a little high, but there are a billion two or a billion three living in First World Countries. Not all of them have First World Living Standards. We have poor people. But then there are another. Several billion living in countries that are not first world countries who do live in a first world living standard. Hundreds of millions of people in China, a couple hundred million people in India and so forth. So green”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“the thesis is that there are three great trends that are underappreciated by most people One is the population explosion is coming to an end, hence my use of the word fewer. We're not actually going to have fewer people for a long time. The population is going to continue to grow but slowly, it'll peak late in this century and then begin to decline. Rich are, the world is getting richer, so much richer that it's almost hard to believe the data, but for the first time in history, half of the world's population is middle class by the standards of the World Bank The world GDP per capita in purchasing power terms. Is around 16 to $18,000. That's what the United States was in 1949 when we were unquestionably a First World Country. We were the richest country in the world.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Encouraged by that, and we need to find ways to Get clean energy fast. Fast means 20 to 40 years. The cleanest energy there is is nuclear power. We know how to build small Standardized plants so that the parts are interchangeable, the knowledge is interchangeable. If you have a problem in one plant, the nuclear engineers from another plant can just drive over and take a look instead of custom building everyone. So these problems are soluble. We have to have the political will. And I believe that as this energy transition takes place, there's a very large opportunity for investors in the right. Kinds of companies and countries”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“So they suffered from serious lung disease starting at a young age. More people die from smoke inhalation than from malaria. Their education is severely reduced because little children after work collecting fuel during school hours. And just cannot bring myself to support a policy that takes energy away from these people. Need to use more, not less, maybe we need to use less. Energy transitions from wood to coal, cold oil, oil to nuclear, whatever is going to be next, take a long time because of the size of the installed base and the capital required. Build out the new infrastructure. We're going to use a lot of carbon based energy, whether we think it's good for the environment or not. So we need to be looking at ways to remove carbon from the atmosphere. There's a lot of technology being developed along those lines.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Live like Americans or Portuguese or the Southern Brazilians or the Taiwanese or whoever your role model is for a middle class society. Those are pretty good ones, by the way. The biggest ingredient in that recipe is energy. Have an anecdote in my book called Fewer, Richer, Greener, which you said we get to in a minute, but I'm going to quote from him now. There are women and children in Kenya. Kenya is not a particularly poor African country, but it has a lot of poor people in it. Spend hours every day searching for wood. To burn inside their homes without a chimney. That's how they heat, that's how they cook, probably how they get lighting.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably the biggest myth of all. Is that we can Move the whole world into the middle class Without using energy The form that we currently know. Climate change is a concern. The standard error or error bars around the Potential cost damage done by climate change is so large that it ranges all the way from no damage at all. But we don't care if it happens or not, to effectively the end of the world. When you have that little knowledge, it's hard to figure out what to do. So meanwhile, most of the people in the world and almost majority has never been middle class. And wants nothing other than to be able to buy a car or refrigerator, have some savings, perhaps own their apartment.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Rest of the world wants to live the way we do. And if they can't come here Phys They want to make their countries look more like the United States.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“didn't claw our way back to the 1929 level of production until 1937, then it fell again. Didn't get back to the 1929 level never to be surpassed until 1941, where we were producing mostly things to be blown up. A healthy peacetime economy didn't return until 1948-49. So 20 years. Much smaller crisis of the current century seemed to have worked itself out after 10 years. And this isn't forever. And look what happened after the 20 years of Great Depression and recovery was over. We went into another technology driven boom. Likes of which Haven't really seen since, except for a few years in the 90s, but these things happen every so often, and we should be prepared for it. Right now we're in a little bit of a technological lull, but Vietnam isn't, Bangladesh isn't, China isn't, although they're having some short-term troubles.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“What's most likely to happen? We'll get this under control. It'll be a new virus that we deal with on an ongoing basis like the flu or SARS or MERDS or MERS or AIDS or polio. There will be a vaccine. There may be a cure. And we'll move on to the next crisis Meanwhile Global growth should proceed around three and a half. Which is the historical rate? I think it'll be better, actually, because we have been in a slow period for the United States. No reason why the United States should grow this slowly for this long other than the foreign competition sometimes cramps your style a little bit and that we've had kind of a hangover from the Last global financial crisis in 2007 to 2009, for some reason, financial crises inhibit growth more than Other crises. Maybe it's a lack of capital. I don't know. But after the financial crisis in 1929 to 1932”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Has and that's why I said things look better now than Rothschild will forget whether it was Nathan or one of his relatives said about 200 years ago by when there's blood in the streets but we usually forget the second half of his aphorism was even if the blood is your own so I'm inclined to think that we're going to get through this panic. The market is already I think reversed itself something like a third of the way back to the top it's going to be volatile and different it's going to be a hard time to be an investor for a while but if you care about the next 20 or 30 years not the next 20 or 30 weeks”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's an interesting question where people have said for a long time that we're in a low return environment. And it didn't play out that way for a decade, maybe twelve years since the financial crisis. But now, if you remeasure that period of time, depending on what day with things moving up and down, it's certainly muted some of what looked like a high return environment for a decade.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Buy a bond for $103 today and in 30 years, having received no interest, you receive 100 euros back. I don't know who would buy one unless they're forced to do so by regulation or contract being an index fund or some kind of a bank chart. That's a low return environment. Remember when you used to be able to guarantee 9% by buying a laddered portfolio of treasury bonds? Was about 24. When you could do that, but I was old enough to have a finance job and a finance education, so I knew what was happening. Are we going to be in a low stock return environment? We just got much better.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mantra. A decade ago was we're going to be in a low return environment. People look back 10 years, we had two crashes and looked like we were going to be in a low return environment because that was all anybody could remember. If you're in a low return environment for long enough, you're in a high return environment. So then the stock market doubled and doubled again and bonds went up and up. And so now that we've been in a high return environment until seven weeks ago In a low return environment because prices are high, they're not necessarily internationally, but they are in the United States, and the prices of fixed income internationally are simply out of sight. The idea of negative nominal yields is kind of like telling me that gravity has begun to pull things up instead of down. You can invest in German bonds where you”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Person to adopt a new strategy, you may do very well, and then when a flood of money comes in, you're not going to do as well. But I think that the very long-term orientation and willingness to take some illiquidity risk is not so bad as long as you set aside enough money to pay, let's say, three years' expenses and have a healthy cash flow into the organization. Colleges that are providing a poor product for a high price don't deserve to survive and they're going to be in trouble no matter how their endowments do. But if you provide a good product at a fair price, the endowment is a mixture of working capital and trust fund. That, according to James Tobin, the Nobel Prize winner represents the claims of the future against the present. And I think that endowments in general are doing an okay job.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Instruments where you hedge out the beta because all the action is in the beta. So if endowments continue doing what they've been doing and markets act more like normal markets, I think that they'll do fine. They're not going to shoot the lights out because those opportunities don't exist anymore. If you're the first...”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Mix of stocks and bonds that is the benchmark, let's call it 60-40, would have had a fairly mediocre rate of return over the last 10 years. And I think that the endowment model investments would have beat it. The stock market went up and up and up, and even more surprisingly, the bond market did the same thing. Interest rates went from three or so at the three or four at the beginning of the period to zero point something at the end, one if you're looking at the 30 year, which is a huge return for pines. At those low interest rates, convexity takes over and the rate of return when interest rates go down, it's just astonishingly large. And there are periods where bond speed stocks. You can't compete with that by buying private equity or by buying portfolios of hedged.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that they believe the endowment model is broken because endowments have underperformed the stock market by a lot. Now, what actually happened? They went into Alternatives which range from what I call normal alternatives like real estate and private equity. Through hedge funds, which are kind of an in-between, and I'll get to that in a second, to true exotics like violins and Intellectual property rights that sometimes trade, music, royalties, and Pharmaceutical royalties and so forth Settlements of life insurance. Their performance has been about what you would expect if the stock market had not. Double and then doubled again. In a normal rate of return environment between 6 and 9 percent a year. With interest rates at, say, three, I don't think that's normal. I think the normal is a little higher.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Crises that happened starting in the 1970s with the grain inflation, the rise of interest rates to about 15%, and then the more recent crises, we've really had three in a row and a short period, the tech bubble, the great recession, and then the recent events with the coronavirus. Want a man on a white horse to ride to the rescue Say everything is going to be fine, and neither corporations nor money managers are going to position to do that. Government's kind of are. I mean, they may be ineffective, but they can at least say that they're Position properly in society for that role, so maybe that's it.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“I haven't thought about that, but it occurs to me there was a period of about 30 years between those two where money managers were the rock stars. Warren Buffett still is Jim Simons. Can think of a handful of household names. Fads, and fashions. Jazz, and then there was rock, and then there's rap. And despite all of my best efforts, RAP has knocked on away. So, Alan Greenspan. Had something to do with it Being very active central banker. I'm a little uncomfortable with this explanation because it's a little too glib. There's been a tendency to think that governments are responsible for running the economy Franklin D. Roosevelt certainly helped with that perception, but then it kind of went away. With a succession of financial”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Keynes, the great economist, said the governments should engage in deficit spending during downturns and build up a surplus or a reserve during periods of growth, which is most of the time. Keynesians Generally don't have anything to do with the economics of Keynes. They think it's always an emergency, so they're always trying to stimulate. And then when you have a real emergency, they're out of ammunition and can't do much of anything. Call this view of the world a crisis crisis, the crisis is that there is always a crisis. Everything that happens is a justification for expensive intervention which benefits the interveners. I think more humility about what central banking can do would be a great idea.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Let's look critically at that for a second. When you're a fireman, you benefit from an abundance of fires. Disrespect meant the first responders, but if you fall down in my little town, 16 firemen come on four fire trucks to pick you up and see if you need to go to the hospital. They need emergencies in order to justify their jobs and paychecks. When you're a central banker, you're really bored almost all the time, except in economic emergency. So you benefit from emergencies. And if they're either perceived or real emergencies all the time, you get asked to consult. The kings and presidents of the world invited to the best party and you dine in five hundred dollars a plate restaurants. Is craziness.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Central bankers are the new rock stars used to in business, worship CEOs. I remember being in business school and Barry Sullivan, the head of First National Bank of Chicago, came to give a talk, but he showed up early and hung out. People were looking at them kind of the way they would look at Paul McCartney at a concert. Hey, there's a CEO over there. Now it's central bankers. People know the central bankers the way they know the names of their favorite rock stars or rap stars or whatever. And they've put themselves to some extent because we, the people, have allowed them to, in a position of... They believe they can get us out of any kind of scrape we get ourselves into A lot of money into the economy is the pill that cures all ills”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Don't know. I have a client. run by some really smart people which is going to try this they haven't launched And I don't know how they'll do when they do launch, but if anybody has a chance of meeting their benchmark with that technology, it's them, and we'll see how they do. I guess I'm skeptical. They're going to have competition. A lot of people can set up operations like that the same way a lot of people can hire security analysts to tear apart balance sheets and visive companies. And the first mover advantage is that pioneers get shocked. Spend a lot of money Invent the necessary technology, then the settlers get rich. So the second mover advantage is the real advantage. Then the third, fourth, and fifth face diminishing returns, and I don't know where this particular firm stands in the hierarchy, but I don't know. I feel like”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, this technology is valuable, and Kelly uses it with his firm, the firm that he works for, AQR. He's a strong advocate of it, but he doesn't believe that people should be fooled into thinking that we've taught machines how to think the way that people think, nor is having access to big data an automatic or magical way of making money. It's just fundamental analysis. If you have a satellite traveling over the parking lots, comparing the number of people who are parked in front of different stores, you're doing the same thing that a fundamental analyst was doing by listening to brokers' calls 50 years ago or by going to visit companies and asking them how they were doing and seeing what the executives had to say. You're trying to get under the hood of the company and find out Through legal means what inside”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“The next wave is clearly something to do with big data and artificial intelligence, sometimes called machine learning. Brian Kelly, who is at Yale and AQR, used to be at the University of Chicago, gave a great talk on this when he spoke at the Q group, which is a discussion group for investment executives, particularly quantitative. People. And he said that machine learning is just applied statistics. It's what you learn when you took your statistics class in college or graduate school and you read Thomas Bayes, who lived in the 1700s and Gauss who lived in the 1800s. And there's nothing that machine learning does that isn't in these foundational works. But it feels different and works differently when you apply it to really large amounts of data, trillions of bytes with really fast and cheap computers.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Do what it takes to become middle income and then upper income countries. And what's stopping them is bad government. We've seen this to some extent with China, which is the greatest wealth building. The history of the world. We're much richer. Europe is much richer Japan, but we took 200 years to do it and they took 40. They're much larger than the United States. As a portfolio investor, it's hard to make any money in those companies. And I basically think you have to be an active manager and not buy just whatever they're selling it.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Looked at the BRICS countries and said, well, these countries are growing at eight or five and the US is growing at one or two. So we'll just put our money in them and then they went down. Of course, some of them went up a lot before they went down. The period of 2003 to 2006 or 2007. Believe the Emerging Markets Index went up by a multiple of five to one. That's how you get rich. You don't get rich at 9%, you get rich by buying something that goes up by a multiple of five to one and still having it when the rise is over. And emerging markets were the great play of the first decade of the century, the odds or oughts. Now... Disappointed The people in those countries still want to get rich.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm thinking about both. The underlying driver. A stock isn't the growth of the overall economy, it's the growth of corporate profitability. So, if you're in a country which is growing fast, but it's hard. Companies to grow without taking tremendous amounts of delusion. You can't buy the shares that the locals are getting, which are the good companies, and they say the bad ones, this has happened. You have to distinguish between the growth of the economy and the valuation of the stock. And that's what active management in non-U.S. markets is good for. There are an awful lot of people who”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's just a myth that the United States is the only country worth investing in. The farther afield you go from the mainstream, the more likely you are to find great deals. And if you're an active manager, you should pursue these. If you're an index fund holder as I am for my personal investments for most of them, I would just hold the global portfolio rather than the US portfolio. So you get about half in the US. That's an appropriate weight.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is 1.2 trillion, which would cause it to rank just below Australia but above the Netherlands and put it well into the top 20, almost the top 10. And ignoring these investment opportunities is ridiculous. They're cheap. The EFA XUS index hasn't gone up since 2014. The emerging market index has kind of been all over the place and the frontier market index is down. And you can buy companies at 10 times. Can't buy them here unless companies have one foot in the grave. Fastest growing economies in the world are India, Vietnam, Bangladesh, some in Africa.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Myth number four, we're in a new bipolar world of US and Chinese dominance for those two economies of the only ones anyone cares about, since it's hard to invest in China, a very large weight in the United States is a good idea Oh, sure. It is. It's a great country. And it has the largest market cap in the world by far, $30 trillion as of the end of last year down from that. Second largest is China at around. $6 trillion, and that doesn't include Hong Kong. How about the rest of the world if you end up the next 20 countries, Japan, Hong Kong, France, India, Canada, the UK, and so forth, you get to $30 trillion, almost exactly the same as the United States. Japan's as big as China within rounding error, and Taiwan, which is somehow not a country.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“And it has, and it could go on for longer than you think in the future, and it may. But that just makes the rest of the market, including the non-US equity market, where the whole thing is behaving like a value investment, even more attractive. And if you're a long-term investor, you should probably tilt your portfolio toward value, not growth at this point. You may lose for a while, but in 10 or 20 years, we'll be very happy.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Type of investment anybody wanted, and then it got to the point where value was expensive and growth was cheap and the cycle went the other way. That was about the period from about 1999 to 2006. So we're now 13, 14 years into this growth wave, and it's been driven by a group of companies I call FanMag because I can pronounce it, Facebook, Apple, Netflix, Microsoft, Amazon, and Google. This can go on longer than you think.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“The myth number three is that we're in a new era of technological change at breakneck speed where growth outperforms value permanently, or at least as permanently as anybody cares about. I don't think that, first of all, that that's possible. There can never be a preferred return to a certain type of asset. Because if an asset earns a risk adjusted return that's higher than all other assets, then a wall of money will come in. Drive the price up to where the expected return in the future is lower and you get a cycle growth is very, very extended. Value is very, very cheap. We are at the extremes. Close to the extremes that we saw in 1999, and we know what happened after that. Value did so well that it became the only”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“The optimal capital structure for government would probably involve some way of owning equity in the government. But I allowed to do that. So I believe that A government should be prepared for emergencies because God knows we get them and should keep its debt level low because when there's a war or a pandemic or a depression, it's going to have to get high and then you want it to get low again as conditions improve so that it can go up again without a ratchet effect where Japan where you go to 100% of GDP, then 200, then 300. So, I guess I would say I'm a fiscal conservative. I believe that the government should conserve resources so it can use them to do what governments do, which is help people when times are tough.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are only three ways a government can raise revenue. We can either get it through current taxation, borrowing, which means future taxation, or inflating away the real value of existing debt, which is tax in the past. It's taxing the accumulated savings from work done in the past. David Ricardo said this in, I believe, 1805 or 1815. Nothing has changed. And so we can expect inflation at some point because the government is printing a lot of money.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of course, we're studying a period for interest rates were much higher, so the debt service on a debt-to-GDP ratio that high to be enough to consume a lot of your tax revenue and crowd out the legitimate functions of government. With interest rates being lower, you can go to a higher debt to GDP ratio. It's not a magic number. And also a group of people found that they had made a data error because their work was not Quite carefully enough, their opponents took that as evidence that everything they said was wrong. You could borrow all you wanted. Well, no, you can't. And it is not because of the debt service, it's because of the principal. We don't know where the tipping point is, and at today's low interest rates, it could be double that. It could be 180% of GDP. That some level of indebtedness, we will have problems.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Too is there's no inflation, so the government can borrow. Well, government. Is like any other organization, it has a balance sheet and an income statement and cash in has to be at least as much as cash out or you're in trouble. Of course, they do have a printing press, but they don't print real economic resources like trucks and factories and patents and labor contracts. They print this stuff called money, which Loses its value, the more you print of it. So there was a discussion about a decade ago started by Carmen Reinhardt and Kenneth Brogoff. They wrote a book called This Time It's Different, showing that highly indebted nations get into fiscal trouble when their debt to GDP ratio exceeds 90%.”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think there is a tipping point in that we're nowhere near it. It probably is somewhere past 80 and before 95. I'd be very surprised if we ever get there because as you approach that point, fewer and fewer dollars are managed actively and it should become easier to beat the market. The fact that most active managers don't beat the market shows you we're nowhere near that”
2020-05-11 · Capital Allocators · Laurence Siegel – Current Myths and Long-Term Optimism (Capital Allocators, EP.137) · IDENTIFIED FROM THE TRANSCRIPT · source