Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

One other name that is on our radar and stock shares of Alphabet down about two point three percent. It's been on our mind all this week. You remember on Monday the stock dropped about four and a half percent amid renewed fears about Google's AI offerings, and that after a research note from Milius research analyst Ben Wrightss, who noted that problems with AI tools may fuel the perception that Google is an unreliable source for AI his words, and create an opening for competitors. Ben Writs is also specifically highlighting the possibility of users growing concerned.

One other name that is on our radar and stock shares of Alphabet down about two point three percent. It's been on our mind all this week. You remember on Monday the stock dropped about four and a half percent amid renewed fears about Google's AI offerings, and that after a research note from Milius research analyst Ben Wrightss, who noted that problems with AI tools may fuel the perception that Google is an unreliable source for AI his words, and create an opening for competitors. Ben Writs is also specifically highlighting the possibility of users growing concerned.

About Google's bias.

About Google's bias.

Our Ed Ludlows Booth with Ben Rightsis earlier this week about his note and concerns on Google's AI strategy.

Our Ed Ludlows Booth with Ben Rightsis earlier this week about his note and concerns on Google's AI strategy.

Check it out.

Check it out.

You want to make sure they don't have a bud light moment, and we're not sure yet. I don't want to weigh in on the merits of what they did or the debate. It's just real simple. When you alienate a part of the population and they believe that you may not be a source of truth, that's not good for business in their business.

You want to make sure they don't have a bud light moment, and we're not sure yet. I don't want to weigh in on the merits of what they did or the debate. It's just real simple. When you alienate a part of the population and they believe that you may not be a source of truth, that's not good for business in their business.

That was Ben rightsis speaking to our own ed Ludlow earlier this week, Alphabet CEO Sunder Pachai responding to the concerns as stock is now done nearly six percent so far this week. Thunder Pachai is saying in an email to employees, quote, we have been arguing that search behavior is about to change with new AI infused futures. This, once intigestion is changed by itself, creates opportunities for competitors, but even have a meaningful portion of user growth. Continued about Google's hallucinations and bias. Excuse me? That was from rightsis I should say under Pachaise say, no AI is perfect, especially as this submerging stage of the industry's development, But we know the bar is high for us and we'll keep at it for however long it takes.

That was Ben rightsis speaking to our own ed Ludlow earlier this week, Alphabet CEO Sunder Pachai responding to the concerns as stock is now done nearly six percent so far this week. Thunder Pachai is saying in an email to employees, quote, we have been arguing that search behavior is about to change with new AI infused futures. This, once intigestion is changed by itself, creates opportunities for competitors, but even have a meaningful portion of user growth. Continued about Google's hallucinations and bias. Excuse me? That was from rightsis I should say under Pachaise say, no AI is perfect, especially as this submerging stage of the industry's development, But we know the bar is high for us and we'll keep at it for however long it takes.

This has been and we're just trying to keep track of it because there's been a back and forth going on all week here, So let's get to it. We knew we had to get to the bottom of the concerns and what is going on in Alphabet and its key Google unit. So with us is the co host of Bloomberg Technology and BTV Ed Ludlow. He's in our San Francisco bureau, and also with us as Bloomberg News Technology reporter, Davey Alba in New York City.

This has been and we're just trying to keep track of it because there's been a back and forth going on all week here, So let's get to it. We knew we had to get to the bottom of the concerns and what is going on in Alphabet and its key Google unit. So with us is the co host of Bloomberg Technology and BTV Ed Ludlow. He's in our San Francisco bureau, and also with us as Bloomberg News Technology reporter, Davey Alba in New York City.

And I want to start with you.

And I want to start with you.

At the heart of this is Gemini, formerly barred Google's flagship AI products. Step back for us, the criticism from the analyst, the chief concerns. You talked with him, and then let's get into Sondar Pachai's response.

At the heart of this is Gemini, formerly barred Google's flagship AI products. Step back for us, the criticism from the analyst, the chief concerns. You talked with him, and then let's get into Sondar Pachai's response.

Sure, and by the way, not just Tim, you know, I speaking to a lot of people that the investor concern is right that Gemini is the poster for Google and it's public facing AI tools and competence. But the deeper concern is that that AI technology is going to spread and underpin all of the things we know Google for search, YouTube in the long run, and those are the bread and butter businesses. And that's a concern, right, It's an issue of trust and what I find extraordinary about this story. I applaud you and commend you guys for being so thorough on explaining what happened. But investors do have short memories. If you go back to exactly one year ago, what happened. Google released Barred and in that demonstration video, it was asked about the Hubble telescope. You may remember, I believe I came on the show with you and talked about it, and it gave an incorrect answer, and what played out was downward pressure on the stock significant We're seeing the same thing play out this week. Trust has been damaged and that's hurting the shehes.

Sure, and by the way, not just Tim, you know, I speaking to a lot of people that the investor concern is right that Gemini is the poster for Google and it's public facing AI tools and competence. But the deeper concern is that that AI technology is going to spread and underpin all of the things we know Google for search, YouTube in the long run, and those are the bread and butter businesses. And that's a concern, right, It's an issue of trust and what I find extraordinary about this story. I applaud you and commend you guys for being so thorough on explaining what happened. But investors do have short memories. If you go back to exactly one year ago, what happened. Google released Barred and in that demonstration video, it was asked about the Hubble telescope. You may remember, I believe I came on the show with you and talked about it, and it gave an incorrect answer, and what played out was downward pressure on the stock significant We're seeing the same thing play out this week. Trust has been damaged and that's hurting the shehes.

And ed what do you make of Sunder Pitcha's response the way he tried to handle this yesterday at the company.

And ed what do you make of Sunder Pitcha's response the way he tried to handle this yesterday at the company.

Yeah, I mean it's a pretty direct and frank admission. You know that. Verbatim, he said that the answers given by the text and image generation side of Gemini insulted and offended people, and it was unacceptable. What I'm interested to hear from Davey is that he said they've got teams out working around this on this around the clock, right, Well, how do you fix it?

Yeah, I mean it's a pretty direct and frank admission. You know that. Verbatim, he said that the answers given by the text and image generation side of Gemini insulted and offended people, and it was unacceptable. What I'm interested to hear from Davey is that he said they've got teams out working around this on this around the clock, right, Well, how do you fix it?

Well?

Well?

And let's so.

And let's so.

Davey come on in your story with with your Bloomberg colleagues, digs into internally what's been going on at Google, specifically around its ambitious AI strategy. I mean, February was supposed to be a pretty good month from them, but it hasn't played out. Tell us what's been going on behind the scenes.

Davey come on in your story with with your Bloomberg colleagues, digs into internally what's been going on at Google, specifically around its ambitious AI strategy. I mean, February was supposed to be a pretty good month from them, but it hasn't played out. Tell us what's been going on behind the scenes.

Yeah, you know, you're right. February was supposed to be a banner month for Google and it's AI products. It released a bunch of updates, including some impressive new upgrades to Gemini, an open source model called Gemma, and you know, more context windows so you can kind of querry the AI for longer text and video. But you know, this controversy has been playing out all week, and our reporting found that the way Google rolled out this technology included a technical fix that would transform the crop that you would actually send to Google and kind of force some outputs that would try to mitigate the inherent biases of AI, given that it's trained on such a corpus of data that does preference you know, sort of Western images and stereotypes, and and so Google basically over corrected in releasing Gemini. And now you know the company is trying to work hard to fix it. But I in my opinion, this is going to be a long journey for them. They will have to really take a look at how they built this product from the ground up and try to see what fixes they can make to the fundamental product rather than kind of a band aid fix that they rolled out.

Yeah, you know, you're right. February was supposed to be a banner month for Google and it's AI products. It released a bunch of updates, including some impressive new upgrades to Gemini, an open source model called Gemma, and you know, more context windows so you can kind of querry the AI for longer text and video. But you know, this controversy has been playing out all week, and our reporting found that the way Google rolled out this technology included a technical fix that would transform the crop that you would actually send to Google and kind of force some outputs that would try to mitigate the inherent biases of AI, given that it's trained on such a corpus of data that does preference you know, sort of Western images and stereotypes, and and so Google basically over corrected in releasing Gemini. And now you know the company is trying to work hard to fix it. But I in my opinion, this is going to be a long journey for them. They will have to really take a look at how they built this product from the ground up and try to see what fixes they can make to the fundamental product rather than kind of a band aid fix that they rolled out.

Well, I want to throw it back to ed just for a second here to help contextualize where Gemini is slash was when it comes to lms that are out there, like where does it compare to open ais and other ones that meta platforms perhaps are working on, and either ones from other companies as well.

Well, I want to throw it back to ed just for a second here to help contextualize where Gemini is slash was when it comes to lms that are out there, like where does it compare to open ais and other ones that meta platforms perhaps are working on, and either ones from other companies as well.

Well, Look, I would I think Davey would agree that the way Alphabet and Google Alphabet, the parirent of Google, have rolled out first Barred and now Gemini the kind of all encompassing generative AI tool, has been more careful and in different stages than others have rolled out their chatbots. You know, they did it with limited beta access at first, opening it up to a wider audience. I do think it's important tim to remember kind of what happened to set this all off, which is basically Gemini was asked what was worse, Hitler or Elon Musk and that's a very layman's and short answer. But the response that the Gemini bot gave was it's hard to say, and so that is what spurred the debate online. The problem being the root of your question is we are twelve months on from the general release and so that's worrying, right, because if you go back in history, Google is at the advent of the R and D that went into early AI. Fast forward to the first twelve months of commercialization, and that response on that specific question has got a lot of people saying, well, how on earth could Google, of all companies, allowed it to get to this stage, right.

Well, Look, I would I think Davey would agree that the way Alphabet and Google Alphabet, the parirent of Google, have rolled out first Barred and now Gemini the kind of all encompassing generative AI tool, has been more careful and in different stages than others have rolled out their chatbots. You know, they did it with limited beta access at first, opening it up to a wider audience. I do think it's important tim to remember kind of what happened to set this all off, which is basically Gemini was asked what was worse, Hitler or Elon Musk and that's a very layman's and short answer. But the response that the Gemini bot gave was it's hard to say, and so that is what spurred the debate online. The problem being the root of your question is we are twelve months on from the general release and so that's worrying, right, because if you go back in history, Google is at the advent of the R and D that went into early AI. Fast forward to the first twelve months of commercialization, and that response on that specific question has got a lot of people saying, well, how on earth could Google, of all companies, allowed it to get to this stage, right.

And you know, Davey considering that Google you right, you guys write in your story that's on the bloomberd today that Google pioneered some of the techniques that.

And you know, Davey considering that Google you right, you guys write in your story that's on the bloomberd today that Google pioneered some of the techniques that.

Are today at the heart of the AI boom.

Are today at the heart of the AI boom.

So it's kind of ironic, But come on in on some of what we just heard from ed in terms of what's been going on and what they're finding out some of the issues.

So it's kind of ironic, But come on in on some of what we just heard from ed in terms of what's been going on and what they're finding out some of the issues.

Yeah, you know, this is a problem for all large scale AI systems, not just Google. This is something that open AI faces and you know metas LM faces. The fact is that these AI systems are trained on all of the Internet's data basically, and if you think about what's on the Internet, a lot of it is kind of garbage. And so the way that the AI mirrors what it's trained on is a huge problem and one that these companies don't have a an elegant fix for. So it ads right. Google has been absolutely way more careful than some of its other peers in rolling out its products. It usually does so in experimental stages first, But the problem is that there is no other way to train these AI systems, and so so when you have this fundamental issue of the AI kind of being problematic, what they can do is apply sort of hard coded fixes on it, technical fixes, and in this case, our reporting found, you know, they may have gone a little too far, which is how you get these absurd answers of like who is worse Elon Musker or Hitler, And it's like, oh, waffling, like we can't say one way or the other.

Yeah, you know, this is a problem for all large scale AI systems, not just Google. This is something that open AI faces and you know metas LM faces. The fact is that these AI systems are trained on all of the Internet's data basically, and if you think about what's on the Internet, a lot of it is kind of garbage. And so the way that the AI mirrors what it's trained on is a huge problem and one that these companies don't have a an elegant fix for. So it ads right. Google has been absolutely way more careful than some of its other peers in rolling out its products. It usually does so in experimental stages first, But the problem is that there is no other way to train these AI systems, and so so when you have this fundamental issue of the AI kind of being problematic, what they can do is apply sort of hard coded fixes on it, technical fixes, and in this case, our reporting found, you know, they may have gone a little too far, which is how you get these absurd answers of like who is worse Elon Musker or Hitler, And it's like, oh, waffling, like we can't say one way or the other.

So guys, we got about a minute left and let me go to you first, So how should we And I'm thinking about the Bloomberg audience of investors trying to say, well, wait a minute, is.

So guys, we got about a minute left and let me go to you first, So how should we And I'm thinking about the Bloomberg audience of investors trying to say, well, wait a minute, is.

This a really big issue.

This a really big issue.

This is just part of a bigger, broader story as we wait our way through this new world of AI, Like, what is it?

This is just part of a bigger, broader story as we wait our way through this new world of AI, Like, what is it?

Yeah, it's hard for me to answer.

Yeah, it's hard for me to answer.

I'll go with investors vote with their feet, right, And the negative share reaction this week was not as severe as the negative reaction one year ago in that example of Bard making a mistake. You just have to continue to see how investors interpret the get picture. How does Gemini Gemini relate to its core businesses and either improve them or cause more concern?

I'll go with investors vote with their feet, right, And the negative share reaction this week was not as severe as the negative reaction one year ago in that example of Bard making a mistake. You just have to continue to see how investors interpret the get picture. How does Gemini Gemini relate to its core businesses and either improve them or cause more concern?

Davie saving twenty five seconds for you your thoughts forward, you know, as you continue to report this out.

Davie saving twenty five seconds for you your thoughts forward, you know, as you continue to report this out.

Yeah, I'm curious to see what fixes Google will have going forward. The CEO of DeepMind, Demissabis, had just said this week that he intends for this feature to go back online within the next couple of weeks. And I think if they don't have anything more than kind of the band aid fix that we saw, then you know what, investors will probably take note and vote accordingly.

Yeah, I'm curious to see what fixes Google will have going forward. The CEO of DeepMind, Demissabis, had just said this week that he intends for this feature to go back online within the next couple of weeks. And I think if they don't have anything more than kind of the band aid fix that we saw, then you know what, investors will probably take note and vote accordingly.

Investors not shy when there's any kind of AI angle that that disappoints guys.

Investors not shy when there's any kind of AI angle that that disappoints guys.

This is exactly what we wanted to do.

This is exactly what we wanted to do.

A deep dive on this which has been over the news throughout the week, co host to Bloomberg Technology Ed Ludlow, and of course our thanks to Bloomberg News tech reporter Davy Alba.

A deep dive on this which has been over the news throughout the week, co host to Bloomberg Technology Ed Ludlow, and of course our thanks to Bloomberg News tech reporter Davy Alba.

You're listening to the Bloomberg Business Week podcast Can't Just Look five weekday afternoons from two to five pm Eastern Listen on Apple car Play and then Brout Auto with a Bloomberg Business app or want us Live on YouTube.

You're listening to the Bloomberg Business Week podcast Can't Just Look five weekday afternoons from two to five pm Eastern Listen on Apple car Play and then Brout Auto with a Bloomberg Business app or want us Live on YouTube.

Well shares of the power generation company energ Energy hitting a record high today inter day before dropping back this following its latest quarterly update, the company reaffirming its twenty twenty four guidance and an upbeat forecast for twenty twenty four adjusted EBITA. So we continue to get some news and earnings reports, including on some of the energy names.

Well shares of the power generation company energ Energy hitting a record high today inter day before dropping back this following its latest quarterly update, the company reaffirming its twenty twenty four guidance and an upbeat forecast for twenty twenty four adjusted EBITA. So we continue to get some news and earnings reports, including on some of the energy names.

Yeah, and it's important to follow, of course, because Bloomberg News recently reported how the US power grid is struggling to maintain an even flow of electricity and putting homes at risk. It was a big take a couple of weeks ago. We covered it here on the program. So with more on some of the trend shaping the electricity sector as an investment play, We're joined by Timothy Kramer, the CEO at CNIC Funds. It's home to the cnic ice US Carbon Neutral Power Futures Index ETF, which has about four million dollars in assets in the fund. That's, according to Bloomberg, down about twelve percent since the beginning training in May of last year, down about four percent year to date. Tim joins us from Houston. Tim, good to have you on the program today. Talk a little bit about who this is for. Carol and I did some digging in the Bloomberg terminal and it was it was a bit tough to make sense of what exactly is in the ETF and what it tracks, So give us the details here, sure.

Yeah, and it's important to follow, of course, because Bloomberg News recently reported how the US power grid is struggling to maintain an even flow of electricity and putting homes at risk. It was a big take a couple of weeks ago. We covered it here on the program. So with more on some of the trend shaping the electricity sector as an investment play, We're joined by Timothy Kramer, the CEO at CNIC Funds. It's home to the cnic ice US Carbon Neutral Power Futures Index ETF, which has about four million dollars in assets in the fund. That's, according to Bloomberg, down about twelve percent since the beginning training in May of last year, down about four percent year to date. Tim joins us from Houston. Tim, good to have you on the program today. Talk a little bit about who this is for. Carol and I did some digging in the Bloomberg terminal and it was it was a bit tough to make sense of what exactly is in the ETF and what it tracks, So give us the details here, sure.

So what's in the ETF is electricity future So ICE the Intercontinental Exchange has the futures listed. So just like you've got crude oil futures, goal futures, et cetera, you've got these futures on electricity. And so what the index then the ETF has in it is it takes an average of six of the major power trading hubs in the US and it takes those futures and then it weights them according to what the electricity consumption is in the US.

So what's in the ETF is electricity future So ICE the Intercontinental Exchange has the futures listed. So just like you've got crude oil futures, goal futures, et cetera, you've got these futures on electricity. And so what the index then the ETF has in it is it takes an average of six of the major power trading hubs in the US and it takes those futures and then it weights them according to what the electricity consumption is in the US.

So who is this for? I'm curious about you.

So who is this for? I'm curious about you.

Guys have about a little bit more than four million dollars in assets under management.

Guys have about a little bit more than four million dollars in assets under management.

Who do you target with this?

Who do you target with this?

Who?

Who?

What kind of exposure is an investor looking for by tapping into this ETF?

What kind of exposure is an investor looking for by tapping into this ETF?

Sure, So electricity is the most consumed commodity in the US on a retail notional basis, but up until now it hasn't been in any ETF, any index, any mutual fund, nothing. So right now, if you take a look, modern portfolio theory says that you should have somewhere between five and fifteen percent of your aun allocated to commodities, and that's for portfolio diversification and for inflation protection. So if you take a look, pensions and endowments typically have about three percent right now allocation, and there's like over eight hundred billion dollars tied with the Bloomberg Commodity Index and other other commodity indexes. So this is geared towards a few different types of audiences. The first would be we'll say model portfolio. So if you take a look, a lot of the major platforms have been pushing a sixty forty portfolio, so sixty percent equity forty percent debt, and now they're trying to find tune that a bit, and so they're pushing like a sixty thirty five to five with the five being commodities. And so if you look back over the past three, five and seven years, on an absolute basis and on a risk adjusted basis, the sixty thirty five to five has been beating the sixty forty. But if you do a sixty thirty five three to two, three in commods and two in electricity, it beats everything on an absolute and a risk adjusted basis. So we think a model portfolio for investors would make sense. And then for the pensions and endowments, this gives you inflation protection because CPI is two point five percent electricity month in and month out right, and this person the index is eighty percent related to inflation.

Sure, So electricity is the most consumed commodity in the US on a retail notional basis, but up until now it hasn't been in any ETF, any index, any mutual fund, nothing. So right now, if you take a look, modern portfolio theory says that you should have somewhere between five and fifteen percent of your aun allocated to commodities, and that's for portfolio diversification and for inflation protection. So if you take a look, pensions and endowments typically have about three percent right now allocation, and there's like over eight hundred billion dollars tied with the Bloomberg Commodity Index and other other commodity indexes. So this is geared towards a few different types of audiences. The first would be we'll say model portfolio. So if you take a look, a lot of the major platforms have been pushing a sixty forty portfolio, so sixty percent equity forty percent debt, and now they're trying to find tune that a bit, and so they're pushing like a sixty thirty five to five with the five being commodities. And so if you look back over the past three, five and seven years, on an absolute basis and on a risk adjusted basis, the sixty thirty five to five has been beating the sixty forty. But if you do a sixty thirty five three to two, three in commods and two in electricity, it beats everything on an absolute and a risk adjusted basis. So we think a model portfolio for investors would make sense. And then for the pensions and endowments, this gives you inflation protection because CPI is two point five percent electricity month in and month out right, and this person the index is eighty percent related to inflation.

I saw Carol furiously writing down every number you just mentioned that, Timothy, Hey, So I do have to ask though, in terms of exposure to commodities. There are lot of different ways to get exposure to commodities. So somebody watching could be saying, okay, well, you know, I could buy this etf or I could buy I could buy crude I could buy natural gas, I could buy coal. These are all things that are used in the US to generate power. Why not just go directly to the source in terms of how that power is generator? I mean they could buy equity, you know, equity in companies that are solar companies.

I saw Carol furiously writing down every number you just mentioned that, Timothy, Hey, So I do have to ask though, in terms of exposure to commodities. There are lot of different ways to get exposure to commodities. So somebody watching could be saying, okay, well, you know, I could buy this etf or I could buy I could buy crude I could buy natural gas, I could buy coal. These are all things that are used in the US to generate power. Why not just go directly to the source in terms of how that power is generator? I mean they could buy equity, you know, equity in companies that are solar companies.

So in terms of going to the actual source, we'll go with what the occrude natural gas that you mentioned first. The US has a stated goal of being eighty five percent renewable generation by twenty thirty and one hundred percent carbon free by twenty thirty five, and so you're seeing less and less reliance on fossil fuels and more on other types of generation, and that creates a number of problems. And so you get direct exposure to the electricity as a commodity with this particular product. That's the first thing. And then if you do the equities, well, you know, you don't know if they'd hedge their exposure or not, and they can have accounting irregularities and they got to cover management and overhead. So you're not really getting the clean direct exposure to the commodity itself as if you as if you played the index or the ETI talk to.

So in terms of going to the actual source, we'll go with what the occrude natural gas that you mentioned first. The US has a stated goal of being eighty five percent renewable generation by twenty thirty and one hundred percent carbon free by twenty thirty five, and so you're seeing less and less reliance on fossil fuels and more on other types of generation, and that creates a number of problems. And so you get direct exposure to the electricity as a commodity with this particular product. That's the first thing. And then if you do the equities, well, you know, you don't know if they'd hedge their exposure or not, and they can have accounting irregularities and they got to cover management and overhead. So you're not really getting the clean direct exposure to the commodity itself as if you as if you played the index or the ETI talk to.

Us about flows over four million in assets under management. What kind of flows have you seen in and out as of late?

Us about flows over four million in assets under management. What kind of flows have you seen in and out as of late?

So right now, we've got interest from some of the platforms and from family offices, and we have seen some people that have been treading this in terms of their view on natural gas and or absolute price levels on commodities. And I will point out that what happens is we had probably the warmest winter January February of twenty four that you know, we've ever had, and so that's kind of depressed the price of this a little bit. And so that was due to winel Nino phenomena. But we are looking now for this summer for law Nina to be a very hot and very dry summer. So we're seeing interest in this pickback up for people that are looking to try to profit or participate on that.

So right now, we've got interest from some of the platforms and from family offices, and we have seen some people that have been treading this in terms of their view on natural gas and or absolute price levels on commodities. And I will point out that what happens is we had probably the warmest winter January February of twenty four that you know, we've ever had, and so that's kind of depressed the price of this a little bit. And so that was due to winel Nino phenomena. But we are looking now for this summer for law Nina to be a very hot and very dry summer. So we're seeing interest in this pickback up for people that are looking to try to profit or participate on that.

So Tim, is that it like you in terms of participation, you're kind of relying on the weather in terms of interest into the ETF. I'm just curious about what's the strategy for getting AUM a little bit higher here?

So Tim, is that it like you in terms of participation, you're kind of relying on the weather in terms of interest into the ETF. I'm just curious about what's the strategy for getting AUM a little bit higher here?

Sure, So to get the AUM hire, we're having conversations with the exact same pensions and endowments that we talked about and we're also having the conversations with some of the platforms about getting onto the model portfolios and getting this more available to some of the retail investors.

Sure, So to get the AUM hire, we're having conversations with the exact same pensions and endowments that we talked about and we're also having the conversations with some of the platforms about getting onto the model portfolios and getting this more available to some of the retail investors.

Interested in your thoughts just on infrastructure and on the grid, since you're so involved in this space, Tim, I mean, there's been so much reporting, especially in your home state in Texas after that grid failure a couple of years ago during that really huge cold snap in the are US grids up to snuff to handle increasing power consumption as we do shift and start using more and more electricity.

Interested in your thoughts just on infrastructure and on the grid, since you're so involved in this space, Tim, I mean, there's been so much reporting, especially in your home state in Texas after that grid failure a couple of years ago during that really huge cold snap in the are US grids up to snuff to handle increasing power consumption as we do shift and start using more and more electricity.

The short answer is no. The easy way to describe that is there's an article that came out the other day that talks about completion rate, and so approximately eight point seven percent of everything that goes into the development queue gets built. So there's a lot of things that are trying to get built as we're going towards that one hundred percent renewable, but it's very difficult to get them permitted and it takes a longer period of time to do it. It's up from between two to three years and now it ranges between four and seven years. So the fact that it's difficult to get the stuff permitted and it is taking longer to build. You need to combine that with the fact that's you've got higher expenses and so you know, higher interest rates, higher labor costs, and things like that just make it more prohibitively expensive to get the grid to where it needs to be for the stability factor that you're referencing.

The short answer is no. The easy way to describe that is there's an article that came out the other day that talks about completion rate, and so approximately eight point seven percent of everything that goes into the development queue gets built. So there's a lot of things that are trying to get built as we're going towards that one hundred percent renewable, but it's very difficult to get them permitted and it takes a longer period of time to do it. It's up from between two to three years and now it ranges between four and seven years. So the fact that it's difficult to get the stuff permitted and it is taking longer to build. You need to combine that with the fact that's you've got higher expenses and so you know, higher interest rates, higher labor costs, and things like that just make it more prohibitively expensive to get the grid to where it needs to be for the stability factor that you're referencing.

I am curious when you look at the electricity market.

I am curious when you look at the electricity market.

I mean, we talk a lot about AI right and machine learning and the amount of power that's going to be needed. We talked about the autonomous vehicles, the amount of power needed just inside the vehicle to make it all happen if it's autonomous. In terms of the fundamentals, the factors, the macro factors, what do you see tim as the biggest factors impacting demand raising it over the next couple of years.

I mean, we talk a lot about AI right and machine learning and the amount of power that's going to be needed. We talked about the autonomous vehicles, the amount of power needed just inside the vehicle to make it all happen if it's autonomous. In terms of the fundamentals, the factors, the macro factors, what do you see tim as the biggest factors impacting demand raising it over the next couple of years.

You nailed it right. So a couple of sound bites will be a Google search takes one wat of power, an AI search takes one hundred wants and it takes one thousand watts to train that. So the AI right there tells you kind of what the demand is. You guys talk about bitcoin. You've got it scrolling across your screens and so when you look at bitcoin, forty percent of all bitcoin in the world is mined in the US and seventy percent of bitcoin's expense is electricity. And then just the proliferation of data centers, the electricity demand due to data centers alone for data centers should be growing at about ten percent a year through like twenty thirty. So just for what you talked about technology reasons, just a massive name that we think is understated.

You nailed it right. So a couple of sound bites will be a Google search takes one wat of power, an AI search takes one hundred wants and it takes one thousand watts to train that. So the AI right there tells you kind of what the demand is. You guys talk about bitcoin. You've got it scrolling across your screens and so when you look at bitcoin, forty percent of all bitcoin in the world is mined in the US and seventy percent of bitcoin's expense is electricity. And then just the proliferation of data centers, the electricity demand due to data centers alone for data centers should be growing at about ten percent a year through like twenty thirty. So just for what you talked about technology reasons, just a massive name that we think is understated.

Biggest risk though to this strategy for you and just got about twenty seconds here, sure.

Biggest risk though to this strategy for you and just got about twenty seconds here, sure.

I mean the biggest risk is we think from a long term fundamental play that this looks good. The biggest risk is just short term if we don't get you know, demand due to weather. Yeah, I can depress prices a little bit, but other than that, from a long term perspective, we did all.

I mean the biggest risk is we think from a long term fundamental play that this looks good. The biggest risk is just short term if we don't get you know, demand due to weather. Yeah, I can depress prices a little bit, but other than that, from a long term perspective, we did all.

Right, got it?

Right, got it?

Run tim great to get some time. Timothy Kramer our CEFCN I S Funds.

Run tim great to get some time. Timothy Kramer our CEFCN I S Funds.

You're listening to the Bloomberg Business Week podcast. Listen live each weekdays starting at two pm Eastern on Apple car Play and ANDROYD Auto with the Bloomberg Business ad. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.

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Yes, indeed, folks, he is in from the West Coast, in from the state of California. He's also in charge of investing for the largest teachers retirement systems, second largest public pension here in the United States, which provides benefits to California nearly did we say, one million public school educators in their families. We're talking about the California State Teachers Retirement System also known as COLSTERS, which by the way, is also the largest educator only pension fund in the world, and as of the end of last month, the investment portfolio had more than three hundred and twenty five billion in assets under management.

Yes, indeed, folks, he is in from the West Coast, in from the state of California. He's also in charge of investing for the largest teachers retirement systems, second largest public pension here in the United States, which provides benefits to California nearly did we say, one million public school educators in their families. We're talking about the California State Teachers Retirement System also known as COLSTERS, which by the way, is also the largest educator only pension fund in the world, and as of the end of last month, the investment portfolio had more than three hundred and twenty five billion in assets under management.

That's a nice little amount too many.

That's a nice little amount too many.

What of responsibility, I'd say, Chris Allman is who we're talking about. He's chief investment officer of cal STIRS. He's back with us here in the Bloomberg Interactive Brokers studios. So Chris, it's good to see you. We're going to talk about your future plans in a second. But you shared with us an incredible stat just moments ago that California teachers live longer than any other profession in California, which.

What of responsibility, I'd say, Chris Allman is who we're talking about. He's chief investment officer of cal STIRS. He's back with us here in the Bloomberg Interactive Brokers studios. So Chris, it's good to see you. We're going to talk about your future plans in a second. But you shared with us an incredible stat just moments ago that California teachers live longer than any other profession in California, which.

Is sort of any profession in the USA, any actroy table think about it, that makes you talk about California. They're all college educated, they're typically non smokers. They live in California, so they have healthier lifestyles, eating habits, and they're seventy two percent women and live longer than men. So we have over four hundred teachers that are retired over one hundred.

Is sort of any profession in the USA, any actroy table think about it, that makes you talk about California. They're all college educated, they're typically non smokers. They live in California, so they have healthier lifestyles, eating habits, and they're seventy two percent women and live longer than men. So we have over four hundred teachers that are retired over one hundred.

Years old, which I mean right, yeah, that means they're dipping into their pension plans for longer than Oh yeah.

Years old, which I mean right, yeah, that means they're dipping into their pension plans for longer than Oh yeah.

Longevity is a big challenge for me.

Longevity is a big challenge for me.

That's so interesting to hear. I mean, and what was the stat about the teachers over one hundred?

That's so interesting to hear. I mean, and what was the stat about the teachers over one hundred?

Four hundred more? I think right now we're about four hundred and fifty teachers that are over one hundred years old. We write them a happy birthday card. At one hundred, I kind of cringe a little bit because it's like, wow, you know, we got a card back from a teacher that was one hundred, very legible, writing thrilled about her daughter that was eighty, her granddaughter that was sixty, and telling us that our great guyanddaughter was a teacher and thinking about retiring.

Four hundred more? I think right now we're about four hundred and fifty teachers that are over one hundred years old. We write them a happy birthday card. At one hundred, I kind of cringe a little bit because it's like, wow, you know, we got a card back from a teacher that was one hundred, very legible, writing thrilled about her daughter that was eighty, her granddaughter that was sixty, and telling us that our great guyanddaughter was a teacher and thinking about retiring.

I think I'm going to move to California and become a teacher.

I think I'm going to move to California and become a teacher.

It's too late now, Yeah, you gotta start when you're young.

It's too late now, Yeah, you gotta start when you're young.

So let's talk about though the investment environment, something we always like to do. You guys have to you know, guarantee that they're going to be the money there for those who tap into this fund and this retirement fund. How do you continue to think about it in today's environment, and what's the smartest strategy and how first doesn't shift Chris based on you know, we're day to day the gyrations we obsess over it.

So let's talk about though the investment environment, something we always like to do. You guys have to you know, guarantee that they're going to be the money there for those who tap into this fund and this retirement fund. How do you continue to think about it in today's environment, and what's the smartest strategy and how first doesn't shift Chris based on you know, we're day to day the gyrations we obsess over it.

You've got to think longer term, bigger, broader to make.

You've got to think longer term, bigger, broader to make.

Sure you're at Bloomberg because of the focused capital and the long term. A conference that we're part of in a group that we're really trying to help. The key is to think long term. So I've got a thirty year horizon. I think long term. We make I always say we're a giant cruise ship out on the ocean. We're not going to ever go to port. We're always out in rough weather or smooth weather, and what we're doing is making subtle course corrections. So I'm listening to you guys every day on my car to work back home. I'm a diehard listener to Bloomberg Radio, and I am paying attention to the nuances in the market, but I am not making giant corrections to that portfolio. It's long term. You've got to have a thought that it's a marathon, and every year is just one pace in a marathon when you're a mile in a marathon.

Sure you're at Bloomberg because of the focused capital and the long term. A conference that we're part of in a group that we're really trying to help. The key is to think long term. So I've got a thirty year horizon. I think long term. We make I always say we're a giant cruise ship out on the ocean. We're not going to ever go to port. We're always out in rough weather or smooth weather, and what we're doing is making subtle course corrections. So I'm listening to you guys every day on my car to work back home. I'm a diehard listener to Bloomberg Radio, and I am paying attention to the nuances in the market, but I am not making giant corrections to that portfolio. It's long term. You've got to have a thought that it's a marathon, and every year is just one pace in a marathon when you're a mile in a marathon.

So when you.

So when you.

Listen to either conversations from the investor from the investing space or when you listen to Bloomberg, what is it that makes you sit up a little straight and say, oh, that's an interesting trend or that's something significant that could be a longer term investment play.

Listen to either conversations from the investor from the investing space or when you listen to Bloomberg, what is it that makes you sit up a little straight and say, oh, that's an interesting trend or that's something significant that could be a longer term investment play.

Carol, the old adage of don't fight the Fed. I'm listening to what the Fed's saying today, what Jim Williams, who's from Sacramento is saying, you know what, the New York Fed. Listening to them first and foremost and paying attention to their directions, but then the other overall trends within the US market and the global markets, because it's not just the US Central Bank we have to pay attention to.

Carol, the old adage of don't fight the Fed. I'm listening to what the Fed's saying today, what Jim Williams, who's from Sacramento is saying, you know what, the New York Fed. Listening to them first and foremost and paying attention to their directions, but then the other overall trends within the US market and the global markets, because it's not just the US Central Bank we have to pay attention to.

But global central bankers there Oh yeah.

But global central bankers there Oh yeah.

No, because it we are a truly global portfolio. We have a home country bias to the USA. It's over half of the market and it's about seventy five percent of our portfolio. But it still is interest rates first. And you're really listening to whether people are greedy or fearful. And the old Warren Buffett adage is still true. If people are fearful, then that's time to be greedy. If they're greedy like now, it's time to be a little fearful.

No, because it we are a truly global portfolio. We have a home country bias to the USA. It's over half of the market and it's about seventy five percent of our portfolio. But it still is interest rates first. And you're really listening to whether people are greedy or fearful. And the old Warren Buffett adage is still true. If people are fearful, then that's time to be greedy. If they're greedy like now, it's time to be a little fearful.

So when can you get greedy again? When are people going to be fearful?

So when can you get greedy again? When are people going to be fearful?

That's always a tough question. You know, it's the consumer right now is really in a bad mood. But what surprises me. They're flying on planes. All the airports are jammed, they're going to restaurants, they're you know, the the lower end consumer is struggling. But we hit a soft landing. We're doing okay, and the markets are repeating record highs.

That's always a tough question. You know, it's the consumer right now is really in a bad mood. But what surprises me. They're flying on planes. All the airports are jammed, they're going to restaurants, they're you know, the the lower end consumer is struggling. But we hit a soft landing. We're doing okay, and the markets are repeating record highs.

You've you've you've said, we've landed the plane.

You've you've you've said, we've landed the plane.

Yep, look at that.

Yep, look at that.

We hit a soft landing.

We hit a soft landing.

Well it's kind of interesting.

Well it's kind of interesting.

So you think we got to call here?

So you think we got to call here?

Okay, okay, okay.

Okay, okay, okay.

I said it. I said it. Apparel. Back in December, we hit the soft landing. It's done done. Inflation is not totally under control. It's going to jump up to three and fours and then back to two's. We're going to be in a higher inflation environment. But that doesn't mean the Fed is going to ease I think, well, does the market right?

I said it. I said it. Apparel. Back in December, we hit the soft landing. It's done done. Inflation is not totally under control. It's going to jump up to three and fours and then back to two's. We're going to be in a higher inflation environment. But that doesn't mean the Fed is going to ease I think, well, does the market right?

So does the Fed even need to cut rates?

So does the Fed even need to cut rates?

They? I think for the markets sake they need to come off, but maybe not more than three cuts in this year at most. They do not need to ease back. Real interest rates are probably around three percent. That's what the FED is say.

They? I think for the markets sake they need to come off, but maybe not more than three cuts in this year at most. They do not need to ease back. Real interest rates are probably around three percent. That's what the FED is say.

Off landing. You're saying to maintain that's off landing.

Off landing. You're saying to maintain that's off landing.

They're gonna have, I think, to maintain it. Yeah. The economy, you know, we hear every week about some companies with job cuts. Employment though in other sectors is strong. A lot of enthusiasmopsous say about the productivity games we'll see in an AI. Those things have to play out over time, and the FED shouldn't rush because inflation is sticky and it's going to be difficult to maintain.

They're gonna have, I think, to maintain it. Yeah. The economy, you know, we hear every week about some companies with job cuts. Employment though in other sectors is strong. A lot of enthusiasmopsous say about the productivity games we'll see in an AI. Those things have to play out over time, and the FED shouldn't rush because inflation is sticky and it's going to be difficult to maintain.

Hey, I want to talk a little bit about how you buy and what you buy because you have a real passive bias in addition to a US bias. So you said seventy five percent of the portfolio is US focused. How much that is equities? And of those equities, what are you buying?

Hey, I want to talk a little bit about how you buy and what you buy because you have a real passive bias in addition to a US bias. So you said seventy five percent of the portfolio is US focused. How much that is equities? And of those equities, what are you buying?

The key to us is we're about forty eight percent are global equity. Most over half of that's in the USA. We are passive in others. We own the Russell three thousand and index from Microsoft all the way down to the bottom stock and we're going to hold that, so we own the Magnificent seven. Those are amongst our top largest holdings. But we still have fixed income, we have real estate, we have private equity. We're broadly to versided, we have infrastructure, we have some inflation sensitive assets. So it's a very diverse sided portfolio, but a blend of public and private holdings.

The key to us is we're about forty eight percent are global equity. Most over half of that's in the USA. We are passive in others. We own the Russell three thousand and index from Microsoft all the way down to the bottom stock and we're going to hold that, so we own the Magnificent seven. Those are amongst our top largest holdings. But we still have fixed income, we have real estate, we have private equity. We're broadly to versided, we have infrastructure, we have some inflation sensitive assets. So it's a very diverse sided portfolio, but a blend of public and private holdings.

What's been your.

What's been your.

Biggest change since you kind of tend to write, set a strategy and let it stick. You're not kind of moving in and out every day. That's not what you guys do. Is there anything though in the last six to twelve months that's been something new or new.

Biggest change since you kind of tend to write, set a strategy and let it stick. You're not kind of moving in and out every day. That's not what you guys do. Is there anything though in the last six to twelve months that's been something new or new.

You know, kind of just playing around with it a little bit.

You know, kind of just playing around with it a little bit.

You guys have talked about private credit and the concern about private credit. The money going in. If anything, we're still invested, but we've slowed down. The advantage to private credit is when rates are rising, being a variable rate, it's going to climb with it. Well, now rates are peaked and now they're going to start easing off, so there's no reason to rush in a nice alternative to general fixed income and trading bonds in this market has been.

You guys have talked about private credit and the concern about private credit. The money going in. If anything, we're still invested, but we've slowed down. The advantage to private credit is when rates are rising, being a variable rate, it's going to climb with it. Well, now rates are peaked and now they're going to start easing off, so there's no reason to rush in a nice alternative to general fixed income and trading bonds in this market has been.

Tough, but tempering back a little bit.

Tough, but tempering back a little bit.

Just pacing ourselves, I think, a bit more discretionary and paying attention. Anytime you have like this kind of an environment where you're gonna have some stress coming up in the year in terms of people that can't pay, then you want to have to do your credit analysis and pay attention to your exposures.

Just pacing ourselves, I think, a bit more discretionary and paying attention. Anytime you have like this kind of an environment where you're gonna have some stress coming up in the year in terms of people that can't pay, then you want to have to do your credit analysis and pay attention to your exposures.

So Chris, we got to talk about your your plans because you said last month that you were stepping down after twenty four years at Calstairs. Why now, what's next?

So Chris, we got to talk about your your plans because you said last month that you were stepping down after twenty four years at Calstairs. Why now, what's next?

Hey, age, I've been there long enough time to retire, slow down, do some bike riding, and then just do a few other things. I have a real passion about climate change and talking to US and non US investors about that. I think that the energy transition we have to go through calstirs we say fifteen years, I'm telling people it's seven years. Twenty thirty sounds like a long time. What the transition that we really have to move away from hydrocarbons is our source of electricity, propulsion, manufacturing, agriculture, and we have to find other alternative sources. We need more energy around the whole world, and we need different energy.

Hey, age, I've been there long enough time to retire, slow down, do some bike riding, and then just do a few other things. I have a real passion about climate change and talking to US and non US investors about that. I think that the energy transition we have to go through calstirs we say fifteen years, I'm telling people it's seven years. Twenty thirty sounds like a long time. What the transition that we really have to move away from hydrocarbons is our source of electricity, propulsion, manufacturing, agriculture, and we have to find other alternative sources. We need more energy around the whole world, and we need different energy.

I don't disagree. It's become though, a political firestorm in terms of so I don't know. Do you think that's going to continue to kind of slow that process down, that shift away from fossil Oh, this is.

I don't disagree. It's become though, a political firestorm in terms of so I don't know. Do you think that's going to continue to kind of slow that process down, that shift away from fossil Oh, this is.

A hard change. Think back to when we move from blackberries to iPhones. Everybody jumped on them. Number one. They were a huge investment and they were free because the telephone company embedded the cost to you. Everybody moved instantly. This transition is not going to be free, it's not necessarily more efficient. It's a change, and it's probably going to be a little bit expensive, So Carol, Therefore, you're going to see fits and starts. You're going to see people who've devoted their life in the industry to traditional methods hanging on onto those. We still have coal plants around the world for goodness sake, but mother Nature is going to teach us all a very harsh lesson right on the TV screens. You know, there are big brush fires in the middle of winter in Texas, and then they're gonna have snow. And you know La had a hurricane, an earthquake and then a fire. You know we're gonna have these extremes.

A hard change. Think back to when we move from blackberries to iPhones. Everybody jumped on them. Number one. They were a huge investment and they were free because the telephone company embedded the cost to you. Everybody moved instantly. This transition is not going to be free, it's not necessarily more efficient. It's a change, and it's probably going to be a little bit expensive, So Carol, Therefore, you're going to see fits and starts. You're going to see people who've devoted their life in the industry to traditional methods hanging on onto those. We still have coal plants around the world for goodness sake, but mother Nature is going to teach us all a very harsh lesson right on the TV screens. You know, there are big brush fires in the middle of winter in Texas, and then they're gonna have snow. And you know La had a hurricane, an earthquake and then a fire. You know we're gonna have these extremes.

We look forward to the work you do on that. Come back when you want to talk more about that, Chris Allman. We've always appreciated the conversations with you, Chief Investment Officer of Costers joining us in studio, Chris, thank you, Mac.

We look forward to the work you do on that. Come back when you want to talk more about that, Chris Allman. We've always appreciated the conversations with you, Chief Investment Officer of Costers joining us in studio, Chris, thank you, Mac.

A journal.

A journal.

How about you let me drive?

How about you let me drive?

No, no, no, no, all right, please, I'll gravels Wait, I want to drive.

No, no, no, no, all right, please, I'll gravels Wait, I want to drive.

It's a good question.

It's a good question.

This is the drive to the.

This is the drive to the.

Globe, doing well by around each.

Globe, doing well by around each.

Other down on Blueberg Radio, all right, everybody well, Our next guest says it's time to party like it's nineteen ninety nine. That's because he says, there is quote no doubt that twenty twenty four is shaping up to be the best year since nineteen ninety nine.

Other down on Blueberg Radio, all right, everybody well, Our next guest says it's time to party like it's nineteen ninety nine. That's because he says, there is quote no doubt that twenty twenty four is shaping up to be the best year since nineteen ninety nine.

So that'll take you a few decades back.

So that'll take you a few decades back.

I went back a few decades using Bloomberg data, and I found the Nasdaq one hundred that year was up a cool one and two percent. But Carol, we all know what happened after.

I went back a few decades using Bloomberg data, and I found the Nasdaq one hundred that year was up a cool one and two percent. But Carol, we all know what happened after.

That, Yeah, exactly, the tech sell off in a big the dot.

That, Yeah, exactly, the tech sell off in a big the dot.

Com boom, the bubble burst.

Com boom, the bubble burst.

All right, So let's get to it. Let's drive to the clothes with Louis Navalier. He's chairman, founder and CIO of the company that bears his name. He joins us from Florida.

All right, So let's get to it. Let's drive to the clothes with Louis Navalier. He's chairman, founder and CIO of the company that bears his name. He joins us from Florida.

Louis, it's been a while. Nice to have you here.

Louis, it's been a while. Nice to have you here.

You know, I'm not I say this to folks with utmost respect because you've seen a few investment cycles.

You know, I'm not I say this to folks with utmost respect because you've seen a few investment cycles.

So how do you describe the cycle that we're in? Is there more?

So how do you describe the cycle that we're in? Is there more?

We were just talking with Chris Allman talking about fear versus greed. He thinks there's a lot of greed in this market.

We were just talking with Chris Allman talking about fear versus greed. He thinks there's a lot of greed in this market.

How do you see it.

How do you see it.

Well, there's a lot agreed because they AI stocks are ten percent of global market capitalization, but the two leading hardware AI stocks have over two hundred percent sales growth, So that's justified in my opinion. I mean, the software has ways to catch up and to be monetized. But you know, Nvidia's super microcomputer are worth their capitalizations and they do not trade it very high multiples. When you look out to fiscal twenty twenty five, I mean super micros under eighteen times forecasts earnings. Nivida is a little higher, but it's it's a monopoly.

Well, there's a lot agreed because they AI stocks are ten percent of global market capitalization, but the two leading hardware AI stocks have over two hundred percent sales growth, So that's justified in my opinion. I mean, the software has ways to catch up and to be monetized. But you know, Nvidia's super microcomputer are worth their capitalizations and they do not trade it very high multiples. When you look out to fiscal twenty twenty five, I mean super micros under eighteen times forecasts earnings. Nivida is a little higher, but it's it's a monopoly.

These are all these are all names that you would own it by. I'm kind of obsessed with super Micro too. I mean the stacks up one hundred and eighty nine percent this year. It's not kind of a name that we talk about a lot, but we are talking a lot about it because of its significance, it's gains, its moves, and it's fundamentals. But these are names you've owned, owned for a long time, or just been piling money into it.

These are all these are all names that you would own it by. I'm kind of obsessed with super Micro too. I mean the stacks up one hundred and eighty nine percent this year. It's not kind of a name that we talk about a lot, but we are talking a lot about it because of its significance, it's gains, its moves, and it's fundamentals. But these are names you've owned, owned for a long time, or just been piling money into it.

As of late, those are our two largest holdings. Navidia I've had for over five years. It's my second time back in Navidia, dig it out temporarily. Super Micro we've had for over two years, and our biggest holdings after that would be Nova nor disc Eli, Lilly the weight loss drugs. Those are capturing a lot of market share. I will admit that even though we're seeing a lot of breath in small caps since an early January effect late last year that it's still narrow. My opinion is only three of the seven of the Magnificent seven had really spectacular results and money is now moving and super Micro's beneficiary of that, and so it was a Nova Noor disc in Lily.

As of late, those are our two largest holdings. Navidia I've had for over five years. It's my second time back in Navidia, dig it out temporarily. Super Micro we've had for over two years, and our biggest holdings after that would be Nova nor disc Eli, Lilly the weight loss drugs. Those are capturing a lot of market share. I will admit that even though we're seeing a lot of breath in small caps since an early January effect late last year that it's still narrow. My opinion is only three of the seven of the Magnificent seven had really spectacular results and money is now moving and super Micro's beneficiary of that, and so it was a Nova Noor disc in Lily.

Talk to us a little bit about areas that you've missed in recent years, because you're in a pretty good position having owned in video, super Micro, Nova nor Disc and Eli Lilly, what were some missteps in recent years if you could go back in time.

Talk to us a little bit about areas that you've missed in recent years, because you're in a pretty good position having owned in video, super Micro, Nova nor Disc and Eli Lilly, what were some missteps in recent years if you could go back in time.

Meta. I missed Meta because it's a high beta stock and it went higher on short covering. And the way my system works is we look for high alpha, low deviation, So anytime we get a high bay of stock, it doesn't quite fit our model. So there will be some extraordinary stocks running that we will miss, you know, I'll be honest with you. Google is hard to figure out because the guidance is poor. Amazon's a little easier to figure out. Lately it's mostly cloud computing. But the retail society is finally going to make some money, we think, And but you know, Meta is the big one we missed.

Meta. I missed Meta because it's a high beta stock and it went higher on short covering. And the way my system works is we look for high alpha, low deviation, So anytime we get a high bay of stock, it doesn't quite fit our model. So there will be some extraordinary stocks running that we will miss, you know, I'll be honest with you. Google is hard to figure out because the guidance is poor. Amazon's a little easier to figure out. Lately it's mostly cloud computing. But the retail society is finally going to make some money, we think, And but you know, Meta is the big one we missed.

Do you like it now?

Do you like it now?

It ranks high on our quant criteria, but my fundamental criteria, I'm not too crazy about it. The texts are funny. You know, the more people they lay off, the more the stocks rally. And you already have googling of people.

It ranks high on our quant criteria, but my fundamental criteria, I'm not too crazy about it. The texts are funny. You know, the more people they lay off, the more the stocks rally. And you already have googling of people.

Because the year or years of what is it efficiency.

Because the year or years of what is it efficiency.

Yeah, so you got Apple with the Apple car today.

Yeah, so you got Apple with the Apple car today.

Of course you broke that news yesterday. You've got Amazon becoming more efficient a lot of their delivery. They're trying to sub out because it's not cost effective to have a tube of toothpaste delivered to your house, so they they're figuring that one out. But yeah, the meta is laying off people. So maybe it is the AI revolution. Maybe they will they will just be a company and with some drune, some robots. You know, we'll find out. But you know that we're not near that bubble that we had in March of two thousand, that was pretty bad back then. I don't have a multiple problem. You know. My average multiple in large cap is barely eighteen times this year's estimate earnings, and I got a lot of earnings growth. A small cap it's well under ten times this year's estimate earnings with even more earnings growth, So I don't really have a multiple problem or evaluation problem at this time. Obviously we would like the FED to start putting rates.

Of course you broke that news yesterday. You've got Amazon becoming more efficient a lot of their delivery. They're trying to sub out because it's not cost effective to have a tube of toothpaste delivered to your house, so they they're figuring that one out. But yeah, the meta is laying off people. So maybe it is the AI revolution. Maybe they will they will just be a company and with some drune, some robots. You know, we'll find out. But you know that we're not near that bubble that we had in March of two thousand, that was pretty bad back then. I don't have a multiple problem. You know. My average multiple in large cap is barely eighteen times this year's estimate earnings, and I got a lot of earnings growth. A small cap it's well under ten times this year's estimate earnings with even more earnings growth, So I don't really have a multiple problem or evaluation problem at this time. Obviously we would like the FED to start putting rates.

Is that why you think it's time to party like it's nineteen ninety nine, because you don't have a problem, whether it's large caps or small caps Louis with the valuations that are out there and the multiples.

Is that why you think it's time to party like it's nineteen ninety nine, because you don't have a problem, whether it's large caps or small caps Louis with the valuations that are out there and the multiples.

I think the main reason is we have very easy year of year comparisons on the next two quarters, and we just had easier comparisons in the fourth quarter, and you saw, you know, seventy six percent of the stocks it'sant be beat the average surprises seven percent, I believe where the video is a grand finale, and so we got two more cores of good earnings. We got the FED joining the party, and let's face it, in a presidential election cycle, we tend to rally going into the election because we will be promised everything and anything. You know, there's now student loan relief. I thought the court ruled you couldn't do that, but they're going to get do it anyway. So you know, they're gonna tell us what we what we want to hear, and that helps both investor in consumer confidence and the US is so much better shape than the rest of the world. We're food and energy independent, and we got a strong currency, and we're an oasis for foreign capital. So the only thing to go wrong is, I guess if our definity gets too big. I mean, the leading candidates are both going to make the devisit big, So that's going to be interesting to watch.

I think the main reason is we have very easy year of year comparisons on the next two quarters, and we just had easier comparisons in the fourth quarter, and you saw, you know, seventy six percent of the stocks it'sant be beat the average surprises seven percent, I believe where the video is a grand finale, and so we got two more cores of good earnings. We got the FED joining the party, and let's face it, in a presidential election cycle, we tend to rally going into the election because we will be promised everything and anything. You know, there's now student loan relief. I thought the court ruled you couldn't do that, but they're going to get do it anyway. So you know, they're gonna tell us what we what we want to hear, and that helps both investor in consumer confidence and the US is so much better shape than the rest of the world. We're food and energy independent, and we got a strong currency, and we're an oasis for foreign capital. So the only thing to go wrong is, I guess if our definity gets too big. I mean, the leading candidates are both going to make the devisit big, So that's going to be interesting to watch.

So louis, where would you put new money to work right now? Given that, arguably people would say, okay, parts of the market are high, though you argue that you know the tech names that you're in or not high.

So louis, where would you put new money to work right now? Given that, arguably people would say, okay, parts of the market are high, though you argue that you know the tech names that you're in or not high.

That sounds standing question. Well, earning season is over, so I go on every earning season locked and loaded, and I want to buy stocks on dips now because I don't have really news to drive my stocks to mid April. But I am buying stocks where analysts are upgrading and raising their estimates, and if the ounces start to cut, I'll get out of their way because I can't fight with the ans community. But what happens after earning season. We have a lot of mean reversion going on, and Citadella is pretty good at their mean reversion trading. So my view of the world is we have four months where the markets are efficient when earnings are coming out. That's earning season, and the other eight months we have mean reversion, So I just want to sell in the strength and buy in dips. I am bullish on energy going in through some we should get a seasonal surge just from the fact there's more people in North hemisphere in the Southern hemisphere. But if there's any hint that Trump might become president, probably will exit most of my energy stocks by September because you know he'll drill, dro drill and prices could fall.

That sounds standing question. Well, earning season is over, so I go on every earning season locked and loaded, and I want to buy stocks on dips now because I don't have really news to drive my stocks to mid April. But I am buying stocks where analysts are upgrading and raising their estimates, and if the ounces start to cut, I'll get out of their way because I can't fight with the ans community. But what happens after earning season. We have a lot of mean reversion going on, and Citadella is pretty good at their mean reversion trading. So my view of the world is we have four months where the markets are efficient when earnings are coming out. That's earning season, and the other eight months we have mean reversion, So I just want to sell in the strength and buy in dips. I am bullish on energy going in through some we should get a seasonal surge just from the fact there's more people in North hemisphere in the Southern hemisphere. But if there's any hint that Trump might become president, probably will exit most of my energy stocks by September because you know he'll drill, dro drill and prices could fall.

Interesting, interesting, broad macro. Does it matter that much to you who is in the White House? Just got about thirty seconds left here. You mentioned energy specifically for Trump, but more broadly it doesn't matter to.

Interesting, interesting, broad macro. Does it matter that much to you who is in the White House? Just got about thirty seconds left here. You mentioned energy specifically for Trump, but more broadly it doesn't matter to.

You, no, because what makes America great is our states compete with each other, period and as long as we have the states trying to steal business from each other, business will be good and America will prosper. And we have so much better demographics as well.