Market Performance, Private Equity, the AI Revolution and More!

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Stay caught up with our latest updates on the market and our take on how to navigate the changes.

In this live episode of Tower Talk we start by discussing the current state of US and Canadian markets. Markets have been doing well, but those returns have been concentrated in a small number of large companies driven by the ongoing “AI Revolution”.

We compare the economic trends in both countries to see if we can expect markets to continue to climb this wall of worry.

Then Mark outlines why there’s a bubble in the Private Equity market and how it may burst in the next few years, you heard it here first!

This was a live episode and we answered some listener questions regarding the AI revolution, the fallout from the private equity bubble and whether there is a sovereign debt crisis coming. #assetmanagement #marketupdate #airevolution #privateequity #sovereigndebt 

If you have questions, topic ideas or want to discuss your own investments please reach out, we’d love to hear from you. Email us at info@towerasset.ca.

Full Transcript

Tarek (00:00:08) – All right. Well, thank you all for tuning in to the live episode here., just a couple of things to get started. We’re going to do some questions after Mark and I will talk for about, you know, ten minutes. We’ll try to keep it a little shorter. Not too long winded, but really excited to get to your question. So I go, I hope you guys have some. And I hope, you know, as we present, you’ll come up with some as well. So,, I’ll just jump right in then let me know if at any point you can’t hear me or if something cuts out just so that I don’t keep rambling on when nobody can hear me. Okay, so it’s a market update. Oh, Mark, if you don’t mind, could you share that PDF? If you can. I’ll just keep going while you work on it.

Mark (00:00:46) – Yeah. You get going. I’ll,, I’ll see if I can hook it in.

Tarek (00:00:50) – Okay., and then just to that first slide with the,, index returns.

Tarek (00:00:54) – So market update. So where are we now?, the first thing I look at is the TSX, how it’s done year to date. And so the TSX is up 5% year to date. The S&P 500 in the state is actually up nearly 9% year to date. Bonds are down, but just about 2%. So not significantly but yields are up. So that kind of offsets the the price being down. Now we’re almost done the first quarter of the year. And and those are strong returns. But we’re already actually building on what was a strong 2023. So it’s been really, really good lately. Now why are markets up. So if we look at the states the the economy is actually doing really well based on a number of popular metrics. In a few minutes here, I’ll put up a table that shows some of the indicators that I like to look at, but the big ones are unemployment is at record lows. I think it’s at 3.9%, as is the most recent number. So that is pretty much over full employment.

Tarek (00:01:50) – That’s pushing wages up, which is good. GDP is growing in the US, highest among all its peers. Inflation is starting to move in the right direction. So that’s giving rise to expected rate cuts. So people are thinking maybe the fed is going to cut rates. And actually some of the current returns we’re seeing in the market are in expectation of those rate cuts. And then of course there’s the artificial intelligence boom, particularly in the so-called Magnificent Six or Magnificent Seven. So these are the six or rather seven stocks. You know, it’s Apple, Facebook,, Tesla, Google,, Nvidia and Amazon. They are of the seven stocks that have just been on a tear over the last, you know, let’s say 15 months,, they’ve represented 60% of the return on the S&P 500 in 2023 and 50% of the return for the last three months. Which is basically year to date., but you can see it’s trending in a different direction where it went from 60 to 50. If we look down to 30 days, it’s actually down to 40 to 45.

Tarek (00:02:53) – So this is a good thing. This is a a market rotation where we’re seeing all the returns were in these seven stocks that actually make up 30% of the index now. And now we’re seeing it spread out a little bit to some of the other stocks and the other sectors, which is good., and that’s not the The Magnificent Seven anymore., I don’t know who’s naming these things, but you know Tesla’s out. They’ve they’re down quite a bit year to date. Apple’s out there not doing as well year to date. But you know that’s okay. switching to Canada we are seeing some concerns. Let me.

Mark (00:03:22) – Ask can you see the screen share or am I just.

Tarek (00:03:25) – I can see it. Can can everybody else see it. Just give us a nod or a. Yeah okay okay.

Mark (00:03:29) – So the question I’ve got is what screen do you want me on.

Tarek (00:03:33) – , this one’s good. This one’s good for now. I’ll get to this in just a minute. So that’s great. That’s my indicators I was telling you guys about that I like to look at.

Tarek (00:03:42) – Okay, so we’re moving on to Canada. Some concentration in return in Canada as well, but not as pronounced as in the US. So it’s closer to the largest ten companies that represent about 30% of the market., they did generate 50% of the TSX returns over the last six months, but for the last 30 days it was down to 35%. So we’re seeing that same rotation in Canada as well, where the returns are splitting off to different sectors, which is a good thing. But unfortunately Canada just isn’t doing as well as the US is at at this time. And I mean, there’s a couple different reasons for that. But, you know, one big one is any contributions being made to this AI revolution that everyone’s talking about. The ones from Canada are insignificant compared to what’s happening into the States. We’re just not in that market., and that’s where most of the returns in the states have been from. And it’s evident in our top ten companies being, you know, the usual suspects, banks,, resource and resource extraction and railroads, sort of old world,, companies.

Tarek (00:04:41) – , now, now you can see the indicator chart. So I’ll get into that. And these are ten of my favorite indicators to keep an eye on, so I can keep my finger on the big macroeconomic trends in the economy. So I look at Canada because that’s where we live. And I look at the US because we’re Canadian and the US is our largest trading partner and the biggest economy in the world. I won’t go into too much detail., but seven of the ten indicators are green in the States. Green is good. We’re only three of the ten are green in Canada. And so this kind of gets into where that wall of worry is coming from that we were talking about, or that was the headline for this particular episode. You were supposed to have a recession, a proper recession, when rates started to go up and market started to drop. I don’t know if it might be hard to remember this was in 2022., it was the consensus opinion that when rates went up, we were going to have a recession.

Tarek (00:05:32) – , and that never happened. That’s a good thing, of course, but many market participants are still not sure they believe it. So markets are jittery with any negative or unexpected news, right? They’re very on edge. So I’ll give you some of the most pressing concerns right now as we see them. Inflation and interest rates. As I mentioned previously, some of the returns we’ve seen in the last few months, I think a lot of the returns are in expectation of rate cuts from central banks. So if it appears that those rate cuts will not materialize, we would see a market drop. Now the fed actually had their meeting today in Jerome Powell seems committed to the markets predicting free rate cuts this year. He seems to be committed to that. Now this is despite inflation being a little bit stickier. Unemployment’s really really low driving that inflation up. And it’s anyone’s guess what inflation will look like in the next 3 to 6 months. Honestly it’s my opinion if it stays above three or even moves up closer to four, he would be hard pressed to make that decision to cut rates, and I think that would lead to a decent sized pullback.

Tarek (00:06:30) – But you know that’s that’s into the future. Hard to see the other issue. And then I’ll pass it off to Mark here is trade and proxy wars right. So this is the geopolitical stuff that’s so hard to predict. But this you know we see it all the time, you know, the obvious proxy war Russia, Ukraine. But then trade wars are just significant. Maybe don’t get as much press., and the big thing is the reshoring or French shoring of manufacturing to secure supply chain. So, you know, we know global globalization sent supply chains or manufacturing overseas. But in the last couple of years, due to Covid, due to shifting allegiances, we’re reshoring and achieving the low cost, lowest cost for the United States is reshoring. I should say achieving the lowest cost in manufacturing is less important now then protecting and securing supply chains and supply lines for valuable and needed products. So that’s an interesting change. And that’s going to, you know, lead to different trade disagreements and trade wars that could be inflationary and could be a bit of an issue.

Tarek (00:07:33) – , and that’s, that’s kind of where, you know, we’re seeing the market right now, some of the concerns we’re seeing looking forward. And then, you know, I’m going to turn it over to Mark now to talk about kind of a specific asset class that he sees as being interesting, I’ll say.

Mark (00:07:49) – You need this last slide at all. Tarek? No, I think we’re good. Okay, you know what?

Tarek (00:07:55) – They want to see the indicators.

Mark (00:07:58) – , yeah. I’ll slide back to this one., it is sort of a truth among portfolio, especially the institutional managers., that,. Markets climb a wall of worry. As long as there’s stuff to worry about, for some reason the markets do edge up when everything’s in great confidence, then suddenly all the good news is out. It’s all embedded in the stocks, and that is the real time to worry. And of course, that’s when you hear about great stock picks from someone on the elevator. And that is the time to run for cover.

Mark (00:08:34) – So that’s kind of I think, where we are. Also, I’m agreeing with Tariq now. About two weeks ago, I got a call from a friend of mine., I’ll use his name so I can refer to him. Miles. He’s on a couple of foundation,, boards, large ones. And he said, Mark, I don’t understand what’s going on now. He happens to have gone, you know, to one of those schools that has a monstrous,, pension or, you know, endowment account, 51 billion. And it was Harvard. He said, Harvard is trying to issue a $2 billion debt security. But they have $51 billion in their assets in their investment account. Like, why are they issuing a bond rather than. And so I said, well, do some digging. Find out what you can about it, and then let’s talk in a couple of days. We talked a couple of days later. And he said, well, all I heard was they have a liquidity crisis now being sort of one of their alumni.

Mark (00:09:42) – He can get access to some questions and get them answered. And. And it happens that Harvard is particularly out of favor with its alumni. So they’re being a little more friendly than normal to their their students or former students. He said. They said they have a liquidity crisis. They have to get this bond issue. Suddenly I realized,, I know what’s going on. And it took me a little bit to work the pieces together. This has not been written yet in the newspapers, but I do believe this is where we’re at now. Keep in mind, the last time I made a prediction, we were we were either going into a recession or we were in one,, in 22. And I was,. Well, yeah, wrong. Like Derek said a few minutes ago. Okay, so here we go. Harvard has a liquidity crisis. They need to issue a $2 billion bond to give them some cash, but they have $51 billion in their investment portfolio. They should be able to draw it down.

Mark (00:10:48) – What happened? The answer is there in illiquid long term investment securities. Specifically, they’re in a lot of real estate and they’re in a lot of private equity, specifically the largest asset class there is a private equity. So now I’m going to hone in on private equity. Immediately. I said 2 to 2 miles. I know, I get it, I get it, I get it.. The portfolio managers. The investment managers at the school have chosen external investment managers, and they’ve given various pieces of their money to these investment managers who will maximise return. Number two, those investment managers are primarily private equity investors. And so they go out and they put their money to work in illiquid companies that eventually will, you know, turn liquid and they’ll be able to get their cash out. The problem is, sometimes it’s 5 or 7 years to get your cash up. And if something happens, you can’t get your cash out. That number is just extended because there is no real second choice. So I’m convinced.

Mark (00:12:04) – Harvard and Princeton and Yale and the big Stanford. These large pools of private equity are invested in these private equity funds. No one has had to make a capital call or a liquidity call on the on the pools. And so the investment managers have been able to bank large investment returns. So that they get nice bonuses. The investment managers that are in house are able to show 18 to 25% returns on their portfolio. Makes them look smart and they get nice bonuses too. And it’s the club. And they’re on their way to now saying, we need some of that money. You told us we could have liquidity in three years. Five years, seven years. And we’ve hit that three year, five year, seven year point. And we don’t have liquidity we need to get because if this $2 billion bond doesn’t get issued by Harvard, there will be a call on their investments. They’ll simply need to get the cash out. My guess is that those assets are overstated. Quite substantially. I wouldn’t be surprised if they’re overstated by between 20 and 35%.

Mark (00:13:24) – That means the private equity market is in for correction, something that has yet to happen in that market. And I think it’s probably something that’ll take a year, maybe two years to happen. I think it will take three years after that to unwind. And it will flow right across the entire investment horizon. Therefore. For those of US retail investors, there won’t be many of us. But if we have investments in the private equity sector, then what we want to do is try and get our money out early. Taking a 10% haircut right now. I think we’ll look cheap down the road. So as it unwinds, there will be a whole lot of news about investment managers getting fired and internal investment house., you know, house investment,, parties being fired. My guess is there will be some heavy turnover in the senior offices at the universities as they clean house, get rid of the old boys club, and they bring in the new club. So that’s what I thought would be interesting when, when I was talking to Eric about it, he said, I can see it.

Mark (00:14:42) – I, you know, I’m he says, I’d love to read that article. And I’m like, man, I haven’t read the article. It’s I’m just doing the mosaic and seeing if you take this and this and this and this. Like, why would Harvard issue a $2 billion bond? Well, yeah, they would if they’re putting up a big building and that’s the way they want to fund the building. But this doesn’t look like it. It looks like it’s simply they need liquidity. They need some cash to run their company. So that’s all I wanted to say was I think this is something that may be coming. And,, if you have some in your portfolio, then you may want to take a look at it. I think there’s still lots of time to get out. I don’t think that it’s on. It’s imminent. And certainly the bad news has not yet hit the the fan. So I think that’s coming. I think that’s it. Tariq. Anything else I should go to?

Tarek (00:15:30) – No, I think,, you know, the one thing I would add is,, private equity and a lot of sort of non publicly traded assets, they are valued internally.

Tarek (00:15:41) – Right. So that that’s that’s the real sticking point is so you know, when someone says oh I have a private equity in my portfolio companies returned, you know 1315 20%. and sometimes they might every now and then get an external evaluation done. But it’s, you know, the people saying, okay, what is this company done? This is what it’s worth. This is how it’s improved., and they might get an external evaluation done. And I think what you’re alluding to is that the problem is it’s it’s,. Oh, my frat brother is now part of the private equity valuation company, so now he’s going to value my company. He says it’s worth a lot. It’s good for him. I say it’s you know what I mean? It’s kind of like,. Yeah, there’s a circle. Everybody’s. Yeah. Everybody’s benefit to keep the the party going, which is, is how a lot of asset bubbles form and the fact that it’s an internal valuation or non I guess third party evaluation in a way where it’s like a you know when you buy a stock, you know someone else is on the other end of it that has no relation to the person.

Tarek (00:16:39) – That’s how we know that’s what it’s worth. But that’s worth saving too, I think.

Listener (00:16:43) – Yep.

Mark (00:16:45) – Good. I think we’re done.

Listener (00:16:46) – , yeah.

Mark (00:16:48) – Any,, comments from.

Tarek (00:16:51) – Comments, questions, thoughts. We would love to hear.

Listener (00:16:55) – Hey, Derek, I,. Hey, Mark.

Mark (00:16:57) – Hi. Hey, Joey.

Listener (00:16:59) – Hey, I,. I guess I got a company we’re working in I a little bit. And so this question is curious for me., I seems to be generating a lot of activity, and you mentioned that current market leaders in the US are in that position., and AI does seem to be similar to the dotcom bubble in the late 90s, early 2000., is that kind of where you think we are at where,, we’re in an a bubble as well using AI or what are your thoughts?

Listener (00:17:34) – .

Mark (00:17:35) – Okay. Shall I go there to Tarik or do you want to.

Tarek (00:17:37) – Jump in and then I’ll. Okay.

Mark (00:17:40) – number one the.com bubble. Let me go there first.

Mark (00:17:45) – Joy. the.com bubble.. Was a real thing. It was a good thing. It was, in fact, a shift in the axis of the universe., not everybody made it. Not all the different stocks that that ran were there. But the real players are still around and still doing a, you know, a fabulous job. In fact,, I think the ultimate Bitcoin company is,, is Amazon. The the most successful store in the world.. Therefore, I try to sort of bring it here. I think it’s very real. I think it’s very good. It’s spectacularly efficient and productive., to to illustrate the, the, the sort of the, a really good use of it. We’re, we’re creating policy for an application to the government on our bachelor of education at Prairie and our dean of education., I mean, you know, Dean came in and he said, I’m going to try I on this policy. And what he was asking the AI to generate was the duties that would be executive, versus the duties that would go to the Academic Council.

Mark (00:19:03) – That’s a great question, right? It’s one that we should all be able to answer when we’re in this industry. So intuitively, we would know if the list made sense or not. And he put in a long description of what he was looking for, and he got back an eight point comparison of this belongs in the council. This belongs in the Executive Council. All the way down. And as soon as I read it, I was like, okay, that is absolutely brilliant. We might have thought of six of those. But doing it with AI helped us make sure we got all eight., is there another one missing? Maybe, but I would argue in favor of eight rather than, you know, my six. So the 1 or 2 machines that are leading the way now will likely continue to be the leaders.. I think it will change the way we do business. I think it will change the way we do industry and product., I’m excited about it. It’s a little,, it’s a little disconcerting to academics.

Mark (00:20:07) – We’re looking for students who write their own papers rather than get them plagiarized off the internet. But the truth is, we should not be fighting it as as the Academy. We should be teaching people how to use the tool. I think it’s real. I think it’s here to stay. I think it’s a change in the way we do business. There will be many companies that fail along the way. Is it a bubble yet? I think it’s too early to be a bubble.

Tarek (00:20:32) – Yeah, I would agree with that too. I think what you pointed out is it solves a real problem where it’s generating real values. Maybe a better way of stating things. I don’t know if anyone knew they had a problem till they saw how easy it was to solve it., it’s,, and that’s and that’s huge because I think in the height of the dotcom bubble, if you were to go to some of these websites, I think the famous story is Pets.com didn’t do anything. It was just like, oh, we put dotcom behind pets.

Tarek (00:20:56) – People love their pets. It’s worth $1 billion. But it didn’t provide any value in solving a problem where we could look at, honestly, cryptocurrencies. I don’t know what problem you know, 99% of them are solving where why are they valuable. But you can see the service being provided also., you know, bubbles are rarely the same because, you know, those people are like, hey, this this just happened. Let’s have a look and see if it’s the same. It’s, and we just saw in Nvidia the company that makes the AI chips, they make the most in the world., they’re now the third biggest company in the world because of their stock going up like 300% in the last six months. And they just released their earnings maybe three weeks ago. And they like quintupled their revenue. So the numbers are there in terms of they actually had those sales to back up the growth they were seeing. And so I don’t see as being in the bubble. I think you’re right though, Mark.

Tarek (00:21:53) – In any new industry we see a lot of, you know, new companies come out. And then there’s a bit of a culling of the herd along the way. But yeah, maybe not in a bubble territory. Good question Joey. Anyone else have thoughts or questions?

Listener (00:22:08) – Hey,, Mark., going back to the private equities and the big haircut, you think or you see coming in there? Just my question. I’m wondering how you think that will affect the public markets or just the.

Listener (00:22:26) – The.

Listener (00:22:26) – Regular retail investor, I guess.

Mark (00:22:30) – That one is a stumper to me.. My guess is the effect on the public market. Is mostly going to be a function of liquidity. Rather than valuation. I don’t think the public market valuations are necessarily out of whack the way the private equity probably are. So that’s that’s the reason I say that. Now. What do I mean by liquidity? If if it took a lot of public sales, the selling of public stocks to cover liquidity needs in the private equity portfolio, that would push the stocks down in the public market.

Mark (00:23:20) – . Or if. If private equity. My guess is what will happen is,, the private equity portfolios, if they have cash calls. We’ll begin spinning out companies and so we’ll start to see a lot of IPOs. Of new companies that have been in holding tanks as liquidity needs are trying to be met. And so I don’t necessarily see those two having an effect on each other. I don’t know that liquidity is going to flow from one market to the other that way. I kind of see the public market watching over the fence, being a participant in,, IPOs, but not necessarily downgrading or rising, causing public markets to rise. I mean, you know, the fact that public stocks are valued with arm’s length transactions helps them to be valued a little more fairly. Although emotion is certainly a big factor in it. So I don’t. Here’s where here’s where the private equity that the, the, the retail investor might have a a factor one selling early is probably just smart right now., even if I’m wrong, I think these assets are reasonably fully valued in the private equity market.

Mark (00:24:49) – And so you take a 10% haircut to get out. I think that’s not bad. But number two, if I’m right and this private equity market unwinds, I think there will be a buying opportunity in 3 or 4 years. It’ll take a while. It’ll take way longer than we all thought for it to, to get down there, where suddenly there’ll be an opportunity to go back in there. And my guess is this is one of those opportunities where you can look at it down the road. Yeah, I can probably put money into the private equity fund in 3 or 4 years. It’s not a bad market. It’s just not the I think it’s not the right time to put money in. There is rather time to take it out of there. Does that answer it right?

Listener (00:25:35) – Yeah. I think,, that. What are your.

Listener (00:25:38) – Thoughts between private.

Listener (00:25:41) – No, I guess I was curious if,. But I guess it was mostly asking you because I was curious if there is that that correlation or if they’re two totally separate.

Listener (00:25:53) – . Separate entities or if,, yeah, people in the,, would be, you know, selling off in the public market to, to cover their costs or not, I guess so.

Mark (00:26:10) – If that’s a possible factor, that would be the liquidity factor. They liquidate some public equity to cover their requirements over here. That’s a possibility. I don’t I don’t know that it’ll be a big factor. I think the private equity managers will simply say, well, we got an IPO, this one an IPO. That one generates some some capital that some cash.

Listener (00:26:34) – Well, I have a question as well.., you mentioned that the overvaluation in private equity is kind of making the market look better than maybe what it actually is, and that in that sector, there could be coming a,, return to reality. What about the whole issue of public debt going up astronomically? That too is kind of like fake money. It’s printed money. There’s suddenly trillions injected into the economy, which shows up in markets and companies.

Listener (00:27:14) – And but that too is fake in that sense, that there’s going to have to come a return to reality on that one. So what are your thoughts about public debt in the in most Western countries?

Listener (00:27:32) – Okay.

Mark (00:27:34) – Well, it’s a big question. It’s a good one.. And the biggest cause of that was the Covid rescue plans. So, you know, there was just all this money being issued to rescue the economy.

Listener (00:27:55) – Yeah. Cool.

Mark (00:27:56) – , okay. On the public debt.

Listener (00:28:04) – It is.

Mark (00:28:05) – It is a what’s it called? It’s a chicken that will have to come home to roost at some point. The question is going to be when? And I don’t have that answer. Dan. I don’t have that answer. It is a great question. Especially now with interest rates where they are. That moved. The the date of accountability. Much closer. So I don’t have that answer. And I. I’d have to think really hard about that. Maybe we should do another one of these after I’ve had a chance to look at the numbers.

Mark (00:28:46) – Do you have any answers on that, sir or Dan? Do you? What are your thoughts?

Listener (00:28:50) – Well, a follow up on that would be as when the return to reality does happen, what would likely be the effect on the markets and just the, you know, us average people in dealing with responding or living through that? I’m really interested to hear what you thought of that.

Mark (00:29:15) – Well, the risk is, of course, that it comes across in the whole market just sort of melts down., and the public debt trades at $0.60 on a dollar, and the government buys it back at $0.60 on a dollar. That’s a possible the the other government solution is to inflate their way out of it if they can have inflation kick in., so they they are. On the surface., attempting to manage inflation. But inflation is not their enemy. Inflation is the enemy of the economy. Yeah, but inflation is not the enemy of the debt holder of the debt issuer because their tax money will be growing.

Mark (00:30:00) – Business will be growing in those situations., equity markets tend to hold in and kind of go sideways. Because their their revenue is growing, their earnings are growing, but the p multiple expands or you know, it it actually contracts. So the p e multiple comes down. So the stock price usually just goes in a range of. Plus or -10%,, sideways while this high inflation comes through. But they will the companies. If we go into inflation, which the government might want to do. To get its debt back into a manageable size. And that is a very legitimate way to manage their debt. They they’re all aware of it. Well, they just can’t say it publicly. Then the stock markets would just have to kind of muddle their way through. And we might be looking at five years of basically sideways market..

Tarek (00:31:06) – That’s what I would I was going to say too, similarly, as I think it’s it’s a tough question. I think we’ve got., I say we, you know, I was looking at the States recently with this actually,, maybe ten, 15 years until Social Security.

Tarek (00:31:21) – Actually, it’s an unfunded entitlement program in the states where, you know it’s going to be bankrupt or underwater. Right?, the US knows that,, and it’s obviously the worst case scenario if it happens to them. And so politicians kick it down the road that it hasn’t been a budget. Released that is balanced for paying down the debt and who knows how long., and it is something that’s going to, you know, going to have to come to fruition soon in terms of determining what’s going to happen. I think in a best case scenario, it’s an anchor, a literal anchor,, where maybe a politician will be courageous enough. I don’t know how this politician will get elected to, to, you know, implement austerity measures. Nobody likes austerity to reduce entitlements, to reduce spending, and to try and pay back that debt., in, in sort of a yeah. Worst case, it just sort of keeps hanging there, keeps dragging it down. I think debt payments with interest rates are approaching,, maybe a billion, maybe a trillion.

Tarek (00:32:25) – I can’t remember what it is in the States. It’s a significant number where it’s going to be a huge.

Listener (00:32:28) – Proportion, bigger number.

Mark (00:32:30) – The other interesting sort of. Come a country to look at is Japan. Man has been a net saver., they’ve run balanced budgets. They’ve got inflation radically under control and their interest rates have been zero and negative. Just now. They’re finally beginning to get interest rates rising because they are beginning to finally see both growth and inflation. But it’s very, very minimal. So it feels like the best idea is for everybody to be saving. But it has not helped Japan since about 1990. To be in that healthy a financial position. Very interesting. Hey, you know, I think the Nicci is finally back to the high that hit in the 80s. And that’s been a long, very slow.

Listener (00:33:39) – Come on. Yeah.

Mark (00:33:41) – And it fell right off the cliff. And that was because of the change in multiples. They just pushed.

Listener (00:33:51) – And then by.

Mark (00:33:52) – Mid 90s I was thinking the Nikkei is going to come back soon because it would have been down.

Mark (00:33:56) – But forming a base man, it was forming a whole new market.

Listener (00:34:02) – Yeah. Yeah.

Mark (00:34:03) – But the big news this week is they finally got interest rates above zero.

Tarek (00:34:08) – 0 to 0.1.

Listener (00:34:09) – Oh, man. Yeah, yeah.

Tarek (00:34:12) – Big news. For the first time.

Listener (00:34:13) – It was negative.

Mark (00:34:14) – Big news. It’s been 17 years since that’s happened.

Listener (00:34:16) – Yeah. Any other questions? Yeah. Anything else?

Listener (00:34:23) – So if I’m hearing you, you’re you’re going to be doing a equity, a private equity selling like getting getting out of private equity. We’re not in.

Mark (00:34:35) – Private equity at all.

Listener (00:34:36) – Okay.

Mark (00:34:37) – Yeah yeah. No no no no no, it doesn’t affect our business. It is one for all of us to be aware of, I think. But,, we don’t have any private equity, and it’s outside of our mandate. We we actually can’t.

Listener (00:34:51) – Okay, good.

Mark (00:34:52) – Just fine. I, I have done quite a bit of work in private equity in Toronto, so I do know it well, and I’ve got a lot of friends in the business, but,, no, I haven’t done anything in it for probably 15 years, maybe 20, 20 years.

Listener (00:35:09) – Okay.

Mark (00:35:11) – Well, thank you all.

Listener (00:35:13) – Yes.

Mark (00:35:14) – . Let us. Janell, do you have a are you presentable to turn your camera? We should introduce Janelle. She’s the third member of our team. Now she is. Good. She is helping us around the company. So thank you for joining us. When did you join us? A couple of months ago.

Tarek (00:35:34) – I think January new year.

Listener (00:35:36) – Yeah, January.

Listener (00:35:37) – So good.

Mark (00:35:39) – Welcome to the team. We’re glad you’re here.

Listener (00:35:42) – Thank you.

Tarek (00:35:45) – All right. Well, everyone, thank you for tuning in. I appreciate you taking time out of your Wednesday. It’s great to have you some good questions. We’re gonna, you know, put this recording in the podcast and the YouTube video,, so you guys can watch it again if you want to share it with a friend.

Listener (00:35:59) – Thank you. Good night.

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