Louis Vincent Gave: Insights on Finance and Culture

Hello and welcome to Personable, a podcast focused on speaking to the world's best, enabling you to become the best that you can be. My name is Harvey Bracken-Smith and today I wanted to be joined by Louis Vincent Gave. Louis is a graduate from Duke University with a Bachelor of Arts in Economics, History and Chinese. He's also studied Mandarin at Nanjing University. He is now the CEO and co-founder of GavCow. I feel hugely honoured to speak to Louis today and he's an idol for myself and many other people who've been following him for a long time. So Louis. I was wondering if you could take me on the journey through your childhood to what led you to Duke University. Absolutely. Well, first, thank you so much for having me here today. Before we go back, let's start with the present. I don't know about world's best. That's very flattering and I appreciate it. I think when you look in the field of finance, there are many, many people who are having a much bigger impact. let's say, on financial markets than I could ever dream to have. But having said that, I'm absolutely flattered and delighted to be here. So my journey, I was born in the southwest of France in a town called Toulouse. Usually, you know Toulouse for one of two things. Either you're into airplanes because that's where air buses are made, or you're into rugby because that's the heart of French rugby. But when I was young, we moved to Paris. Paris. My dad started working in finance in Paris. And I then spent my childhood in Paris. We moved to London, and I went to the French Lycée in South Kensington. And living actually in South Kensington, for those of you who know the area, you realize pretty quickly it's kind of a French ghetto. You never have to speak English if you don't want to. Few people realize this, but London is actually the sixth biggest French town. Lots and lots of French people live there. And so much so that by the time I was 16, my English was fine, but it wasn't that great. And my parents sent me to summer school at Phillips Exeter Academy in New Hampshire, just for a summer so my English would improve. And it did, and I had a terrific time. And I came back, and I told my parents I want to go to university in the United States. I loved the campus experience. I loved everything about it. My dad said, look, that's fine. If you get into a top 10 school, I'll pay for it. And so I literally took, oh, he had a few rules. He said he didn't want me to live in New York. You know, this was back in the late 80s, early 90s. New York was a much more dangerous city. He said, I don't want you to live in New York, and I don't want you to go to the West Coast because that's too far. But, you know, pick a top 10 school on the East Coast. You get in, I'll pay for it. So. I applied to basically the seven schools that were in that criteria. I got into a few of them. I went to visit and and fell in love with Duke. I visited. It was a beautiful spring day. You know what campus is like during the spring. It's hard not to fall in love with it. To this day, I still think that Duke is the most amazing campus I've ever seen that offers some of the most brilliant facilities. brilliant teachers, you know, all around. It's just an amazing school. And yeah, I went there. I'll say that my first year was actually pretty tough to adapt. You know, I was both homesick, a bit of culture shock, everything was quite different. But after that, after my first year, you know, once you adapt, I hit my stride and I've never regretted any day I've spent on Duke campus. I would second everything you say, and I think it was a very similar story for myself. Growing up in the UK, I'm from a little island called Jersey, and then I went to Eton, and then it was a similar thing. My dad was like, if you want to go to the US, you've got to go to one of the best. Fortunately, I ended up at Duke as well, and I'm in love with it, so I was very happy. I think what's interesting is, I think, from previous people I've spoken to, not only on my podcast, but people in the financial services industry. The story would go, you go to someone like Duke, and then you end up at some investment bank, and then et cetera, et cetera, et cetera. But you kind of took a different path going into the Army. What sort of motivated that choice? Yeah, so I actually thought I would make the Army my career. I come from a military family. And aside from my dad, to be honest, pretty much every male on my dad's side was an Army officer. And so... It was sort of an easy, well, easy path. It was sort of an obvious path. And, you know, I went to Duke. Then I went back to France, went to officer training school, loved it. I graduated from there and went into mountain infantry and loved it. And to be honest, yes, I was seriously considering it, making it my career. But when I was there, what I realized was that the young officers were having a terrific time. The lieutenants, the captains, you know, running around the woods with a rifle, going up and down mountains, all that is tremendous fun. And then as you move up the rank, as you move to major, colonel, etc., what seemed to me was that the senior officers we interacted with were much more bitter and not having as great a time as we were. And I think the reason for that is pretty obvious, is as you move up the ranks in the army, you... Very often, you know, you're no longer running around the woods with a rifle and more and more it's paperwork, more and more it's office jobs for which, you know, let's face it, you're not paid very, very well. And you have fairly little. inputs into your own career. You know, every three years you're told, okay, you're moving from here to there, move you to a different base. And so I thought actually not having control of my life later on in life seemed like a tough proposition. And so I thought, well, I was enjoying it as a young man, I should look to make a move. And here I got lucky because, you know, I started applying to different banks, you know. I didn't know what to do, so I thought finance would be perfect for me. I didn't have any skills whatsoever. And the head of HR at Paribas had actually served in my battalion as an officer. So he picked my resume out of the bunch, got me interviews, and then I got into their management trainee program, and yeah, that was that. So, sorry, sort of going back to that army point, I mean, you're much more informed on the global state of things than me, and we can get onto that later on. But do you think if there was more, like, rising tension, higher prospects of, like, global war outbreak, that would have made you want to join the army more or less? Maybe in, like, today's society, for example. Back then, it would have made me want to join it more because, you know, I was younger, dumber. And, you know, war is a young man's game. Today, for sure, it would make me want to join less. And you're absolutely right that, you know, today the prospects of war are, you know, much greater than they were when I joined. You know, when I joined, the Berlin Wall had fallen. It was post-First Gulf War. It was very much peace in our times. Now, having said that... My battalion, when I joined, had just come back from serving for the UN in Bosnia. And shortly after I left, went off to Afghanistan. So I was sort of caught in a window, just by pure dumb luck, caught in a window of basically between Yugoslavia and Afghanistan. So... The reality is if you join the French army and you join one of the somewhat elite battalions, and there's fewer and fewer of them because of the army cuts, chances are you are going to be sent to somewhere in Africa. You are going to be sent to somewhere in the Middle East. You are going to be sent somewhere in the line of fire. And it's part of the gig. I think it's funny that you mentioned. I didn't want to become... an officer and then you went into investment banking when you were literally in the office the whole time do you think there was any do you think there was any like comparable like skills or like things you picked up uh that made you really enjoy doing that and then making it your whole career like when you transitioned from the army to paribas so no no look i didn't mind working in an office to be very clear i just felt that if i was going to work in an office i should at least have some level of control over my career um number one and number two hopefully make decent money, neither of which you had in the Army. No, but coming back to the Army, I feel I learned a ton in the Army. I learned a ton about who I was as a person. I learned a ton about where my strengths and where my weaknesses are. I learned a ton about, frankly, dealing with... Lots of different people from lots of different backgrounds. And some tremendously smart people, some of the smartest people I've met, as well as some, you know, not as smart people. My grandfather was also an army officer. Always used to joke that not everybody in the army is stupid, but that's definitely where all stupid people go. So it was a great window into our broader society. It was a great window. Just into life itself. So I don't regret my time in the army whatsoever. I wouldn't be the person I am today without that training and without my time spent there. It was, like I said, it was very, very strong. Now, did I learn any specific skills that then helped me in finance? No. What I learned were human relationship skills, where... And again, perhaps what I learned the most was things about myself. And I think when you work in finance, well, you know, finance, we use the term finance, but there's so many jobs in finance, so many different things you can do. But when you're investing, the first thing... Your biggest enemy when you're investing is actually yourself. And so knowing where your strengths, knowing where your weaknesses are, knowing is essential to proper investing because what you want to do when you're investing is not put yourself in situations where your weaknesses are revealed. And on that front, it's not that different from the Army. You know, when you're in the Army, when you're a young officer, when you have... tasked with putting together an operation, the first thing you're doing is actually risk control. It's, okay, how do I go about this mission in the best possible way, in a way that is going to lead me to lose the fewest assets. Those assets being, of course, first and foremost men, then material, and then finally time. And the same is somewhat true in the army, you know, in investing. Obviously, the end of the goal is to multiply the assets that you have. How do I go about that while taking the less, as little risk as possible? Transitioning a bit, I think one of the biggest bets you've made in your career, which a lot of people picked up on and probably why Gaokao started and whatnot, is your bet on China. And I think that may have started even beforehand, you know, with the influence of your dad, but you took Chinese at university. Why do you think you were so bullish on China for such a young age? What made you want to move to Hong Kong and sort of be, you know, within? that sort of region. And yeah, why China at a young age is essentially my question. Yeah, there's an element of luck to life. And on that front, I would say that that was definitely part of it for me. And here, you know, I'll be bluntly honest, I'm not quite sure what attracted me to China from a decently young age. I remember from, again, from my early teens, reading lots of books about China, and just overall being fascinated at how different a culture it seemed from my own. And just, you know, wanting to figure it out, figure it out. Here was, you know, this enormous country, which, you know, several time through history had risen and fallen again and risen again. You know, I think if you look at the history of civilizations, what's fascinating, you know, Many civilizations in the world, you know, Mesopotamia, the Phoenician Empire, Roman Empire, and on and on and on, Egyptians, etc. And, you know, empires rise, thrive, at some point roll over, collapse, never to be seen again. And they end up on the, you know, dust heap of history. And what's fascinating about China as an entity, and as a civilization, it's risen, it's fallen, and it's risen again. And that always sort of captivated me. And I got to Duke. Now, back then, in the early 90s, we were all told that if you didn't learn Japanese, you'd never have another job. So when I got to Duke, I actually initially signed up to learn Japanese. And very quickly, my dad told me, forget Japanese. um you know the the rising power is is china this is you want to learn chinese now remember this is the early 90s um and so i actually switched which uh and you'll appreciate this as a as a duke student was actually quite a sacrifice because the the intro to chinese class was monday wednesday friday at 8 a.m um when when japanese was tuesday thursday at 2 p.m um So it's a big sacrifice. It is a big sacrifice. It was a big sacrifice. And I contemplated, do I really want to do this? Japanese at 2pm sounds so much better. And, but, but I went ahead with it. Then I went to the Duke in China program, which back then was in, in, but you started off in Beijing, then you went off to Nanjing. And, and yeah, I kind of caught the bug. Now, the reality is that the China, you know, I lived in back in the early 90s. no longer exists today. You know, the Nanjing that we lived in, you know, only had a few paved roads. I would take the train to go to Shanghai to buy chocolates because I've got the most wicked sweet tooth because you couldn't get any decent chocolate in Nanjing. And of course, you know, being the glutton that I am, I'd eat it all on the train back. I didn't even have the discipline to keep the chocolate bars going forever. for the week. So it was a very, very different place. You go to Nanjing now, what used to be a four-hour train ride to Shanghai is now less than an hour and a half. It's a megalopolis of massive buildings, neon lights. It's a super exciting place. And so just by sheer dumb luck, I ended up having front row seats to what I think is the world's greatest economic transformation the world has ever seen. Now, when I joined Paribas in Paris, this is where the luck really kicks in. When I joined Paribas in Paris, Paribas was in the process of buying a decent-sized Pan-Asian broker that was headquartered in Hong Kong called Asia Equity. And my boss, who was the head of French equity research, I was sent over to do the integration and he said, hey, look, you speak some Chinese, you speak English, do you want to come with me to do the integration? And so I was obviously more than excited for the opportunity, went over and... Fell in love with Hong Kong, to be honest. It's such an easy city to live in, such an exciting city to live in. And after a while, and there again, this is how luck unfolds. When I got there, the Asian crisis was starting. And the business we bought. Well, Paribas bought, basically imploded. And what would happen in the following two or three years following the Asian crisis was that every major investment bank that just two or three years before was busy deploying capital into Asia, busy saying that Asia was the future. With the Asian crisis, everybody slashed their research budget, everybody fired all their analysts, everybody just basically pulled out of the... the region. Meanwhile, China was really starting to grow. And I thought, well, there's an opportunity here. Because, you know, it's not going to be the Asian crisis forever. Asia, China will grow, people will need to know what's happening there. And very few people are doing the research on it. Now, this was then, of course, since then, things have changed. Although... I think in recent years we've had, it feels very much like the Asian crisis days where everybody says, oh, China's uninvestable, no reason to be here, even though what's happening in China is actually quite exciting. I think what's interesting from my perspective, I mean, I'm only 20 years old, have had little experience in the finance world and can barely pretend I'm as informed as you are, let alone the average person in finance just yet. but a lot of like you know cycles even mini cycles that i've experienced have been like the rise and fall of like trends such as like nfts and crypto is the hottest thing in the world like 2022 hundreds of millions of investment and then it's suddenly nothing and then now bitcoin's rising again um and even what you were talking about with regard to japan being really big in the 1990s and everyone was like go japan and then you bet on china and china did well and now now china is starting to slow down uh i think what you mentioned before was pretty interesting, talking about the changing world order. So I'd actually had a question regarding Ray Dalio, because that was the first person that I've heard bring up the changing world order. And you mentioned that people are still a bit unsure on China moving forward. So I was wondering if you could take me on the journey in your perspective of why you think China was such a big bet then, and then also if it would still be a big bet now. Because what if it's just the next Japan? What if China's now the next Japan? You know, the US just maintain their place, the biggest economy. You know, China have some problems or you think that, you know, 100 percent China's still going to become this biggest global superpower. It's inevitable. I just wanted you to see if you could take me on that journey from what it was like then to what it's like now. Absolutely. So before I do, I think you've made a very interesting point about accelerating trends that, you know, from your 20-year-old vantage point, you've seen the NFTs, you've seen Bitcoin. And what's kind of amazing is how quickly and fast those trends now evolve relative to when I was 20 years old. You know, when I was 20 years old, trends would take 5, 7, 10 years to unfold. Now it feels like they take 5 to 10 months. I forget years. And perhaps, you know, that's the power of social media. Things propagate much faster. Perhaps that's the power of a globalized world. Instead of a trend affecting a few million people here and there, it very rapidly affects 100 million people or even a billion people. You know, there's many potential explanations. But I would concur with what you just said. You know, we live in a world that... that has accelerated dramatically from the time when I was your age and your shoes. And I would imagine that as a young person, it's got to be somewhat harrowing and tiring to try to always keep up with the latest trend, right? It's like, oh, this is hot. Oh, no. Oh, it's gone. Okay, let's move on to the next thing. When I had the luxury at the start of my career to have these 7, 10, 20-year trends, That you thought okay, I'm gonna write this and you know early on you know I would say you know big trend when I joined of course you had the internet then you had the rise of China And again, these were 20 30 year trends and then you had the impact of the smartphone. That was a 10-year trend And yes, I think we can question today, you know, if I look back at my career There was the start of the internet. That was a huge one. The rise of China was a second one The impact of the smartphone was a third one. We could talk about cryptocurrencies, but frankly, that China hasn't had a huge impact on GDP numbers, on economic activity. Yes, there's some people who work in crypto, but it's not a very large number of people. So you haven't yet seen the impact of that on the economy. Maybe you will, maybe you won't. Which brings me to your question about China and whether... you know, China will have, will be a Japan or it won't. Now, I continue to believe that it won't. Now, the case for China being like Japan is a pretty simple one. It's to say, look, Japan had a real estate bubble, China had a real estate bubble. And that real estate bubble popped in Japan, and it took them three decades to sort of resolve the issues. And China is just sort of five year into the popping of their real estate bubble. So there's still a lot of problems. Now, at the same time, Japan had a horrible demographic profile, and China today has a horrible demographic profile as well. And so it's pretty easy to draw that parallel. Now, I think the reason the parallel doesn't work is really, there's a number of reasons, but I would focus on three of them. The number one reason the parallel doesn't work is that when the Japanese real estate bubble went bust, the banks went bust along with it, because the... real estate bubble in Japan had reached such levels of absurdity. You know, it was said that the land under the Imperial Palace was worth more than the whole of California. It was also, there was a shop in Ginza at the top of the market that sold for a million US dollars a square meters. And this was back in 1989, a million dollars in 1989. I mean, a million dollars is a lot of money today, but back in 1989, that was really a lot of money. So... You know, you reach levels of valuations that were so stupid that basically everyone in Japan was involved in real estate and most companies were valued for their real estate. So, you know, maybe you bought a widget manufacturer sitting outside of Tokyo, but the reason people got excited about the widget manufacturer wasn't the widgets. It was because of the land sitting under the factory. Everything got valued on the basis of their real estate. And when it imploded, when the bubble imploded, it meant that everybody's balance sheets was completely shot to pieces, including and first and foremost, the banks. And pretty much every bank in Japan was bust. And once your banks are bust, it's very hard to pick yourself off the floor. That's when you get, you know, you start kicking into Irving Fisher's theory of Great Depressions. And so that was... So that's your first big difference. Today, China's banks are nut-bust. If you got a job after graduation and you moved to Shanghai and you decided to buy an apartment, you would have banks falling over each other. lend you money to buy a house. You'd have banks falling over each other to lend you money to buy a car. The banks are open for business. Again, big difference with Japan in the 90s where the interest rates might have been low, but the banks weren't lending because they were too busy dealing with all the bad loans of the past. So that's your first major difference between China and Japan. I think your second big difference is how competitive China is today. You know, when I was your age, if you went to Tokyo, you had to check your bank balance before going out for dinner. Tokyo was by far, even after the bust, it was by far the most expensive place in the world. You know, people would go to Tokyo and say, it's like, it's $20 for an apple in the food store, and it's like $50 for a watermelon. I mean, prices were just... absolutely ludicrous. And it took, you know, 30 years of deflation for Japan to adjust to more normal prices. Today, you can go to China and things are so cheap. Now, I don't want to sound snobbish. But, you know, you go to Beijing, you stay in a Four Seasons for 200 bucks. I mean, you stay in literally world class hotels with world class service for 200 bucks, while in New York or in San Francisco or wherever you want to pick in the US, for twice that money, you get fairly mediocre hotel rooms in the major cities. Again, I don't want to sound snobbish, but that's the reality. China is so, so competitive. Pick any product, cars, cell phones, train tickets, you name it, and China is a fraction of the cost that we have in the Western world. So that's a huge difference with where Japan was. And that brings me to the third point, you know, reflecting this competitiveness. China today is running trade surpluses of 80 billion a month. Why? Because not only is it competitive, but in industry after industry, what you've seen in China is China leapfrogging the West. And here, I think, to be honest, Western media has a lot to answer for. Because for the past five years, when you picked up the FT, when you picked up... the Economist, and I don't want to name names, but I just did. When you picked up any Western media, all you got on China was, oh, terrible demographics, oh, youth unemployment, oh, imploding real estate. All you got were terrible stories. Meanwhile, there were two stories in China. And every journalist out there focused on the real estate story, the bad real estate story, while at the same time. You had the good industry story. The fact that, you know, cars, solar panels, nuclear power plants, rail, earth moving equipment, you name it. China was not only catching up with the West, but actually leapfrogging the West. And so, you know, back in September, the Ford CEO went to China and came back and, you know, did a big interview with the Wall Street Journal. I'm sure you can find the link for your listeners. And essentially said that... His challenge would now be to try to produce to the level of the Chinese. Now, you know, five years ago, no Western automaker would have said that. But it also raises the question, what was he doing in the past five years? And the answer is he fell asleep at the wheel. He fell asleep at the wheel because if he was reading the Wall Street Journal, he was being told that China was in a threat because China was imploding. When really, China was getting ready. to pretty much take over his entire business. I think you've broken that down very nicely, and I can see why you have a business in this. I mean, I feel more informed. I've done some, don't test me on this, but I've studied a little bit of economics and a little bit of politics in high school, as they call it in the US, and a little bit of similar things at university. And some more like structure. this is sort of like a two-sided question about trust and about economic systems. I look at somewhere like the US, biggest superpower in the world. You know, everyone's talking about the US, dollar reserve, currency for the world. It's based on, from my perception, it might be wrong, a capitalist system. I think Japan's the same. And on the contrary, China is a more state run communist based system, sort of like a parallel to that question. As I said, I've done some basic following. I say basic because I don't want you to ask me any highly specific questions, but basic following of equities over the years, looking at like electric car vehicle companies such as NIO and others. And the minute there's a threat of a delisting in the US and being just focused on China, I think that's a good thing. there's a massive decrease in share price and so let's say china does continue to do well moving forward my question to you is is a communist state-run system the best form of system uh with regard to boosting the economy and the second part of that question is from an outsider perspective you know i have no affiliation with china i'm not in hong kong i have no business there uh no family no friends no nothing can people from the US and the UK and the wider world trust China. So yeah, just to reiterate, communist versus capitalist based system, and can we trust China? I have an old joke that I have to tell you. My joke when I look at Asia is that, and it helps you understand Asia, is that Japan is a profoundly socialist country on which capitalism was involved, was imposed, sorry. Japan is a profoundly socialist country on which capitalism was imposed. and that China is a profoundly capitalist country on which socialism was imposed, and that both of them are going back to the natural order of things. Now, I do tend to believe that the breaking down between good capitalism and bad communism actually does you a disservice. It doesn't help you really understand how... either, frankly, the United States or China works. That it's both binary, it's Manichean, you know, good versus bad. And it also simply doesn't really correspond to reality. You know, in a pure capitalist system, you would expect lots of bankruptcies, right? Now, you know, you would expect capital to move from... the weak hands to the strong hands. Now, if you look at the Western world, I think since Lehman Brothers, we've done everything we could to avoid every potential bankruptcy out there. And if that meant giving out massive subsidies, as we did during COVID, if that meant giving out 0% interest rates to make sure that nobody goes bust, we've kept doing that. So, you know, on the one hand, the Western world... isn't purely capitalist. I think it's massively a stretch to believe that we are. I wish we were. We're absolutely not. And by the same token, China is hardly communist. And I'm not sure the communism label really helps you understand what's going on. For sure, you have an authoritarian government that can have a very heavy hand. But let's not kid ourselves that What you're doing is redistributing wealth in an equal manner in China, because clearly that's not what's happening. What you've had the most creation of billionaires over the past 30 years has very much been China. So again, I think the capitalism versus communism framework, mental framework, is not exactly right. And you mentioned NIO, and perhaps that's a great example right there as to how things work in China. You know, the U.S. has three major automakers. You know, China has 130, to put things in perspective. So what ends up happening in China is that the guys at the top, you know, come out and say, you know what? We want to be in electric vehicles. Electric vehicles are the thing of the future. So you guys should do that. And then what happens is that every local. mayor, every provincial governor, every regional party secretary decides, okay, if I'm going to get my next promotion, I need to show that I've made a great effort at producing electric cars because that's what the guys at the top care about. So that's now in my KPI, you know, producing electric cars. So what they do is they call the local bank, they call Agricultural Bank of China or China Communications Bank or whatever. And they say, hey. I want you to lend money to my local car company so that they can start producing electric cars. And so before you know it, you have 130... guys located all around China, each producing each cash flush because they have access to a lot of bank credit, because China's savings are so high and are captured through a banking system. And Chinese private savers don't have much of an opportunity to do anything else, given their domestic capital controls. So you've got this funnel of massive amounts of capital. And I say capital, not communism. but massive amounts of capital that flow into, you know, 130 EV makers. And then the Hunger Games of capitalism can start. You have 130 guys who are each trying to out-compete each other, produce the best possible cars. And when they do, what ends up happening is that the winner is... is the consumer because he gets a car that's better and cheaper. And the loser, the one who funds all this, is the bank saver because he gets a very low return on his money. And so he's the loser. And again, the winner is the end consumer of the car, which is, again, think of how the U.S. developed electric vehicles. In the U.S., What you have is you have a government that says, you know what, we need to do electric vehicles. So let's give a bunch of subsidies to Tesla and to General Motors and to Ford to grow cars. And then by the end of it, what you have is you have one guy who basically in the U.S. dominates the market. And he gets to be worth $50 billion or whatever Elon Musk is worth or $100 billion. he gets to be worth $100 billion, and Americans get to buy Teslas for $70,000. While in China, what you have is you have BYD that produces electric cars for less than $10,000. So, you know, which one is more capitalist? Which one is, you know, if capitalism is about having guys worth $100 billion, thanks partly to... government subsidies, then the US is more capitalist, if that's what capitalism is. But I don't believe that's what capitalism is. So when it comes to investing, the challenge becomes, okay, great. So China is going to dominate the EV industry, which is where we are today. But do I want to buy BYD? Because, you know, frankly, you know, it's a great company. It's going to be the biggest car company in the world by any measure. The problem is you've got 129 competitors nipping at its heels all day. which prevents it from expanding margins. So this is the real challenge in China, is given the very, very high savings rate of the country and the ability of both the government but also the banks to funnel all the savings into any chosen area. Can you, as a provider of capital, compete with that and generate a... adequate return. It's the old laws of supply and demand. There is a lot of capital in China. As an investor, what is your added value? When you come into the market and you say, hey, I've got money. I want to invest it. Take my money and give me a return. If the guy on the other side says, yep, get in line, buddy, because I've got like... 200 guys willing to give me money, every bank, etc. Then you don't have to be treated very, very well as an investor when, you know, there's lots of people competing for your money. The reason I highlight this is to answer your question. You mentioned NIO. I wouldn't buy NIO. Now, this doesn't mean that right now the share price is moving higher because of stimulus, because of this, because of that. But over a 10-year cycle, do I want to get involved in the hunger games of China's electric vehicle? I don't think I do. I think when you look at China, your starting point has to be there is this excessive capital. There's tremendous opportunities, but I think you want to be in sectors where the barriers to entries are very high, either because of regulations or because of network effects, i.e. the big tech guys, the Tencent, the Alibabas, etc. In those kinds of companies, you stand a chance to generate high returns over the course of a cycle. But elsewhere, no, things are much tougher. You're better off hanging out in the U.S., perhaps, where by this point, everything is organized as an oligopoly. You know, there's three or four car companies. There's basically three companies that determine the entire U.S. agricultural framework. You know, the pharmaceutical lobby has basically captured Washington, D.C. You know, tech, you know, every part of it. big tech is more or less a monopoly by now. As an investor, you know, monopolies sound a whole lot more appealing than hunger capitalism. As a consumer, it sounds a lot worse. You know, you pay up for drugs, you get poison in your food, you pay up for cars, you pay up for your tech products. And, you know, as a consumer, you get a raw deal. But as a shareholder, sure, pick monopolies, protected monopolies, oligopolies, regulatory capture. Yeah, that sounds awesome. Sign me up. Yeah, I was going to thank you for getting to the answer, the crux of the question there. I think when I think from like a, I don't want to say consumer, let's say a citizen of the US or the UK or any one of those countries or even France. And you look at the US and look at China and from an investment standpoint, I think you've made some very good reasons of why China could be. better than the US to invest in for all the reasons you stated before. But I think particularly how the media portrays it, and I don't know, I haven't been in China, I don't know how China perceived the US and what the citizens and people there think about the US. But I think it does come back to like the trust element, because I think you made good points of why, you know, you've got the oligopolies in the US and the lobbyists and the poisoning of the food and whatnot. But I still think that the average person, maybe it's the media's fault, still perceive the US as a much safer alternative to China because of the heavy handedness that you talked about, because of the ability to take out a firm if it disagrees with the rules. But we can talk about that stuff another time. I wanted to transition a bit more to the company that you've built, Gavcal Research. I'd love if you could describe how you started it, why you started it, who you started it with, and also talk me through the different parts of Gavcal. Absolutely. So I started with two people. I started with my dad, who was a prominent money manager through the 80s and 90s. He grew an asset management firm to about 10 billion US dollars and then sold it to Alliance Capital. And he served as CIO in Europe for a while and then he basically retired. And he was writing, you know, Sort of weekly email to his ex-colleagues at Alliance Capital, just to sort of stay in touch. And I saw what he was doing, and I said, look, there's lots of interesting ideas in there, and maybe we can make a business out of it. And an old friend who was more or less doing the same thing called Anatole Kaletsky. And Anatole used to be a decently famous financial journalist in the UK. He he'd written for the Financial Times, for the Times of London, for The New York Times. And so, you know, we set off and initially we thought, well, if we get 30 clients, it'll be terrific. 30, you know, major institutions who basically want to hear about what's happening in the world on a macro basis and how, you know, China's growth is impacting. Could be. potentially impact our portfolios. So we started off and there we got lucky because, you know, obviously China joined the WTO. in December 2011, December 2001, sorry, not 2011, September 2001. And then China really, really took off. And all of a sudden, you know, we had a lot more than 30 clients. And so the business grew, we opened an office in Beijing, we obviously had our office in Hong Kong. And our research business, yeah, evolved. really rather nicely. And today we have about, you know, a thousand financial institutions from, you know, hedge funds, prominent money managers, you know, sort of household names, pension funds. But interestingly, along the way, we also picked up a number of corporate clients, people who needed to find out what was happening in China, you know, people such as, you know, Coca-Cola or... Rio Tinto or, you know, just sort of big, big prominent corporate companies. So it was, we sort of carved out a nice little niche for ourselves and off we went. Then in 2005, we opened a money management arm and we started to launch different funds. And in 2011, China started to open up its bond market to foreigners. And we thought, well, this is interesting. You know. No foreign firm has a Chinese bond fund because it was a closed market for foreigners. So we're really in the starting blocks at the same time as the giants of this world, whether they be BlackRock, whether they be Schroeder's or Fidelity. You know, they don't have any advantage on us. They don't have a longer track record. They don't have a team. So we thought we're in the starting block with everybody else. So we put together a team and we built a decent size team. China fixed income product. At the same time, around 2011, we started to get involved. And so we bought a stake in a private wealth manager in the U.S. called Evergreen, which is now called Evergreen Gavcal. And here we got lucky because, and this was pure dumb luck, the business happened to be based in Bellevue, Washington. And meanwhile... If you think of the back to the past 10, 12 years, and you think of the greater Seattle area, the amount of wealth creation that has occurred in that area between, of course, Microsoft, but also Amazon, but also Costco, Expedia, Starbucks. When you think of all the companies that are based there, where all of a sudden managers could find themselves, people working in those businesses could find themselves. sitting on millions of dollars. And so we, yeah, we got very lucky. Our private wealth business grew by leaps and bounds. And, you know, we've since then bought another private wealth business, this time based in Mauritius, sort of on the same idea. One of my core beliefs is that just as the story of basically 2000 to 2020 was the story of China, I'm very bullish on the prospects for the broader Indian Ocean, for trade all across the Indian Ocean from a booming Africa, booming Southeast, South Asia. And so having a sort of foothold in the financial center of the Indian Ocean, i.e. Mauritius, sort of made sense to us. So we bought this business a couple of years ago and it's humming along. So, yeah, you know, basically, since setting up a little over 20 years ago, we really have three main businesses today. The research we produce for institutional investors, our money management arm that focuses on institutional investors, and that has a strong Asia bias. And then finally, our private wealth business. I think there's a lot of... like research out there sure there may have been not as much about china when you started out as you mentioned but particularly like the us the uk there's a lot of different people giving differing opinions uh conforming some form of consensus so i was going to ask where you source your information from but i think that's all pretty much public knowledge but how do you maintain a sort of edge over your competition to give the best research possible over everyone else That's a very great, that's a super important question. And I guess, you know, probably our clients would be the better people to answer. But I think what we try to do in our research is first of all, start off with the premise that, of course, nobody knows the future. That attaining truth is a sort of Socratic dialogue, that you can, through conversation, you can sort of feel your way towards truth while knowing that you'll never achieve it fully. So what we have at Gafcal is we have a culture very much focused on debates, which I think our clients appreciate because these are the debates that are either going on inside their own heads. I think to be a great investor, you have to be somewhat schizophrenic. You know, you have to think, oh, I think this, and then you immediately have to think, but how could I be wrong? And so We provide this to clients. We have a culture based on airing all of our disagreements, publishing debates, doing video debates. And obviously, we try to pick the issues that we believe are relevant to clients. And sometimes those issues are very obvious. For example, right now, is this Chinese stimulus going to work or not? And, you know, sometimes it's issues that, you know, hopefully sometimes it's issues that clients didn't think of, but that we bring to the fore and they think, oh, you know, I'm glad I've got this on my radar now. And so I think we bring really two separate things that perhaps they don't get from people in London or New York or wherever else. First, of course, we... We bring a different viewpoint because we are based in Asia, because we are based in China. And so we look at the world perhaps in a somewhat different way. And we look at somewhat different things that they wouldn't be exposed to otherwise. So that's one thing. And then secondly, we provide it in a very different format than most other firms. Most other firms, your investment banks will say, well, our house view is the Fed is going to cut. And our house view is this and our house view is that. We pride ourselves on not having a house view. We pride ourselves, again, on a culture of debate, a culture of constant challenging of people's assumptions. So, you know, I'm the founding partner. I'm the CEO. I still publish a fair amount. And I'm very happy when one of our young analysts decides to challenge what I say and publishes something to say, you know, Louis wrote this, but this is where I think Louis is wrong. And I'm very happy for that to happen because. Not only does it show that that young person is evolving and building up the confidence to do it, but it also shows to our clients that we'll entertain any well-reasoned argument. Because the simple truth is that in financial markets, nobody can claim to achieve the truth. You can just, you know, again, you can claim to try to approach it. But nobody ever has a full picture of anything. For those of you that aren't in finance and don't really know what we're talking about, typically a lot of research firms might say if they think maybe a particular stock is going to go, a stock, for example, is going to go up or down, and then they might give a price thinking where it might go. And that one analyst might represent the whole firm. So you might have, you know, Jake from Barclays thinks Apple stock is going to go up. And that's sort of seen as the view for the whole firm. But what, you know, I've had some basic, I keep saying basic because I don't want to be held to account. Look at that. But I've had some basic financial work experience. And I've sort of seen how those research arms work. And I've always found it really stupid in that, as you say, that one analyst gives their view for the whole firm, sticks by it, gives their reasons. But if they're wrong, you know, you can't hold them to account versus what you're saying. So I think even from, you know, whether or not you're better or not, and I'm sure you are, Louis, I'm sure you're better than that. I don't know. Even if you're not, I think the structural view that you've got is a lot better. Like, I think it's trying to dumb down to some consensus and people always want an answer. But, I mean, you even talked about it with regard to Socratic debate, is that there is no answer. I mean, markets are constantly evolving. If prices were perfect, they would always stay the same. They wouldn't move. You know, people don't have complete knowledge. And so it seems quite stupid for people to pretend they do. I want to... I want to sort of navigate a bit away from that and ask you about like sort of your mindset with regard to investing and I guess broader life. I mean what's different about what you do versus say having a startup trying to build a unicorn and exit or trying to be an athlete and achieve a gold medal at the olympics or for a rugby example trying to win the rugby world cup is that these are more like fixed points in time you get fit you work towards some goal and you achieve it whereas investing it never ends you know there's always something going on in some market i know i know we talked about yeah i know we talked about you I know we talked about crypto and you were saying that's not as relevant to the wider global economy. But yeah, it's still a 24-hour market, seven days a week, pretty much three, six, five days a year. Which is why I hate crypto, by the way. Oh, well, there's why. I think having a market that trades seven days a week, 24 hours a day is a very wicked thing. You need time to think, you need time to rest, you need time to relax, or over time you're going to go mad. Louis, we need prices to be as close to realistic as possible. I just want to weave that to my question in terms of, by the way, I agree with you, I was just making a joke. I wanted to ask how you stay motivated because it's never ending. And whether that's fed by your view of having an optimistic or a pessimistic view for the future and you feel like it's out of necessity or it's about just, you know, staying creative and innovative and doing fun things like posting on social media. Like, where does that constant, never-ending motivation stem from? The first thing I'd point out is I'm very super thankful about the career I ended up in because through it I've made some tremendous friends. You know, some of my best friends today. I've met through the business. So to answer your question about motivations, for me, I still meet great people every year. I just came back a couple of weeks ago. I had an investment conference down in Madeira, of all places, which is this island in the middle of Portugal, in the middle of the Atlantic Ocean. And I met some... new people that I'd never met before that I feel I'll be friends with for the rest of my life now. And so that's, you know, that to me is a first grade motivation. And, you know, I think when you work in finance, one of the attractions of the financial world in general is that you meet really an original set of characters. You meet people who think differently, who partly because there is no one path to success in finance. There's you. thousands of paths. And it can cater to all sorts of types. You can be like super quanty, you can be super, you know, historically minded. There's lots of different paths. You just have to find the one that's right for you. And so to answer your question for me, you know, that is one big motivation. It's great to make new friends. You know, I tend to believe that We as humans are fairly social beings. And so I truly, truly enjoy that part of our business. And this is where I would say of our different business, the research business is tremendous because it is a relationship driven business. It is a business where we meet people. So that's number one. You know, number two, I'm not going to lie. When you are... Identify a trend when you pick a winner in the market. It does feel good. It's like winning a rugby game. There is a game aspect to it. And when you feel that you're winning, it feels nice. There's no doubt about it. It's exciting. It's exciting when a plan comes together. And when things work out. So between these two things. Now, by the same token, it's really harrowing when things go against you. And when the market just gut punches you in the morning. When you wake up in the morning and you're just like, you turn on your screens and you know you're going to get beat up that day. It's, you know, and you drag your feet and you don't even want to look at your screen because all you see is red. It's, you know, you have days like that as well. Just like. when you play rugby and you get beat up and you're shipping in 40 points and your scrum's going back five meters every scrum. This happens in the markets as well. And there's no doubt that the beer after a win tastes better than the beer after a loss. But that's how life works. And you take your losses and you think, it's okay, I'll try harder and I'll come back next time. Um, and so that's, that for me is the the two main reasons. You know, you make friends and the wins taste great. It's not that different from rugby. Do you ever feel like you're having a bad day and you're sick of, you know, all the money? You can just give it all to me and I think I'll find something to do with it. I wanted to ask two final questions. The penultimate one being, like, what's next for you? Hopefully more of the same. I mean, I love what I'm doing. I'm doing it with people I love to be with, my colleagues. You know, I've basically hired every single one of them. I love being with them. As long as we can keep doing what we're doing. I love our clients. And, you know, there's, you know, I think the approach of, oh, we have to grow bigger. We have to, you know, always be bigger, etc. I get it. The old story is running a business is like riding a bicycle. If you're not moving forward, then you're going to tip over. But you also have to accept that sometimes this is a nice equilibrium. You have a nice business that... It's profitable. You're doing it with people you love. You're doing things that you love. And, you know, just with that, I mean, I feel like I'm extremely blessed and an extremely lucky place. So, no, if I can keep humming along at what I've been doing, try to add as much value for our clients as possible, that's all I want to be doing. And my final question, and I ask this to every guest, is what is one thing that you would want a listener to take away from this podcast? That's a good question. And I would say, look, if you're, well, I mean, this is true for finance. It's true for anywhere. More often in life, your biggest enemy is yourself. The person that will spend time tripping yourself up is actually you. And so the most important thing you can do as you're a young person in college and you have time on your hand is figuring out what you're good in, what you're not good in, figuring out what you enjoy, what you do not enjoy, and then setting yourself up for life by doing things that you're both good in and that you enjoy. Because then you'll have a chance to be really successful. I tell this to my kids all the time. I think too many young people focus too much on, oh, I need to do this and this, and I need to do that to get this career. You know, roughly half of my friends from when I went to Duke, so I'm 50 years old today, roughly half of my friends work in jobs that didn't exist when we were at Duke. I mean, they literally do. They work in jobs that didn't exist. You know, the Internet didn't exist when we were at Duke. So half of my friends work jobs that didn't exist when we were like the only guys who pretty much work jobs today that existed when we were at Duke are the guys who chose to be lawyers or doctors. You know, most most of us who we ended up in paths that that really those jobs didn't exist back then. So I highlight this because you have to keep an open mind. Um, but B, the world changes very, very rapidly. Chances are you'll work in a job that doesn't exist today. Um, and so, you know, to come in and say, oh, I need to, you know, hit this and hit that to be so goal oriented. And you mentioned it, um, earlier, so many careers, it's like, oh, you know, I need to do this to get my, to go to the Olympics. So I need, and that makes sense, you know, if you're an athlete, but you can't look at your career that way. Um, Yeah. Instead, again, look at what you're good at, what you enjoy. And for me, you asked me about this earlier. I didn't really figure this out while I was at Duke. I figured it out while I was in the Army because I had more time to think. Because I also had, I think, peers that was, it was probably less of a pressure cooker environment. You know, I think when you're at a place like Duke, you're kind of chasing your tail. Well, you're chasing each exam and you're chasing each. Each midterm and it's like, oh, what class do I take next, etc. So you're chasing your tail a little bit, you don't have time to take a step back and think, okay, what am I good at? What do I enjoy doing? And again, once you figure that out, if you figure out what you're good at, and what you enjoy doing, then you're probably better off than 99% of the population, because then you can focus on something where your chances of success, whatever it is you choose, your chances of success will be very high. I think it's a very good way to end. I mean, a lot of people, even in finance, that don't seem to like it as much, don't even give that view. They're more like, oh, I'm doing it for the money. But I think what you've just said about doing it, doing something you enjoy and you're good at is incredibly important. I love your journey. I think it's a fascinating journey you've been on. And I always find it interesting when people have achieved great things, when they call it luck. I appreciate your humbleness in thinking. that you know choosing china was lucky um but for those listening like whether it's going to be a great predictor on uh whether china's the place of the future or not or if it is actually japan or whatever else um i don't think it's just about randomly picking one i think it's being informed and if you've heard any any part of this podcast with louis today i think you can tell he's very informed and if china was not doing as well he probably would have moved and done something else so in your own life when you're when you're making those big bets always stay informed I think there are so many different angles and different questions I could have asked you about, from portfolio composition to the art of making a good deal to even the US election. So I'm sure there's much more that even listeners would like to know. So if you want to know, Louis is very active on X, Twitter as they formally call it. So you can follow him there. But thank you so much for your time today, Louis. I really, really appreciate it. And thank you so much. Absolutely. My pleasure, Harvey. Best of luck.

He's also studied Mandarin at Nanjing University. He is now the CEO and co-founder of GavCow. I feel hugely honoured to speak to Louis today and he's an idol for myself and many other people who've been following him for a long time. So Louis. I was wondering if you could take me on the journey through your childhood to what led you to Duke University.

Absolutely. Well, first, thank you so much for having me here today. Before we go back, let's start with the present. I don't know about world's best. That's very flattering and I appreciate it.

I think when you look in the field of finance, there are many, many people who are having a much bigger impact. let's say, on financial markets than I could ever dream to have. But having said that, I'm absolutely flattered and delighted to be here.

So my journey, I was born in the southwest of France in a town called Toulouse. Usually, you know Toulouse for one of two things. Either you're into airplanes because that's where air buses are made, or you're into rugby because that's the heart of French rugby. But when I was young, we moved to Paris. Paris.

My dad started working in finance in Paris. And I then spent my childhood in Paris. We moved to London, and I went to the French Lycée in South Kensington. And living actually in South Kensington, for those of you who know the area, you realize pretty quickly it's kind of a French ghetto. You never have to speak English if you don't want to.

Few people realize this, but London is actually the sixth biggest French town. Lots and lots of French people live there. And so much so that by the time I was 16, my English was fine, but it wasn't that great. And my parents sent me to summer school at Phillips Exeter Academy in New Hampshire, just for a summer so my English would improve.

And it did, and I had a terrific time. And I came back, and I told my parents I want to go to university in the United States. I loved the campus experience.

I loved everything about it. My dad said, look, that's fine. If you get into a top 10 school, I'll pay for it.

And so I literally took, oh, he had a few rules. He said he didn't want me to live in New York. You know, this was back in the late 80s, early 90s.

New York was a much more dangerous city. He said, I don't want you to live in New York, and I don't want you to go to the West Coast because that's too far. But, you know, pick a top 10 school on the East Coast.

You get in, I'll pay for it. So. I applied to basically the seven schools that were in that criteria.

I got into a few of them. I went to visit and and fell in love with Duke. I visited. It was a beautiful spring day. You know what campus is like during the spring.

It's hard not to fall in love with it. To this day, I still think that Duke is the most amazing campus I've ever seen that offers some of the most brilliant facilities. brilliant teachers, you know, all around. It's just an amazing school. And yeah, I went there.

I'll say that my first year was actually pretty tough to adapt. You know, I was both homesick, a bit of culture shock, everything was quite different. But after that, after my first year, you know, once you adapt, I hit my stride and I've never regretted any day I've spent on Duke campus.

I would second everything you say, and I think it was a very similar story for myself. Growing up in the UK, I'm from a little island called Jersey, and then I went to Eton, and then it was a similar thing. My dad was like, if you want to go to the US, you've got to go to one of the best.

Fortunately, I ended up at Duke as well, and I'm in love with it, so I was very happy. I think what's interesting is, I think, from previous people I've spoken to, not only on my podcast, but people in the financial services industry. The story would go, you go to someone like Duke, and then you end up at some investment bank, and then et cetera, et cetera, et cetera. But you kind of took a different path going into the Army.

What sort of motivated that choice? Yeah, so I actually thought I would make the Army my career. I come from a military family. And aside from my dad, to be honest, pretty much every male on my dad's side was an Army officer.

And so... It was sort of an easy, well, easy path. It was sort of an obvious path. And, you know, I went to Duke.

Then I went back to France, went to officer training school, loved it. I graduated from there and went into mountain infantry and loved it. And to be honest, yes, I was seriously considering it, making it my career.

But when I was there, what I realized was that the young officers were having a terrific time. The lieutenants, the captains, you know, running around the woods with a rifle, going up and down mountains, all that is tremendous fun. And then as you move up the rank, as you move to major, colonel, etc., what seemed to me was that the senior officers we interacted with were much more bitter and not having as great a time as we were. And I think the reason for that is pretty obvious, is as you move up the ranks in the army, you...

Very often, you know, you're no longer running around the woods with a rifle and more and more it's paperwork, more and more it's office jobs for which, you know, let's face it, you're not paid very, very well. And you have fairly little. inputs into your own career. You know, every three years you're told, okay, you're moving from here to there, move you to a different base.

And so I thought actually not having control of my life later on in life seemed like a tough proposition. And so I thought, well, I was enjoying it as a young man, I should look to make a move. And here I got lucky because, you know, I started applying to different banks, you know. I didn't know what to do, so I thought finance would be perfect for me. I didn't have any skills whatsoever.

And the head of HR at Paribas had actually served in my battalion as an officer. So he picked my resume out of the bunch, got me interviews, and then I got into their management trainee program, and yeah, that was that. So, sorry, sort of going back to that army point, I mean, you're much more informed on the global state of things than me, and we can get onto that later on. But do you think if there was more, like, rising tension, higher prospects of, like, global war outbreak, that would have made you want to join the army more or less?

Maybe in, like, today's society, for example. Back then, it would have made me want to join it more because, you know, I was younger, dumber. And, you know, war is a young man's game.

Today, for sure, it would make me want to join less. And you're absolutely right that, you know, today the prospects of war are, you know, much greater than they were when I joined. You know, when I joined, the Berlin Wall had fallen.

It was post-First Gulf War. It was very much peace in our times. Now, having said that... My battalion, when I joined, had just come back from serving for the UN in Bosnia.

And shortly after I left, went off to Afghanistan. So I was sort of caught in a window, just by pure dumb luck, caught in a window of basically between Yugoslavia and Afghanistan. So...

The reality is if you join the French army and you join one of the somewhat elite battalions, and there's fewer and fewer of them because of the army cuts, chances are you are going to be sent to somewhere in Africa. You are going to be sent to somewhere in the Middle East. You are going to be sent somewhere in the line of fire. And it's part of the gig. I think it's funny that you mentioned.

I didn't want to become... an officer and then you went into investment banking when you were literally in the office the whole time do you think there was any do you think there was any like comparable like skills or like things you picked up uh that made you really enjoy doing that and then making it your whole career like when you transitioned from the army to paribas so no no look i didn't mind working in an office to be very clear i just felt that if i was going to work in an office i should at least have some level of control over my career um number one and number two hopefully make decent money, neither of which you had in the Army. No, but coming back to the Army, I feel I learned a ton in the Army. I learned a ton about who I was as a person.

I learned a ton about where my strengths and where my weaknesses are. I learned a ton about, frankly, dealing with... Lots of different people from lots of different backgrounds.

And some tremendously smart people, some of the smartest people I've met, as well as some, you know, not as smart people. My grandfather was also an army officer. Always used to joke that not everybody in the army is stupid, but that's definitely where all stupid people go.

So it was a great window into our broader society. It was a great window. Just into life itself. So I don't regret my time in the army whatsoever. I wouldn't be the person I am today without that training and without my time spent there.

It was, like I said, it was very, very strong. Now, did I learn any specific skills that then helped me in finance? No.

What I learned were human relationship skills, where... And again, perhaps what I learned the most was things about myself. And I think when you work in finance, well, you know, finance, we use the term finance, but there's so many jobs in finance, so many different things you can do.

But when you're investing, the first thing... Your biggest enemy when you're investing is actually yourself. And so knowing where your strengths, knowing where your weaknesses are, knowing is essential to proper investing because what you want to do when you're investing is not put yourself in situations where your weaknesses are revealed. And on that front, it's not that different from the Army. You know, when you're in the Army, when you're a young officer, when you have...

tasked with putting together an operation, the first thing you're doing is actually risk control. It's, okay, how do I go about this mission in the best possible way, in a way that is going to lead me to lose the fewest assets. Those assets being, of course, first and foremost men, then material, and then finally time.

And the same is somewhat true in the army, you know, in investing. Obviously, the end of the goal is to multiply the assets that you have. How do I go about that while taking the less, as little risk as possible? Transitioning a bit, I think one of the biggest bets you've made in your career, which a lot of people picked up on and probably why Gaokao started and whatnot, is your bet on China.

And I think that may have started even beforehand, you know, with the influence of your dad, but you took Chinese at university. Why do you think you were so bullish on China for such a young age? What made you want to move to Hong Kong and sort of be, you know, within?

that sort of region. And yeah, why China at a young age is essentially my question. Yeah, there's an element of luck to life.

And on that front, I would say that that was definitely part of it for me. And here, you know, I'll be bluntly honest, I'm not quite sure what attracted me to China from a decently young age. I remember from, again, from my early teens, reading lots of books about China, and just overall being fascinated at how different a culture it seemed from my own.

And just, you know, wanting to figure it out, figure it out. Here was, you know, this enormous country, which, you know, several time through history had risen and fallen again and risen again. You know, I think if you look at the history of civilizations, what's fascinating, you know, Many civilizations in the world, you know, Mesopotamia, the Phoenician Empire, Roman Empire, and on and on and on, Egyptians, etc.

And, you know, empires rise, thrive, at some point roll over, collapse, never to be seen again. And they end up on the, you know, dust heap of history. And what's fascinating about China as an entity, and as a civilization, it's risen, it's fallen, and it's risen again. And that always sort of captivated me. And I got to Duke.

Now, back then, in the early 90s, we were all told that if you didn't learn Japanese, you'd never have another job. So when I got to Duke, I actually initially signed up to learn Japanese. And very quickly, my dad told me, forget Japanese. um you know the the rising power is is china this is you want to learn chinese now remember this is the early 90s um and so i actually switched which uh and you'll appreciate this as a as a duke student was actually quite a sacrifice because the the intro to chinese class was monday wednesday friday at 8 a.m um when when japanese was tuesday thursday at 2 p.m um So it's a big sacrifice.

It is a big sacrifice. It was a big sacrifice. And I contemplated, do I really want to do this? Japanese at 2pm sounds so much better.

And, but, but I went ahead with it. Then I went to the Duke in China program, which back then was in, in, but you started off in Beijing, then you went off to Nanjing. And, and yeah, I kind of caught the bug.

Now, the reality is that the China, you know, I lived in back in the early 90s. no longer exists today. You know, the Nanjing that we lived in, you know, only had a few paved roads.

I would take the train to go to Shanghai to buy chocolates because I've got the most wicked sweet tooth because you couldn't get any decent chocolate in Nanjing. And of course, you know, being the glutton that I am, I'd eat it all on the train back. I didn't even have the discipline to keep the chocolate bars going forever. for the week.

So it was a very, very different place. You go to Nanjing now, what used to be a four-hour train ride to Shanghai is now less than an hour and a half. It's a megalopolis of massive buildings, neon lights.

It's a super exciting place. And so just by sheer dumb luck, I ended up having front row seats to what I think is the world's greatest economic transformation the world has ever seen. Now, when I joined Paribas in Paris, this is where the luck really kicks in. When I joined Paribas in Paris, Paribas was in the process of buying a decent-sized Pan-Asian broker that was headquartered in Hong Kong called Asia Equity.

And my boss, who was the head of French equity research, I was sent over to do the integration and he said, hey, look, you speak some Chinese, you speak English, do you want to come with me to do the integration? And so I was obviously more than excited for the opportunity, went over and... Fell in love with Hong Kong, to be honest. It's such an easy city to live in, such an exciting city to live in.

And after a while, and there again, this is how luck unfolds. When I got there, the Asian crisis was starting. And the business we bought.

Well, Paribas bought, basically imploded. And what would happen in the following two or three years following the Asian crisis was that every major investment bank that just two or three years before was busy deploying capital into Asia, busy saying that Asia was the future. With the Asian crisis, everybody slashed their research budget, everybody fired all their analysts, everybody just basically pulled out of the...

the region. Meanwhile, China was really starting to grow. And I thought, well, there's an opportunity here.

Because, you know, it's not going to be the Asian crisis forever. Asia, China will grow, people will need to know what's happening there. And very few people are doing the research on it.

Now, this was then, of course, since then, things have changed. Although... I think in recent years we've had, it feels very much like the Asian crisis days where everybody says, oh, China's uninvestable, no reason to be here, even though what's happening in China is actually quite exciting.

I think what's interesting from my perspective, I mean, I'm only 20 years old, have had little experience in the finance world and can barely pretend I'm as informed as you are, let alone the average person in finance just yet. but a lot of like you know cycles even mini cycles that i've experienced have been like the rise and fall of like trends such as like nfts and crypto is the hottest thing in the world like 2022 hundreds of millions of investment and then it's suddenly nothing and then now bitcoin's rising again um and even what you were talking about with regard to japan being really big in the 1990s and everyone was like go japan and then you bet on china and china did well and now now china is starting to slow down uh i think what you mentioned before was pretty interesting, talking about the changing world order. So I'd actually had a question regarding Ray Dalio, because that was the first person that I've heard bring up the changing world order.

And you mentioned that people are still a bit unsure on China moving forward. So I was wondering if you could take me on the journey in your perspective of why you think China was such a big bet then, and then also if it would still be a big bet now. Because what if it's just the next Japan? What if China's now the next Japan? You know, the US just maintain their place, the biggest economy.

You know, China have some problems or you think that, you know, 100 percent China's still going to become this biggest global superpower. It's inevitable. I just wanted you to see if you could take me on that journey from what it was like then to what it's like now. Absolutely.

So before I do, I think you've made a very interesting point about accelerating trends that, you know, from your 20-year-old vantage point, you've seen the NFTs, you've seen Bitcoin. And what's kind of amazing is how quickly and fast those trends now evolve relative to when I was 20 years old. You know, when I was 20 years old, trends would take 5, 7, 10 years to unfold.

Now it feels like they take 5 to 10 months. I forget years. And perhaps, you know, that's the power of social media. Things propagate much faster.

Perhaps that's the power of a globalized world. Instead of a trend affecting a few million people here and there, it very rapidly affects 100 million people or even a billion people. You know, there's many potential explanations.

But I would concur with what you just said. You know, we live in a world that... that has accelerated dramatically from the time when I was your age and your shoes.

And I would imagine that as a young person, it's got to be somewhat harrowing and tiring to try to always keep up with the latest trend, right? It's like, oh, this is hot. Oh, no.

Oh, it's gone. Okay, let's move on to the next thing. When I had the luxury at the start of my career to have these 7, 10, 20-year trends, That you thought okay, I'm gonna write this and you know early on you know I would say you know big trend when I joined of course you had the internet then you had the rise of China And again, these were 20 30 year trends and then you had the impact of the smartphone.

That was a 10-year trend And yes, I think we can question today, you know, if I look back at my career There was the start of the internet. That was a huge one. The rise of China was a second one The impact of the smartphone was a third one.

We could talk about cryptocurrencies, but frankly, that China hasn't had a huge impact on GDP numbers, on economic activity. Yes, there's some people who work in crypto, but it's not a very large number of people. So you haven't yet seen the impact of that on the economy.

Maybe you will, maybe you won't. Which brings me to your question about China and whether... you know, China will have, will be a Japan or it won't. Now, I continue to believe that it won't.

Now, the case for China being like Japan is a pretty simple one. It's to say, look, Japan had a real estate bubble, China had a real estate bubble. And that real estate bubble popped in Japan, and it took them three decades to sort of resolve the issues.

And China is just sort of five year into the popping of their real estate bubble. So there's still a lot of problems. Now, at the same time, Japan had a horrible demographic profile, and China today has a horrible demographic profile as well. And so it's pretty easy to draw that parallel.

Now, I think the reason the parallel doesn't work is really, there's a number of reasons, but I would focus on three of them. The number one reason the parallel doesn't work is that when the Japanese real estate bubble went bust, the banks went bust along with it, because the... real estate bubble in Japan had reached such levels of absurdity. You know, it was said that the land under the Imperial Palace was worth more than the whole of California. It was also, there was a shop in Ginza at the top of the market that sold for a million US dollars a square meters.

And this was back in 1989, a million dollars in 1989. I mean, a million dollars is a lot of money today, but back in 1989, that was really a lot of money. So... You know, you reach levels of valuations that were so stupid that basically everyone in Japan was involved in real estate and most companies were valued for their real estate. So, you know, maybe you bought a widget manufacturer sitting outside of Tokyo, but the reason people got excited about the widget manufacturer wasn't the widgets. It was because of the land sitting under the factory.

Everything got valued on the basis of their real estate. And when it imploded, when the bubble imploded, it meant that everybody's balance sheets was completely shot to pieces, including and first and foremost, the banks. And pretty much every bank in Japan was bust.

And once your banks are bust, it's very hard to pick yourself off the floor. That's when you get, you know, you start kicking into Irving Fisher's theory of Great Depressions. And so that was...

So that's your first big difference. Today, China's banks are nut-bust. If you got a job after graduation and you moved to Shanghai and you decided to buy an apartment, you would have banks falling over each other.

lend you money to buy a house. You'd have banks falling over each other to lend you money to buy a car. The banks are open for business.

Again, big difference with Japan in the 90s where the interest rates might have been low, but the banks weren't lending because they were too busy dealing with all the bad loans of the past. So that's your first major difference between China and Japan. I think your second big difference is how competitive China is today.

You know, when I was your age, if you went to Tokyo, you had to check your bank balance before going out for dinner. Tokyo was by far, even after the bust, it was by far the most expensive place in the world. You know, people would go to Tokyo and say, it's like, it's $20 for an apple in the food store, and it's like $50 for a watermelon. I mean, prices were just...

absolutely ludicrous. And it took, you know, 30 years of deflation for Japan to adjust to more normal prices. Today, you can go to China and things are so cheap. Now, I don't want to sound snobbish.

But, you know, you go to Beijing, you stay in a Four Seasons for 200 bucks. I mean, you stay in literally world class hotels with world class service for 200 bucks, while in New York or in San Francisco or wherever you want to pick in the US, for twice that money, you get fairly mediocre hotel rooms in the major cities. Again, I don't want to sound snobbish, but that's the reality.

China is so, so competitive. Pick any product, cars, cell phones, train tickets, you name it, and China is a fraction of the cost that we have in the Western world. So that's a huge difference with where Japan was.

And that brings me to the third point, you know, reflecting this competitiveness. China today is running trade surpluses of 80 billion a month. Why? Because not only is it competitive, but in industry after industry, what you've seen in China is China leapfrogging the West. And here, I think, to be honest, Western media has a lot to answer for.

Because for the past five years, when you picked up the FT, when you picked up... the Economist, and I don't want to name names, but I just did. When you picked up any Western media, all you got on China was, oh, terrible demographics, oh, youth unemployment, oh, imploding real estate.

All you got were terrible stories. Meanwhile, there were two stories in China. And every journalist out there focused on the real estate story, the bad real estate story, while at the same time.

You had the good industry story. The fact that, you know, cars, solar panels, nuclear power plants, rail, earth moving equipment, you name it. China was not only catching up with the West, but actually leapfrogging the West.

And so, you know, back in September, the Ford CEO went to China and came back and, you know, did a big interview with the Wall Street Journal. I'm sure you can find the link for your listeners. And essentially said that...

His challenge would now be to try to produce to the level of the Chinese. Now, you know, five years ago, no Western automaker would have said that. But it also raises the question, what was he doing in the past five years?

And the answer is he fell asleep at the wheel. He fell asleep at the wheel because if he was reading the Wall Street Journal, he was being told that China was in a threat because China was imploding. When really, China was getting ready. to pretty much take over his entire business.

I think you've broken that down very nicely, and I can see why you have a business in this. I mean, I feel more informed. I've done some, don't test me on this, but I've studied a little bit of economics and a little bit of politics in high school, as they call it in the US, and a little bit of similar things at university.

And some more like structure. this is sort of like a two-sided question about trust and about economic systems. I look at somewhere like the US, biggest superpower in the world.

You know, everyone's talking about the US, dollar reserve, currency for the world. It's based on, from my perception, it might be wrong, a capitalist system. I think Japan's the same.

And on the contrary, China is a more state run communist based system, sort of like a parallel to that question. As I said, I've done some basic following. I say basic because I don't want you to ask me any highly specific questions, but basic following of equities over the years, looking at like electric car vehicle companies such as NIO and others. And the minute there's a threat of a delisting in the US and being just focused on China, I think that's a good thing. there's a massive decrease in share price and so let's say china does continue to do well moving forward my question to you is is a communist state-run system the best form of system uh with regard to boosting the economy and the second part of that question is from an outsider perspective you know i have no affiliation with china i'm not in hong kong i have no business there uh no family no friends no nothing can people from the US and the UK and the wider world trust China.

So yeah, just to reiterate, communist versus capitalist based system, and can we trust China? I have an old joke that I have to tell you. My joke when I look at Asia is that, and it helps you understand Asia, is that Japan is a profoundly socialist country on which capitalism was involved, was imposed, sorry. Japan is a profoundly socialist country on which capitalism was imposed.

and that China is a profoundly capitalist country on which socialism was imposed, and that both of them are going back to the natural order of things. Now, I do tend to believe that the breaking down between good capitalism and bad communism actually does you a disservice. It doesn't help you really understand how...

either, frankly, the United States or China works. That it's both binary, it's Manichean, you know, good versus bad. And it also simply doesn't really correspond to reality. You know, in a pure capitalist system, you would expect lots of bankruptcies, right? Now, you know, you would expect capital to move from...

the weak hands to the strong hands. Now, if you look at the Western world, I think since Lehman Brothers, we've done everything we could to avoid every potential bankruptcy out there. And if that meant giving out massive subsidies, as we did during COVID, if that meant giving out 0% interest rates to make sure that nobody goes bust, we've kept doing that. So, you know, on the one hand, the Western world...

isn't purely capitalist. I think it's massively a stretch to believe that we are. I wish we were. We're absolutely not. And by the same token, China is hardly communist.

And I'm not sure the communism label really helps you understand what's going on. For sure, you have an authoritarian government that can have a very heavy hand. But let's not kid ourselves that What you're doing is redistributing wealth in an equal manner in China, because clearly that's not what's happening. What you've had the most creation of billionaires over the past 30 years has very much been China. So again, I think the capitalism versus communism framework, mental framework, is not exactly right.

And you mentioned NIO, and perhaps that's a great example right there as to how things work in China. You know, the U.S. has three major automakers. You know, China has 130, to put things in perspective.

So what ends up happening in China is that the guys at the top, you know, come out and say, you know what? We want to be in electric vehicles. Electric vehicles are the thing of the future. So you guys should do that. And then what happens is that every local.

mayor, every provincial governor, every regional party secretary decides, okay, if I'm going to get my next promotion, I need to show that I've made a great effort at producing electric cars because that's what the guys at the top care about. So that's now in my KPI, you know, producing electric cars. So what they do is they call the local bank, they call Agricultural Bank of China or China Communications Bank or whatever. And they say, hey. I want you to lend money to my local car company so that they can start producing electric cars.

And so before you know it, you have 130... guys located all around China, each producing each cash flush because they have access to a lot of bank credit, because China's savings are so high and are captured through a banking system. And Chinese private savers don't have much of an opportunity to do anything else, given their domestic capital controls. So you've got this funnel of massive amounts of capital. And I say capital, not communism.

but massive amounts of capital that flow into, you know, 130 EV makers. And then the Hunger Games of capitalism can start. You have 130 guys who are each trying to out-compete each other, produce the best possible cars. And when they do, what ends up happening is that the winner is... is the consumer because he gets a car that's better and cheaper.

And the loser, the one who funds all this, is the bank saver because he gets a very low return on his money. And so he's the loser. And again, the winner is the end consumer of the car, which is, again, think of how the U.S. developed electric vehicles. In the U.S., What you have is you have a government that says, you know what, we need to do electric vehicles. So let's give a bunch of subsidies to Tesla and to General Motors and to Ford to grow cars.

And then by the end of it, what you have is you have one guy who basically in the U.S. dominates the market. And he gets to be worth $50 billion or whatever Elon Musk is worth or $100 billion. he gets to be worth $100 billion, and Americans get to buy Teslas for $70,000. While in China, what you have is you have BYD that produces electric cars for less than $10,000.

So, you know, which one is more capitalist? Which one is, you know, if capitalism is about having guys worth $100 billion, thanks partly to... government subsidies, then the US is more capitalist, if that's what capitalism is. But I don't believe that's what capitalism is.

So when it comes to investing, the challenge becomes, okay, great. So China is going to dominate the EV industry, which is where we are today. But do I want to buy BYD? Because, you know, frankly, you know, it's a great company. It's going to be the biggest car company in the world by any measure.

The problem is you've got 129 competitors nipping at its heels all day. which prevents it from expanding margins. So this is the real challenge in China, is given the very, very high savings rate of the country and the ability of both the government but also the banks to funnel all the savings into any chosen area.

Can you, as a provider of capital, compete with that and generate a... adequate return. It's the old laws of supply and demand. There is a lot of capital in China.

As an investor, what is your added value? When you come into the market and you say, hey, I've got money. I want to invest it.

Take my money and give me a return. If the guy on the other side says, yep, get in line, buddy, because I've got like... 200 guys willing to give me money, every bank, etc.

Then you don't have to be treated very, very well as an investor when, you know, there's lots of people competing for your money. The reason I highlight this is to answer your question. You mentioned NIO.

I wouldn't buy NIO. Now, this doesn't mean that right now the share price is moving higher because of stimulus, because of this, because of that. But over a 10-year cycle, do I want to get involved in the hunger games of China's electric vehicle?

I don't think I do. I think when you look at China, your starting point has to be there is this excessive capital. There's tremendous opportunities, but I think you want to be in sectors where the barriers to entries are very high, either because of regulations or because of network effects, i.e. the big tech guys, the Tencent, the Alibabas, etc.

In those kinds of companies, you stand a chance to generate high returns over the course of a cycle. But elsewhere, no, things are much tougher. You're better off hanging out in the U.S., perhaps, where by this point, everything is organized as an oligopoly. You know, there's three or four car companies. There's basically three companies that determine the entire U.S. agricultural framework.

You know, the pharmaceutical lobby has basically captured Washington, D.C. You know, tech, you know, every part of it. big tech is more or less a monopoly by now. As an investor, you know, monopolies sound a whole lot more appealing than hunger capitalism. As a consumer, it sounds a lot worse.

You know, you pay up for drugs, you get poison in your food, you pay up for cars, you pay up for your tech products. And, you know, as a consumer, you get a raw deal. But as a shareholder, sure, pick monopolies, protected monopolies, oligopolies, regulatory capture. Yeah, that sounds awesome.

Sign me up. Yeah, I was going to thank you for getting to the answer, the crux of the question there. I think when I think from like a, I don't want to say consumer, let's say a citizen of the US or the UK or any one of those countries or even France.

And you look at the US and look at China and from an investment standpoint, I think you've made some very good reasons of why China could be. better than the US to invest in for all the reasons you stated before. But I think particularly how the media portrays it, and I don't know, I haven't been in China, I don't know how China perceived the US and what the citizens and people there think about the US. But I think it does come back to like the trust element, because I think you made good points of why, you know, you've got the oligopolies in the US and the lobbyists and the poisoning of the food and whatnot. But I still think that the average person, maybe it's the media's fault, still perceive the US as a much safer alternative to China because of the heavy handedness that you talked about, because of the ability to take out a firm if it disagrees with the rules.

But we can talk about that stuff another time. I wanted to transition a bit more to the company that you've built, Gavcal Research. I'd love if you could describe how you started it, why you started it, who you started it with, and also talk me through the different parts of Gavcal. Absolutely.

So I started with two people. I started with my dad, who was a prominent money manager through the 80s and 90s. He grew an asset management firm to about 10 billion US dollars and then sold it to Alliance Capital.

And he served as CIO in Europe for a while and then he basically retired. And he was writing, you know, Sort of weekly email to his ex-colleagues at Alliance Capital, just to sort of stay in touch. And I saw what he was doing, and I said, look, there's lots of interesting ideas in there, and maybe we can make a business out of it. And an old friend who was more or less doing the same thing called Anatole Kaletsky.

And Anatole used to be a decently famous financial journalist in the UK. He he'd written for the Financial Times, for the Times of London, for The New York Times. And so, you know, we set off and initially we thought, well, if we get 30 clients, it'll be terrific. 30, you know, major institutions who basically want to hear about what's happening in the world on a macro basis and how, you know, China's growth is impacting. Could be.

potentially impact our portfolios. So we started off and there we got lucky because, you know, obviously China joined the WTO. in December 2011, December 2001, sorry, not 2011, September 2001. And then China really, really took off.

And all of a sudden, you know, we had a lot more than 30 clients. And so the business grew, we opened an office in Beijing, we obviously had our office in Hong Kong. And our research business, yeah, evolved. really rather nicely.

And today we have about, you know, a thousand financial institutions from, you know, hedge funds, prominent money managers, you know, sort of household names, pension funds. But interestingly, along the way, we also picked up a number of corporate clients, people who needed to find out what was happening in China, you know, people such as, you know, Coca-Cola or... Rio Tinto or, you know, just sort of big, big prominent corporate companies.

So it was, we sort of carved out a nice little niche for ourselves and off we went. Then in 2005, we opened a money management arm and we started to launch different funds. And in 2011, China started to open up its bond market to foreigners. And we thought, well, this is interesting. You know.

No foreign firm has a Chinese bond fund because it was a closed market for foreigners. So we're really in the starting blocks at the same time as the giants of this world, whether they be BlackRock, whether they be Schroeder's or Fidelity. You know, they don't have any advantage on us. They don't have a longer track record.

They don't have a team. So we thought we're in the starting block with everybody else. So we put together a team and we built a decent size team. China fixed income product.

At the same time, around 2011, we started to get involved. And so we bought a stake in a private wealth manager in the U.S. called Evergreen, which is now called Evergreen Gavcal. And here we got lucky because, and this was pure dumb luck, the business happened to be based in Bellevue, Washington.

And meanwhile... If you think of the back to the past 10, 12 years, and you think of the greater Seattle area, the amount of wealth creation that has occurred in that area between, of course, Microsoft, but also Amazon, but also Costco, Expedia, Starbucks. When you think of all the companies that are based there, where all of a sudden managers could find themselves, people working in those businesses could find themselves.

sitting on millions of dollars. And so we, yeah, we got very lucky. Our private wealth business grew by leaps and bounds.

And, you know, we've since then bought another private wealth business, this time based in Mauritius, sort of on the same idea. One of my core beliefs is that just as the story of basically 2000 to 2020 was the story of China, I'm very bullish on the prospects for the broader Indian Ocean, for trade all across the Indian Ocean from a booming Africa, booming Southeast, South Asia. And so having a sort of foothold in the financial center of the Indian Ocean, i.e. Mauritius, sort of made sense to us. So we bought this business a couple of years ago and it's humming along.

So, yeah, you know, basically, since setting up a little over 20 years ago, we really have three main businesses today. The research we produce for institutional investors, our money management arm that focuses on institutional investors, and that has a strong Asia bias. And then finally, our private wealth business. I think there's a lot of...

like research out there sure there may have been not as much about china when you started out as you mentioned but particularly like the us the uk there's a lot of different people giving differing opinions uh conforming some form of consensus so i was going to ask where you source your information from but i think that's all pretty much public knowledge but how do you maintain a sort of edge over your competition to give the best research possible over everyone else That's a very great, that's a super important question. And I guess, you know, probably our clients would be the better people to answer. But I think what we try to do in our research is first of all, start off with the premise that, of course, nobody knows the future.

That attaining truth is a sort of Socratic dialogue, that you can, through conversation, you can sort of feel your way towards truth while knowing that you'll never achieve it fully. So what we have at Gafcal is we have a culture very much focused on debates, which I think our clients appreciate because these are the debates that are either going on inside their own heads. I think to be a great investor, you have to be somewhat schizophrenic.

You know, you have to think, oh, I think this, and then you immediately have to think, but how could I be wrong? And so We provide this to clients. We have a culture based on airing all of our disagreements, publishing debates, doing video debates. And obviously, we try to pick the issues that we believe are relevant to clients. And sometimes those issues are very obvious.

For example, right now, is this Chinese stimulus going to work or not? And, you know, sometimes it's issues that, you know, hopefully sometimes it's issues that clients didn't think of, but that we bring to the fore and they think, oh, you know, I'm glad I've got this on my radar now. And so I think we bring really two separate things that perhaps they don't get from people in London or New York or wherever else. First, of course, we...

We bring a different viewpoint because we are based in Asia, because we are based in China. And so we look at the world perhaps in a somewhat different way. And we look at somewhat different things that they wouldn't be exposed to otherwise. So that's one thing.

And then secondly, we provide it in a very different format than most other firms. Most other firms, your investment banks will say, well, our house view is the Fed is going to cut. And our house view is this and our house view is that.

We pride ourselves on not having a house view. We pride ourselves, again, on a culture of debate, a culture of constant challenging of people's assumptions. So, you know, I'm the founding partner.

I'm the CEO. I still publish a fair amount. And I'm very happy when one of our young analysts decides to challenge what I say and publishes something to say, you know, Louis wrote this, but this is where I think Louis is wrong. And I'm very happy for that to happen because.

Not only does it show that that young person is evolving and building up the confidence to do it, but it also shows to our clients that we'll entertain any well-reasoned argument. Because the simple truth is that in financial markets, nobody can claim to achieve the truth. You can just, you know, again, you can claim to try to approach it. But nobody ever has a full picture of anything.

For those of you that aren't in finance and don't really know what we're talking about, typically a lot of research firms might say if they think maybe a particular stock is going to go, a stock, for example, is going to go up or down, and then they might give a price thinking where it might go. And that one analyst might represent the whole firm. So you might have, you know, Jake from Barclays thinks Apple stock is going to go up. And that's sort of seen as the view for the whole firm. But what, you know, I've had some basic, I keep saying basic because I don't want to be held to account.

Look at that. But I've had some basic financial work experience. And I've sort of seen how those research arms work.

And I've always found it really stupid in that, as you say, that one analyst gives their view for the whole firm, sticks by it, gives their reasons. But if they're wrong, you know, you can't hold them to account versus what you're saying. So I think even from, you know, whether or not you're better or not, and I'm sure you are, Louis, I'm sure you're better than that.

I don't know. Even if you're not, I think the structural view that you've got is a lot better. Like, I think it's trying to dumb down to some consensus and people always want an answer.

But, I mean, you even talked about it with regard to Socratic debate, is that there is no answer. I mean, markets are constantly evolving. If prices were perfect, they would always stay the same.

They wouldn't move. You know, people don't have complete knowledge. And so it seems quite stupid for people to pretend they do. I want to...

I want to sort of navigate a bit away from that and ask you about like sort of your mindset with regard to investing and I guess broader life. I mean what's different about what you do versus say having a startup trying to build a unicorn and exit or trying to be an athlete and achieve a gold medal at the olympics or for a rugby example trying to win the rugby world cup is that these are more like fixed points in time you get fit you work towards some goal and you achieve it whereas investing it never ends you know there's always something going on in some market i know i know we talked about yeah i know we talked about you I know we talked about crypto and you were saying that's not as relevant to the wider global economy. But yeah, it's still a 24-hour market, seven days a week, pretty much three, six, five days a year. Which is why I hate crypto, by the way.

Oh, well, there's why. I think having a market that trades seven days a week, 24 hours a day is a very wicked thing. You need time to think, you need time to rest, you need time to relax, or over time you're going to go mad. Louis, we need prices to be as close to realistic as possible.

I just want to weave that to my question in terms of, by the way, I agree with you, I was just making a joke. I wanted to ask how you stay motivated because it's never ending. And whether that's fed by your view of having an optimistic or a pessimistic view for the future and you feel like it's out of necessity or it's about just, you know, staying creative and innovative and doing fun things like posting on social media. Like, where does that constant, never-ending motivation stem from? The first thing I'd point out is I'm very super thankful about the career I ended up in because through it I've made some tremendous friends.

You know, some of my best friends today. I've met through the business. So to answer your question about motivations, for me, I still meet great people every year.

I just came back a couple of weeks ago. I had an investment conference down in Madeira, of all places, which is this island in the middle of Portugal, in the middle of the Atlantic Ocean. And I met some...

new people that I'd never met before that I feel I'll be friends with for the rest of my life now. And so that's, you know, that to me is a first grade motivation. And, you know, I think when you work in finance, one of the attractions of the financial world in general is that you meet really an original set of characters.

You meet people who think differently, who partly because there is no one path to success in finance. There's you. thousands of paths.

And it can cater to all sorts of types. You can be like super quanty, you can be super, you know, historically minded. There's lots of different paths. You just have to find the one that's right for you.

And so to answer your question for me, you know, that is one big motivation. It's great to make new friends. You know, I tend to believe that We as humans are fairly social beings.

And so I truly, truly enjoy that part of our business. And this is where I would say of our different business, the research business is tremendous because it is a relationship driven business. It is a business where we meet people. So that's number one.

You know, number two, I'm not going to lie. When you are... Identify a trend when you pick a winner in the market. It does feel good.

It's like winning a rugby game. There is a game aspect to it. And when you feel that you're winning, it feels nice. There's no doubt about it.

It's exciting. It's exciting when a plan comes together. And when things work out. So between these two things.

Now, by the same token, it's really harrowing when things go against you. And when the market just gut punches you in the morning. When you wake up in the morning and you're just like, you turn on your screens and you know you're going to get beat up that day.

It's, you know, and you drag your feet and you don't even want to look at your screen because all you see is red. It's, you know, you have days like that as well. Just like. when you play rugby and you get beat up and you're shipping in 40 points and your scrum's going back five meters every scrum. This happens in the markets as well.

And there's no doubt that the beer after a win tastes better than the beer after a loss. But that's how life works. And you take your losses and you think, it's okay, I'll try harder and I'll come back next time. Um, and so that's, that for me is the the two main reasons.

You know, you make friends and the wins taste great. It's not that different from rugby. Do you ever feel like you're having a bad day and you're sick of, you know, all the money? You can just give it all to me and I think I'll find something to do with it. I wanted to ask two final questions.

The penultimate one being, like, what's next for you? Hopefully more of the same. I mean, I love what I'm doing. I'm doing it with people I love to be with, my colleagues.

You know, I've basically hired every single one of them. I love being with them. As long as we can keep doing what we're doing. I love our clients.

And, you know, there's, you know, I think the approach of, oh, we have to grow bigger. We have to, you know, always be bigger, etc. I get it. The old story is running a business is like riding a bicycle.

If you're not moving forward, then you're going to tip over. But you also have to accept that sometimes this is a nice equilibrium. You have a nice business that...

It's profitable. You're doing it with people you love. You're doing things that you love.

And, you know, just with that, I mean, I feel like I'm extremely blessed and an extremely lucky place. So, no, if I can keep humming along at what I've been doing, try to add as much value for our clients as possible, that's all I want to be doing. And my final question, and I ask this to every guest, is what is one thing that you would want a listener to take away from this podcast?

That's a good question. And I would say, look, if you're, well, I mean, this is true for finance. It's true for anywhere. More often in life, your biggest enemy is yourself. The person that will spend time tripping yourself up is actually you.

And so the most important thing you can do as you're a young person in college and you have time on your hand is figuring out what you're good in, what you're not good in, figuring out what you enjoy, what you do not enjoy, and then setting yourself up for life by doing things that you're both good in and that you enjoy. Because then you'll have a chance to be really successful. I tell this to my kids all the time. I think too many young people focus too much on, oh, I need to do this and this, and I need to do that to get this career.

You know, roughly half of my friends from when I went to Duke, so I'm 50 years old today, roughly half of my friends work in jobs that didn't exist when we were at Duke. I mean, they literally do. They work in jobs that didn't exist. You know, the Internet didn't exist when we were at Duke.

So half of my friends work jobs that didn't exist when we were like the only guys who pretty much work jobs today that existed when we were at Duke are the guys who chose to be lawyers or doctors. You know, most most of us who we ended up in paths that that really those jobs didn't exist back then. So I highlight this because you have to keep an open mind. Um, but B, the world changes very, very rapidly. Chances are you'll work in a job that doesn't exist today.

Um, and so, you know, to come in and say, oh, I need to, you know, hit this and hit that to be so goal oriented. And you mentioned it, um, earlier, so many careers, it's like, oh, you know, I need to do this to get my, to go to the Olympics. So I need, and that makes sense, you know, if you're an athlete, but you can't look at your career that way.

Um, Yeah. Instead, again, look at what you're good at, what you enjoy. And for me, you asked me about this earlier. I didn't really figure this out while I was at Duke. I figured it out while I was in the Army because I had more time to think.

Because I also had, I think, peers that was, it was probably less of a pressure cooker environment. You know, I think when you're at a place like Duke, you're kind of chasing your tail. Well, you're chasing each exam and you're chasing each. Each midterm and it's like, oh, what class do I take next, etc. So you're chasing your tail a little bit, you don't have time to take a step back and think, okay, what am I good at?

What do I enjoy doing? And again, once you figure that out, if you figure out what you're good at, and what you enjoy doing, then you're probably better off than 99% of the population, because then you can focus on something where your chances of success, whatever it is you choose, your chances of success will be very high. I think it's a very good way to end. I mean, a lot of people, even in finance, that don't seem to like it as much, don't even give that view. They're more like, oh, I'm doing it for the money.

But I think what you've just said about doing it, doing something you enjoy and you're good at is incredibly important. I love your journey. I think it's a fascinating journey you've been on. And I always find it interesting when people have achieved great things, when they call it luck.

I appreciate your humbleness in thinking. that you know choosing china was lucky um but for those listening like whether it's going to be a great predictor on uh whether china's the place of the future or not or if it is actually japan or whatever else um i don't think it's just about randomly picking one i think it's being informed and if you've heard any any part of this podcast with louis today i think you can tell he's very informed and if china was not doing as well he probably would have moved and done something else so in your own life when you're when you're making those big bets always stay informed I think there are so many different angles and different questions I could have asked you about, from portfolio composition to the art of making a good deal to even the US election. So I'm sure there's much more that even listeners would like to know. So if you want to know, Louis is very active on X, Twitter as they formally call it.

So you can follow him there. But thank you so much for your time today, Louis. I really, really appreciate it. And thank you so much.

Absolutely. My pleasure, Harvey. Best of luck.

Transcript for:Louis Vincent Gave: Insights on Finance and Culture

Transcript for:
Louis Vincent Gave: Insights on Finance and Culture