Balancing Conviction and Risk: Masters in Business with Maria Vassalou

Barry speaks with Maria Vassalou, Head of the Pictet Research Institute. They discuss her research into global markets, and how they balance geopolitical risk. They also discuss China's growth as a technical innovator, and the risks to US debt. Finally, Barry and Maria discuss the differences between investing research and academia. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  At Brookfield, we invest in the thing behind the thing behind the next big thing. Our focus across infrastructure, energy, real estate, private equity, and credit is helping to build the backbone of the global economy. We combine deep operational expertise with disciplined long-term investing, uncovering value, and partnering alongside clients to shape tomorrow's economy today. Learn how you can own what's next at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital.

• 0:33Speaker 01

  Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro Plans.

• 1:15Speaker 02

  Never bet against American grit or American energy. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.

• 1:42Speaker 01

  Bloomberg Audio Studios, podcasts, radio, news.

• 1:52Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest is Dr. Maria Vassalou. She is head of Pictet Research Institute, which she joined in 2024 to help build a staff of PhD-level researchers that collaborate with outside academics and think tanks. Pikte's long-term strategic mandate covers asset allocation, portfolio construction, risk premia, capital market structures, global economic, and investment trends. The firm manages nearly a trillion dollars.

• 2:33Barry Ritholtz?

  Dr. Vassalou arrived from Goldman Sachs Asset Management, where she was co-CIO at SAC Capital. She also served as president of the European Finance Association. Pikte was founded in 1805 as a partnership of managers and owners, which it still is to this day. I thought this conversation was utterly fascinating, and I think you will also. With no further ado, my sit-down with Pictet Research is Maria Vassalou.

• 3:06Barry Ritholtz?

  Dr. Maria Vassalou, welcome back to Bloomberg.

• 3:20Speaker 04

  Thank you, Barry. Thank you for having me. Always a great pleasure to be here.

• 3:24Barry Ritholtz?

  The last time you were here, you were co-CIO at GSAM. We'll talk a little bit about your career in a minute, but I got to roll back to the academics. Bachelor's in economics at the University of Athens, PhD in financial economics at the London School of Business, which leads to you becoming a professor of finance at Columbia for over a decade, 1995 to 2006. Academia, was that always the career plan?

• 3:54Speaker 04

  When you do a PhD, you're expected to go to academia. And the reason I did a PhD was because I wanted to dwell deeper into the various topics. I didn't want to have a superficial understanding of economics and finance, and that's what made me get into it. And then I had this wonderful opportunity to join Columbia as a European PhD. This is, at least at the time, it was a very rare occurrence. I was actually, at the time, probably the first or second PhD from Europe that was ever hired at the Ivy League School.

• 4:39Speaker 04

  And so, of course, it was an offer I couldn't turn down.

• 4:43Barry Ritholtz?

  And you spent a good 11 years there. I'm fascinated by your work history. It's like a who's-who of investing. You're head of quant at Soros, you're a portfolio manager at SAC Capital, you consult for Citadel, you're head of asset allocation at McKinsey, PM at Perella Weinberg, co-CIO at GSAM. That's an incredible run. How different were each of those shops? What were the big takeaways? What'd you learn at this?

• 5:13Speaker 04

  Well, they were very different, as you know. And also, coming out of academia, going into the industry, you know, to some extent, you don't really know the cultures for all these places. But the reason I made this transition was because my research in academia was in empirical asset pricing and how macro factors affect asset returns. So I was always working on this interrelation of macro and finance, which at that time was not a very big area. There were a few other people doing it, obviously. And it started finding applications to hedge fund strategies.

• 5:57Speaker 04

  So I started being approached by various hedge funds to consult. And so, over time, of course, that led to job offers, and I was very reluctant to make the switch because it's a big, it's a big change, obviously.

• 6:17Barry Ritholtz?

  To say the very least, the first gig out of Columbia, was that with Soros Capital Management?

• 6:23Speaker 04

  Actually, it was with another hedge fund that approached me as to consult for them. And then Citadel? No, it was a smaller hedge fund at Connecticut, DSD Capital, I think it was called. And then I had various others that approached me, and then Citadel approached me, and I was a retained consultant. They wanted me to join full-time, but I was very scared to leave academia, if you like.

• 6:56Barry Ritholtz?

  Well, it's safe and secure, and, you know, out in the real world, they're very demanding.

• 7:01Speaker 04

  Yeah, so I said, I'm not ready to leave academia, but I'm happy to consult. So we had this arrangement where I would spend one or two days a week in Chicago, in their offices. At that time, that's where their main offices were. And then Soros approached me, and I started consulting for them. And eventually, I joined them to start this quantitative strategies group. But as we started developing the strategies, and I was presenting it to the management

• 7:42Speaker 04

  there, Robert Soros was the CIO at the time, he liked the idea, so he said, okay, take 20 million to try this one, take 30 million to try the other one. And at the end, I was managing about 200 million for them, which was not a lot of money for Soros, but it was an opportunity for me to, you know, to dip my toes into the markets and start seeing how things work. And these strategies were quantitative in nature. So eventually, when I left Soros, I was able to take the coat with me, and I moved to SAC,

• 8:22Speaker 04

  and then I was a full-blown PM with my own silo and team and so on and so forth. So that launched my career as a global macro PM.

• 8:33Barry Ritholtz?

  So I have to ask about, how different is teaching at a place like Columbia versus managing money at Soros, Citadel, SAC? What's the biggest gap between academic theory and real-world practice?

• 8:50Speaker 04

  Ego.

• 8:51Barry Ritholtz?

  Is that, is that a big part of it?

• 8:53Speaker 04

  I think it's a big part, and one of the biggest hurdles I had to overcome when I moved to industry, when I was meeting different people or people were approaching me for positions, was the first question would be, academics don't succeed on Wall Street. What, what do you think is different about you? And they were, because it was, you know, LTCM was very recent, Sandy Grossman hadn't done well. I mean, he had done initially, but then he didn't. There were a couple of other examples.

• 9:29Barry Ritholtz?

  Here's the pushback. Dimensional Funds is a trillion dollars, academically driven. Vanguard is 12 trillion. BlackRock is 13 trillion. Those are big academically driven shops.

• 9:42Speaker 04

  But these are not hedge funds. They're long-only shops. Um. So in the hedge fund world, the perceptions are different. And I think they were very much colored by the failure of LTCM. Because there you had all these big names in academia.

• 10:00Barry Ritholtz?

  And 100x leverage.

• 10:01Speaker 04

  Yes.

• 10:02Barry Ritholtz?

  It's less academia than a bad.

• 10:04Speaker 04

  Exactly.

• 10:04Barry Ritholtz?

  That's more inexperienced. And here we are, fast forward, and situational awareness blows up for the same reason. So you mentioned ego. I saw a study, I don't know, about five years ago. Women PMs tend to outperform male PMs by something like 80 basis points.

• 10:23Speaker 04

  Yeah.

• 10:23Barry Ritholtz?

  And my immediate thought was, oh, I don't even have to read this. It's testosterone poisoning and male ego. Is that an exaggeration? Or how accurate is that?

• 10:31Speaker 04

  Well, you know, at some level in academia, the stakes are not as high in the sense that you can have your views and go with them. And there is, most of the time, there is no way to equitably prove whether you're right or wrong. I mean, in some cases, you can.

• 10:51Barry Ritholtz?

  But there's no P and L where at the end of the quarter, you're.

• 10:54Speaker 04

  You know, whereas when you run a fund, I could be very, you know, confident about my idea or my trade. But if it works against me and I'm about to hit my stop loss point, I have to cut risk. And there, you know, it doesn't matter how strongly you feel about the idea. You get your scorecard every day that says how well you've done. And that's the case, at least in public markets. If you're in private markets, you have a longer runway. But in public markets, it's very brutal. You get a scorecard every day.

• 11:34Speaker 04

  Um, when you make money, you're happy, but you're not as happy as you're sad when you lose money.

• 11:41Barry Ritholtz?

  Well, isn't that, isn't that Kahneman, Tversky's classic?

• 11:45Speaker 04

  Yeah.

• 11:46Barry Ritholtz?

  Finding that, that the reason we have such a loss aversion is we feel the pain twice as much as we enjoy the pleasure.

• 11:56Speaker 04

  Yeah, exactly.

• 11:57Barry Ritholtz?

  So how do you balance? I'm hearing a mix of theory, conviction, and risk management. How does a PM balance that when, all right, the risk says 5%, I'm out. But I know that this trade is going to work out, and I would love to re-enter it. How does a PM like yourself, that's so quantitative and theoretical in nature? How do you balance those out?

• 12:21Speaker 04

  Well, the premise of my strategy was, um, uh, having a view in the markets and expressing it through many different trades in many different ways. So no particular trade was dominant in the, in the portfolio. And always I was focused very much on protecting the downside. So in that sense, the risk management was integrated into the portfolio construction phase of the strategy. And I must say, going from SARS to SAC, in each of these places, I learned different things.

• 13:05Speaker 04

  So SARS was a big macro shop, so it was a great school from that perspective. Uh, but SAC was so focused on risk management. So even someone like me coming from academia where risk management is an obvious thing to take, to, to focus on. I had to spend a lot of time refining that part of my strategy in order to be able to, to do well and, you know, succeed there. So, um, so that, so that's really how it was happening. It would be small trades and then I would do, uh, um, volatility targeting at a portfolio level.

• 13:49Speaker 04

  And then if I would see that I had many metrics by which I was tracking volatility in the markets. And if I would expect that the volatility going forward will be elevated, then I would, uh, cut the risk across the board at a portfolio level. So I would, uh, you know, basically target a lower vol.

• 14:11Barry Ritholtz?

  Let's stay with the macro because I want to relate it back to some of your academic work. One of the things you focused on was analyzing how news about future economic growth relates to equity returns. Um, but as anybody who's invested or traded for any length of time, getting the economy right is not enough to get the market right. How do you reconcile those two?

• 14:37Speaker 04

  Well, the market is a predictor of future economic growth. So that's the case. And actually relating, and so, uh, it depends on the horizon over which you trade. So my approach was never, you know, day trading. It was more longer term, uh, themes that were playing in the portfolio. And so from that perspective, uh, having this more long-term aspect in the, in the portfolio construction was helpful. But it was complemented with shorter term themes.

• 15:17Speaker 04

  So we had a blend of different ideas that were playing out over different horizons.

• 15:24Barry Ritholtz?

  Huh. Really, really interesting. Coming up, we continue our conversation with Maria Vasalou, head of Pikte's Research Institute, discussing the academic theory behind investing. I'm Barry Ritholtz. You're listening to Masters of Business on Bloomberg Radio.

• 15:44Speaker 00

  At Brookfield, we believe you can own wealth that's measured in generations. Because true ownership looks beyond today and beyond cycles. For 125 years, we've built long-term wealth through expertise, discipline, and a clear vision for the future. Providing investors access to alternative strategies built for what's next. Brookfield. Own what's next. Learn more at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital. Past performance is not indicative nor a guarantee of future results. Please review performance and offering materials before investing.

• 16:21Speaker 01

  Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro Plans.

• 17:03Speaker 05

  The world of business is constantly evolving. Every day, new challenges, new opportunities, new ways of working. Comcast Business keeps you totally in step with secure AI-backed networking built to power the way modern business gets things done today in more than 100 countries around the world. That's some serious muscle. And get this, Comcast Business powers over 90% of the Fortune 500 and millions of small businesses. Behind it all, network engineers, cybersecurity specialists, support teams, thousands of experts answering your call at 2:00 a.m. like it's 2:00 p.m. Always on, always ready. That's a lot of coffee.

• 17:46Speaker 05

  One partner powering how business gets done for companies of every size all around the globe. When you add it all up, no one does business like Comcast Business.

• 17:57Speaker 06

  A business gift is never just a gift. It's a thank you, a milestone, a moment of appreciation. It's a message about how much someone matters and what your brand stands for. At 4imprint, you'll find thousands of customizable options. Like premium apparel, branded drinkware, tech, totes, and more. Each chosen not just for function, but for meaning. You can tailor every detail, your logo, your message, your presentation, so your gift feels personal and on-brand. And with expert support, dependable service, and thousands without a setup fee, creating something thoughtful doesn't mean making it complicated. Every order is backed by 4imprint's 360-degree guarantee. So you can be 4imprint certain it'll arrive exactly as expected, on time, and with the care your brand deserves.

• 18:41Speaker 06

  Because when the moment matters, the right gift speaks volumes and the right partner makes it easy. Explore gifting with purpose and certainty at 4imprint.com. 4imprint, for certain.

• 18:53Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My guest is Dr. Maria Vassalou. She is head of Pictet's Research Institute, uh, which runs essentially all of the academic market research for the firm, which manages nearly a trillion dollars in assets. So, so you joined Pikte in January 2024. I mentioned earlier, the firm was founded in 1805. But you joined specifically to build the Research Institute from scratch. What was that like, starting from, you know, the ground floor? That sounds like quite a lift.

• 19:35Speaker 04

  Yes, and that was really the attraction of this opportunity. The fact that Pikte had this vision of creating this institute for quite a while.

• 19:48Speaker 04

  And being a firm that has been around for a long time, they have weathered many cycles in the markets and the geopolitical developments, obviously. So they're very careful and deliberate about the decisions they make. But once they make a decision, they really go for it in a very

• 20:11Barry Ritholtz?

  High conviction?

• 20:12Speaker 04

  High conviction way. So eventually, you know, they were looking for someone for a while. Eventually, we met and I found the idea fascinating to start this internal think tank, effectively, that would be focused on the study of long-term trends that can affect the way we approach investing. So effectively, we focus on three areas: geopolitics, macro and portfolio implementation issues. We have a team of PhDs that are dedicated to the institute and we do academic level research.

• 20:54Speaker 04

  We don't focus on short-term themes, so we're not going to be the ones to tell you whether the market will go up or down next month, or where S and P will land the year, or things like that. But we focus more on long-term themes that could be important for how we approach investing, how we develop our investment processes, how we develop our product offerings, if you like, and really provide new insights to our clients and investment professionals.

• 21:30Barry Ritholtz?

  So I'm fascinated about how you balance all this. So you've said, both here and elsewhere, the focus is long-term, it's macro, it's geopolitical. How do you prevent your whole research team from getting sucked into the daily news cycle, especially here in the U.S.? But globally, there's so much news, it's so noisy and distracting. How do you keep everybody focused?

• 21:58Speaker 04

  Well, first of all, the institute is a group-level function. We cut across all the different businesses of PICTA. But under us, or in parallel to us, each business line has its own economists and strategies that focus more on the short-term and the news flow. So this is not our job. We have other people doing that. So we take a step back. All the members of my team are PhDs and we have an agenda of different topics we work on, and we do basically academic-level work.

• 22:39Speaker 04

  But it's not academic in terms of its rigor, but it's not academic in the sense of being abstract. We always ask the question, what does this mean for investing? What does this mean for our business? What does this mean about how we should plan our future as a firm? So that's the main difference. And then I cooperate with the different businesses.

• 23:10Barry Ritholtz?

  So I want to talk about some of the academic and PICTA research you've done, and how all of this eventually is expressed in portfolio allocations. Your '04 paper is one of the best-known in the Journal of Finance, Default Risk and Equity Returns, where you effectively argue that size and value is a default effect, meaning the small cap and value premium show up in the high default risk corners of the market, if I'm not oversimplifying that. Walk us through what you found, how it was received at the time, and how do you express that with actual dollars?

• 23:51Speaker 04

  Well, that's part of my academic work. It's not part of the institute work that we're doing now. Back then, my focus in academia was to explain asset pricing anomalies through, you know, economic factors. So what we've done there was, and I did it with a PhD student of mine, so what we've done was to create a measure of default risk, which was effectively the Merton's measure

• 24:31Speaker 04

  of risk, where we're calculating probabilities of default, and creating a measure about it and using this measure to basically show that there was this big debate about small-cap effects at the time, and what is driving it? Is it an anomaly? Is there a risk-based explanation? And our approach was to develop a default probability measure based on Merton's model, where we would measure the default risk of different types of stocks and focus then on the small caps.

• 25:12Speaker 04

  And what we would show is that the small caps will always load highly on this default measure, but as the default probability in the markets will vary over time with the business cycle, when default risk was low in the economy, the effect will be diluted, so you wouldn't really see the small-cap effect. And when the default probability will rise, then that will become more pronounced. And once we were using that measure, we could effectively explain away all the small-cap effects. So that was part of this research.

• 25:53Speaker 04

  Now, at the institute, we are focusing on other work, and we are also going through a transformative time in our history, because we are moving away from the world of globalization, the dominance of the U.S. and the world in a way that was established after the end of the Cold War, to a new equilibrium that is yet to be defined. And this is really a period of high uncertainty, a period where a lot of things are happening

• 26:32Speaker 04

  and where, to be a good investor, you need to also focus on geopolitics and macro. You cannot do your job well by just focusing on the particular asset class that you manage. And this is where the institute comes in. So we developed a framework to understand what is happening in the world and how the different pieces fit together, from geopolitical initiatives and policies to economic policies to what is happening in terms of the competition between China and the U.S., the rest of the

• 27:12Speaker 04

  world, the position of the U.S., the role of technology, the role of demographics, industrial policies, and so on.

• 27:24Barry Ritholtz?

  So let's talk about some of the PICTA Institute's published studies over the past couple of years. In 2024, the study was titled "The Critical Role of U.S. Debt Sustainability in World Financial Architecture." And that was before we had the tariffs, before we had the Iran War, before the current administration repositioned the U.S. in a somewhat aggressively isolationist way. Tell us what you found. What is the contested leadership? What is the power battle, the dynamic between U.S. and China? How does that all manifest in markets?

• 28:08Barry Ritholtz?

  What does it mean for the average investor?

• 28:10Speaker 04

  After the end of the Cold War, there was a global financial arrangement that was put in place. By which the US, the, the rest of the world will produce surpluses, they will ship these surpluses to the US. And in exchange, the US will provide to the rest of the world, the US dollar, dollar as a reference currency, USA facets in terms of US treasuries and US equity returns. And this arrangement was working so long as the US was the undisputable leader in technology. Why?

• 28:55Speaker 04

  Because for the US to play that role, it had to issue debt, it had to run deficits. And as we know from economics and the Triffin Dilemma, this is what eventually leads to the demise of the currency, reference currency providers, because you have to issue debt in order to become a dominant hegemon in the global financial system. But as you issue more and more debt, you erode your own credit worthiness and eventually you lose that privilege.

• 29:37Barry Ritholtz?

  Is that inevitable for, because we saw it go back over the centuries. First it was Amsterdam, then it was London.

• 29:43Speaker 04

  Exactly.

• 29:44Barry Ritholtz?

  Then it was New York. Is it, and there was dalliances with Tokyo and people have talked about Beijing as possibly the next leader. Is it just inevitable that all empires crumble and every country with the mantle of leadership eventually in, puts itself in so much debt, they no longer can lead the global economy?

• 30:07Speaker 04

  Well, this is exactly the point of this paper and this is what is different with the US. The US has done all those things, but the smart thing that the US has done over its history is to focus on innovation and technology. And that effectively works as a collateral for the debt it issues. Because what is the problem with issuing a lot of debt? Well, beyond a certain point, the markets start doubting whether you will be, ever be able to repay that debt. But if you have a great machinery of producing innovation and technology that fuels economic

• 30:48Speaker 04

  growth, then that effectively will be your guarantee that you will be able to service your debt. And so, US has been the indisputable leader in technology all these years, until recently, well, we were seeing this coming, but it has become a real issue in the, in the recent years. Now we see China seriously challenging the leadership of the US as a technology provider. And the moment the US loses its leadership, the whole global financial architecture and

• 31:31Speaker 04

  this arrangement that we described, crumples. And so, for the US to maintain its leadership in technology and innovation is not an ego-driven pursuit. It's really existential in nature. And I think this is what a lot of people are missing. So this competition between the US and China is not going to go away when the administration changes, for instance.

• 32:04Barry Ritholtz?

  So that, that's really fascinating to, when I look at the history of the past, I don't know, the entire post-war era, it began with US as an industrial power, eventually that migrated Germany, Japan, and then Korea. Then it was a, a technology, semiconductor, software, internet. That still, the US has, has maintained somewhat of a lead. Now we look at AI, and yet in every one of these areas, China has very aggressively pushed into the space. The central government has funded lots and lots of entrepreneurs and businesses.

• 32:47Barry Ritholtz?

  There's a big industrial policy there. Let's say in the next 10 years, China passes the US in terms of technological leadership. What does that mean for, for the US as an economic power? What does it mean for the people who are sitting on a lot of bonds and fixed income, the debt of, of the US government?

• 33:11Speaker 04

  Well, the, that's really the risk ahead and how we manage the period between now and the next five to 10 years. I'm not even sure we have 10 years ahead of us. I think a lot of things will play out over the next five years.

• 33:29Barry Ritholtz?

  Wow.

• 33:30Speaker 04

  So how we manage this period will be key in terms of the standing of the US and the global geopolitical pecking order there, which will have profound implications for the global financial system, the standing of the US, the standing of the US dollar, of US treasuries and so on. So I think we are really under pressure to make the right decisions now. Now, how did we get to that point? We got into that, to that point because the emphasis was on globalization, on economic efficiency.

• 34:12Speaker 04

  So it was all driven by low cost of production. US was happy to produce the ideas, but then generate the goods, produce the goods at the lowest cost, wherever that may have been. China was always very far sighted in terms of its policies. So it always insisted that when they produce something, there will, there will be a knowledge transfer, they would learn from that, there will be JVs with local firms. So it had always a very strong industrial policy as part of its agenda.

• 34:57Speaker 04

  So it managed to learn and evolve over time. And the other thing that happened was China was very strategic in accumulating key resources around the world that either it controlled directly or indirectly, or controlled the processing of these resources. They're important for industrial production, for innovation, for the new technologies and so on. So now we are in a situation where China is not at the same level as the US in terms of innovation production, even though the patterns, the number of patterns may give

• 35:40Speaker 04

  a different idea, but I would say this is misleading. But it controls so many of the factors that one needs to be a producer of these technologies going forward, that effectively it controls a lot of this process. And so a lot of the, the developments we see also at the geopolitical level have to do with that.

• 36:08Barry Ritholtz?

  So for

• 36:09Speaker 04

  How to address this.

• 36:10Barry Ritholtz?

  So for most of my lifetime, the US deficit and debt has been expanding and it, more or less, there were the usual deficit hawks, chicken hawks always complaining about it, but it felt manageable. It's only in recent years, and I want to talk about policy, not, not politics, but it's only in recent years where we saw a couple of giant tax cuts that really opened up the deficit. The tariffs sent inflation higher, the war in Iran sent inflation higher, that made servicing the debt much more challenging and at the same time created even more spending on the

• 36:55Barry Ritholtz?

  military side. So. It kind of sounds like the risk factor you envision is the result of a series of unforced errors. Is that a fair policy analysis? Did we shoot ourselves in the foot over the past couple of years?

• 37:13Speaker 04

  I think the US and Europe have been very naive in terms of their long-term economic policies, letting their countries deindustrialize.

• 37:24Barry Ritholtz?

  In other words, just outsourcing manufacturing to China, to Korea, to Turkey, to Vietnam, to anyone that would do it cheaper?

• 37:34Speaker 04

  Yes.

• 37:35Barry Ritholtz?

  Well, we saw it during COVID where you couldn't even buy masks or toilet paper because nothing was made here.

• 37:41Speaker 04

  Exactly. So I think if I remember correctly, after the Second World War, US manufacturing accounted for about 45% of global manufacturing, and now it's down to 19%. Europe is in the process of also deindustrializing. It's not just that all this manufacturing moves to other countries and primarily to China, but it's also that increases the vulnerabilities of this economy.

• 38:10Barry Ritholtz?

  Clearly.

• 38:11Speaker 04

  So now we have moved to a world where the focus has moved from economic efficiency to economic resilience. And that means that the mixture of services and manufacturing has to be redressed. And actually, the current technologies help in that respect. At the same time, you see that the demographics are also changing around the world, and that also has an effect.

• 38:42Barry Ritholtz?

  Let's talk about that because you've published several studies on that. What's going on both in the US and Europe demographically? We've seen the fertility rates plummet, the number of people having children drop significantly, and the whole society aging. What does that mean from an investment perspective?

• 39:03Speaker 04

  What it means from an investment perspective is that successful investments going forward would have to basically fulfill three criteria. First of all, they should use technology to improve productivity. Productivity has been low at various parts of the world, particularly in Europe. But with the current technologies, there is an opportunity to increase productivity even with reduced use of labor, which in a way mitigates some of the effects of the

• 39:43Speaker 04

  declining demographics. These new investments should cater to the evolving demographics in the sense that it should cater to the needs of this cohort of people that age over time, and they should be developed in an economic environment that has the infrastructure to allow this potential productivity gains to get realized. So as an investor, you can invest at various points of this process. It could be in the infrastructure, it could be in the development of the technologies, it could be in the applications of these

• 40:27Speaker 04

  technologies and so on. But when we talk about technology, we shouldn't just think in terms of the tech firms. A lot of the productivity gains will be in the use of these technologies in other products. And I think some of the more, you know, old economy sectors, for instance, can greatly benefit from these technologies and become very attractive in terms of their investment potential.

• 40:57Barry Ritholtz?

  That's Joseph Davis at Vanguard's book, which is "Technology Arrives in Two Waves." First, the tech companies, then everybody else that sees productivity gains. But I want to stay focused on Europe and how different they are from the US in terms of productivity. First, how much of that is purely cultural? And second, do you really want to give that up? I'm so envious of the lifestyle in Italy and France and Greece, where it just feels so much more relaxed and less stressful than the United States, especially New York, San

• 41:38Barry Ritholtz?

  Francisco, LA, Chicago, any of the big cities, just are go-go-go. I don't get that vibe in the major cities in Europe.

• 41:46Speaker 04

  Yeah. So I think there is a middle route. It doesn't mean that these countries have to change their culture, but they have to improve their efficiency. They have to invest in productivity gains, which have been very low. Even if you look at Germany, for instance, which is the manufacturing heart of Europe, productivity has been effectively zero. So that-

• 42:14Barry Ritholtz?

  No gains at all for the past couple of decades?

• 42:16Speaker 04

  Yeah, very, very, very low gains and certainly not in total factor productivity.

• 42:23Barry Ritholtz?

  Even with automation and software improvements and robotics, Germany hasn't seen an uptick in productivity? That's amazing.

• 42:32Speaker 04

  Not really. And you can see that also in real wages that haven't gone up. And so that increases the income inequality in the country. But they can, I think that there is the realization that they need to invest in those things. And at the same time, there are also certain constraints, because these technologies also require sufficient cheap energy. And Europe hasn't really invested in energy resources.

• 43:08Barry Ritholtz?

  They seem to have embraced more electrification and solar and wind and geothermal than the US has, but not nearly as much as China has.

• 43:16Speaker 04

  Yes. And this is all nice and good. I don't have anything against the green forms of energy. But just like in the case of, you know, the structure of an economy, you need to have a diversified pool of energy resources. You need effectively a portfolio approach to energy resources. And that should include also other sources of energy, including nuclear. And it was a mistake that Germany got out of nuclear power. We see the benefits of nuclear power in France, for instance.

• 43:59Barry Ritholtz?

  Ninety-plus percent of their energy comes from nuclear.

• 44:03Speaker 04

  Exactly. For the foreseeable future, I don't think we can walk away completely from fossil fuel. This is going to be in the mix. But we see now what's happening with Hormuz and so on.

• 44:16Barry Ritholtz?

  And Russia.

• 44:17Speaker 04

  And Russia. So having alternative ways to provide the cheap energy is very, very important. So, and you can really invest in automation technology if you don't have access to cheap energy and abandoned energy.

• 44:34Barry Ritholtz?

  Last question about Europe. The changes in the United States have been leading Europe to consider reinvesting and raising their own defense spending, and especially with homegrown manufacturing and their own various defense products. What does that mean? They've been relying on the US for so long. The change in the US relationship to NATO and just who the US, or at least who this administration considers an ally, what does this mean for

• 45:14Barry Ritholtz?

  spending if more and more of European spending has to be steered towards defense?

• 45:21Speaker 04

  Well, first of all, in terms of US interests, Europe is not as strategic as it used to be. It's important to have it as an ally, but in the past, the main adversary of the US was Russia, the USSR before that. Now, the competition has moved to China. So the role of Europe in that respect has been degraded. That's number one. Number two, Europe is a very affluent part of the world. It doesn't need this military subsidy that it has been

• 46:02Speaker 04

  receiving since the Second World War. Not spending 3% of their GDP over 80 years on military has allowed them to build their social safety net, free education at a very high level, free healthcare, and so on. On the other hand, of course, Europe has been investing a lot of its surpluses to the US, but most of these surpluses were invested in the stock market and in treasuries. So they have been receiving the dividends from

• 46:42Speaker 04

  them that have been supplementing the growth rates of Europe. And this effort from US administrations to really convince Europe to increase their spending on military is not a new thing. It started with President Obama, even with President Bush, I would say, before that. But the tone was gentler and, you know, less pushy, I would say. The current administration has been much more vocal about it. And in a way, I think it led to an overdue wake-up call for

• 47:23Speaker 04

  Europe, because Europe now starts debating how they are going to structure their economies going forward, what they need to do to become more self-sufficient. And in a way, when you have a reordering of countries in terms of their geopolitical importance-

• 47:46Speaker 04

  Being able to stand on your own makes you also more valuable as an ally to other countries and especially to the US. So I don't think that this is necessarily a bad thing. Now, in terms of the military, if you leave aside the fronts where the French defense system is independent of NATO, the rest are all linked to the center command of NATO. So they can't really function on their own unless they go through the NATO command, which is controlled by the US. So this is a major issue they have. So of course,

• 48:28Speaker 04

  they can produce some drones or some other equipment, but they can't really work together as different countries as they stand now unless they build a new framework to integrate their military.

• 48:43Barry Ritholtz?

  Really interesting. Coming up, we continue our conversation with Maria Vasallo, head of Pikta's Research Institute, discussing how to turn theory into practice. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

• 49:01Speaker 01

  Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting Work Mode, available on Plus and Pro plans.

• 49:44Speaker 05

  The world of business is constantly evolving. Every day, new challenges, new opportunities, new ways of working. Comcast Business keeps you totally in step with secure AI-backed networking built to power the way modern business gets things done today in more than 100 countries around the world. That's some serious muscle. And get this, Comcast Business powers over 90% of the Fortune 500 and millions of small businesses. Behind it all, network engineers, cybersecurity specialists, support teams, thousands of experts answering your call at 2:00 AM like it's 2:00 PM. Always on, always ready. That's

• 50:25Speaker 05

  a lot of coffee. One partner powering how business gets done for companies of every size, all around the globe. When you add it all up, no one does business like Comcast Business.

• 50:37Speaker 06

  A business gift is never just a gift. It's a thank you, a milestone, a moment of appreciation. It's a message about how much someone matters and what your brand stands for. At 4imprint, you'll find thousands of customizable options, like premium apparel, branded drinkware, tech, totes, and more, each chosen not just for function, but for meaning. You can tailor every detail, your logo, your message, your presentation, so your gift feels personal and on-brand. And with expert support, dependable service, and thousands without a setup fee, creating something thoughtful doesn't mean making it complicated. Every order is backed by 4imprint's 360-degree guarantee, so you can be 4imprint certain it'll arrive exactly as expected, on time, and with the care your brand deserves. Because

• 51:22Speaker 06

  when the moment matters, the right gift speaks volumes, and the right partner makes it easy. Explore gifting with purpose and certainty at 4imprint.com. 4imprint, for certain.

• 51:33Speaker 05

  For big business, AI opened up a world of promise, but that world of promise turned into a world of pain. Costs spiraling, data scattered across disconnected systems, security and governance increasingly complex, AI initiatives struggling to scale, and ROI that remains frustratingly out of reach. The challenge isn't AI itself, it's having the infrastructure AI needs to succeed, which is right where Boomi says, "We got you." Tens of thousands of enterprises trust Boomi to connect data, applications, processes, and AI. With Boomi, businesses can eliminate silos, automate workflows, strengthen governance, and create the foundation AI needs to perform at scale. The result? Faster innovation, more efficiency,

• 52:18Speaker 05

  better business outcomes. Boomi turns a world of AI pain into a world of AI gain. As Boomi says, "We got you." Head to boomi.com to learn more. That's B-O-O-M-I dot com.

• 52:32Barry Ritholtz?

  I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest is Dr. Maria Vasallo. She's head of Pikta's Research Institute. The firm was founded in 1805 and manages nearly a trillion dollars in assets. So I'm fascinated by the concept of taking all of this original academic research and expressing it in a portfolio. Walk us through the process. How does a research finding actually become a portfolio decision?

• 53:07Speaker 04

  So the role of the institute is to provide some new insights or a new way of looking at what's happening in the world. And then, one of my functions is also to discuss those findings with our investment teams and see how they can affect different products, the different ways we invest, and so on. I'm not a risk taker anymore, so I'm not going to incorporate them into a particular strategy, but I am working with our investment

• 53:49Speaker 04

  professionals to help them understand what we are doing or express those findings into potentially useful things for their investment process. So, for instance, a lot of our work points to the fact that this compartmentization we have in countries between developed markets and emerging markets becomes increasingly obsolete.

• 54:22Barry Ritholtz?

  Explain that, because that's so fascinating. You would think there's a huge difference between Greece and Japan, between Turkey and the United States. How are those distinctions becoming less important?

• 54:38Speaker 04

  Well, there are big differences among those countries that you mentioned, but it's not a matter of where they are now, but it's a matter of what is likely to affect growth going forward. So we have those important factors that are affecting growth that have to do with productivity, with access to important commodities, with access to energy, with demographics. And so the mix is changing. And that's why it's also important for Europe or other parts

• 55:22Speaker 04

  of the world not to neglect how their economic structure evolves over time, because the fact that this part of the world is developed does not necessarily mean that it will always stay at that high level of development going forward. So what defines a developed economy? It's their GDP growth, it's their trade, it's their manufacturing, it's their use of technology. But those five elements are changing. So technology is not necessarily

• 56:05Speaker 04

  produced all in the currently defined developed markets. There are economies that are considered emerging. China shouldn't be an emerging economy, but it is still considered that it's a leader in technology. On the other hand, you have various bottlenecks in economic growth, which have to do with access to minerals, to commodities, to energy. So some of the emerging markets

• 56:41Speaker 04

  that have control over such resources can become much more important going forward. So there is a change in that respect. We think that if you look at what defines a middle power or a great power, the factors that define them are changing going forward.

• 57:08Barry Ritholtz?

  So let's stay with that for a second, because you've said the investment playbook needs a complete reset. What we've been dancing around is little changes around the edges, but you're really saying, hey, we need a clean sheet, we have to rethink, the geopolitics of the world are changing, the macro side of the world is changing. So what are the assumptions that the old playbook had built into it that have to be thrown away? What does that clean sheet, new investment playbook look like?

• 57:42Speaker 04

  So first of all, there is a reordering of countries in terms of their geopolitical economic importance. And what one needs to focus is not what has happened in the past. The past is becoming increasingly less helpful in predicting the future. One needs to see what are the driving forces of growth going forward, and which countries control or have already in their possession or have the ability to develop those elements that will lead to growth going forward. So this is really the key. And so one needs to focus on who is likely to grow going forward.

• 58:26Speaker 04

  And commodities and technology are important factors in the standing of these countries going forward. So that's one thing. The second element is where are you standing in the spectrum of technology? Are you a producer of innovation? Are you a competent adapter of innovation? Are you someone who is providing the inputs for the development of this innovation and so on? And the third one is demographics. How you use your demographics to promote your growth

• 59:10Speaker 04

  and effectively ensure that productivity growth will continue going forward.

• 59:17Barry Ritholtz?

  One of the themes I'm hearing over and over from you is economic growth seems to cure a lot of problems.

• 59:24Speaker 04

  Yes.

• 59:25Barry Ritholtz?

  And if you can grow fast enough, it offsets geopolitics, it offsets deficits, it offsets almost everything.

• 59:34Speaker 04

  Exactly, and that has always been the case for the US. US has never really paid off its debt even after the Second World War. It just grew at high rates and reduces debt to GDP ratio. And actually, in all fairness, US has been the only developed economy that has produced, that has grown a 2% real growth rate for the past several decades. So this is quite spectacular. And when you look also at the debt, as you mentioned before, of the US, US had a pretty modest level of debt until the financial crisis.

• 1:00:16Speaker 04

  So there has, there have been two episodes that led to the increase of debt. One is the financial crisis and the second one is COVID. And I would say that the second time, that was a bit of a misguided increase of debt. I think there was way too much accommodation, fiscal accommodation thrown in the economy, together with a lot of monetary accommodation that eventually led to this inflationary episode.

• 1:00:49Barry Ritholtz?

  I want to just jump in because the criticism of the spending post-financial crisis was was all focused on Wall Street banks and brokers and ignored the average person, homeowners, mortgage owners, who were also suffering from the same problem. The overcompensation in COVID was, let's just flood the economy. And I want to point, remind people, the CARES Act I and CARES Act II under President Trump, CARES Act III and the infrastructure bill under President Biden was the single biggest fiscal stimulus as a percentage of GDP since World War II.

• 1:01:34Barry Ritholtz?

  I mean, it was, people don't realize how unprecedented that fiscal surge was.

• 1:01:40Speaker 04

  Yes, and at the same time, the Fed cut rates to zero, they started QE. And so you had stimulus on both sides. And that's, there is no surprise that we ended up with inflation.

• 1:01:57Barry Ritholtz?

  So let's stay with the US and debt. You've called the United States the ultimate too big to fail and have said the main risk to US debt sustainability is geopolitical, not simply numbers. Explain that a little bit. What does that mean for fixed income investors?

• 1:02:18Speaker 04

  First of all, we were used to very low rates because of financial repression. So the yield curves that most people active in the markets are generally used to are rates that were established under the involvement of the Fed by buying at the different parts of the curve, treasuries and so on. So the rates weren't really reflecting reality. The purpose was to push investors out the yield curve and take risks. So as the Fed started stepping back,

• 1:02:59Speaker 04

  it's normal to expect the yield curve to start becoming upward sloping. I don't personally find the steepness of the curve particularly worrisome in terms of how steep it is. The problem is that, of course, we have a high debt that needs to be rolled over. And now, if you look at the budget deficits, a greater part of the budget deficits goes to servicing the debt. And obviously, as the yields go up, that becomes more onerous.

• 1:03:38Speaker 04

  But in terms of the, if you remember before the financial crisis, the 10-year was at 6% or?

• 1:03:48Barry Ritholtz?

  So let's talk about that because all my friends who were bond managers have said, now we're just reverting back to long-term average. These rates aren't high, they're just higher than the financial repression rates. And a 5%, 10 yield and a 6.5% or 7% mortgage rates, that's the average for the past 50 years. It's not a crisis.

• 1:04:12Speaker 04

  Yeah.

• 1:04:12Barry Ritholtz?

  It just feels that way relative to zero.

• 1:04:14Speaker 04

  I agree, I completely agree. The difference is that back then, the debt to GDP in the US was, I don't remember off the top of my head.

• 1:04:23Barry Ritholtz?

  80%, 90%?

• 1:04:25Speaker 04

  Even less, I think, it was, I think, even less than that.

• 1:04:29Barry Ritholtz?

  And now it's well over 100%.

• 1:04:31Speaker 04

  Yeah, so that's, that's the main problem that we have.

• 1:04:36Barry Ritholtz?

  Although, where is Japan, 220, 240?

• 1:04:38Speaker 04

  Yeah, but it's different because 90% of the debt in Japan is internally held.

• 1:04:45Barry Ritholtz?

  Yeah.

• 1:04:45Speaker 04

  And so you don't worry about refinancing that debt. In the US, foreigners hold close to 28% of US debt. So there is a bit more risk. However, people only focus on the external debt of the US. If you look at all the obligations of the federal governments or the governments in different parts of the world, and we do that in a new study I'm working on with Professor Donaldson from Columbia, where we look at reindustrialization, the fiscal space that exists in different parts of the world and so on.

• 1:05:26Speaker 04

  And you add, for example, the pension obligations that exist across the world. Europe scores actually higher than the US. So it's one thing to focus on external debt. It's another thing to focus on the total obligations that these governments have.

• 1:05:52Barry Ritholtz?

  So as long as we're talking about debt, I feel obligated to talk about the US dollar as the reserve currency of the world. As the geopolitics change, as China continues to ascend, as we continue to make a series of unforced errors, what does it mean for the dollar? Are there any other currencies that are potential replacement? I've heard people float a basket of everybody versus it. That's not really a reserve currency. Is it the dollar for the foreseeable future?

• 1:06:27Speaker 04

  There is no obvious alternative to the dollar. And it's not in China's interest to make the renminbi a reference guarantor.

• 1:06:37Barry Ritholtz?

  Why is that?

• 1:06:38Speaker 04

  Because they will have to, have to run deficits. And China is doing exactly the opposite. And they have capital controls. If China lifts capital controls, a lot of money will leave China. And, you know, then they cannot really be the manufacturer of the world and producer of these surpluses. So what they, what they are doing is effectively just some trade that does with other BRICS countries or other emerging market countries. They do them instantly at the renminbi. But then, you know, whether this is attractive to the other side

• 1:07:24Speaker 04

  depends also to the extent that they trade, both countries trade with each other. Because if China doesn't want to import anything from the rest of the world, then the rest of the world can't really do anything with the renminbi they receive for selling or from, you know, from selling to China.

• 1:07:46Barry Ritholtz?

  In other words, you need to be a big importer in order to be the reserve currency.

• 1:07:50Speaker 04

  You need to be a big importer. So, and you need to be a producer of safe assets because if you hold renminbi, you don't have anything to invest them in. Whereas if you receive dollars, then you, you invest them in treasuries. You, you earn a yield.

• 1:08:12Barry Ritholtz?

  So all this is so fascinating and so incredible. I'm simultaneously hearing from you that on the one hand, there are huge changes happening geopolitically. We really haven't even barely touched on AI and what that might do for productivity. At the same time, There's no substitute for the reserve currency of the US, the safe asset of US treasuries. It would probably be in our interest to not alienate a lot of our allies. But the world really doesn't seem like it has any other choices, does it?

• 1:08:54Speaker 04

  It doesn't have any other choices. Of course, you know, weaponizing the dollar beyond a certain point is not a good strategy because countries and people have memories. But I think what is key is for the US to remain, if not the world's leader in technology, but certainly one of the main producers of technology. And it has to improve its economic resilience. So I think the US needs to some extent re-industrialize, not produce T-shirts and plastic toys, but be self-sufficient in certain key industries.

• 1:09:39Barry Ritholtz?

  Semiconductors, everything from solar cells.

• 1:09:43Speaker 04

  Chemicals, pharmaceuticals, you know, certain equipment and so on. So things where at a pinch, they can be self-sufficient, but they can also there's it's not just that. It's also that the process of producing innovation passes through the production of the product. And there is a lot of knowledge acquired there that then feeds into new innovation. And it also creates a pool of labor that can migrate from one subsector of the economy to another and cross pollinate and enhance the production of

• 1:10:28Speaker 04

  further innovation.

• 1:10:30Barry Ritholtz?

  The Silicon Valley flywheel.

• 1:10:31Speaker 04

  Exactly. And China is benefiting from that. And we are missing out.

• 1:10:39Barry Ritholtz?

  So I only have you for a few more minutes. I'm going to jump to my favorite questions that I ask all of my guests, starting with, tell us who your mentors are, who helped shape your career?

• 1:10:52Speaker 04

  A lot of people, but I'm not the typical case where I had one person that was my mentor through my career. Because I moved around a lot. I moved, as we said, from academia to the industry. But I'm someone who likes to study people. And whether they are officially my mentors or not, I try to learn from them and, you know, try to emulate their good sides and try to avoid things that I find that potentially were not very helpful. So there were professors at the

• 1:11:34Speaker 04

  various schools I went, my thesis advisor, people I worked with at different firms.

• 1:11:43Barry Ritholtz?

  I'll let you in on a little secret. That's the motivation of this whole podcast for 12 years. Let's talk about books. What are you reading? What are some of your favorites?

• 1:11:53Speaker 04

  Well, I spent most of my life studying the thing, the themes we just discussed. So my spare time now, I've started a new book by Roman Garay, La Promesse de l'Or. It's a it's a book in French.

• 1:12:13Barry Ritholtz?

  You speak several languages, right?

• 1:12:16Speaker 04

  Yeah, well, three, not too many. But yeah, so I'm trying to read, I'm reading it in French. And it's a very nice, partly autobiographical book that also talks about his relationship with his mother. And it seems like a very nice book to change ideas from everything that is going on in the world.

• 1:12:43Barry Ritholtz?

  A good break. Anything you're streaming these days? Are you listening to anything or watching anything in particular?

• 1:12:50Speaker 04

  I must say that since I moved to Geneva, I have much more opportunity to be outdoors and do sports. So that means less streaming after work. And so it's a it's a really wonderful city, very livable, very inhumane dimensions. So you can be from one side to the other in 20 minutes.

• 1:13:14Barry Ritholtz?

  Very walkable.

• 1:13:15Speaker 04

  And so after work, I try to spend some time doing sports and and then limit my screen time. So I don't stream very much these days.

• 1:13:28Barry Ritholtz?

  I'm jealous. We were in Lake Geneva a couple of falls ago, and it was just spectacular. It's like an hour or two from Geneva. Have you spent much time up there?

• 1:13:38Speaker 04

  Oh, yeah. I mean, even 20 minutes, you're in the countryside.

• 1:13:43Barry Ritholtz?

  It really is is very spectacular. Our final two questions. What sort of advice would you give to a recent college graduate interested in a career in either financial academics or actual research and hedge fund asset management?

• 1:14:02Speaker 04

  I don't envy the people who are starting their career now. I think every generation has its own challenges. I think people now have to be remain very agile, very adaptable. You have to continue learning all the time. That has always been the case for everyone. But I think the pace of change is so much higher now.

• 1:14:27Barry Ritholtz?

  So fast.

• 1:14:28Speaker 04

  And so all these people need to constantly re-educate themselves. They have to be very proficient with the development of technologies, with the implications of their technology of these technologies for their own career. But I think my view is, in general, technology, in a sense, eliminates certain jobs. But that also pushes people to use their creativity and intellect at a higher level. And I think these technologies that we're facing now will lead people to be more creative, to try to come up with new ideas.

• 1:15:13Speaker 04

  And so I think they need to invest in that process and also invest, not just in the technology, but on the full set of their skills.

• 1:15:23Barry Ritholtz?

  And our final question. What do you know about the world of investing and research and just looking at all the opportunities that any allocator of capital has to manage? What do you know today might have been useful 25, 30 years ago when you were really first starting out?

• 1:15:44Speaker 04

  I think we live in a very different world now than 25 years ago. 25 years ago, you could study the past and learn something about the future. Now we are in a phase of a history where the future, the future will look very different. We are in a transformational pivotal time. So I would put less emphasis on the past and more in understanding the drivers of the future. So sitting now here and looking at what happened in the past 100 years, yes, there may be some elements you can extract from that. But there is so much innovation also in

• 1:16:26Speaker 04

  the markets, in the asset classes, in the drivers of those asset classes, that you can actually come up with very misleading, you know, conclusions if you put too much weight on the past.

• 1:16:45Barry Ritholtz?

  Maria, this has been absolutely fascinating. Thank you so much for coming back. We have been speaking with Dr. Maria Basalo. She's head of PICTE's Research Institute. If you enjoy this conversation, well, check out any of the 667 we've done over the past 12 years. You can find those at iTunes, Spotify, Bloomberg, YouTube, wherever you get your favorite podcasts from. I would be remiss if I didn't thank the crack team that helps me put these conversations together each week. Elizabeth Cedrin is my video producer. Sean Russo is my researcher. Anna Luke is my podcast producer. I'm Barry Ritholtz.

• 1:17:30Barry Ritholtz?

  You've been listening to Masters in Business on Bloomberg Radio.

• 1:17:40Speaker 06

  If you listen to financial news, you know a lot of time is spent thinking about what's next, the next opportunity, the next investment, the next move. But sometimes what matters most is being ready for what you never saw coming. For more than 75 years, Cincinnati Insurance has worked with independent agents to help protect businesses, homes, valuables, and more. Because planning for the future isn't only about knowing what's next, it's about making sure you're ready for what you can't predict. Let Cincinnati Insurance make your bad day better. Find an independent agent at C I N F I N dot com.

• 1:18:17Speaker 05

  For big business, AI opened up a world of promise, but that world of promise turned into a world of pain. Costs spiraling, data trapped, security and governance risks multiplying, and ROI out of reach. That's why enterprises turned to Boomi to connect data, apps, and AI, helping them operate securely, efficiently, and at scale. Boomi turns a world of AI pain into a world of AI gain. As Boomi says, we got you. Head to Boomi dot com. That's B O O M I dot com. The world of business is constantly evolving, and Comcast business keeps you totally in step with secure AI-backed networking in more than 100 countries. They're powering over 90% of the Fortune

• 1:19:01Speaker 05

  500 and millions of small businesses. That's a lot of muscle. And behind it all, thousands of experts answering your call at 2 AM like it's 2 PM. One partner powering how business gets done for companies around the globe. When you add it all up, no one does business like Comcast business.

• 1:19:19Speaker 06

  Wise is the smart way to manage the currencies you need around the globe. When you send money abroad using your bank, you could get hit with hidden fees and exchange rate markups. There's a better way. Try Wise. Wise uses the exchange rate you'd usually find on Google with no unwelcome surprises. Plus, most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me. It's simple and free to sign up when you download the Wise app. Be smart, get wise. Ts and Cs apply.