The Compound and Friends - Looks Like a Bull Market, Feels Like a Crash

Episode Date: February 20, 2026

On episode 230 of The Compound and Friends, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠���⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠is joined by Robyn Grew and Kristina Hooper of Man Group to discuss: the 2026 outlook, AI's impact and recession possibilities, as well as International markets, private credit, and much more! This episode is sponsored by Public and ClearBridge Investments Find out more about Public at: https://public.com/compound International and emerging market stocks outperformed the U.S. in 2025. At ClearBridge, we believe this momentum can continue. Find out more at https://www.clearbridge.com/ Sign up for The Compound Newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Instagram: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠instagram.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Twitter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠twitter.com/thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ LinkedIn: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠linkedin.com/company/the-compound-media/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TikTok: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠tiktok.com/@thecompoundnews⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Public Disclosure: Paid endorsement. Brokerage services provided by Open to the Public Investing Inc, member FINRA & SIPC. Investing involves risk. Not investment advice. Generated Assets is an interactive analysis tool by Public Advisors. Output is for informational purposes only and is not an investment recommendation or advice. See disclosures at public.com/disclosures/ga. Past performance does not guarantee future results, and investment values may rise or fall. See terms of match program at https://public.com/disclosures/matchprogram. Matched funds must remain in your account for at least 5 years. Match rate and other terms are subject to change at any time. Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠⁠⁠⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

I don't want to be too forward, but I noticed that you all have, I've watched, I've listened to a lot of your podcasts. I think they're fantastic. The one thing I feel you don't have enough breath of is noises. So I told you I'm an empty nestor, but when my son was eight, he loved this. And I thought this might be very valuable because it has a whole, you know, just array of noises. Right? You've got that here. That's just me crying.

Because I feel like the applause, like you just have a very limited repertoire, right? And this, I think this could add like a whole like multiple dimensions. So Josh is normally controlling the noises, but I've got them this time. But you know what? Do you have enough? I've got like 20 here if you want to try any. What is this face? Oh, I press the wrong one.

Those are software stocks. Or do you? Yes. Are we supposed to wear these? I guess so. Didn't you criticize somebody for putting on the headphones incorrect? I did it. I was wrong.

I was right. I will never say anything ever again. I'm sorry. And we're pretty much ready whenever. Okay. Okay. Let us know if like levels are fine in your ears. How do we sound?

I hear myself. I hear you too. Okay, wonderful. Christina, sounding good, feeling good. Mm-hmm. And feel free. Don't let me stop you. Please.

If you've got to hit the buttons, you want to add some noise. Robin, you know what? Absolutely. Let's do it. Silent screaming. Here we go. Nicole's coming in.

Let's do it, you guys. All right. The compound in friends. 2.30? All right. Okay. Whoa, whoa, whoa. Stop the clock.

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not someone else's. Go to public.com slash compound and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com slash compound. Paid for by public investing, full disclosure in podcast description. This episode is sponsored by Clearbridge Investments.

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Clearbridge, a Franklin Teppleton company, go to clearbridge.com to learn more. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnik, and their castmates are solely their own opinions and do not reflect the opinion of Redholt's wealth management. This podcast is for informational purposes. only and should not be relied upon for any investment decisions. Clients of Bridholz wealth management may maintain positions in the securities discussed in this podcast. Wow, I'm excited to have you both here. It is not too often that we speak to a gigantic, the most gigantic publicly traded hedge fund in the

world. Gigantic. I like that. Okay. All right. So with me today, we're going to do Robin first. Robin Gru is CEO of Man Group, a global alternative investment management firm. with over $200 billion in assets of their management. As CEO, she leads the firm's executive committee and as an executive director on the Man Group board. Previously, she held senior global positions at investment banks, including Barclays Capital and Lehman Brothers. And with her today is Christina Hooper,

the chief market strategist at Man Group. In this role, she provides views and insights on the economy and markets. And prior to joining Man Group in 2025, Christina served as the chief global market strategist at Investco and previously worked at Alianz global investors. Welcome. Thank you for having us.

So excited. Okay. We're going to set the stage for the conversation today. We're going to do the macro backdrop, lots of going on in the world. We're going to get into your base case of a modest U.S. recession. A little bit contrarian. I like that. We'll do international stocks absolutely on fire.

And of course, how can we not get to the violent, re-rating in the market, particularly, anything that might be disrupted by artificial intelligence. But before we start, I don't want to take for granted that the audience is too familiar with who you are and what you serve. So gigantic hedge fund, publicly traded, long history, all sorts of stories. Who are you and who do you serve? Okay, so, yeah, we're over 240 years old. Not me, obviously, just the company. So we are UK listed. We serve largely institutional clients.

Think about 80% of our AUM as institutional. And the rest is into the wealth space, but via platforms and via other functions. We don't directly interface with wealth or retail. What do we do? Well, we kind of split our business up into three things. We split ourselves up into a discretionary arm, so classic fundamental, you and me, people who make investment decisions. both hedge funds and long only. We have a systematic business, which is about $130 billion or so,

and that's both macro and micro, so think long only equities, or think the largest macro CTA type space, and that is both hedge fund, and again, long only, and then we have this thing called Solutions, which is a word that we all use, but we drive and develop content capabilities for clients. We take our content and we package it, put it into a space and into a frame that fits the issue that a particular client might be

facing. And large allocators don't always have the right square pegs and the bits and pieces that go together. So we drive a lot of looking at our content and saying, what do you need us to do? And then what are the consequences of that? Could you, and do you want overlays? Do you want to think about inflation protection? Do you want to think about volatility protection? How do you think about those things? And then alongside that, we have a bunch of other stuff. We have Oxford Man Institute, which has been around for about 17, 18 years, where we work directly with Oxford University, and has been one of those things that enables us to think about

and harness the great minds throughout in education to make us better, and we do that with other universities across the world, but at Columbia or as I say, Oxford. And so we put that together, and we service the largest allocators in the world. So better than endowments, pension funds, sovereign wealth funds, big family offices, those types of things. Okay, very good. So you put out a 2026 paper outlook, and Robin, you wrote at Mangroup, we have no house view.

That's right. Our portfolio managers pursue opportunities based on individual, high conviction approaches, whether because of a trade's fundamental value or an algorithm's powerful signal. Yep. So those are two very very. different things. Like the classic discretionary bottoms up, boots on the ground, as much information as you could possibly have on management, on competition, versus like, I don't really care about it, that. I'm looking at a signal and it's telling me to buy, sell, hold, whatever. Those are

very different things. So how do you balance it to? So, well, that's the point. In some ways, what you do is you tool up the capabilities of both sides of the house to do the very best. So we use technology at every point, in every part of the organization. And that's on the discretionary side of our floor as much as it's in our systematic. It's in our legal function and our operations function. I mean, tech is part of the reason we say, you know, tech and talent at Man Group is because bizarrely as a statement, there's sort of the intersection of our DNA's technology as well.

But it enables every single discretionary manager to hold their own views in accordance with the strategy they're running. And likewise, if you've got a thousand issuers in a particular strategy in a microsystematic space and our equity long only space, you can be asset agnostic or indeed sector-specific without having to be aligned with what the discretionary manager over there is doing. So we can run these things completely freely because we don't have a single view that says

we are a buyer of X and a seller of Y. Okay, but at the same time, you did put out a 2006 outlook, Christina, which I read yesterday in the airplane, and you said that we believe, you believe, 2006 is likely to be an environment of high uncertainty. I would agree. Significant geopolitical risks and economies weighed down by tariffs and other policies. This is likely to result in slowing global growth

with several key economies at risk of entering a recession, particularly the U.S. You say your base case is a modest recession, especially if the investment in AI slows. Can you unpack that a little bit? more? Absolutely. If we think about 2025, and I'll point to work done by Jason Firm and the Harvard economist, when he looked at the first half of 2025, he found there was one key driver of growth, and that was AI CAP-X spending. It was responsible for the vast majority of the growth.

And of course, we also know consumer spending has been an important part of this economy. It has been, you know, to use a off-to-use word, resilient. But if we were to drill down, we'd see that it is only higher-income consumers that have spent the vast majority of the money that has gone into the economy in 25. So I asked myself, looking at 2026, what could go wrong? Well, I think it's, we are resting on two fragile pillars in terms of economic growth, AI CAP-X spending and higher-income consumer spending. Especially with AI CAP-X, there are a number of different potential speed bumps. And we've already seen them emerge somewhat, right?

We could see nimbie movements, not in my backyard. My electricity costs are already high, or data center noise is awful. I don't want any more of it. that could certainly impede slow down data center build-out. Also, the ability to access rare earth elements. That has been a critical part of what many worry about for AI CAPEX, just because the U.S. doesn't have it, doesn't have much of it, certainly doesn't have the ability to refine it.

So that could be a real issue, a real way that AI CAPX spending slows down. And then, of course, you also have barring. will companies, will the hyperscalers be able to borrow enough? We saw a 100-year-old bond issued yesterday, but the reality is that there are more and more question marks, and there may not be the interest in financing going forward that we've seen thus far. For example, last year, if a company announced that they were spending more on AI CAP-X,

that was actually a positive in terms of stock market reaction. Recently, that's been a negative. It went from, whoa, look at how much they're spending to, whoa, look at how much they're spending. What are they doing? Exactly. And then finally, you could have just a desire on the part of companies to say, hey, maybe we should slow down and see the results before we throw more money of this. Does a modest recession, let's just assume that we get one? Does a modest recession in the United States mean a bare market for the stock market?

No, it doesn't because we're seeing greater and greater disconnect, to be quite honest. So we could see a scenario where, for example, you could have the stock market, perhaps have some kind of a sell-off in forecasting recession, and then have a pretty brisk pickup, especially if monetary policy supports the stock market. If we were to see an environment where rates were cut, and especially if we were to see some QE, then I think the stock market would take off at the same time. that Main Street could very well deteriorate. That's sort of what we're saying. There's this really weird dynamic playing out that has never happened before. Matthew Bowes at Bloomberg showed a chart

that shows U.S. real GDP accelerating. But there's no job growth coming. And you really, those two things have historically gone hand in hand. So he said, what's happening in the U.S. economy is looking less like Greenspan's 1990s productivity miracle and more like Bernanke's 2000s, jobless recovery, except this time it's a jobless boom with no recession first. So there are all sorts of socioeconomic political ramifications,

but it's this weird thing where there's a lot of anxiety under the surface, job growth is just not really there, and the stock market's hanging in. I'm not sure it's even on the surface. I mean, just aren't at the surface. I think the anxiety is writ large right now. I think that if you're at any... walk into any room and people jump on me with the, what's going on with AI then? And what do we think? And how do I think about it? And whether that's my friends who, you know, don't luckily

chose a better career and don't have anything to do with finance or actually every room that you're having a client meeting with or an allocated meeting with. So this is, this is the conversation and whether it's my 22 year old who's looking down a barrel along with the rest of his friends saying, hang on a second, how do I get a job? Or whether it's, it's the graduating classes coming up who are equally frightened by that, or whether it's any of us who are like, hang on a second, it was fine when this used to be a blue collar thing, right? But what do you mean? The white collar recession, that doesn't sound very good.

That doesn't sound fun at all. And it's that group, right? It's that group where the joblessness, that's a word, is really biting as well. It's where are those opening jobs? What does that look like? And how much is this a consequence of real delivery on AI, a wake? and see is something going to happen and therefore I'm just going to hold tight. How confusing is this? How much is how much are jobs going somewhere else? How much are people leaving and finding

opportunities elsewhere? And is this this this year, five years, ten years? What it isn't is a easy to ring fence phenomenon, right? That's the interesting dynamic here is that I, I I said the other day that, you know, the worm and the tin, well, that's happened, right? Now we're redefining the tin business. And it's a bit of that. It's the sense that we know there's change, we know there's capability, we don't know at what speed this is going to impact. And speed, I think, is critical here.

If you take many revolutions, evolutions, and whether it's, I was, we were talking earlier today, whether it's the person. I liked this because I'm that old who, when you walked into the lift, elevator, and there was a person there with a uniform and a cap. And they used to say, on what floor would you like? And you used to say, I don't know, three. And they used to say, thank you very much. And they would press three.

And you'd say, thank you very much. And you'd wait. And three would come and they said, you'd have a good day. And I'd say, thank you very much. And I'd leave. And that job went away. We don't have those people anymore. We don't have people who connect telephones either anymore.

We don't have a bunch of jobs. but the rate of change for those jobs happened in a way that was absorbable by our countries, by our communities, by our society. The difference here is rate of change. And I think if you look at many of the papers that we all talk, and by the way, you can talk about the Canaries paper, you can talk about any of the A.A. Evolution papers. What you have are a bunch of people looking backwards and saying,

how does change actually affect and what are the numbers we need to take mind of? You have a bunch of people who are trying to crystal wall gaze, which is impossible. And the reality is, how much is this becoming a societal issue? And the rate of change, the pace of change, will determine whether there's an outcome there that feels deeply unsettling beyond markets and into society. Farther complicating matters is that if you look around the globe and you're looking at the economics of the world. It looks pretty good. So who's this chart from? This is from global data macro bond. All right. So they have a chart showing the proportion of countries with positive three-month momentum

in 2026 GDP growth forecasts. And it is at a record high. It's 83%. And further supporting that, the next chart shows an inverted central bank decision, whether they're hiking or cutting. And a lot of central banks are cutting. And that tracks very nicely with the PMIs of developed markets manufacturing. And it's just a bizarre set of circumstances to have that feeling that everyone has. Am I going to have a job in 12 months? And yet the macro backdrop is pretty darn healthy. Well, that's because the macro backdrop is being driven by capital.

It's being driven by investment in CAP-X. It's being driven by, I mean, if we were to look in the U.S., the labor wages share of GDP is at its lowest point since 1950. So I think we're just seeing a very different kind of economy. It's a paradigm shift, and it is very hard for folks to get their arms around it. And there's a reason the Luddites sabotaged farm machinery. deliveries because of all the fear. And of course, they did lose their jobs. Now, the good news is there were new jobs that were created. And perhaps the speed of change of job loss might mean the speed of change of job creation is faster as well. I think that's the thing. I mean,

when we talked about this with ATMs, right? That thing, when people had ATMs, everybody went, all of the jobs go away. Actually, more tellers than ever post-ATMs. So there are technologies and capabilities that beget outcomes that are actually incredibly good. They're just the jobs I don't know how to describe yet a little bit. So I think speed of change is exactly the challenge. But it's also, as we think about markets, this vol that we're seeing, we're no longer, let's go back a bit into what we're seeing in markets. If you're trying to take a little bit more charge of what your financial planning looks like, now is the time where all of a sudden, no longer. longer are you in that passive environment where an index is going to just give you some certainty.

I can point you to a number of different screens right now. And we can touch on that thorny issue of private equity, you know, where you don't have liquidity. What we're seeing is the need and at the institutional level and why would it not be therefore for you and me and Christina the same thing, where we need to think about the portfolios we have And we need to think about resilience in those portfolios. We need to think about how do you navigate these choppy markets? How do you think about things and sort of we can pan out and go, crumbs, there's some big issues here.

There are. But also we have to think about how we protect ourselves financially. What are we doing to provide ourselves with a little bit of robustness, right? Okay. So, yeah, that's Nicole. So forgive me. I should have warned you before we said and then I was going to do that. All right, so let's get back to like markets and what we spend our time talking about.

So you mentioned paradigm shift. There is this thinking that, hey, wait a minute, 40% of the index is powered by these hypers or whatever the number is. Maybe I don't want all of my eggs in what has been the greatest basket in the world. And investors are going elsewhere. They are pouring, they're piling into international stocks. Daniel Thubchart 6, please. This is the estimated net flows for international ETFs. It was at $50 billion last month.

And one of the reasons why they're doing that is because the rest of the world is working really, really well, especially compared to the United States. Dan, the previous chart, please. So this shows the path of returns for the U.S. compared to the rest of the world going back to 1995. And year to date, we have never seen a wider spread of international stocks outperforming U.S. by 8.3% through, I guess, yesterday. This has never happened. Investors are voting with their dollars. And I will make a note that thus far, the 2026 outlook is playing out quite well, because it was about favoring emerging markets and favoring developed ex-US. And I think that is what we're seeing is that valuations aren't predictive, usually in the short term, but they are

predictive in the longer term. And we've gotten to the point now where valuations are so stretched in the U.S. stocks are prices. for perfection. And here are these opportunities in lower valuation areas where there are catalysts for growth. So let me ask you about this because you know a lot more about what's actually driving returns, the election in Japan and all that sort of stuff than I do. Coming into 2024, I feel like that was like December 2020, was like, enough. I don't want, don't tell me about international stocks anymore. I don't care. And I think even looking back with perfect foresight, I still am not exactly sure what the catalyst was for international stocks.

Yes, they were cheaper, but they've been cheaper for the last forever and ever and ever. Are there actually catalysts that you have better clarity into than I do for what's driving this? Absolutely. I think it has to be valuations plus catalyst. And so the catalyst in a broad brush is stimulus, where we see more spending. And so if you look at Japan, there's a lot of excitement. and really it started last year around the potential for far more spending. The new prime minister, she is all about fiscal stimulus.

She's Abe on steroids. And I think that's going to make a huge difference for the Japanese economy. It could also, of course, drive up debt. So that's had an impact on yields. But when I think about stocks, I think that's the reason. And we can look at Europe as well. Europe has a very real and immediate reason to increase defense and infrastructure spending, Russia. And it is absolutely going to do a ramping up of defense and infrastructure spending quite quickly, especially Germany.

Germany actually has hurt itself by being so fiscally austere, especially the manufacturing sector. That is changing now. And I think that's a very, very important source of significant stimulus. People were looking at Japanese yields for the first time and ever going like vertical and say, wait a minute, something's going to break. And maybe it's, maybe it's not that simple. Maybe it's a result of like policy changes and optimism. Yeah.

I think it is a bit of that, quite frankly. I think you're seeing that in multiple different places where whether it's forced, a little bit of force. I mean, the policy, there is a moment where you drop. a stone or a pebble in this great country. And it has ripple effects. I mean, you might want to thank this current administration for Europe's focus and stimulus in defence, for example. There's some very obvious outcomes of some of the policies that are happening domestically

in the US driving capabilities elsewhere in the world. But you look at 25 and the emerging markets MSCI more than outperformed the S&P. 500 is just that's not really what's talked about. So I think the other for me and Christina, you know, dive in at me. But the other piece here is that we're coming out of this benign environment that we talked about. If you have interest rates and you have volatility and you have dispersion and you have that alpha opportunity, hedge fund, active managers are back. This is what we do. It's been a minute. It's been a minute. And I'd say that was my full American ability to understand what that meant then.

You know, it's been a minute. And so it's right that we're finding ourselves in a place where what we do, what we've always done is you go actively into markets all over the world and you seek out alpha and the tools and the capability to do that, especially beyond the footprint of America, there is real excitement out there for what opportunities can be part of active ETF programs, that we might run, but also in the opportunity set of being part of, again, that moment of finding out performance because equities are not priced to perfection. Sectors are doing

different things. Assets are doing things. Jurisdictions are doing different things. And that's really interesting because it gives you some protection when markets are volatile and potentially a little bit unpredictable. I love it. It's been a relatively boring. market the past couple of years. It was... Last year wasn't boring. It was... It was AI hyperscalers and the 493, who cared about them.

100%. So this year, year to date, 57% of large-cap mutual funds are outperforming their benchmark. And 2022 was a blip. There was a good deal there. But it's been really... It's been extraordinarily difficult because the biggest stocks have been the biggest

winners. And if you were underweight Apple, you might as well have been short. And now, find, finally, there's opportunity. Yes, absolutely. But I will give the caveat that when it comes to the S&P 500, in periods where we see the vast majority of stocks outperforming the overall index, we tend to see pretty low returns. So I think this year, we're over 330 stocks outperforming the S&P 500.

And I suspect we're going to have a pretty low return year. Index is up 10 basis points as of this morning. So be careful what you wish for. All right, let's talk. So I was looking at some of your financial reports, and I want to talk about the trend of retail behavior, how it might impact market structure, because you manage a lot of money and trend following strategies.

And market structure has changed. They're now 25% of total volume. Everybody hurts. All investors hurt. Professionals, retail, but they do it, I would say, probably more than most. So in the first half of 2025, from one of your reports.

You saw $1.5 billion of net outflows from absolute return, reflecting a challenging market environment for trend-filing strategies. So has, how has, I don't even say has, because it has, how has market structure, the rise of retail, the zero days to expiration options? Like, how has all of that changed some of the way that you think about the strategies that you deploy? So, if you don't mind, I'm going to sort of zoom you out a bit. So let's understand what trend means as well

because, and I'm open everybody knows, but just bear with just in case you don't. There's ultimately what trend needs to work across macrospaces is what it says in the title. It's trends. Now, it's trends for somewhere between 8 to 12 weeks, right? And what you experience, or what we all experienced in 2025,

especially past early April, was an absolutely whip-soaring markets. And so there was no space that enabled you to find strong signals which drove a version of trend, right? Alpha signals across and it could be currencies, it could be commodities, it could be agriculture, it could be metals, it could be any number of different things, these big kind of macro spaces.

That's where trend does not do well. Now, it's a tremendous other side of your defensive alpha because when you start to see things, then trend out as they normally do, actually post periods of high vol. You start to see that you can build on these things. And that's what happened at the end of last year. So you started to see trend coming back really strongly. But the thing that where you see retail really playing, I think, is in equities, is in indices. It's in that space.

And it's the kind of the, and it's a phrase that's sort of. been used most recently. It's indiscriminate in and it's indiscriminate out. And so that provides an extra layer of volatility, particularly in those things that people can see. It's the, it's the, you sit down with your dentist. And for the first time, I'm not kidding, I had this conversation, real time. And they were like, I can now afford Nvidia, Robin. You know, it's that. And that's, that, so I rank my broker kind of thing, except they said it with an American accent. So where you're seeing the retail play is that sense of name recognition, but not fundamental investing. Not as we would historically think about it. And that does change things. That changed things

materially in that space. What it doesn't tend to change is in commodities and agriculturals. It might turn a bit in your precious metals. Might have seen that in silver and gold lately. But it doesn't necessarily get to wheat and it's not in emerging market currencies where you're looking at different, you know, peso dollar pairs, for example. So it's a different thing, but it changes the way that equities, in particular the S&P, has operated. And that is a different thing from the trend traditionally that you would be hearing in that space. I think trend following is intuitive for investors, right? Like an object and motion, station motion.

But one of my favorite, and rising prices attract buyers and falling prices attract sales. We know how it works, right? like you're more likely to buy something after it's gone up because, oh, it's going to continue to go up. And that does drive prices up. One of my favorite investment quotes is from mail abroad who said, the trend has vanished killed by its discovery. And not just particular to what retail is doing, but the rise of CTAs, I mean, the rise happened a long time ago. But there's a lot more competition. So even if retail investors aren't trading currencies and commodities to the degree that you are,

that actually might make it harder for you because now you're not competing. against the Patsy's no offense. You're competing against other professional investors with a lot of resources and a lot of the same data and signals and information. And that's it. And therein lies the nub of it, right? Is when you say it's the same,

the thing for any organization, listen, I said we're 240 years old, if we hadn't changed, I'd still be making barrels on the side of the River Thames and supplying rum to the Royal Navy on the daily ration. and I'm not joking, that was the monopoly, right? The thing that changes through the lives of organisations like ours is the need to stay relevant and stay right at the bleeding edge,

the cutting edge of alpha signals and capabilities. The one thing I can for sure assure you is that alpha becomes commoditized quicker. And more data doesn't mean that more people are more skilled at it also. So the product we had 30 years ago in a momentum trend product, which had 30 markets and had a fee structure that would make me very happy today, would trade for nothing today. It would be replicable. You and I could sit on our computers right now

and replicate that strategy across those eight markets and get the execution benefit. When you're at 800 markets and when execution becomes part of the alpha, and when portfolio construction is part of it again and when risk management is part of it again and risk scaling and false scaling is part of it, it's a much harder thing to replicate. And that's where you have to continue to look

is the capability to find more signals that are alpha signals that you can trade at scale that you can optimize, that you can put in a portfolio that provides outperformance, that you can execute, and that you can deliver the risk and the value back to clients, that's what you do. And that's what you have to be able to do.

Again, running something at $100 million and running something at $10 billion, they're a whole different kettle of fish. And so we run man incredibly hard to be at that bleeding and cutting edge. And it takes an army of, this is a shocker to people perhaps, but people, like real people who are really smart, really capable, but use every part of the advances in tech and in research to make sure that we can deliver value back to clients. Good answer. Okay. There was, Bank of America does a global fund manager survey, and they always ask, what do you think the biggest tail risk is? And they

were, so they showed November, chart 4C, please, Daniel, November, December, January, February. and you could predict what happened. AI bubble was number one in November, and then people got a little bit less worried in December, a little bit less worried in January, and a little bit less worried in February, as the air came out of the bubble that never really blew up in the first place.

If there was to be a public proxy, I think, for OpenAI, which of course is not publicly traded, I think it would look something like this. Next chart, please, Daniel. So we're looking at Microsoft divided by the S&P 500 since the launch of chat, GBT, And yeah, people got really excited, as well they should have. And now no more excitement.

So Microsoft has underperformed the S&P 500 since November 2020. That's not how a bubble is supposed to work. So I don't think this is a traditional bubble. I think a lot of this has to do with, again, the rate of change and how quickly things are moving. I mean, what we've seen over the last few weeks, and really it started a few months ago, was, you know, the investment. world's version of a murder mystery. We know who the murderer is, but we don't know who was murdered or who will be murdered. And so there has been this incredible sell-off. Some of it quite irrational. And so many, I think when we look back on this chapter, we'll point out a lot of investing

irrationalities that occurred. And I would argue that Microsoft could very well be one of them. We don't know today exactly how this shakes out. I think this is very, very similar to what we saw in the late 90s and early 2000s with telecoms and the money they spent to build out fiber optic networks. And there was a huge race and there was an enormous amount of excitement. And ultimately, that excitement was correct because that really laid the groundwork for a far more modernized economy and the internet. But there were some victims. And so I think that, it's right to worry about who the victims are. But certainly what we've seen in terms of these sell-offs, there's been a lot of irrationality. I love the murder mystery analogy is a good one.

And you're right. I think there is a lot of irrationality. Of course, none of us know which players are acting irrational. I'll let you know in a year or two. But I shared a chart last week that went viral because it's so unusual. So, Daniel, chart 10, please. we've seen a surge in blowups while the stock market is near an all-time high. So last week, we saw 115 stocks

that fell 7% of more in a single session. Meanwhile, the S&P 500 was 1.5% away from an all-time high. The last time that happened not to make comparisons

I, for the record, do not think that this is going to happen. I don't think that like passes prologue in this case. Maybe it is, and I'm an idiot in this ages poorly. But the last time this did,

happened was in the late 90s. Now, differences galore. We don't need to necessarily get into that, but the market is trying to figure out who's going to be the loser and who's going to be a bigger loser. Yeah. Yeah, and this is the point, isn't it? It's the, we can't, we've got a lot of data that goes backwards. No front tests. No front tests. And so this is, I mean, I, I, I like Christina's analogy was the one that made me smile as well as they kind of, yep, motor mystery, get it. We're playing it in reverse. We know what's going to, we know the outcome.

Now we've got to work out who. I'm sure there's a movie that does that somewhere. But it's the set, I'm sure. It's like knives out for AI. Yeah, that's it. Right. So there is a bit of that. I think the other piece is the players that we don't,

who aren't even on the chart yet. You know, there's a bit of this, which is, as we've talked about, this isn't the first time. It wasn't just dot com. It wasn't just fiber optics. We can see through time that the people who go out and spend loads of money on this

don't tend to be the people who end up with or the institutions that end up with the net benefits here. But also they have public financials back in the day. These are open AIs at the episode. That's the hub. And we don't know what they're up to. I mean, you know, we hear drips and drabs. But we mentioned this earlier.

In September of 2025, when they made the announcement with Oracle, everybody was like, oh, my God, look at how much they're spending. And every stock got bit up, Infinity and all the chips. And now it's like, holy shit, look at how much they're spending. So Michael Mobison wrote, a piece last week showing that OpenAI, their sales forecast. So 3.7 billion in 2004. They're projected at $145 billion in 2020, because they owe Oracle $60 billion a year for the next five years. And he said, hey, wait a minute. Let's take a look at how many

companies in the history since 1950 to 2024. Now, these are, it's apples to oranges because no, you know, companies weren't this big, but whatever. Two to five billion dollars in sales. How many of them, I don't know if you adjust for inflation. Let's assume. that he does. How many of them were able to grow, so let me just quote him. Michael said, and his colleague Dan, the data revealed that no public company has grown this fast for five years in the last three quarters of a century. The results include all industries. The average compound annual growth rate is 7%, and the standard deviation is 10.6%. This forecast implies a roughly 9.5 standard deviation outcome for Open AI, which is extraordinarily unlikely, obviously.

So how are you all thinking about the relationship between the hypers, the gigantic startups, and the market's reaction to this? Like, are we not going to use Salesforce or is, I mean, into it, maybe it's a different story, but how in trouble are these SaaS companies, particularly the horizontal ones that serve everybody and then I guess maybe nobody? I think one of the interesting things. So I'm going to try and answer that question really badly, though. We're all guessing. It's okay.

So there's a huge caveat in here. Kristen just stopped. Maybe somebody needs to press that button in a minute and make a funny sound. But I think, thank you very much. Thank you. You're welcome. So there are a few things that is a dynamic. One, we have this rather weird cycle where all of the hyperscalers and the software companies

and the tech companies are all cross-investing in one another. So you've got this kind of AI financing cycle, which in and of itself is producing some slightly weird outcomes. When it comes to will we be using SaaS or will this, is this really under, is it really going after these guys? Well, the answer I think is kind of yeah, right? It is. How quickly, though, and how big, let me do a different analogy. when we talked about things like the way that you may or may not want to think about using hydrogen as fuel at some point in shipping, right?

The problem is you've got a bunch of ships that are not built and their entire fuel system is not going to be built for hydro any time soon. Right? So there is a delay in the ability to act, even if you wanted to, put this kind of cleaner, smarter, cheaper, potentially technology into some of these literal ships. Same thing goes with the way that producing manufacturers had. Manufacturers had great, big basements full of machinery with cogs and wheels and belts and stuff. And the reason there was a delay, perhaps, in the way that there was benefit in manufacturing, kind of took 40 years or so to get the benefits

of electrification and all of those things in manufacturing, was because you had to decommission some of this other stuff and put the new stuff in. Make no mistake, it is really hard in these very big companies to unpick the legacy systems. And as Christina put her kind of finger on, people have to help. I mean, this is one of those interesting things. In order for there to be mass adoption

and for people to be able to really take the benefits of AI and this capability, they are part of teaching AI. They're part of replacing. and understanding the pipework in organizations. I sit in an organization where, you know, about a third of the organization are much cleverer than I by far. You know, they're quants, they're developers, they're engineers, they're technicians. We have tech as part of the DNA of the organization.

I have a lot of people very excited about the capability that this puts in their hands. They're the same people, though, who also understand its limitations. I have an organisation where we have a single version of the truth. I have that capability because this is the way we've built man. 35 years of Quant Heritage helps you do stuff better, driving systems, scalable systems. But very large organisations out there have a ton of legacy systems. And unpicking that ain't straightforward and requires real people to help them do that. So when you talk about delays and you talk about Ludditism, which is sort of

of is a word, that, you know, there is a bunch of things that are going to prevent delay naturally slow down adoption, but are they going after it? Sure. That's such a great example. Go ahead. Well, I was just going to add. So for investors wondering where to go, what to do in this kind of environment, I would say the key is diversification, because if you look at the U.S. landscape, there will be winners and losers. If we go back to the, the, the, the dot-com phase, Corning was very much an old-school company, and it morphed. So there is the very real potential that some companies that we think might go obsolete

actually morph and become critically important. Also, I think it's important to diversify outside the U.S. China has had a very different approach to AI CAPEX. It's been more methodical. It's been slower. And of course, just given that it's more of a command economy, it has been targeted at helping older school industries like manufacturing. And so I think that in a world where we don't know who the winners and losers will be,

diversification is very important. Robin, I loved her answer. Christina, yours was good too. It's okay. We're a team. It's fine. Let me make sure I've got the good one. Come on.

There we go. But spoken like somebody who runs a company, who works with human beings, who is not a techno weirdo, you can't just rip these things out. And investors are acting as if, and they're probably right, that the terminal value of these businesses has changed. It has, even if we haven't seen it yet. Like, it just, there's no doubt about it. To the extent of which these new companies are going to, we don't know. But my friend Warren Pyes has this incredible data point. He said there has never been until just now.

There has never been an S&P 500 industry that accounted for more than 8% of total market cap declined by 25% and have the index remain within 3% of an all-time high. And it's completely indiscriminate selling. So Rob Anderson from Ned Davis Research, Daniel Chart 13, says, no software stock has escaped to sell off unscathed. 100% of industry stocks were in drawdowns of at least 20% from their 52-week highs. And almost 80% of them saw a drawdown greater than 30% obviously the highest reading outside of any bear market.

It's just unbelievable how quickly investors are pricing this in. And maybe more. Yes, I think that's right. And it's back to Christine's point. Let's zoom out people. You know, this is the zoom out moment. if you want to not be glued to X, and I'll get charts like this, if you want to have a little bit more of a wider perspective,

there's options here that help you. And it's not a bad thing because this is a global economy. This isn't just a phenomenon that is being experienced in the US. It's a phenomenon that's being experienced just about everywhere. It isn't just the purview. You don't have a monopoly on this one. This is one where actually being part of how this impacts societies and impacts industries everywhere it's real. I think the other overlay here is this is different in a social impact perspective, politically and otherwise.

This is going to be for people to wrangle with everywhere in the world. How are societies going to deal with this? What is the role of protectionism or allowing or retraining or re-training or skilling people in our societies. There's no doubt that this is great stuff, but we've talked about it. This is nerve-wracking. And daunting.

And you can't have excitement without a bit of that, right? I mean, part of why this is exciting is because we don't know the outcome, apart from the Miss Marple analogy. You know, you don't know the outcome of where this lands. What are we going to look like five years from now or ten years from now? I don't know. I do know that there are some.

things that we all want, though, and that's financial security, and we want some stability, and we want to be able to feel like we have some control over that. And I think, therefore, it's incumbent upon people and organizations like ours, like, man, to try and be part of a solution for financial security and stability. We don't do that by just looking at one index. We don't do that by just looking at one sector. We do that by giving access to the largest institutions in the world, as they're thinking about their portfolios and how they really need to rethink the allocations that they've had historically. You know, it's, if you want to be dynamic, you care about liquidity all of a sudden.

If you want to be active, you need some bolts in your space that are liquid. If you don't want to just be the vagaries of an index, you need to be active in that space, not passive. And so all of a sudden, you've got the largest institutions in the world. rethinking portfolio construction. My question is, why, why aren't we doing more to help real people in the world, at the wealth and the retail space, to help think through that same piece of logic for our own? We'll get there in a second.

We'll gather a second. Last thing on this topic before we get there. Christina, you mentioned diversification as being a sensible solution, and I would agree. Dana, chart 11, please. So in 2024, it really was the Mag 7 versus everything else. Right? So the chart that we're looking at is the S&P 500 market cap divided by the equal weight. And it was up into the right for the most part.

Like it was really four, it was seven versus everything else. And we're seeing the exact opposite year to date, which is lovely. I love it. I think it's phenomenal. It's fantastic. How much of this do you think is people rejecting the hyperscalular spending? This is not sustainable. I don't want to be a part of this versus.

Now, actually, thank you for your spending because the $493. Are going to be transformed. They're going to see margin expansion after a long time of oppressive interest rates. And it's going to be great for many industries. I think it's both. I mean, if we were to go back to that telecom example, you know, there certainly was a rejection of it, but also excitement about all the companies that benefited from it. And I think that's very much the case with the hyperscalers today.

And who knows? They could very well have second and third. But for right now, I think there is a very good reason to be cautious and careful with them. Also, the other thing that we were talking about earlier on hyperscalers was they're not just doing one thing. It's slightly different as well. So they've got broader business models that it's not just the only thing that they're throwing into the mix is that I'm putting all of my eggs in one basket. Yeah, they're throwing a ton of money and capex at it. But actually, they've got whole areas of other business models, in Amazon, for example,

we're doing a lot of other stuff that might be extraordinarily benefited by this type of capability. Okay, let's talk lending. So, there's been a lot of loud vocal skeptics of private credit. Yep. I don't think I've been one of them. I understand the skepticism. I think the way that the financial markets have been structured with the legal stuff from the banks to the blackstones of the world, I think makes sense. I think it's okay.

So when Jamie Diamond said, there's never one cockroach, I said, listen, this is, I think, fraud. And so fraud happens in public markets. And sometimes loans go bad. That happens. It's not like unique to private markets. Okay. But. Let's guess where you're going.

But where I'm going and where I have. legitimate concern is the software. B. Credge has put out a piece. They've got 26% exposure in that portfolio to software. And a lot of the alternative asset managers, the charts look really bad, like really bad. I don't look today. It looks really bad. Your guys looks great, by the way. You look nothing like the companies I'm talking about. Credit to you. So are we going to see the line of, in 2021, a lot of the real estate, and you're ready to go, Rob, but I'm almost done. A lot of the real estate, the private real estate manager say, no, we're not in office. Is that going to be private credit? Oh, no, we're not in software.

I think, so I'll hand over to Christina in a sec. Let me do the intro, because I think it is, creditors for me, as I said earlier, I'm old and I grew up on, on the investment banking side on credit floors apart from anything. And credit was always about risk management, actually. it was all about understanding the credits that you were lending to. You know, it sort of sounds a bit straightforward, a bit dull, doesn't it? A lot of concept. I mean, ain't it? If you look at the rate of lending, the speed of deployment,

I think you scratch your head a bit, don't you? Don't you? Yes. That sounds like a song. I thought I was going to burst into something there. But don't you kind of stop and hang and say, hang on. if this is about risk management, and this is about understanding fundamentally the risk you are taking, the terms of lending that you're providing, then that takes discipline and it takes

diversification and it takes you pricing things right. And if somebody or certain larger organizations in certain spaces are just writing checks, a billion a week. A billion a week. At some point, you've got to go, this is kind of hard. And the, the hard thing in credit is to stop, be patient, be thoughtful, deploy with integrity into those spaces, with intellectual integrity. But when you have inflows, relentless inflows, how do you do that? You be careful about the inflows you've got and you're honest about the deployment rate that makes sense.

And this is one of those interesting conundrums. There's a reason why we think about our private credit space in a very sort of disciplined way. we sat on dry powder last year. And by doing that, by the way, it means I don't count it as a UM and I don't take fees on it. And I'm comfortable with that because we need to keep disciplined on deployment. If you don't do that, then you're investing, crossing your fingers.

And that's not what people pay us to do. So just with that as the intro, I think you are going to see some interesting outcomes here. not surprised you're seeing some of the red on the screen today. I'm also in that point where, you know, I remember gating post-GFC. It, you don't, that's a big thing. You've just come back from that. You've pressed a big red button when you've done it. We know it.

We learned it. And so when you do that, that's, you are definitely signaling something that's, that's painful. I mean, Krista, you're two cents. No. I think that's... Can I read something, Christina, before you jump in? And you don't have to comment on this particular, but I can. This is from the FTA.

Private Credit Group Blue Owl will permanently restrict investors from withdrawing their cash from its inaugural private retail debt fund, backtracking from an earlier plan to reopen to redemption this quarter. The New York Investment Group on Wednesday said investors in Blue Owl Capital Corp 2 would no longer be able to redeem their investments in quarterly intervals, but that the company would instead return investors' capital in episodic payments as it sells on assets in coming quarters in years. So they made a couple of mega sales and 99.7% of the C, we're all good, it's all.

And the publicly traded BDC opened up 3%. And the last time I checked, it was down a lot more than that. The market is not buying what they're selling. And they had the opportunity several times to maybe be a little bit more forthcoming with what was happening. They did not do that. I listened to the earnings call last month.

and the CEO, Mr. Lipschultz, was saying, we don't have red flags, we have green lights. I mean, it was just like a lot of, and then boom. And he might not speak for the space, but it doesn't matter because investors are now understandably and rightfully scared. Yes, they are. And you're seeing it today. I think this will be a point where perhaps diligence,

dull though it might sound, becomes, you know, we're going to see clients. We should be seeing clients doing really deeper dives on diligence. I think it's going to be very interesting to see whether there's a regulatory response to this. You know, one of those interesting points about mark to markets. Remember, I'm a public salts house. Very dull. It means I am subject to marking the vast majority of my book to market.

I care about liquidity management. I care about the version of whether a mark goes up and I have value or the market goes down and I don't. You don't have that transparency in private credit. You can't see it. And it's going to be quite interesting to see where the valuations are. And that is nerve-wracking for people. I understand it. And if the lenders can't have the visibility or the total visibility, as an allocator,

How are you supposed to get comfortable? Because really the only way to be confident is the relationship. Hey, I think they're smart. I think they're disciplined. I'm not reading the subdocs. How would I even know what's in there? You have to rely on the experts. And this is why credit, I go right back to it's a risk.

It's a risk mechanism. Risk investing. It's understanding everything about that underlying. And you have to deal with people who really care about that and deployed capital carefully. And listen, not every loan portfolio works 100%. You know, there are risks of default and there are levels of default and you can understand that sometimes things don't work. Not every investment goes up, I wish. You know, so fundamentally portfolio construction is important.

Risk management is performing, understanding the underlying performance. And thinking about whether you're in a space where you want exposure to lending to certain sectors, there will be entire parts of the lending books which have no technology. exposure at all because they choose to be. We run in one part of our business and a recession, less sensitive recession strategy effectively. And I said, what does that mean? What does that look like, for example?

And somebody gave me a great example. And I don't know. It feels like I'm obsessed by elevators today. And I don't mean to me just turns out. That's what happens. Elevators, they're a thing. People who service elevators, they tend to be reasonably recession-proof. because you and I still need to go up and down in buildings.

It was really useful for me to understand that. These are the types of thoughtfulness. When you are talking and thinking about the people that you are putting money with, do you understand how they go about putting that money to work for you? Under what circumstances, how, why? And I'm a little like the indiscriminate in, indiscriminate out. There's a little bit of, I worry and I care about making sure, there's transparency about what people are expecting and liquidity mismatches. I've been there before.

So it's difficult for advisors to really understand what's under the hood. If you were to ask an advisor who's looked at Blackstone, Blue Owl, Kek, whoever, and you said, okay, well, what's the difference between this, this, Black Rocks version? Come on, right? Like, what can they really tell you? And then you think about the transition and the cynical take. on the transition from Ivy Leaguers, the Ivy Leagues, institutions, endowments, pension funds,

they're already invested. They're 40%. Distributions haven't been great. They're full. They're not allocating more. Returns haven't been great. Okay, well, there's a whole new channel. It's the $40 trillion wealth channel,

whatever it is, a 401k market, $11 trillion, the advisor market. I think that there's some things that are reasonable, but the cynical take, like, it's, you know, you don't have to, like,

really stretched to connect the dots that no more money here, let's get money there. So how are you all thinking about the, I hate this phrase, but the democratization of alternatives. I mean, you're a very serious asset manager. Yep. And I'll start and then, Krista parlin. One democratization of into liquid alts is exactly that. It's not just into private credit, by the way, just to, to, to, to, you know, to make that clear. So there are many, many liquid alternative products. So I think the democratization

into liquid alternatives is something that is sensible in a portfolio. I think it's out there to find at the right price point, there are many, many different styles of alternative liquid products that are beyond passive investing and aren't throwing your money to private equity. So number one, we need to demystify that hedge funds all look the same and all do the same stuff. They don't. You can be there via systematic. You can be there with discretionary managers. You can be there in European equities.

You could do a bunch of different things. But do you want retail money in your hedge funds? I want retail. I want wealth to have an opportunity to benefit via the right wrappers and the right products from the returns that you can get in alternatives. and that will diversify their portfolios. And I think that's right. I think it's the right thing that...

So let's do it a different way around. I work with the institutional... The institutional environment that I work with are people who run your pensions. Are people who are responsible for 401ks. Are responsible for the protection of teachers and firemen all over the world, metal workers in Holland, whatever it may be, ambulance drivers in Japan.

we work with those people all day long to put your hard-earned and saved money to work so that you have financial security. They do it in a way that is across diversified portfolios and they ask us to help them do that. If there's also something as a pool of money that you would like to have access to that same type of exposure, there are mechanisms which you can do that. And you can see that with active ETFs or you can see that with interval funds or you can see that through any number of different wrappers and processes which are designed for retail and wealth consumption. I think that is very, very important that it's that mechanism. You're going to come balling in and just write checks where we have minimums to get into

some of the, you know, the systematic CTA type space. You can't do that directly, but there are mechanisms by way you can absolutely benefit from the credit capabilities that we have. you can absolutely, in the public space, you can absolutely benefit from an emerging market space, you can absolutely get access. But in wrappers that are going to give you liquidity and are going to give you marked market. I think the key is liquidity. I think what so many university endowments, especially the IVs learned during the global financial crisis,

is the importance of liquidity. It may have been lost just given allocations today. But I think this is true for institutional investors. It's true for wealth investors. It's all about ensuring that there is adequate liquidity in portfolios. Look at the kinds of pressures. It's been sort of an annis horribilis for universities, and they've had to draw a lot more from their endowments on average.

There are years when there are many individual investors that also face those kinds of difficult headwinds. So liquidity should be at a premium for all of them. I was at an institutional investor conference in the fall, and I was on a panel with an institutional consultant who said, I've gotten more interest in hedge funds in the last five months than I've gotten in the last five years. And I think that really speaks to the uncertain environment we're in. But my qualifier was, but there should be just as much interest in liquidity as there should be in alternatives.

And that's right. And by the way, you know, that, we're focusing on some of the retail wealth space, but let's be super clear. Some of the biggest organizations, the biggest allocators in the world, trillions of dollars, are finding themselves in a heavily and denominated outcome of being illiquid. And that's so as they required liquidity and they haven't had equitization, larger proportion of their portfolio is sitting in illiquid, in illiquid. liquid assets. Now, that's going to take, that takes time to rebalance. It just does. So that

liquidity premium, I think, is hugely valuable to be able to take advantage of dynamics, but also the vast majority of our conversation, excellent conversation, has been about what we can't predict the future to be. Who doesn't want to have the capability of being dynamic, of having the opportunity to participate in new alpha sources, in new spaces, and diversifying capabilities, in new countries, asset classes, in new technologies, even, right? And so to find yourself hamstrung is frustrating. What we're talking about is, I mean, I'm going back maybe 15 years,

but that capability of choice, of freedom, to be able to be dynamic, but liquidity. liquidity is back. The story about how pension funds think about liquidity and long-term management and working for the firefighter all checks. Alpha is finite, right? These alpha sources will turn into beta very quickly as they're democratized. And there is just a fundamental difference between how these longstanding pensions with investment teams and we forget about all the biases that go on. there, but at least there's systems and processes in place, and they understand deeply

the pros and cons of each strategy and where they fit into a portfolio. The reality is individual investors just do not behave that way. They line item everything, and if something isn't working for three years, they get rid of it. We know this. It's been this way, and it will always be this way. So I think a maybe sensible place to start, and I even like hesitate shut it to say this because there's so much people throwing tomatoes at this idea, is the 401K. Because at least that is long duration capital. You look at it less.

You're less likely to panic. So maybe in a target date fund where it's professionally managed. But this idea that people are going to have access to these alternative premiums in their brokerage account and it's going to go well, I just don't think so. Well, we may want to bet on that, and we'll see where it goes. There will be a prediction market for that, I'm sure. Absolutely. So maybe next time you guys come back out and we'll talk prediction markets. All right, this was really excellent.

Thank you so much. Thank you. All right. For people that want to learn more about Man Group, the 240-year-old rum trading, not rum. Not rum. No, barrel. We sold rum. We told rum to the Royal Navy. We're not running.

We were, yeah, something like that. There's probably a sound for that. Look us up. We're on a website. Okay. Mangrove? All right. Thank you so much.

Thank you. That was great.