Episode #307: Vikram Mansharamani, Harvard Lecturer and Author, “In All Bubbles, You Usually Have A ‘This Time It’s Different’ Story”

Episode #307: Vikram Mansharamani, Harvard Lecturer and Author, “In All Bubbles, You Usually Have A ‘This Time It’s Different’ Story”

 

 

 

 

 

Guest: Dr. Vikram Mansharamani is a global trend-watcher who shows people how to anticipate the future, manage risk, and spot opportunities. He is the author of “THINK FOR YOURSELF: Restoring Common Sense in an Age of Experts and Artificial Intelligence” as well as “BOOMBUSTOLOGY: Spotting Financial Bubbles Before They Burst.”  Vikram is currently a lecturer at Harvard University, where he teaches students to use multiple perspectives in making tough decisions. He has a PhD and two Masters degrees from MIT and a Bachelors degree from Yale University.

Date Recorded: 4/15/2021

Sponsor: Bitwise – The Bitwise 10 Crypto Index Fund is the world’s largest crypto index fund. It holds a diversified portfolio of cryptoassets, including bitcoin, ethereum, and  DeFi assets. Shares of the fund trade under the ticker “BITW” and are accessible through traditional brokerage accounts. Shares may trade at a premium or discount to net asset value (NAV). For more information: www.bitwiseinvestments.com

Run-Time: 59:46

To listen to Episode #307 on iTunes, click here

To listen to Episode #307 on Stitcher, click here

To listen to Episode #307 on Pocket Casts, click here

To listen to Episode #307 on Google, click here

To stream Episode #307, click here

Comments or suggestions? Email us Feedback@TheMebFaberShow.com or call us to leave a voicemail at 323 834 9159

Interested in sponsoring an episode? Email Justin at jb@cambriainvestments.com

Summary: In episode 307, we welcome our guest, Vikram Mansharamani, a Harvard lecturer, author, and global trend spotter who shows people how to anticipate the future, manage risk, and spot opportunities.

In today’s episode, we’re talking all about financial bubbles. Vikram wrote the book BOOMBUSTOLOGY: Spotting Financial Bubbles Before They Burst, which uses multiple lenses to spot financial bubbles. In this episode, he shares that framework with us and relates it to today’s market. He explains why skyscrapers and stadiums help predict where there is excess in the market. Then we talk about the Internet bubble, housing bubble, and what he sees today with the rise of SPACs, student sentiment, and monetary and fiscal policy. We also cover a number of other topics, including why it’s important to think for yourself, why he’s bearish on India, and even some UFO’s.

All this and more in episode 307 with Harvard’s Vikram Mansharamani.

Links from the Episode:

 

Transcript of Episode 307:

Sponsor Message: Today’s episode is sponsored by Bitwise. You’ll hear more about them later in the episode.

Meb: Welcome to the “Meb Faber” show where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

Meb: Hey, everybody. Great show today. Our guest is a Harvard lecturer, author, and global trend spotter who teaches people how to anticipate the future, manage risk, and spot opportunities. In today’s episode, we’re talking all about financial bubbles. Our guests wrote a bestselling book on the topic of how to spot bubbles using multiple lenses. He uses that framework to look at the Internet bubble, housing bubble, current market, including SPACs, student sentiment, and monetary and fiscal policy. He also explains why construction of skyscrapers and stadiums can be a great bubble indicator. As we wind down, we cover a number of other topics, including why it’s important to think for yourself and why he’s bearish on India and talk even a little bit about UFOs. All this and more in episode 307 with Vikram Mansharamani. Vikram, welcome to the show.

Vikram: Thanks for having me, Meb.

Meb: Where do we find you in 2021? Tax Day or at least Tax Day for the last 100 years. Not anymore. Tax Day is now in May. But April 15th, where are you?

Vikram: I’m in Massachusetts today. Lexington, Massachusetts.

Meb: Today we’re going to talk a lot about some topics that are near and dear to my heart. How to think for yourself, booms, busts. I wanted to start, however, with stadiums. I’m a Broncos fan and our mile-high stadium has been named like five different things. Stadiums and buildings, I think is a good place to start. Talk to us a little bit about stadiums and buildings. The reason this is front of mind is I think it’s a Miami stadium, just got named after a crypto firm.

Vikram: Doesn’t make you feel good, does it, Meb? Let’s go back. I’ll talk in terms of skyscrapers and buildings there, and then we can sort of extrapolate from that. But look, these are literally monuments. We’re sort of talking about the fact that people are trying to, at this stage, gather attention through physical buildings and monuments, sometimes to particular companies or to someone trying to hold a crown and sort of say, “Look at me. Look what I’ve done.” So let’s go back and just think a little bit about the history of buildings and skyscrapers. And we know that even going back into the early 1900, even in the 1800s, that skyscrapers, when they hit sort of world tallest status, predicted financial calamities. I mean, with pretty good regularity. So let’s not go back that far. Let’s just go back pretty good time to the great depression. In 1929, we had three buildings competing for the world’s tallest tower in New York City. You have 40 Wall Street, then you had the Chrysler Building, which erected that Spire on top of it precisely to take the title and then you had the Empire State Building being built. And, by the way, that didn’t get finished because the great depression hit, but they were trying to get the title. Yeah, and then you have the great depression. So that didn’t feel good about that competition. Roll the clock forward, ’73, ’74, we had the Sears Tower, World Trade Center, a decade of stagflation and economic chaos that really felt to many like a bubble bursting.

Roll the clock forward even further, the title leaves North America and goes East, goes to East Asia, 1997 the Petronas Towers take the title as the world’s tallest freestanding structures.

And, by the way, they took that title in ’97, right before the Asian financial crisis hit, right at the ground zero of the Asian financial crisis. So, again, there’s something eerie going on here. 1999 into 2000, they started construction of Taipei 101, which became the world’s tallest tower, I think in ’01 or ’02, but nevertheless, the ambition was there and that marked the top of the tech bubble. That was the home, at least in the hardware sense, if you’re talking foundries and semiconductors of the tech bubble. And then in 2007, in July, actually, of 2007, within weeks of global equity markets peaking, the Burj Dubai claimed the title of the world’s tallest freestanding structure. That marked yet another one of these things. It sort of hit the cycle and you’re like, “Wait, what the heck is going on?”

So there’s a couple of things going on here, which is the reason why I think it’s a fun indicator that I pay attention to when I look at bubbles. Number one, it’s a good indicator of easy money. None of these things are really built with 100% equity financing. Number one, banks have to feel confident. Number two, you have to have a speculative instinct alive and well. Those juices need to be flowing because if you don’t have those speculative instincts going, these are mainly developers saying, “Hey, let me build it, and hopefully, the tenants will come.” Even the Petronas Towers needed tenants, even though it was a major company building it. And you’re not hearing about things like, “Oh, ExxonMobil’s building a new world headquarters world’s tallest tower. We’re going to occupy the whole thing.” No, you need to get tenants. So they’re speculative.

And lastly, as I started with, there’s a little bit of chest-thumping behavior here. This is hubris overconfidence embodied. And let’s roll the clock forward to say, “Hey, where are the world’s tallest towers going to be?” Because we can look at announced plans today. And what you see is that they’re going back to the Middle East and are getting bigger. Saudi Arabia announced a 1-kilometre high tower that they were going to build in Jeddah. Uh-oh. Quite literally, a castle on the sand. I mean, it’s literally, you’re building castles in the sand. This is a desert. Like if you’re going to build something that high, do it so you can see something, right. We need to get sand followed by water. I mean, I want to do it like and you see the Himalayan Mountains. And India should build it, but they don’t. And then not to be outdone, the folks in Dubai said, “Hey, hold on a sec, we’re not giving up that title to the Saudis. We’re going to take it back.” Dubai Creek Tower was announced to have a 1.3 kilometer intended height, 1300 meters straight up in the desert. This is actually saying something. There’s something going on here. So easy money, yes. Speculative instincts, yes. Hubris, yes. Those are three really telltale signs of excesses.

Meb: It’s as evolved and rational and logical as humans, I think, really like to think they are this genetic wiring of going back to pyramids thousands of years ago and here we are in 2021 and still running through the same scripts that we have been forever. You can dial it down onto a micro-level too, keeping up with the Joneses here in Los Angeles. The housing boom is well underway, it seems like. Talking to my broker friends and every house has 20, 30 bids, all above offer. I can think back to being a child and it being somewhat hardwired, maybe cultural, but, man, that beautiful red Lamborghini Countach of the ’80s, the Corvette, maybe. I don’t know. But it’s funny because I’d started with the stadiums and sentiment’s always challenging for me, but looking at there’s an old Victor Niederhoffer study that looked at stadium naming for public companies and then future performance, same thing with skyscrapers. And not surprisingly, it’s atrocious, but talk to me a little bit about…you had a great book, “Boombustology,” it was a really fun read, thinking about a topic that I think people love to marinate on, which is bubbles. Give us some criteria for how you think about a framework for identifying them, characteristics, all that good stuff, how to avoid them or how, in my opinion, get caught up in them. They’re a lot of fun. I graduated university in the ’90s, my favorite bubble, Internet bubble. And that was a fun time if you were in San Francisco in the ’98, ’99. Talk to me a little bit about it.

Vikram: Before I do that, let me just add one tidbit to your prior question about stadiums and corporations and stuff like that. I just love the fact that Bear Stearns built a monument to themselves. What 2007? I think it was like 2007, ’06, ’07, they had a perfectly capably functional, useful, not even a bad address, 245 Park Av is not a bad address. Great location. They moved two blocks away and built a beautiful, nicer, newer, shinier spectacle at an ungodly cost. And that didn’t end so well. And, by the way, you got this with “The New York Times,” you get a long number of them, but any case. So yeah, look, thanks for bringing up “Boombustology.” It’s a framework and it was designed as a framework for thinking about bubbles because it goes back to a deep philosophy I have, which has infused all my work, which is every lens, every perspective we have is biased, incomplete, and limited. And as such, it’s kind of arrogant to think that one approach is the right approach. And so what we need to do is think probabilistically and layer these lenses on top of each other. And only when you start getting a bunch of lenses pointing in the same insight, can you say, maybe we’ve got something.

There’s nothing certain, we know that. Now, this is a game of probabilities and odds. And so what I did was I started teaching about financial bubbles to liberal arts undergrads at Yale University. I had English majors, biology majors, history majors, as well as economists, computer scientists, etc. And I said, “Look, we’re going to take this issue of financial bubbles as a probabilistic phenomenon and study it through multiple lenses.” And that’s what we did. And so there’s obviously the economic lens, lens one, price action. If you have supply and demand, curves intersect, then you should get a price. But what happens when higher price generates more demand rather than more supply? You normally think more supply should come, higher prices, more supply, less demand. But sometimes that doesn’t happen. Sometimes higher prices get more demand and you start getting a self-fulfilling cycle, so the higher prices, more demand, higher prices, more demand. And so that doesn’t make it a bubble, but it sure sounds and smells like a bubble dynamic and one that we want to pay attention. So I’ll let you just put a checkmark if you see that. It doesn’t mean you got a bubble.

Lens two, what happens if you got capital being invested? So let’s look through a macroeconomic lens. What happens if you see credit conditions such that you get money mispriced or underpriced, generally? It’s rarely overpriced. So if money’s mispriced, it’s overused. So mispriced money is misallocated money. That’s one of the phrases I keep coming back to. And if you see that very visibly in the form of investing using borrowed capital, when there’s already overcapacity, anyone who’s ever been to Las Vegas can go to Las Vegas. And if you were there in 2006, ’07, you knew that there were like low vacancy rates, lots and lots, and lots of real estate development going on, more condos, more construction, MGMs project cities. All that stuff’s going on, but there was no shortage of available capacity and supply, right? So we’re borrowing money to invest in more. That’s not a good sign.

Then there’s a psychology lens, I talked about sort of herd behavior, overconfidence, hubris, etc. When it’s different this time. Usually is different, but the extrapolation of the different things to a different way to think about valuing them, that’s usually problematic. I mean, in all bubbles, you usually have a, this time it’s different story, whether it was going back to automobile, radio, going through obviously your favorite bubble, the internet, sort of it’s different this time, it’s going to change the world. Social media is going to change the world or what have you. There’s always a storyline that’s believable and usually has some kernel of truth to it. I mean, the Internet did change the world. I mean, how many of us buy a book by going to Borders bookstore? Some of the listeners here may not even know what Borders bookstore is. Probably too young.

Lens three would be psychology. Lens four that I talk about in my book is politics. We know there are things like, you know, the Community Reinvestment Act. I think it was sort of…I forget what it was called, but they’re are government policies that actively sought to promote homeownership, that pushed it above what might’ve been natural or normal, creating rigidity and labor market conditions or encouraging banks to lend to not lend worthy borrowers, doing things between subsidies or tariffs, but manipulating supply and demand for political reasons can create artificial conditions where things don’t clear and that creates problems and can create both bubbles as well as busts and sort of confuses the dynamics, but enough to raise your guard and say, “Hey, hold on a sec. There’s something going on here. There’s false propping up of a market or false propping down.” You can think about political manipulation there and the moral hazard it creates. I mean, if it’s heads high, win tails, you lose, Meb, I’m playing that game with you all day long. And, by the way, that’s what some of Wall Street banks did. They played heads, I win tails, you lose, you being the taxpayers of the world or of America in the case as we saw.

And then the fifth lens I use in that book at least is herd behavior. And, you know, you sort of talk jokingly about sort of cocktail party conversations or what the shoeshine boy used to say. But when everyone’s focused on a topic, your broker friends talk about too many bids. That’s the same conversation I’m hearing here in Massachusetts. Houses are going well over asks, 5 bids, 10 bids, 30% of above asks. What? Thirty? Yeah. It went 30. These are the stories everyone’s harping on. Or I just made X million dollars in Bitcoin, or what have you. These conversations, when they capture popular sentiment, they’re usually a late-inning indicator. So what it means is that you basically run its course most of the way, maybe not all the way. I can’t tell you when exactly, but the amount of fuel to pour on the fire is running low. That’s what I described in the book, Meb. And subsequent to that book, I’ve added lenses and there were five lenses and five case studies in the book and the only reason was five was a nice round number. My view is the more the merrier. In the past, I’ve talked about a cultural lens when they seek cultural homogeneity, and you saw that in some of the Asian cultures. You know, there’s other lenses you can bring to bear.

Meb: The ’90s was certainly the most fun for me as a participant and instructive in retrospect. It was certainly painful, the aftermath were many at the time, for me, as well as looking back, I have fond memories, but the favorite profile of mine in your book, particularly for an investment lens that just has so many takeaways is Japan. So the U.S. bubble, stock market bubble in the ’90s, we love talking about long-term valuations while the highest that had ever been before was in the roaring ’20s when the 10-year PE ratio got in the ’30s and then we blew right through that and got to 45, which is the highest the U.S. has ever been. But in Japan, that was quaint. They got almost to a PE of 100. And, again, not a tiny economy, and biggest stock market in the world at the time.

Vikram: It’s even better than that. Think about what they did with the mortgages. It went to 100-year mortgages because valuation gets so high at the spread, like even on real assets, everything. It was ludicrous.

Meb: And that had kind of the trifecta of the kerosene and everything to pour on the fire that you talk about in the book with particularly credit and borrowing, that one, a big real estate and stock market at the same time in commercial real estate too that has had three-decade implications on… I’m a big skier in Japan, and we go ski some of these quasi-abandoned resorts where they built hundreds of ski resorts and golf too. Now, maybe we’ll see all those get put to use after they claim their first master’s title for Japan recently. As you look around from these historical case studies, is it informing anything around the world today? And you mentioned some of the buildings in Asia. Are there any investment markets, anything else that seems to be tripping up some of your criteria?

Vikram: I do worry about the misprice money dynamic, Meb. And I think that surfaces, unfortunately, in lots of places. There’s a reason why U.S. real estate markets are going crazy. I might be wrong, I suspect a contributing factor is the low cost of borrowing money. I suspect a lot of liquidity in the system means banks have to feel like they got to find places to deploy that capital and real estate, historically, before 2008, it was not safe as houses was the phrase, right? I think we learned a lesson. Actually, things correlate there too and the sort of separation of risk and the financial engineering that took place. So I get a little worried when I see things like that from a lens of housing, but then, again, the U.S. markets or U.S. economy might be bouncing back with some pent up demand. And maybe there’s a new wave of government-led investment.

So maybe there’s activity, maybe it’s justified. I don’t know. I’m not about to go and up my real estate exposure at all today. Let me just put it that way, right? That’s a useful topic to raise, Meb, because I think the investing game is about managing the errors you make. My interpretation is that we’re going to all make errors, but we can choose whether we’re going to make an error of commission or an error of omission. And right now the error of omission is to miss gains and the error of commission is to try to ride that last X percent and you go flying off the edge. And I just think there’s times when you want to choose which area you’re going to make and the error to make today, I would suggest is more of the omission rather than the commission error. Sometimes when things are beaten up, you make the commission error. Hey, things are cheap. Will they get cheaper? They might. It’s going to go against me and I’m going to take that risk because that’s okay. I want to get the hit in the bottom and even if I write it down, I’m going to write it up because I feel like I’ve got a perspective that gives me that insight.

And that’s where, go back to your analogy of Japan’s at 100 times. There’s times where certain markets are down mid to low single digits. In the emerging markets, you’ve seen that for sure. And you can say, “Hey, hold on a second. Make the error of commission there. You might not get it right. It’s going to go against you. That’s okay. So that’s one area. Secondly, I think if you look at what’s happening with some of the crypto currencies, which a lot of people ask me about, “Hey, these bubbling, what’s going on?” And I say, “Well, they’re signs of overconfidence, etc.” But crypto currency’s like gold to me. And, again, a crypto is not a crypto, is not a crypto. So we can disentangle that or peel that onion if you want. But generically, those are things I think of almost as anti-assets rather than assets. They’re sort of the alternative to something that you think of as an asset in the sense that one divided by your faith and Fiat currencies can be the way to think about non-printable currencies. And I think of gold or crypto, generically crypto, we’ll get to the specific if you want, as nonprintable currencies. And if they’re nonprintable, then they’re not subject to the political manipulation, they’re not subject to the monetary debasement, they’re not subject to some of these things.

And so scarcity value should, in fact, actually come home, and therefore they should play a role. I don’t know, debate how large a role in portfolios. I’m less concerned about calling things like gold or crypto a bubble than I am about thinking, has Fiat currency become a bubble? Have we gone too far with our belief that we can print, print, print? Maybe not. Maybe the U.S. has this exorbitant privilege of being the reserve currency, the ability to print and people want to take our paper-like, “Okay. Well, if you’ve got that, take advantage of it,” right? Build infrastructure. I’m thrilled to see infrastructure spanning because that…we’ve got a limited runway. Let’s use it to do things that’ll help us in the future. Like infrastructure. Those are some thoughts. I’m sorry for meandering around here. I don’t know if you’re still listening.

Meb: I’m just spinning in my head as you’re talking, thinking about history and we’re talking about building monuments and… But thinking about currency, money has been around for thousands of years, but the concept of our modern system, 50 years for floating currencies? You know, in the scope of human history, not that long. We love talking about trying to derive lessons for investing from history. And even we go back what I consider to be a long way of 100-plus years, but that’s…in the scheme of things, a speck of sand in the hourglass. So, who knows? I always say that things can get weirder and crazier in the future, by definition, 2020 and 2021 seem to be doing a good job of that thus far with GameStop, and Reddit and Wall Street bets, and SPACs. What’s the vibe? You have been a lecturer, you interact with a lot of students and people, everyone talking about that topic. Does yours still?

Vikram: The whole idea of student sentiment and what it telegraphs, it’s an area of personal interest I’ve paid a lot of attention to. And so I remember, look, I was teaching at Yale. I was a Yale undergrad, and I studied Chinese and East Asian studies when I was a Yale undergrad. And that was a contrarian move because everyone thought Japan was taking over the world. It was the early ’90s. Japan’s taking over. Look, they just bought Sony. They’re just buying Pebble Beach. Like they’re doing everything. And I was like, well, you know, China’s got more people, like maybe I’ll study that. It’s sort of more interesting. And so I studied China. The student sentiment in 2008 and ’09 when I was teaching at Yale, the most popular language to study was Chinese. Interesting. The most popular language in the early ’90s was Japanese. Oh, okay. Hold on. What’s going on here? Is it a trailing indicator? Is it an indicator of something else? I don’t know.

The other thing, professionally, when I was an undergrad and even in my early years of teaching, investment banking, consulting, asset management, private equity, those were the hot things. Now, I’m going to a tech start-up. I’m going to go do some science. You’ve seen cycles of that too, right? That happened in the late ’90s. People are like, “Hey, forget about investment banks.” Those are two traditional. Those are stale. Those are risk-averse people go there. I’m going to the start-up land. That’s where the real action is. And so you’ve seen some bouncing back and forth. The other thing I’d say, it’s interesting. I think post the global financial crisis, a bunch of students just don’t seem as motivated. I think they’re self-selecting because they come to study the topics I teach, but a bunch of them seem less motivated by just let me go build a pile of capital and cash for myself. And there’s sort of this desire to change the world.

And some of that’s infused in this values-oriented way through start-ups and social enterprises and whatever else, social investment, or social entrepreneurship, whatever they call it. But there’s a definite noticeable vibe in the student population that, “I got to do something that matters.” And if it’s like,” Hey, I got to do something that’s being done today, but do it differently and greener.” Okay, great. “Well, I want to do it in this way, because this is going to help the indigenous people of blank.” Great. Or, “I want to do something that’s really harming water, and overusing water.” Okay, great. But there’s this sort of do-good angle to it all. It doesn’t mean they give up on the idea of making money, they just want to make money doing something positive. And there’s more of that, I sense.

Sponsor Message: And now a quick word from our sponsor, the Bitwise 10 crypto index fund is the world’s first and largest crypto index fund. With nearly a billion dollars in assets, the Bitwise 10 crypto index fund offers diversified exposure to the 10 largest crypto assets, including Bitcoin, Ethereum, and rapidly emerging defy assets. The Bitwise 10 crypto index fund was created by experts to help financial advisors and other investors allocate to crypto. The fund rebalances monthly, so it remains up-to-date with the fast-moving crypto market. Shares of the Bitwise 10 crypto index fund are now trading under the ticker symbol, BITW. Shares may trade at large and variable premiums and/or discounts in net asset value. For more information, check out www.bitwiseinvestments.com and ticker symbol, BITW. And now back to the show.

I talk a lot about this on the podcast where I’m pretty vocal about the broad U.S. stock market and kind of the way that we see it as being expensive and lots of sort of ancillary sentiment indicators, starting a fire, including one where I tweeted about stock market valuations last night and everyone was like pretty angry about it, responses. Maybe the people that agree just don’t respond, but all the responses were kind of angry. I said the U.S. stock market is hitting a valuation level. And we’ve only seen like three times for the big indices, so we’re foreign developed in ’88, ’89, ’99. Emerging hit it in ’07. And the late ’80s was really that Japanese story, right? Europe and elsewhere was reasonable. And then the U.S., of course, in ’99 and then today, not even in ’29, I said, usually, at least historically, the future returns were zero, and man, people got kind of angry about it.

Vikram: As you asked in an earlier question, I didn’t answer it. The whole idea of SPACs and what’s going on in SPAC land, it’s funny. On my webinar series, and I have a webinar series and podcast I host and I had Jeremy Grantham on in December and he was fabulous, right? He’s like SPACs should be illegal. This is regulatory arbitrage. And he literally, I think he…I don’t know if it was during that webinar or in a private conversation I had with him, but he talked about, he’s like, “SPACs are the modern-day Mississippi company-type stuff. This company is so good and we’re going to make so much, but we just can’t tell you what it is yet.” That’s the SPACs story. This is such a good story.

Meb: I mean, I get the various parts of the SPACs story and why people would participate in each part. You certainly have a history of SPACs being a total cash incinerator post deal consummation, will this be different? I hope so. Maybe the pedigree, and the companies, and the selection incentives aligning, hopefully, that creates a better outcome for investors. But historically, it’s been an absolute dumpster, like minus 70% or something is the average post-consummation return. So listeners, be aware. It doesn’t mean you can’t make a lot of money there, but it’s been crazy to watch.

Vikram: Yeah. I mean, the one thing I’d add to that, is some bubbles leave really good wake for society. Capital gets channeled in ways, over-channeled, misallocated, but generate some decent long-term possibilities or platform capabilities for others to build upon. Sometimes they have societal value even if it torches investor capital in the process. So you don’t want to be part of that torching, but you can understand why they actually do good for society. I mean, the classic example that I like to use is fiber optics, right? And in ’99, 2000, we built all these fiber optics companies and a lot of them went bankrupt on a global crossing level. All these companies that laid a bunch of fiber all over the place to enable high-speed Internet upon which business models like Netflix grew. And you couldn’t have that without that and yet the investors in one segment that allowed the infrastructure to get overbuilt provided the overcapacity which enabled the low cost because there was overcapacity that allowed new business models to form on top of that. Are SPACs going to cause that with, I don’t know, an area like space? Will they lower launch costs? Will they generate more activity in out of space? Will they enable the commercialization of space? Probably. Do we need to have 500 SPACs chasing a few? No.

Meb: Look, you have really expensive, large-cap market-weighted stock public in the U.S., fine, but the amount of innovation and amazing companies, particularly on the start-up level that I feel like you’re seeing this sort of…American Renaissance would be the wrong word, but because so many of these companies, and you can start with the late ’90s, but into the past decade of start-up founders getting liquidity and then seeing the pollination across them being start-up investors and more people getting excited about that, I love and hugely bullish on, but my nervousness is that people get drawn in at the perfect wrong time, which seems to be something we can never avoid. I mean, it’s over, and over, and over, and over again, and I don’t know how we can build the guardrails to avoid it, but it seems like if you look at these stocks as a percentage of household assets, it has like an almost perfect correlation to future returns on the stock market. And we’re second-highest we’ve ever been right now. It’s three months delayed. We’re probably already past it given the market’s up this year. I don’t know if you have any thoughts as more just of a ramble. It’s more of a rant than anything.

Vikram: No. Look, I understand what you’re saying, but I think the societal value argument is an interesting innovation. I agree with what you’re saying here, that that sort of thing, but it is this dynamic. I think you’re right. That it can suck people. And, you know, a lot of people say there’s greed and fear. And as a bubble thinker, I obviously think in terms of greed and fear, but I also still say regret kicks in too. Greed, fear, and regret. So it’s okay to be greedy sometimes, it’s okay to be fearful sometimes. You want to try to be contrarian if possible. But the real power that sort of becomes problematic is the regret that, “Oh, my God, Meb just bought that SPAC and he made 200%, God dang it. I wanted to be in on that. Now I regret I didn’t do it with him.” Regret, envy, jealousy. I don’t know. Call it what you want.

Meb: You can say FOMO. You can say FOMO.

Vikram: FOMO. Yeah. I call it FOMO on my book in terms of why people tend to do a lot of irrational things. You need to get on board. But more than FOMO, FOMO implies a proactive jumping in. It’s the fact that it’s happened makes it more likely for others to go like, “You just made X percent. That is ridiculous. Now I want to get in.” FOMO is, “Uh-oh. I’m worried Meb’s didn’t make X percent and I won’t.” I’m saying like, you’ve already made it. Now I’m annoyed. And so now I come in and I’m a second layer. And then once you run out of people to join the party, it’s over.

Meb: Buffet or Munger. I can’t remember which one said it, probably Munger where he said, “It’s not fear and greed as much as it’s envy,” which is exactly what you’re talking about. Like name something worse than your neighbor making money on dogecoin. That’s literally the worst thing could happen on the planet or someone you don’t like making a ton of money. That’s even worse.

Vikram: No. That’s actually a better, Meb. I think he’s saying it more eloquently than I am. I’m dancing around Danny Kahneman did some work on regret and some of his early work actually was around regret rather than the irrationality. He said, “Is it regret that people try to minimize. Is that the explanation for rationality?” Is that everyone’s literally trying to minimize regret. Greed, fear, and regret, or how I think of it, but I think you’re right. Munger’s right. Yeah, a better description. Envy is probably more accurate.

Meb: We love as institutional investors to kind of look down on retail and say, “Look how silly these guys are.” But in reality, the sort of herd behavior happens just as much in our world just with more commas and fancier names, and committees, and everything else. If you look at how the big institutions invest, they kind of all chase each other and seemingly always do the wrong thing at the wrong time. You put out another great book and as a bridge, maybe we could talk a little bit about… You touch on passive investing and its ascendance over the past 50 years. Love to hear your thoughts there and kind of bridge over from the sort of herd mentality to how in the world can we start to think for ourselves and not just chase what our neighbors are doing.

Vikram: From what I understand your views are, from having what I’ve heard you say and read, etc., I think you and I are aligned on this passive thing here. Passive investing is an attempt at minimizing costs. That’s been the driving consideration. And, by the way, cost is not what any investor goes into allocating capital for. You’re not in there to minimize cost, you’re in there to maximize returns. Costs come out of the returns. And so in so far as cost-effective returns, yes, we want to think about it. And I think that makes a lot of sense to think about costs. And one shouldn’t blindly pay up for things where you can get cheaper. So I’m with you on that. The passive concern I have is this. Passive investing was a really good idea when very few people were doing it because you could ride shotgun, if you will, on the research endeavors and the battling out that resulted in the price. People battle for prices, prices are accurate, we get to something, and there’s this fundamental underlying premise upon which the entire passive investing edifice is built, which is prices are correct. And they’re correct because you have active investors battling it out to determine a price. This is logical. I believe it, it makes sense.

Now, what happens when passive investing grows and grows, and grows, and grows, and grows, and grows, and grows as it has, suddenly, the driver of prices is no longer a battling of active investors, it’s flows. It’s inflows and outflows and everything moves together. And you can see this in some of the correlations statistics within markets. You can see it in other data. The fact is passive investing is, in fact, distorting the price mechanism. And so this logic that you should, as a passive investor, be a price taker has inadvertently, and frankly, without the knowledge of most people who continue to participate, turned into a logic of price making. Wait, I thought it was a price taker, now I’m a price maker? Yes. You are. And, in fact, when you throw on institutional capital with more commerce, as you say, that exacerbates that problem. It doesn’t make it easier. Doesn’t make it less extreme. It makes it worse. And so the fundamental logic of passive investing is to buy and sell independent of price because price is right. Call me old school, Meb. The idea of buying and selling independent of price is not something I’m genuinely comfortable with. I like the idea of buy low sell high.

Meb: I think if you pulled the majority of investors that are invested in passive indexes, market cap weight, and to me, that’s the really only passive index. The term has been somewhat polluted over the past decade because people have co-opted passive just to mean anything rules-based so you can have a ESG Brazilian, small tech passive fund. And in my mind, that doesn’t really…what we’re talking about. But if you were to poll most people and ask them if they actually knew what passive investing was, I think they would almost universally assume it has to do with the size of the company based on revenues, or earnings, or something tangible and fundamental, but in reality, it’s literally just the price of that stock, I’m sure is outstanding. And if you would ask people then is that a reasonable investment methodology, I can’t imagine anyone saying that makes sense. Now, it works overtime for lots of reasons, but is fairly suboptimal and at times, and particularly with booms and bubbles, can be severely distorted because there’s no tethered to fundamentals whatsoever.

Vikram: Well, it’s even worse than that. I think there’s a element of momentum embedded because of the market cap-weighted, right? So incrementally, Apple’s a huge component, incrementally there’s inflows because something having nothing to do with Apple, and so there’s buying. Incrementally, Apple gets weighted slightly more in the index tonight compared to tomorrow, all else equal, which I get is not always…it’s rarely the case. Never is all else equal, but theoretically, all else equal, which means that tomorrow there’s buying in Apple to get that waiting right. And so there’s this slightly ever so subtle momentum element to it that’s based on flows.

Meb: The big takeaway in my mind so much is also to be aware of it, be cognizant of it also in really anything flows into anything change the valuations. A great example that, you know, the media is certainly talking about now is Cathie Woods ARK phenomenon where it’s raised $50 billion. And so flows into what she owns is, of course, going to drive the prices up just like when people get excited about India and China in the mid-2000s. Drove those prices way up when the endowments got…and institutions got excited about buying commodities, you know, after the 2000 buzz. That drove prices up. And some asset classes are a lot bigger than others and could absorb it better than say maybe, I don’t know, non-tangible tokens and people buying art. But I think it’s useful because when the opposite is true, when the flow’s reverse, the same effect happens, and we’ve seen this a million times in history.

Vikram: These, in fact, I think passive has now become because of its impact on flows and flows impact on prices. People call it boom bus. You could just say, it’s a virtuous vicious logic. It’s going to be virtuous, higher flows, more price action. Higher flows, goes up prices, etc., until it doesn’t. And then when you get the opposite, you can see that. Now, it could be really profitable to get ahead of big flows. If you see big flows coming or you can identify where there’s going to be big tectonic shifts, you get ahead of that. And that could be really, really, really lucrative for those who do get ahead of it.

Meb: That’s the sort of trend element that I think is useful. The challenge for many people, of course, is they’re trying to subjectively time when these things happen, which is, of course, really, really impossible or hard to do. I like coming into it with the set of rules and guide rails, but that’s just me. Talk to me a little bit. Are there some hacks, are there some ideas, suggestions, like how do we get away from this herd mentality? How do we think for ourselves, that we can apply to not just investments, but life in general?

Vikram: It’s interesting because the logic of that next book, “Think for Yourself,” came out of the logic from “Boombustology.” And really just fun stories. So let me share it here, if you don’t mind. So I was running around the world, talking to sovereign funds, talking to endowments foundations, describing the Boombustology framework, talking about how China had overbuilt, etc., throughout 2013, ’14, ’15. And an older gentleman in one of my speeches comes up after and says, “Hey, Dr. Mansharamani, I’d love to keep in touch. Can I get your contact?” Fine. I give him my card, thought nothing of it. And he’s probably in his 90s. Two years later, he calls me up, says, “I want to talk to you. Remember I met you at the conference.” “Oh, of course, sir. Yes, please. I’d love to talk to you. How are you doing?” And he says, “I’m good. I just want to thank you.” “Why is that?” “I’m going to thank you because the framework you presented helped my wife and I navigate a cancer diagnosis.” And I said, “Wait, what?” “I was talking about, finance, bubbles, economics, what are you talking about?” He said, “No, you’re not. You’re not talking about that.” And I was like, “Okay. Let me just…my ears perked up.” I was like, this guy is just wreaking of wisdom.” I want to listen. I want to learn. And he says, “No. What you have is a framework for thinking about navigating uncertainty. You have a multi-lens logic that says every single approach is imprecise and incomplete. And so we took that same fundamental logic to thinking about how to navigate medical decision-making and it helped. So thank you.” And I was like, “Wow.”

I then took a couple of years at the Harvard Kennedy School and what came out of it was this idea that became the book, “Think for Yourself.” But look, it’s ultimately the same thinking process that I’m suggesting with the study of bubbles, multiple lenses, triangulation, an understanding that a generalist logic might prove better to helping you think about probabilistic phenomenon than a specialist logic. I realized this is going to be mostly audio for your audience here, but I’ve got a fox that I keep here over my desk because a fox is a generalist, those lots of little things. It’s messy here, but nonetheless, down on the ground, I keep a little hedgehog because the hedgehog knows one big thing, but that’s lower status in my world. And so I think it’s useful and constructive to think like that regardless of what we’re talking about. Understand your perspective is limited, biased, and incomplete.

I mean, I love reading David Foster Wallace because he’s sort of a fabulous way to capture some of these things. Like he describes in…I forget in one of his talks or one of his stories or what have you, we’re all literally self-centered. We literally see the world from our eyes. Our perspective is based on where our head is and everything revolves around that. Well, understanding that that’s not the complete story or picture can help you be, I think, slightly more humble and appreciative of the fact that there are other ways to see the world. Also being a generalist I think helps you think for yourself because you’re more open-minded to hearing other people’s perspectives. Why is that? Meb, I can’t tell you the number of rooms I’ve walked in where I know right off the bat everyone around the room knows more about something than I do. I’m not an expert on anything actually. So when I got a microeconomist talking to me saying, “Okay, I’m going to listen,” because like I know he knows more than I do. A macroeconomist knows more than I do. A psychologist definitely knows more than I do. And I view myself, and this is sort of pulling it all together. Think of it as you’re putting together a mosaic of the world or the worldview that you’re trying to form and you take the tiles from the experts who are useful, the specialists who have more domain knowledge than you do, but you’re painting that mosaic, putting together that mosaic. You’re not just going to paint it, putting the tiles in place. And so the phrase I use in the book is, you know, we have to learn to keep experts on tap, but not on top. So don’t outsource your thinking. Take insights, but own the context.

Meb: Think of yourself as an interesting, because most people assume it’s contrarian by nature, but not always. Your conclusion could result that you’re part of the herd, but it often will result in something that is lonely. That feels scary and uncomfortable for many people, right? We’re social animals. We want to be, you know, it’s fun if you’re watching a game, you know, or be cheering as part of the crowd, like that’s in our genes somewhere. I’m a Broncos fan and unless you’re like one of my short-seller friends who’s just wired differently, your brain just works differently, it’s hard to stand apart from the crowd when that does result, but in many times, I think that is where often the real insight comes.

Vikram: No. I think you’re right. I think sometimes it’s interesting, thinking for yourself doesn’t mean contrarian. It can be contrarian, need not be contrarian. So I think you’re right. I agree with what you’re saying there.

Meb: In that vein thinking for yourself, I like to read your future predictions. Is that what it’s called? Your forecasts, which I love that you ended the piece with the last one quoting Galbraith saying, “There’s two types of forecasters, those who don’t know and those who don’t know they don’t know.” Which if you are on Twitter, listeners, there’s really only one type of forecaster and that’s they know the future perfectly. Pick out a couple, tell me, what’s going to happen in the next five years? And why that timeframe?

Vikram: Yeah. It’s interesting. So funny, I had a call with some of my consulting clients this morning and it’s corporate America sort of traditional big real companies. They were talking to me about their five-year plan. And I was like, “Why do you guys have a five-year plan?” And they said, “Well, you know, we sort of capitalist sort of tilt of our head to the Chinese and the communist systems of five-year plans. I don’t know.” They didn’t even…no good reason, right? Same reason. Why do I know five? I don’t know. There’s not a really good reason other than I don’t want it to be one-year. I don’t want it to be three. I need to look out further. And part of that is, I think when you’re looking at long-term trends, you can actually possibly see signal with a little bit less noise. The short-terms gets very noisy.

It’s random, this plays a larger role there. But over the longer-term, we call it five years, possibly longer. I think some of these signals emerge. So I’ve been writing these predictions up as a tool for myself. They started really, Meb, as Vikram’s going to take his ideas and congeal them. It started in 2015, really to just help myself get my arms around, “Hey, how do I think about what’s happening on that timeframe?” And so I started doing in 2015, done it every year since, and I put them out there publicly and let people comment and still with them. You know, it’s funny, I had in 2015, in my first set of predictions, I said, “The risk of a global pandemic would occur.” I thought it would be MERS, actually. I actually put MERS in parentheses with a little question mark there. Obviously, it was COVID, but something like that. There are a whole bunch of things I talk about. The ones that currently, and I don’t know whether they’re the most recent one, but they’ve been in the last couple of years and I would say are worth thinking about, that they are ideas that come to me through my process of trying to think for myself, connecting dots, looking at different perspectives.

The first is India. People tend to really have binary feelings towards India. They love it. It’s the next China, right? Tim Cook says, you know, “I’m not convinced.” The idea of farmers being taken to factories instead of five bushels of wheat making 500 iPads, getting huge surplus, sharing it back with a worker who then becomes a consumer and you get a large middle-class that sort of development model, I don’t think it’s going to work in India. I don’t think it’s going to work for one reason. You got robots, you got technology, automated manufacturing. And so you may get manufacturing in India, but you’re not going to necessarily get equivalent number of jobs. So that process of industrialization-based development, I think that game’s over. That gig’s up as a result of that. I think we haven’t done the thinking academically or even just as a society about how to think about demographics properly.

This idea that’s still thrown out there, there’s a demographic tailwind. What does that mean? Well, what does it mean when labor isn’t a value? Labor ends up being a liability. Oh, I got lots of young people that used to be a real value. Cheap labor. Good. Throw a little bit of capital, labor-plus capital, productivity. Fabulous. Well, hold on a sec. Now, what if I just need capital? I don’t need as much labor. All that extra labor, cheap, it’s actually a liability. Now I got to find them jobs. There’s nothing for them to do. Oh, no. What do we do now? And so I think one of the real risks from an economic development perspective, because of technology, because of demographics, etc., is India becomes a perennial disappointment. And that has implications in a whole bunch of ways. Now, interestingly enough, I think India has got a really interesting geopolitical spot, playing off this, U.S.- China rivalry. We got some stuff going on with Russia here, Pakistan, maybe India can sort of, “Hey, we’re the world’s largest democracy. Come help us.” So the geopolitics of India’s sort of a little bit confusing to me, honestly. It’s above my pay grade. I can’t figure it out. But the demographics, technology, and economic outlook there seems to point to headwinds more than tailwinds. So that’s one idea that I’ve been talking a little bit about, about India and how I think that plays out.

Meb: That’s interesting because I think a lot of people, the common accepted belief is that demographics are, you know, destiny. That it’s a massive asset of having all these young people and less old people. Like that seems like an almost universally held belief.

Vikram: I’m going to suggest the opposite, Meb. When I think for myself, I try to do. Most people think India’s got this demographic engine behind them, lots of young people, smaller percentage of old people, less dependency, etc., but they’re missing the point. You got to get jobs for them. And these sort of economic engines are changing. Whereas you look at Japan, you say, “Oh, my God, all these old people, no labor coming in.” Let me ask you this. Where are robots and automation going to be less socially disruptive? You can bring robots into Japan, no problem. Robots are increasingly the equivalent of labor. And so you can change your demographic pyramid however you want. You got holes because you’re upside down, fill it in. As you get more technological innovation, that becomes increasingly possible. And so our whole study of demographics and how it interacts with economics and the “destiny” may, in fact, be 180 degrees wrong at this point. I’m not sure. I’m still doing work on it. That’s one of the ideas that I talk about in my predictions.

The other one that I think it might be fun and interesting to talk about here with your audiences as a result of this U.S.-China rivalry, I do think all these supply chains shifting back or getting shorter and sort of moving. And the storyline is pretty simple. I’m a global manufacturer. Let’s say I’m an American company and I get this little piece, this component, this widget made in China and it goes through a whole bunch of other countries, but it ends up here and it costs me $5. And it’s a key component. Then there’s the trade war and it says, “Oh no, this $5 widget is going to be $25 now because of the tariffs. It’s okay, it’s disruptive, pinching my profits, but I’ll adapt. I’ll do what I can, but I’m a little nervous about my supply chain there.” Then COVID comes. Now I can’t even get the widget, $5 or $25 a widget. Not available. Okay, well, that doesn’t make me feel good. I got to think about suppliers. Throw on top of it the ESG mandates. Well, people are saying, I need to have a shorter supply chain because supply chain length is correlated with the carbon footprint. Okay. So now I need to bring supply chain close to home. Well, there was tax arbitrage cruise. They used to add the value there because U.S. had higher taxes, add the value there, lower value add here. Therefore, well, hold on the U.S. just lowered tax rates. Now there’s no tax arbitrage. That’s okay. There’s labor cost arbitrage. Costs a lot of money. Well, the labor component of these goods is falling because technology is doing more of the work.

So that value is gone. National security implications now click into play, U.S.-China rivalry, whether it’s tech component, back doors, firmware, uh-oh, you know what? We’re heading towards not just supply chains shifting as I think is well thought out and well discussed. I think we may even be headed to two separate global economies, two separate global economies. There’ll be a Chinese-led ecosystem and a U.S.-led ecosystem. And if you don’t believe it, I’ve run around and I’ve talked to countries, senior government officials in different countries and nobody likes this idea. They want to be able to play the Chinese market and also have U.S. political and military coverage, if you will. And then I ask them, “Okay. That’s fine. It’s a great ideal. I know you want it. What telecom equipment are you installing for 5G?” Okay. Maybe you’re going to keep this at 6G. At some point, you’re going to choose. And when you choose, you’re going to choose an ecosystem in that process, like it or not.

Meb: I was going to say the modern Betamax question. I was hoping you were going to talk about Ursa major technologies and UFOs. We’ll save that to the next conversation. Vikram, you got a curious mind. You’ve done a lot of great writing. As you look to the horizon, what’s got you excited today? Anything you’re scratching your head about? Any projects you’re working on? Any new classes, seminars? What’s on the frontier?

Vikram: I am teaching a class right now at Harvard called humanity and its challenges. And it’s a class that looks at the world’s toughest problems by using surprise, surprise, my sort of approach, which is multiple lenses, multiple angles, but also a systems-thinking approach, which is to incorporate feedback loops. So when you push here, not just, “Hey, look at what I did by pushing,” where’s the reaction force coming and where’s that surfacing and what is that going to cause? So it’s thinking not only through multiple lenses, but also feedback loops to understand where some of the impacts may surface. So some of the cases, and again, I’ve been teaching this class at Harvard since 2017, actually January ’17. We looked at global pandemic risks, which students laughed at in ’17, ’18, and ’19. They don’t laugh anymore. We look at technology and jobs, we look at capitalism and inequality. We look at privacy and data. We looked at a whole bunch of things, energy dynamics in the environment, climate change. We looked at space and the multiple dimensions of space. I find that fascinating, whether it’s commercialization, you mentioned Ursa Major, but the lowering launch costs, what is that going to do? And what’s happening with not only commercialization and that kind of stuff in space, but also like sovereignty. Like if someone goes and starts mining the moon, is that just a free for all? Is this like we just go take or is there some governance structure that’s going to emerge?

And going further, so there’s technological innovation, there are economic issues, there are political issues, there’s social and moral issues, who gets to go to space first? Is it going to be Elon Musk and Richard Branson, they get to go take their joy rides in space because they’ve got the capital to do so? Probably. But, you know, at some point, when does it become equal access? Just because you asked, I got to drizzle this last tidbit in about aliens. There’s a colleague of mine. I don’t know him well, I don’t know really at all, at Harvard, Avi Loeb, who wrote a book called “Extraterrestrial.” She talked about something, and I’m not going to pronounce it right. But Oumuamua, which is this structure that came into our solar system and left. It had luminosity that suggested it was shinier than rocks. It didn’t have a tale of exhaust, like some comets do, didn’t have a shape that we’ve seen before. It left at a speed that is not accounted for by its incoming speed and gravitational moves, so the math didn’t work and it’s believed it could be possibly some form of alien technology. And the reason I bring that up and when I think about space is the impact if it was determined to be alien technology, I think could really help all of us here on this planet look beyond our differences and find some of our similarities. I mean, suddenly it’s not me, Vikram, versus you, Meb, or me, an American versus them, the Chinese or etc., it’s we, the humans. And that I think could be socially really powerful, whether or not we ever interact with aliens.

Meb: It sounds like the plot of Will Smith’s “Independence Day.”

Vikram: Yeah. Exactly.

Meb: I saw that at a drive-in in Colorado. Drive-ins kind of had a nice little renaissance, I mean, when it came out, by the way. Drive-ins had a nice renaissance here during the pandemic. That was like one of the only things you could do in Los Angeles for that period when everything was totally shut down. What do we go see, “Ratatouille?” I got a 3-year-old, so my film options are limited. You know, that concept, what you’re talking about, first of all, it’d be an interesting book or series if you were to work on it. I actually used to think of someone like a really interesting book would be grab 50 thought leaders and ask them simple questions, what’s the best idea in the world to change the world? What would you do? You got one idea, what would it be and how would you implement it? What’s the biggest problem? How do you fix it? Some pretty diverse opinions. So I don’t want to work on it. If you do, let me know. I’ll contribute. Vikram, what’s been your most memorable investment? Anything come to mind over your career? Good, bad, in between?

Vikram: Yeah. You know, it’s interesting. I was a kid from a lower middle-class family. Went to college on financial aid as maxed out on the college loans, etc. And in 1993, I remember meeting a guy in New Haven. Frank Mashinsky is his name. I can’t believe I remembered it. Anyway, Frank was a great guy. Got to know him well. And he was working on this company. He’s a computer scientist guy. He’s working on his company, says, “You know what, we’re going to solve this problem. There’s a gigantic ticking time bomb.” And he had like this religious fervor to him about this problem. And this problem was the year 2000 bug that’s in all the software and we’re figuring out how to identify where the year 2000 bugs are and we’re going to automate that identification process which is going to avoid massive and companies are going to pay us. And so this was a little penny stock. And, you know, I spent a lot of time getting to know them, figuring it out. And then I borrowed on credit cards money and I went to the Fidelity physical location in New Haven, literally in there and I invested in this thing, watched it like a hawk, would like talk to him and the CEO like on an almost daily basis. What’s the update? What’s the update? Because borrowed money, like I don’t have it. And I’m on financially. Anyway, long story short, it worked out beautifully. It was a company called Aladar Software back then. But Aladar went from… I think I bought like 20 cents and I think I sold a bunch of it a couple of years after graduation for 20 bucks and got myself out of student debt.

Meb: How do you have the fortitude to hold, because I mean, this is actually a great example. I mean, how many young investors with the debt you mentioned, something doubles. It goes from 20 to 40 cents. I mean, elated. Like that’s the happiest you’ve probably ever been. And God forbid you held it until it goes to two bucks. That’s a 10 bagger. You’re rich. It’s a hit the lottery, basically. And this is something we talk a lot about where you look at these compounders over time, did eventually to 5, 10, 50, 100 baggers status. It wasn’t a smooth ride. What was the experience like? Do you remember? Were you like checking this every day, walking down to Fidelity, harassing everyone?

Vikram: You had to use phone calls to call in and you have to type in the ticker, but and 1 and then like 333 to get the next ticker, four.

Meb: That was like the big innovation, by the way, when you could actually do the touch-tone.

Vikram: This was pre-internet. Some people forget this. They’re like ’92, my kids are like, “What’d you do?” “I didn’t have email then.” “So how’d you meet people?” I said, “I didn’t have a cell phone. You told people you’re going to meet him at 5:00, you went there, they want there, at 5:15, you leave.” “What?” No. So it’s interesting, the psychology comes into play. And I think this actually helped me tremendously. It was very simple. I waited. Once it doubled, I took half my money off and I paid off the credit card loan. That was it. And then I’ve said, “All right. It’s out there. It’s out there and it’s either going to have an impact or it was house money.” So the psychology problem, which actually was probably imprudent in retrospect, I probably bore a lot more risk than I shouldn’t have actually. It worked out, but, you know, sometimes things work out for the wrong reasons. This was probably a lot of luck after the initial success that let me capture more because I just stuck it out because I was like, “Oh, it’s house money. What happens if I lose all? So what?”

Meb: YOLOing before YOLOing was a thing.

Vikram: It wasn’t house money, right? It was my money at that point. It wasn’t house money, but I used to say, “Oh, house money.” You know, I was what? Geez, I guess I was 22, 24 at that point, I was selling it and I thought it was the best thing since sliced bread, because I’ve now got rid of all my loans. I got to zero. Hey, that was a win. Balance sheet got to zero.

Meb: No better feeling than clearing that debt out, that’s for sure. Vikram, this has been a blast. Where do people go? They want to read your predictions for next year, they want to learn about UFO’s, what’s the best spot?

Vikram: You know, so I’d say, look, my website’s probably the easiest place to connect with me. It’s just www.mansharamani.com. But I’m also on LinkedIn. And, in fact, for those that are really curious, my LinkedIn profile has a hundred and some odd articles I’ve written about a lot of the topics we’ve talked about today. I put my predictions up there. It’s actually formatted a little nicer than my own websites. So it might be easier on the eyes to go find the content there. And I’m happy to connect with people on LinkedIn there, but I’m also on Twitter. It’s just my last name, Mansharamani.

Meb: Listeners, links to the show notes, mebfaber.com/podcast. Vikram, thanks so much for joining us today. It was a blast.

Vikram: Awesome. Thanks, Meb.

Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at feedback@themebfabershow.com. We love to read the reviews. Please review us on iTunes and subscribe the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.