Dr. Alan O'Sullivan

So my pre-mortem, if I'm again sort of too cautious for the next decade here, would be that the AI story just will have such legs that we are going to have so strong growth and even maybe richening equities from these already rich levels because of that

That strong AI story, that's a pre-mortem.

It could happen.

A hundred years of data says that it's unlikely, but the story is powerful.

And I understand that many people are seduced by it and they might turn out to be right.

So there's a humility.

So I think it's a nice contrast and there have been many academic papers recently looking at capital market assumptions and finding that institutions are sort of more rational in the sense that they sort of act along the lines of these objective measures.

In reality, I do think that many investors, many institutions also have got some extrapolative tendencies and they've been proudly not underweighting US and feel very good about it, fully understandable.

But that contrast has been interesting.

And I do think that there's something that the organizations...

have read the academic stories of how higher valuations should mean lower expected returns and the empirical studies that says that over the last 100 or 50 years that has tended to work out like this.

Whereas for most retail investors, they haven't read the theories and they haven't read the evidence.

And they go with, like, I tend to contrast this with Kahneman's fast thinking and slow thinking.

So Kahneman's fast thinking is just extrapolating what comes to you naturally.

And I think that's where most retail then tends to go, or average, let's say, tends to go, whereas organizations have got more time and resources to do this sort of slower, more deliberative thinking, which tends to lead you to this kind of more contrarian and more value-oriented approaches, right?

And sometimes it works to their favor and for a while it doesn't.

So it goes.

So it is beautiful how you can use this survey data just

Just look at the 10-year yield and decompose it into those three parts, you said, by having a survey of inflation expectations and rate expectations for the next decade.

And that type of decomposition told that all three parts were coming down to all-time low levels pretty much in 2021.