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Chapter 1: What is the main topic discussed in this episode?
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Pushkin. The Unhedged podcast is on the road and we have a live audience. Live audience, say hello. Hooray! We have been allowed out of our sad, grey audio studios and come here instead to a fancy kind of loft space in New York City for the FT Weekend Festival.
Behind us is a huge window with a skyline of New York and patches of sky as blue as the Lincoln Memorial Pool was before the Antifa algae turned up. I am Katie Martin. I'm a markets columnist at the FT in London. I'm joined by Mr. Robert Armstrong. Rob, say hello.
Hello. I want to say a special thank you to everyone in the audience for not going to the wine tasting.
Yeah, I don't know what it says about us that our colleagues, who I previously thought were friends, put us for this session alongside the wine tasting session. Anyway, we'll quiz them about that later. Luckily, we've got some brains on board. FT readers will be familiar with him. It's Rashir Sharma, who is chair of Rockefeller International and author of What Went Wrong with Capitalism.
It's a long book. Rashir, it's so great for you to come and do this. Thanks so much for joining us.
Well, thanks, Katie. Rob's been obsessed with how many people we'll have in the room. And we've done okay. Pretty good turnout. Yeah, this is good. So far, so good.
This is the hardcore. So, look, this is an opportunity, I think, this session to kind of step back and take the temperature of what is going on in markets. It's a mistake to think of markets as people. They don't want to do anything. They just do what they do. But they really want to go up, right, at the moment. Stock markets really want to go up.
There's a kind of feeding frenzy vibe in stocks at the moment. There's almost a kind of last days of Rome sort of feeling about stocks. You know, like that kind of crypto mindset that it just seems to have settled in across sort of traditional markets. So, like, Rashir, you've been bobbing around markets for a long time. How weird is this current environment to you?
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Chapter 2: How do current market conditions reflect past financial bubbles?
So they're all being rewarded for having created a tech stack. Then you have what I call the followers. These are countries which don't have too much of great technology of their own, but they're building data centers and other things to feed the ecosystem. Malaysia, even Mexico, Thailand, Singapore, these are countries. And then you have AI losers.
Every time there's a technological revolution, Europe is always in the AI losers basket, right? So that's what happens. With the only notable exception being the Dutch because of one company. ASML. Yeah, ASML. And then there is the real losers. And this is how quickly narratives can flip. And this is something we have to all keep in mind. India, for example. Right?
Like, this was the big celebrated country until even a couple of years ago on a high.
It was the hottest stock market in the world for a couple of years.
The hottest stock market in the world. The only market keeping pace with America. All of a sudden, last two years, in dollar terms, about the worst performing stock market among the major markets in the world. Because not only... don't they have any of the AI hardware, which is what is driving markets today?
But they also have industries like IT services, which has seemed to be the wrong end of the AI wrecking ball. So Philippines, Indonesia, India, all these markets, nobody wants to touch them. They're tech outsourcing markets. Tech outsourcing markets. Yeah, yeah. So I think that what we have is this AI world order in the world. But once again, this point about narrowness, dispersion,
99, it was even worse, right, in terms of what happened in the last six months, last nine months, the dispersion, the narrowness of the markets, what was driving it was even more extreme in some cases. So that's where you have it.
And yet, bubbles, you know, like feel best, like at the end, because the NASDAQ, like as you know, in October of 1999, till March of 2000... I was only four years old, yeah.
Right.
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Chapter 3: What are the four defining frameworks of a market bubble?
And I said, look, I'm not here to give financial advice. And if I did, it would be terrible. But it's still very difficult to come to any conclusion other than ride this thing for as long as you can, buy a diversified bucket of stocks, do it passively, do it cheaply, and just sit on it until it goes wrong. I mean, it's hard to come to any other... I think you're right.
You know, with the proviso, the old cliche, which is not an old cliche in my case, it's reality in my case, is that more money is lost getting out before the bubble than is lost in the popping of the bubble. And so the worst thing that happened to me in my life as an investor... is that I got the 2008 crash just about right.
And so I had all my money out of the market, down the market goes, and I had the fatal thought that I understood markets as a result. And over the ensuing decade, I set more money on fire thinking that I understood how markets worked than I had saved in the first place by a factor of two or three. Right.
So you can't like it's just not a strategy to not participate because then, you know, as Jeremy Grantham likes to point out, you have to make the decision about when to get back in and you're going to screw that decision up, too. So I agree with you. You have to be in. We have a you know, we have a genuine expert here. But you do need kind of sleep at night capital. Right.
You need cash, enough cash in your account where you're not. Reading the Financial Times in a state of emotional hysteria every day, I would say.
But if you had all of your money in U.S. stocks, and you'd gone into a coma in March 2025, and you'd missed Liberation Day, and you'd missed the war in Iran, and you woke up today, you're up about 30%. Yeah. Happy days. What are we doing here, worrying about all this stuff? But so, Rashir, you spend a good portion of your life advising the rich and powerful on what to do with their money.
We are obviously all in this room very rich and very powerful.
I can tell just looking at you.
Look at them. Look at these people. So what's your advice? Is it the same as mine, which is just buy a diversified bucket of stocks and forget about it?
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Chapter 4: What are the risks associated with investing during a bubble?
Is it a bubble or not? It's agnostic to that. So, you know, just do that. And, you know, just go and, you know, for the next three to five years, you know, just beā¦
content with that but of course deal with FOMO if you're you know your mother-in-law or your daughter-in-law they're coming and saying we are like up this much on on SpaceX yeah yeah I'm going to be long June normally whenever I come to New York it's either far too hot or far too cold this is delightful this is
Not bad.
This is okay. Maybe you're right about this city. Maybe it's all right. So I'm going to be long of this. Rashia, thank you for sharing your brain. Rob, thank you for sharing what's left of your brain. Audience, thank you so much for being here.