Getting Water to Those Who Need It Most

Week on iTunes, SoundCloud, bl Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio every weekday, or watch us on YouTube by searching Bloomberg Global News. Well, Facebook, we already had some news this week about the FTC preparing a possible

antitrust suit against it, according to those in the know. Well, this week's cover story happens to be about Facebook and how employees of the social media giant really kind of fear that it's founder and CEO Mark Zuckerberg and his commitment to free speech is more about protecting President Trump than the company's ideals. Bloomberg News technology reporter and author

of No Filter, The Inside Story of Instagram. Sarah Fryer joining us on the phone in San Francisco, along with Bloomberg business Week editor Jill Webber on the phone in Massachusetts. Amazing story and an amazing cover. Thank you so much, and do we have I think it's okay, come on in, Sarah. Hey, you know, listen, it's a virtual world technology. It's a little crazy, So go ahead, Sarah. Takeaway. It is an

amazing story. I think it's just a compilation of all the things that my colleague Kurt Wagner and I have been hearing over the past few months and years about how Facebook has increasingly been willing to look the other way when members of Trump's world break the rules on Facebook. And that's not any mistake the company has. Um, you know, the Trump administration has leverage over Facebook. They're facing a potential regulation and even worse, potential for Trump to blow

up and create another bad news cycle. But they are catering to that power, and employees are quite concerned about what that means, as we had into the November election. So you know, I think, um, Sarah, the there's a lot of stuff in here, and it makes me just think about everything that we've kind of observed um about politics and Facebook going back to basically team where obviously all the concerns were ended up being about sort of Russian interference and it's uh and its role on on

on on manipulating the platform effectively. Um, and that is a concern um again, but it's actually it seems like the thrust of this might be in sort of the Facebook's response to that wasn't necessarily uh to take on that stuff. Um. And they've done, I think a pretty amazing job of at least recognizing ability to spot some of that stuff. But there seems to have been sort of a right word drift at Facebook, and and that has been um, you know, that's obviously the center of

the story. Can you talk more about where those concerns are rooted in? Right? So, after the Russian election interference, remember Russia was was inserting itself into us of polarizing topics like immigration, like race, like like feminism. They were building groups on on basic using people pretending to be Americans who weren't. And what Facebook concluded from that is that it wasn't the thing that the fake people were saying.

The problem was just that they were fakes. So Facebook really does not care if people are trying to manipulate others on Facebook and spreading um, sometimes at vary incendiary fake news. They don't want to take it down. They only want to get get their enforcements into gear if there are fake people behind it, if they're breaking other rules. And what that's done is it's created this environment where

Trump can really test the limits of these policies. He's been spreading a lot of misinformation about how to vote, telling people things, um about mail in voting, saying that that would lead to fraud. Of course it's not true. Um. He has been using Facebook essentially to uh so doubt

in the potential results of the election. And Facebook has said, well, I know we've said that we cared about voting misinformation, but we don't think that Trump is breaking our rules and we don't want to take down anything from a politician. So some with you know, I want to ask Sarah, is Mark Zuckerberg courting the president and and what's great

about your stories? You did some really inside reporting talking to employees who have worked at the company and seen, you know, some of the policies that they have done and and kind of what they've been focusing on but is Zuckerberg courting the president. Well, he's not a Trump Republican. What he is is interested in power and dominance for Facebook, and that requires the support of people in power. And that's not just in the US. We've seen this in

many countries throughout the world. Facebook always helped out the government in charge, caters to their concerns and in some cases, you know, give them face time with Zuckerberg, lets them break rules that they wouldn't let them break if they weren't powerful. And what employees are concerned about is that this is actually having this unbalanced effect on what Facebook users see and how they are learned about the election.

One example that that we learned for the story is that there were a lot of changes to the new speed after presidential elections to try to reduce them out of incendiary and untrustworthy news because that was one of the big problems. Well, Facebook tested the potential outcome of an algorithm change, and the policy team reviewed that and thought, well, this is this is hurting the traffic more conservative outlets

too much. We need to tweak this algorithm right and and have an equal effect on conservative liberal up outlets of where we roll it out to our users. That's an example. Yeah, listen, and there are so many examples. The reporting on this is just, you know, like you always do. Sarah, fantastic it. If anybody miss part of this interview, check it out because it will be on our feed and we're going to feature it too in our weekend show as well. It is the cover story

of Bluebird Business Week. Sarah Fryar, thank you so much, and of course our thanks to Joel Webber, editor of the magazine. Check it out. This is Bloomberg Business Week with Carol Messer and Jason Kelly on Bloomberg Radio. Well, for those of you who have been paying attention, we actually kicked off this entire festival with one of the co founders. You might have heard of him, Matt Damon. Now we're going to turn to the folks who were doing some of the most important work in the world

when it comes to water. We're talking about, of course, the CEO and co founder of water dot org, Gary White, and the president of water dot Org, Jennifer Shorsh. Guys, thank you so much for joining me. All right, thanks to be here. Good to your Jason. So Gary, I want to start with you, you know, tell me about the organization at this moment, because we are in a global pandemic. I don't need to remind anybody about that, but I do wonder how it has changed your work.

That is the top headline every day. It feels like, well, it had had a tremendous impact on our work. And what what I see is it calls much more for us to pay attention to water and sanitation, particularly for the global community. One of the first things that we heard when this pandemic struck is like, you should wash

your hands vigorously, and you should wash them often. And in the United States, and we have that ability without a thought having to be able to do that, but when you think about people around the world, more than two billion people who don't have access to safely manage water and sanitation, that simple act is a huge hurdle every day. So we can see how the pandemic is

exacerbated in those types of environments. And as we know, this pandemic doesn't know any national borders, and so it's easy to see how that can can spread from one poor person living uh, you know, in the slum uh in Mumbai to somebody in New York and it is all interconnected. And I think the thing about water, sanitation, water, and particularly as we will see today, it's completely interconnected

with climate. And when we talk about some of the world's most vulnerable populations and climate, what they're gonna see is this lack of security. As we get more flooding and more drought, it forces people who are already living on the margins, who might have access continuous access now to these services, to completely lose that and backslide. Well, Jennifer, let's get right to the heart of that, because Gary teed it up for us beautifully. Let's talk about that intersection.

Because I have to confess, as I started to really dig into this, I was blown away by the connection and the urgency of this from a climate perspective that I don't think I fully appreciated. So help us understand, because you guys have done some amazing recent work that really crystallizes, as I say, this inter section of climate and water crises. Yeah. Thanks, Jason um you you struck upon a really important concept, which is the urgency of it.

Like climate change, I think people really might think of this as an issue of tomorrow, but the water crisis is an issue of today. Um a third of the world's population lives in water stressed areas right now. We talked about COVID. Three billion people cannot wash their hands at home in the midst of a pandemic, and every morning women and girls around the world wake up and collectively spend two hundred million hours simply trying to provide for the needs of their family in water. And so

it's and and on. Gary mentioned sanitation. That's more than twice the issue of water. So it's an issue right now, and is it? It is an issue that has real human costs and real economic costs. And as climate progresses, the water crisis will only get worse. And so let's talk a little bit more about that and how it manifests, Gary, because there are a number of different ways, some obvious, some not so obvious, where the changing climate is inextricably

tied uh to the water crisis. One of them, sort of going the other way in terms of trying to get water to people, is that it's sometimes, just to put it very simply, isn't always good for the earth? M hm. Well, I think when we talk about water scarcity and how we allocate the water resources that we do have. It's important to keep in mind that you know, uh, only about ten percent of the water that we consume goes towards human needs, if you will, so household level

water and sanitation. And then we especially look at those two billion people there there are folks that aren't showing up, you know, for water with you know, drinking it through a fire hose. They're coming with a straw, right. People living in poverty are certainly by if we get them access there certainly are not going to exacerbate this csis. There's many ways that we can do that while still

conserving the water resources. And I think what when we see water and climate come together, we do see it in terms of adaptation. How are we going to ensure the resilience of the populations that are on the margins right now in the context of water access, And that's important. It's kind of the least among us who are going to be affected. First, we know that as drought strikes and water scarcity hits that we're going to have people that need to migrate, We're going to have climate refuge

refugees because of their water supply. But on the other side, just to take it a little bit more in a different direction. It's interesting to hear Bill Gates talking about some of the carbon issues and like cement and things like that. I think one thing that people don't realize is how much carbon is embedded in water. So if we look at solving this crisis from a mitigation perspective for carbon and climate, that's important to to real eyes

as well. We don't realize, for instance, of all the electricity consumed in California goes towards sourcing and moving and treating and distributing water that comes into people's homes. We don't recognize that. Globally, we have utilities that lose half of all that water that's treated because of leaky pipes

and poor infrastructure. If we could just save of that, that's the equivalent between If we could save of those losses, that would be like taking two hundred and eleven million cars off the road for a year in the United States. So we uh, we need to get tuned into more how much this whole water supply system and infrastructure and the shortcomings in it cause us to to use more

carving than we need to deliver the water. That's so important, Jennifer, I want to take it into a slightly different direction and stay a little bit domestic here, because one of the things that we've talked a lot about in this current crisis is where people live, how they live the disproportionate impact as we've been talking about of the pandemic. When we think about the climate, one of the things we know is that are rising sea levels are going to affect where we live. Water is going to play

a detrimental role to some extent in that. How does your work sort of figure into that and how do you think about water in that context? Sure? Um so, if if we think about the water issue, we we really want to focus on the quality, the quantity of it, how much is available for use, the quality of the water, and then the accessibility of the water. And as we mentioned, we are really looking at those who are disproportionately affected

by this. It was interesting hearing Bill talk about vaccines because like many things, the impact of the water crisis is disproportionately borne on the shoulders of people living in poverty. And so we are focused on the access element of water and sanitation and what I like to call the humanity of water. Um as Gary reference corporations, industrial and agricultural uses of the freshwater supply. About two thirds of the freshwater supply is used for its estimated the supply

chain and the provisioning of products. So we have to have corporations participate in this, and we have to address not only stewardship, quality, health, and the quantity of water available, but also the access the accessibility of it. So our work is singularly focused on ensuring that those living in poverty, the two billion people who live without every day, have access to save water and sanitation, and that's what we bring to the table. The lens that we bring is different.

We approached this through affordable finance, so it's really about removing the barriers that exist for those individuals ving in poverty and doing it by creating a system, wrapping a system around them that starts with an affordable loan to allow them to hook up to the water system that runs right under their feet. They just don't have the savings to connect to that or to build a toilet in their home. So we focus on that individual living in poverty. We enable often her to get access to

um to alone to get that water connection. And what we're seeing is that there is a market that is playing out more than six million loans enabled. Thirty million people now have access to water and sanitation, and they're doing it through um saving their time and saving their resources. And that has created a commercial lending portfolio of two point four billion dollars which is put in the hands of people living on less than six dollars a day.

So Gary talked about that a little bit more and and the growth of that and how that finance peace is essentially enabled. Because this is right in the Bloomberg sweet spot, I have to say, in terms of our audience and and sort of understanding the underpinnings financially. Yeah, and I think what's exciting about this is that there is a solution. And in many ways, this problem of helping people in poverty get access contains its own solution.

And as Jennifer was mentioning, we worked through getting access to micro loans to people living in poverty and just real quickly how that how that works. Uh. There was a woman I met recently in the Philippines. Her name was Lenadiza, and she was paying a water vendor, someone who sold you know, dubious quality water in her neighborhood. Uh, you know about thirty dollars every month to bring water to her home. Uh and what I'm sorry she was

saying about sixty dollars. And then so what we saw was the opportunity for her to connect to this utility, but she didn't have the upfront money to do you that. So through our program, she was able to get a small loan and able to capture those savings. So now she's paying about ten dollars a month for her water bill and for her loan combined, so she's able to save fifty dollars and so every month that's money that's

back in her pocket. So that's how this this system can work, and it is about trying to bring the global capital markets to bear on this. So we work with local microfinance institutions to to bring that capital into the system so people like Lesa can get those loans. And as this is evolved, we've realized that we can actually see new ways and looking at social impact investing for instance, to drive more capital into the system so

that these loans can be scaled up. And water dot org was actually able to create and stand up and spin off a new entity water equity that brings the capital markets to bear giving an investors in attractive rate of return so that we can then scale up these these small loans and then expand to micro enterprises that serve the poor as well as as utilities. And that's what we can offer accredited investors who want to learn more, they can invest in this with that type of vehicle.

But also we need that philanthropic capital that sets all this in motion to do those things that Jennifer was talking about to correct those market failures, and that's what we're trying to do, use this these innovations to show that, you know, people living in poverty are actually not necessarily a problem to be solved, but a market to be served.

So I love that um because I am engaging every day with a whole lot of capitalists who are seeing increasingly it feels like Gary this opportunity, this investment opportunity in also doing good. Was there an inflection point where this became possible the Water Equity Fund? Was it because of the appetite growing or was it because the model didn't exist before? What was the key moment in getting

that stood up? I think that the key moment was when we were working with some of our local partners around the world, and we asked them what's preventing them from scaling up these loan portfolios much more, and it was an answer of, you know, access to safe I'm sorry,

access to affordable and consistent capital. And at the same time, you know, uh, you know, Matt, Actually Matt and I were in the jeep driving around India when we were talking to our partners about this, and that's where we kind of hatched this idea of bringing the capital markets in through social impact investing. So it's kind of a

perfect storm, right. We saw this incredible demand and you know, we see about an eighteen billion dollar demand for these small loans among people living in poverty that could serve about eight hundred million people. And we saw that demand bubbling from the bottom up in the form of our partner saying we need more capital to get out more

loans from more water connections and more toilets. At the same time, we saw social impact investing really starting to come into its own and so we were able to create Water Equity. Is really this the first asset manager that's focused exclusively on solving this crisis to be able to bring in those accredited investors. Match that with people at the household level to get the loans from that capital and provide that attractive rate of return to investors

while still helping people get water. So, Jennifer, let's talk a little bit more about the philanthropic side than especially in this time of crisis where there are so many people in need, so many organizations. We talked about this at the top of the conversation. How are you seeing the philanthropic side both from an individual and a corporate perspective. Yeah,

I mean, the philanthropic environment right now is interesting. What we see is that philanthropists are stepping up in a in a way that has been unprecedented in some ways. What we're seeing is that a lot of those funds are going towards relief, immediate relief, um and the important issues of racial justice and so what what we are seeing is that now more than ever, we need to

accelerate progress against against water and sanitation. It is the first and the second line defense against pandemic and frankly, the philanthropic environment for water and sanitation is challenging. So what we are trying to do is help folks think about this as building global resilience that we need to invest in water and sanitation. At water dot org, we need people to come and visit, whether you can give ten dollars or a million dollars to donate to water

dot org to accelerate COVID. We've identified more than twenty five million projects that we want to accelerate to redouble our efforts in the light of COVID. But frankly, Jason, it is a challenge environment for us, given that so much is going against immediate relief. And if I could just say one other thing about the stakeholders that need to participate in this issue. Um as they referenced earlier corporations and their use of water. We need corporations to

step up. We are fortunate to work with dozens of corporations and corporate foundations in fulfilling their water and stewardship needs. And what we want to see and what we're starting to see through things like the Water Resilience Coalition, is these corporations not only make elevating their ambitions, but accelerating

their actions. And we want to partner with those corporations we at water dot org and use their philanthropy and that of philanthropists catalytically to create this system that wraps around that woman living in poverty and create sustainable solution. Well, Gary, there's certainly. I mean one of the things that I think is so appealing about this is you have a clarity of purpose and both of you have talked about it, uh so well, and it is a it's so fundamental

to to what we're what we're all striving for. Here as we wrap up, I mean, what gives you in the in the uh, in the sense of maybe ending with some optimism, What does make you optimistic? What gives you a sense of hope at a time when man, we're looking for some I think what gives me hope is that the power of the people that we're trying

to help get access to safe water and sanitation. I mean, there they are the ones who understand the value in that, and they're the ones who are willing to invest in helping create that value for their family, whether that's their daughter now being able to go to school because she's not carrying water, or because they're saving on medicine because they're not sick all the time. And that's what drives

is there the center of this work. This is why the market can work because right now connecting people like that to the capital markets. It's a broken system and that's why we exist with our philanthropy capital to kind of help correct that failure. And you know, we've been doing this for thirty years and we developed a lot of different insights into this, into how we can do it,

and we can do more of it. I think Jennifer mentioned, you know, we have twenty million dollars worth of projects and initiatives that are ready and waiting to go so

that we can scale this up further. And so to me, what we've done is like become this innovation engine in this market, helping people understand that it is there, and then finding these different tools, whether it be philanthropy to scale this up and create new solutions, whether it be helping corporations pursue their e s G scores and drive those up because they are looking at their social license to operate with respect to water for these communities where

we work, or whether it's impact investing and looking to accredited investors to come in and deploy their capital in a way in a way that gets them that financial return that they need also then serves those need needing water. In particular, Foundations right now, as we look towards foundations investing in mission related investments and these types of things, we can deliver that type of impact. We can solve

this global water crisis. We can do it from the bottom up with the people who are impacted by it, and from the top down with the people who can bring the capital. All right, Well, a really interesting discussion. I learned a ton. I know that our audience did as well. As I said. This is a core issue for us as humans. It's a core issue as it relates to the environment, a core issue as it relates to as we all figure out where we go from here.

My thanks to Gary White, the CEO and co founder of water dot org, and as well to Jennifer Sure she is the president of water dot Org. They joined me from their respective locals, Kansas City and Seattle, respectively. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. All right, let's talk a little bit about economics with one of our favorite economists. He's the chief economist at lending Tree, Tinda kept Feezy. He

joins on the phone from New York City today. Have you been what's going on doing good. Guys, how are you hi? We're doing all right. It's kind of a funky week, as they all are. The week I think working from home although I'm in the studio, Carol's at home. I'm guessing you're at home still. So what is this economy telling us right now? What data are you looking at? You have access through lending Tree too. I feel like a trove of data that many people don't. Um, yeah,

we do have a lot of data today though. I'm looking at the housing starts, which is a piece of data that the senseless bureau puts out and how he starts. They actually felt in August five month of the month, uh, and the decline was driven by the multifamily housing, but single family houses were actually up. My whole family was down twenty month of a month, a pretty big drop, which I think reflect changing preferences amongst home buyers and

rents as well. So what does that tell you about kind of where we are in this cycle, this economic cycle? Because I think we know the hit was hard. We know initially there was a big bounce back and then now we're just kind of depending on the statistic you look at trending water trending water too. I'm sorry, Jason, I think it's just your trending water. Water. Water is trending, but trending water is what I meant to say. So are we treading water tonight? Um? I think we certainly are.

In terms of the other sectors of the economy, right the housing sector is actually a big positive upside surprise, and that's largely because of interest rates. But if you look at something like we sale sales, which came out yesterday, uh, it shows that, you know, after kind of initial recovery

of some of the decline, we're really moving sideways. So we're you know, we're only making back uh maybe half of the decline that we saw from COVID, and you know that leaves the economy in a very deep hole. What does that mean? What does it mean that one like you know, we Jason I kind of laugh a

little bit, but we don't mean to laugh. Um. But about you know, the lack of visibility from companies and CEOs when they report their earnings are like, yep, we don't have visibility still fore, but you know, we know they have to make decisions. We know some of them are making decisions like letting go workers, so they must have some kind of visibility about what the world looks like. Yeah, I'm actually very worried about because, you know, really the way to get back the economy is to solve the

health crisis. And it's not clear right that we're gonna get a vaccine right. I used to work a spiser before my current job, and vaccines are not easy to make, uh, you know. Fives. Then a lot of other companies are working very hard to try and figure this out, but it's not a given that they will. And then from the economy perspective, what we've seen in is that a lot of companies have made pledges right to the employees that we're not doing COVID layoffs. A lot of big

companies have done this. I think in one when these pledges end, we're going to have another round of job losses if the economy hasn't truly come back. And that's

a big concern I think for next year. And so when you listen to what J. Powell said yesterday and I you look at the publicly available data, you look at your data that you guys are able to get through lending tree, is there, what's the what's the signal in the noise, I guess, I mean, what is the thing that we need to be focused on even in the next thirty to sixty days as we think about, say, the elections, everything is noise except if they come up

with some vaccine or you know, some way to mitigate the health risk. Everything else, I think is is noise. And you can't really solve for anything without solving for the health problems. What about the a big you know, aid package from government. Does that do it? Yeah? It does it for a while. Right, we saw that earlier

this year. Really what you know kind of sustained or prevented the decline from being greater was this huge stimulus package, which the idea was to you know, build a bridge the other side and hopefully would have had some solutions to the health crisis. Unfortunately, we didn't really build that bridge.

We didn't really solve for the health issues. So again, uh, you know, you can do all kinds of things, you know, power can do all kinds of things, but really you have to solve the root problem in order for any of these other actions to have their maximum impact. All right, Tinda Fez, thank you so much, Chief Economists for a lending treat joining us on the phone from New York City. And that's interesting to hear him say basically, nothing matters except a vaccine. I'm roc a journal. But you let

me drive. Oh no, no, no no, no, honey, please, I'll do the riding revels. I want to drive, Just drive, baby, good questions trying. This is the Drive to the Globe Commune. Thanks well, run on Bloomberg Radio. It is time for the Drive to the close. We're both so excited to welcome back Cold Smead, President and portfolio manager of Smeet cap At Management, joining us on the phone from Phoenix, Arizona. Cole, How are you? How are things out in Arizona? Thanks?

Are actually pretty normal on here. It's it's, uh, it's a pretty strange world where people go to lunch and do business meetings and you go out to dinner in the evening and uh, you live life pretty normally, which is kind of the shock too right now. So not where it was, that's for sure, Yeah, no question, it's

so it's on outside. It's we couldn't feel more blessed. Yeah, that's pretty Uh, that's pretty incredible because we feel I think I can speak for a lot of people here in the Tri State area where still very much on lockdown. I mean, I'm looking even across our barely occupied office and seeing, you know, the folks who are moving around wearing masks, and you know, moving around New York City a little bit over the past few weeks. Not a lot of um, not a lot of people out and about.

Still it's getting better, um, but it is. It is sort of interesting. And you know, we talked with an economist earlier, Cole, who was basically saying that from an economic perspective, nothing is close to normal until there's a vaccine. I think we can we could dissect that a little bit. But I would ask you, from a market's perspective, how does an investor look at sort of this underlying pandemic and how to think about it as you look at

a portfolio. Well, it's like great question, and I will uh, I will cheat and copy and paste straight from Sir John Templeton. He would say that people often ask me, you know, what looks the best, and he said, that's not the right question to ask you. Could you should be asking where things look the worst? And that's what he was interested as an investor, So to your point. For the economists to say that, I love that because obviously they're great predictors of everything and nothing at the

same time. So so that is a picture that people have in their mind right now that nothing will be normal until a vaccine, okay, which means that security prices are completely miss allocated up until then, or until the market gets a better sense of then. Um. You know, people always talk about the wisdom of the crowds. Markets

tend to sniff out things better. By the time the market sniff sniffs out the change that the economists was referring to, a lot of the security opportunities could be gone in things like oil, malls, et cetera that are

incredibly depressed at this point. So it's the value guys saying, hey, folks, there's some great deals out there, correct, Because well Dave Dave Wilson, who does our Chart of the Day earlier, came on specifically looking at value stocks, and you know, those relatively cheap names are more out of favor with investors in developed markets, and they have been in almost four decades. But you know, having said that, cold, to

be fair, they can get even cheaper from here. Well they can, but my gut instinct says that two weeks ago this thing ended. Just see, you guys are aware, okay, and I'm just telling you out of watching and experience. Um, there was a half a trillion dollars being wagered on UH options tied to small retail traders the four weeks that ended last week. And just to give you guys a sense, that was that was five times as large as what we saw in the late ninet So you

can see all the elements of a speculative euphoria. You know, John Kenneth Galberth probably did the best writing on that subject matter. And what I love about it is, I'm thirty six. For my generation, this is really the first time that people have tried to figure out ways to take speculative risk in the stock market. They've done it to the highest degree of speculative risk. And like Rich Bernstein, the famous former meryal strategists, would say, they're not just

gonna with lower returns. They will actually be poorer coming out of this, which is most people's experience in common stock investing. They never have success, they wake up poorer, and these episodes is what causes that to happen. Where do you think investors are making mistakes specifically, Uh, well, just as a picture. Your colleague John Authors wrote a great piece on Monday, and he was comparing I think

that it was a foot see to Apple. Okay, and he noted that Apple had passed up the market cap size of the foot. Well, what's interesting about it, he commented on, Let's just say the capex He pointed out the foots he does a hundred eight billion of CAPEX

versus eight billion dollars of CAPEX and Apple. Okay, do you actually take the R and D and add that back to those numbers and say, okay, let's just say CAPEX and R and D is going to be something that kind of decides how sustainable a business model is in profitability. Well, the foots he's doing about five fold of CAPEX, R and D relative to Apple. So all things equal, you'd say, well, probably the company that's reinvesting

the most would be able to sustain the best. But then if you add security prices into that, you'll find that, well that's not really true. Right, one is doing one fifth the other and has the same market cap. So that just highlights how screwed up the allocation of money is right now. Now, does that mean that Apple hasn't had a lot of success and isn't a great business. No, that that's not what it says. It just means the capitalization of that is ruining the future returns for investors.

And we've done we've done, I think in the piece we'd share with you guys, we've done some work looking at the ten biggest market cups since nineteen eight each decade, and you know, IBM had the same thing in it was still the biggest company. What did it do? It underperformed the market for ten years to still stay the biggest company. That's the rule. Did you say IBM? Would you really put IBM on Facebook? Uh? In the same category. They called it big Blue for a reason. It was

a small g god in the stock market. And by the way, g have the same phenomena at one point too. So I say that because um it. Once again, it's not the question of whether you know these businesses. I'll give example. I think the biggest problem in the market is Microsoft, not because it isn't a great business and it's not a great not that it's not a great American company, it's that that seems so safe to say, oh, look at these two great businesses in office and the

operating system, and then what hosting could be. They feel so safe, and yet if people wake up finding out that's forty times earnings, will never fulfill their wildest dreams and they can actually lose money with the best businesses in the world, that will destroy common stock trust. And that's why people will do what they do. They use survivorship bias. They look at these things and say, oh,

they're the survivors. They performance chase. They wake up two years later getting punished, and that is why I'll have a job in ten or twenty years. Here you go, and you're a young man as you confidence. Great Cole, love catching up with you. Really great cold Smead of course, the president portfolio manager at Smeat Capital Management. Johnny's on the phone from apparently pretty normal Phoenix, Arizona. Good to hear that things are going well out there. Thanks so

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