John.
You know, we talk a lot about how cheap UK equities are, I mean endlessly right, And last week we had Rob are not telling us that there is trade of the decade, etc. And you and I both agree with that, we believe in this story. But we're always so busy talking about how cheap UK equities are. We very rarely talk about how incredibly expensive American equities are. We're always looking at one end of the thing and
kind of ignoring the other. Because the key thing here is it's partly the UK equity is achieap, but also that US equities are still off the scale expensive.
Yeah, I mean the main reason for that maybe because we're horribly embodised, But.
Why are we embarrassed? I'm not embarrassed.
The basically the problem with US equities is that the art expensive. But they've been expensive for an insanely long amount of tame compared to cane like Hasterday. So and I think this is best summed up and that kind of piece of research from US as the manager's GMO. And they've got a strategies there called James Monte who excellent, Yeah, excellent, kind of right, And I remember prior to two thousand and eight.
He was really on.
The ball about it coming up and then afterwards. One thing that really sticks in my mind is that he wrote about this basically portfolio bombed out stocks at a time when everyone else was like, don't touch the stock market at a temper passport. And if you just bought the ones that he'd looked at, then you made like multiples there money, like probably like a tenth Do.
That we read that? Well, why didn't we do that?
See?
I like we still here.
I like to blame compliance reasons.
And was complaint.
Yeah, exactly. It's just it's the admin.
It's the admin, isn't it.
The bit of my life? If I was better admint, I would be rich.
It's both of us. I mean, this is the problem, and it's one of the things that we do.
I'm going off topic here, but one of the things that I always think about whenever we write anything but our reader and listeners. How big is the admin leap that they have to take to do anything? So hard?
Yeah?
And that's important.
I mean, actually that's I mean that regardlessly of views on crypto currency, that is one of the big issues we betcoin and always was, and I see the period reason I don't want any so yes.
No customer service when you get the admin wrong.
Yeah, that's my problem with crypt although to be fair that that expine extends to just about every kind of service these days any week, so.
You might as well by bitcoin anyway.
Yeah, So back to James. Actually, so James, like in March twenty twelve, I think it was, wrote an article for GMO. The GMO have always been that's where Jeemy Grantham works, and they've always been on the value side, et.
Cetera, et cetera.
But he basically pointed out that US stocks were very expensive, but also US profit margins were very high. So say the long run average from about nineteen fifty was six percent, and they were running about nine percent. He came up with various reasons as to why that might be, but to be honest, they're not important just now because it's
complicated istion, it's a bit a distraction. His point was that corporate margins should, in theory mean revert, so in other words, they should go back from nine percent to six percent, and therefore you would end this US out performance. And just in case anyone's wondering the reason that corporate profit margins should presumably kind of you know, mean revert
is because capitalism, So you get a free market. One company starts making outside profit margins, the others come along, they all compete with each other, and the margins come down.
And so obviously that didn't actually happen. Then US stocks continue to performed for the following decade, and even even now we've kind of gone back into this weird situation where we're kind of going back to growth outperforming value again despite the recent changes and interest rates, etc. And so James is a technolo look at this in a paper that you can download off the GMO website. He's basically sort of like saying, look, oh, where did I
go wrong? And again, that's more about the economics side of it, and it's not actually that important to our discussion. His point low was that, Okay, I've been wrong for the past ten years. What happs if this on this one?
Definite?
Yeah, I recognize that ire wrong for the past ten years. What happens with profit margins just stay the same? And the point he was making was that, well, but the things valuations have increased so much that even if you think the corporate profit margins is going to stay at
nine percent. US stocks are sitting on a shillerpe or a cape ratio of about thirty, which makes them as expensive as they were at the top of the tech bubble in two thousand and that that was the most expensive US stocks or stocked pretty much.
Brave interruption, brave interruption. UK market is on a Shillippe more like fourteen till half the press just.
Saying exactly, and then he was saying, his point is that's even if profit margins stay where they are, if profit margins do actually revert to the means to go back to the six percent overall, then if you adjust the cape for that, the cape is more like forty five fifty, and that's way higher than it was even at the dot com bubble. And again Bernmin dot com bubble was essentially the most expensive US stocks.
I've ever been.
And so his point was that, so even if you think everyone's going to go perfectly correct and it's going to be absolutely fine, then if margins stay high and valuations don't change, you're still looking at roughly a three percent real return based on real annual return based on GMO's views, which is slower than you would normally expect to get from equities. You know, it's not enough money to get paid for taking the risk of buying equities.
And he's pointing positive, A positive real return of any kind feels kind of good.
Oh yeah, but we're talking over a decade.
I mean, you would have hoped that something else would do better than that, or I mean you would have hoped, right, I mean, maybe maybe it won't put I mean I think then there's linked kind of like UK points and there often a real yield of one percent over thirty years, so you know, when you look at it, three percent is not that great. So very so that's that is the kind of I've probably butchered all the academic side
of that paper. But long story short, even if things go perfectly for the next ten years, US stocks are rampantly over valued, and know.
They won't go perfectly. We know they won't go perfectly. Did he give any sense of what it might be that would bring those corporate margins down? Is it the return of the power of labor? Is it big glaberalization? Is it all these things that we've been talking about.
Thank you?
He doesn't address that in this particular piece. Because he's looking I mean, his argument and it's all about accounting identities basically, but his argument that the thing that has enabled corporate profit margins to be so high is the US running a kind of massive deficit, and that was that's the big sort of change that's happened, that kind of permanent deficit, because his argument is basically that they must be coming from somewhere over this extra money essentially,
and then there's all sorts of arguments about you know what intangible assets and kind of like, you know, the tech tech companies.
He said earlier, earlier in this conversation, do you want to.
Now now we're finding out John didn't want to touch the detail with a.
Barge ball something called the Kalei equation in there, and I'm likeing that, let's let's not let's not.
Getting the listeners.
You're boring them.
Switched off. Sorry, come back, Jim Mellon's on that.
Everyone, Come back, Jim Mellon.
Listen, We're going to talk to somebody now who doesn't make very many errors at all. Welcome to Meren Talks Money, the podcast in which people who do know the markets explain the markets. I'm Maren zumset web this week a conversation with Jim Mellon, chairman of Burnberry and well known invest in gurup.
Jim, thank you so much for joining us. It is lovely to have you on today.
Great to be here. Thank you.
Now listen. I did, and I'm sorry about this. In fact, I'm really sorry about this. But before I sat down to record, I asked on Twitter what questions any of my followers might have for you, And then I sat back to wait for lots of interesting conversations on you know, out of weather, inflationary times, and biotechnology and agronomics and all kinds of technology, etc.
Instead of which.
They all said, ask him how he thinks Brexit is going. So I'm sorry we have to start there.
Well, it's a reasonable question.
I mean, obviously it's neither going as well as the Brexiteers would have hoped, nor as badly as the remainers would have.
Suggested.
I'm not sure hoped, but I think hoped is fair. I can't say there's a lot of good stuff. I can't say a lot of good stuff about the government's handling of the situation. And as you know, if it had been me in charge or you in charge the day after Brexit, we would have applied for a Norwegian style trade agreement with the European Union, which would have been so much better than the current situation. I mean, I think that, you know, things are getting better rather
than worse. And I don't believe all the predictions, which as you know, are generally wrong. About four percent of GNP is going to be lost over the next ten years or whatever as a result of Brexit, and I do see there are some signs of equilibrium, and particularly in services trade, where the UK is doing very well at the moment, funnily enough. But overall, you know, I've
got my regrets. I mean, that's simple as that. And although I didn't have a vote in the referendum, I think I would have been neutral as opposed to have been so in favor of it. I mean, I think it's caused much more chaos than I would have expected. I'm not saying that we should now try and rejoin, because I think that that's probably not the best thing, but we should definitely try and do this Norway arrangement or EA arrangement that should have been done ab initio.
It's been very badly handled by the Tories. I mean, I think you and I are both worried about a labor government, and so we should be. But the Tories have really not covered themselves in glory in any respect in the last five years or six years.
No, it's interesting they've been empowered for a long time.
It's hard to see the positives they.
Leave behind them. And I agree with you on that that like a lot of sort of semi soft Brexiteers. I kind of assumed that after type arrangement would be come to very quickly, but I'm increasingly seeing evidence that we will come to pretty much that kind of deal.
It's just taking quite a long time. So now when anyone asks me how I think Brexit's going, I'm falling back on too early to tell, which I think it probably probably is, Which it probably is, But there is I mean, there is a big positive to Brexit for investors, and it's a long term positive, which is that by discouraging international investors from coming into our market in the shorter term, we've had what been great Brexit discount and
anything else discount on our equity market. And that's I think, and John and I both written about this endlessly, and I think we're beginning to see people beginning to agree with us. That's made the UK equity market phenomenally cheap and a phenomenally good long term opportunity for investors. And you and I've discussed this before, but are you're still on board with that view?
Yeah? I am.
And you know, we talked around a year ago about exactly this, and actually the UK market's not done so badly since then, and the pand has been relatively strong,
and I think it will continue to be strong. That having been said, you know, if the British government wasn't intent on throwing molotov cocktails in the way of a relatively robust economy in the form of increased corporation tax, stealth taxes by raising by basically putting more people into the forty percent tax band, and all sorts of other taxes, as well as you know, not unpicking regulations that should have been unpicked ages ago.
Well and adding more regulation on top relentless editions of regulation. So we suffer from this sort of huge heaviness of regulation before we even start on anything else. I was thinking about this the other day wheneveryone was complaining on the same day about too much regulation in the UK economy and more and more regulation coming in and at the same time time complaining about obesity in and the
effect that that has on the NHS. And it's like it's the same kind of thing, you know, these big sort of burdens weighing down our NHS, of weighing down our economy on the other hand, and what do.
We do about them?
And are we taking the crab interrupted?
You you carry on, you carry on.
No, but I'm with you.
I mean, you know, why is the government so damned incompetent And you know, it's just it beggars belief really. You know, there are obviously some very good ministers out there. I don't think Richie's doing a bad job. He seems to have stabilized the ship and you know he internationally he's doing quite well. But there's just so much more that could be done. And they had an eighty seat majority.
I mean, they could have done so much. He could have done anything they wanted, and it's just a wasted opportunity.
They haven't been said.
You know, I read and I don't mean to say I read it in any great detail or with great linguistic skill, but I read the French newspaper her every day, and I read built Sitong, which is Germany's equivalent to the Sun, every day. And you know, we think that we're in this sort of economic malaise that's specific to the UK, It's just not true. Every other country in Europe thinks it's in a dire situation as well. And there's a lot of inward looking stuff going on in
Europe as well as in the United States. So while we hunters going on about how we're talking ourselves into, you know, going backwards economically, every other country that I can read their press of is doing exactly the same, and including where I spend a lot of time, which is in Spain.
Okay, So is.
There still value in the UK equity market with that in mind, and if everyone's talking themselves into a funk and UK equities which are certainly at the top end, very international anyway, trading at a thirty five forty percent discount to similar companies in the US, seems like a no brainer to buy those.
Yeah, I completely agree, And you know, I'm sure that the the large sort of fossil fuel related companies like Shell and BP are good long term investments. I'm sure that our defense stocks are good long term investments. I'm sure that our financial services companies are good long term investments. We're not likely the US banking system, where basically the money market funds have completely upended the whole banking model for regional banks, and where there are far too many
banks in the first place. I think the insurance companies are also attractive. Some of our investment trusts are attractive to buy. There's a whole plethora of stuff that you can buy in the UK with long term confidence, whereas you know, if you buy something in the US, you are paying a very distinct premium at a time when you know earnings are all time high as a percentage of GDP in the US and are probably going to start falling.
So yeah, I'm with you.
Let's buy the UK and carry on buying the UK. And you know, as for London losing its position as the largest market in Europe, well, I actually don't think it really matters. London is still the pre eminent, or at least equal pre eminent financial capital in the world. There's no sign that it's losing its pre eminence in the whole of Europe. Only a trickle of people have moved elsewhere, and as I said at the beginning, services exports are an all time high from the UK, which
is our main strength. So although you know the government's doing everything it can to sort of put the reins on the economy, the economy is being remarkably resilient. And there's no doubt in my mind, and I said this from September last year onwards that rather than being the weakest economy in the G seven, this year will be somewhere.
Near the top.
The UK is remarkably resilient as an economy. And we also have the effect, whether you like it or not, and I actually don't mind it, of very very fast flowing inward immigration and that is going to add to our economy in coming years.
I mean, it's not as to our economy as to our economy in terms of GDP, but we're not sure that it adds in terms of GDP per head. Oh we which is the thing that really matters. We're not really interested in what the overall GDP of the UK is. We're interested in whether individuals are seeing their incomes rise
and their living standards rise. We don't necessarily see that with large waves of immigration governments like it because it means they can say, oh, no, GDP is going up, But do individuals like it if it's not actually improving their personal standard of living?
Well, that's a very good point, and I think in the short term, almost certainly, it's going to.
Be diluted of GDP per capita.
And you know, I think there's a couple of things that can be done about that, including allowing migrants to work much earlier or even I wouldn't forcing them, but making it attractive for them to work, and secondly training them in skill sets that the UK is lacking in.
And I think also importantly that we need to target migrants who are of a younger demographic because you know, if XYZ comes in and then brings his whole elderly relative cohorts with him or her, that is definitely going to constitute a drain on the resources of the economy. But longer term, every single developed country, including the one I'm going to tomorrow, in particular Singapore, is facing a
major demographic crisis. You've talked about this before, I've talked about it, but it's actually becoming It's one of those crises.
That doesn't really hit you until it hits you.
We're basically facing population collapse in many countries around the world, and far from discouraging migrants in ten or twenty years time, will be begging them to come to the UK, or to Germany or to wherever else is sure of people. And although we're not on hand, if this.
Is a global dynamic, which it will become, there aren't that many countries left in the world where the population is growing very fast, and very few left, and mostly
in Sub Saharan Africa, whether patiliarated through over four or five. Right, So, if we're suffering from the potential for populations to decline in western countries now and in pretty much every other country over the next few decades, should we be trying to deal with this problem by pushing other people's kids, or should we be trying to find a way to manage our economies in our societies such that we can
cope with our aging populations that we're going to give you. Japan, for example, which is ahead of the game here and there's been beginning to figure out ways to make it work. Rather than thinking, jeez, we can't be doing without young people. Let's get someone else's in well.
Japan's are very as you know much better than me, that Japan's a very particular country.
And the sense of it, it really doesn't.
It's quite xenophobic, and it definitely not multicultural by any stretch of the imagination. And Japan also has an older population that is quite happy. A lot of them are quite happy to go out and work and continued to be employed at lesser salaries than they got when they were at the peak of their careers. And admittedly a lot of it is non jobs, you know, just sort of like opening and shutting barriers and things like that. But flag waving a very very different society to ours.
I'm sure you know this.
But by two thousand and seventy, which is not that far off, more than half of the G seven's population will be over sixty five years old. And in some of those countries, not ours, but including out I don't know, well, yeah, we'll be over sixty five fifty Well, you know, we will all be over sixty five much sooner than that.
But the thing is that in some of those countries, and you're going to see Japan obviously is one example of that, the population will be seventy five percent over sixty five years old.
And so there are two things that need to be done.
One is to prevent people from becoming frail and you know, build robustness and to older people, and that's something that you know, longevity science is trying to do. I don't think it's doing it fast enough to be quite honest. And then the second thing is to let you know, the population know that the good old days of being born, learning, earning, retiring and expiring are gone, that everything is changing, that life is a different trajectory now, and that they can
expect to be working much longer. So you don't get the riots that you got in France over the sixty two to sixty four pension age, and you don't get the sort of mess resistance to later retirement because we are all going to have to retire, not that you and I, oh, I'm mad for it.
I'm absolutely mad for it. I mean, when I have fand disease and dreams, I imagine that when I went into work, instead of going into the private sector and all that I'd gone into the public sectors, I don't know, a mid ranking civil servant or something, and now I was looking forward to retiring in a couple of years on an RPI linked to define benefit pension. I could join all those other fifty five year olds on cruises up and down the Danube. I dreamed it all the time.
Yeah, I don't believe it. Actually, I can't see you doing that, So you're.
Not thinking hard enough. I don't know where to go now.
I want to talk about Japan, and I want to talk about longevity science and where you're investing there.
Let's start with Japan.
Let's start with Japan and investing in Japan. You know, Warren Buffett has just come out of Japan and said, we're not done investing in Japan yet. You know those are those exact words, right, And you know that he's got big holdings in in some of the big Japanese conglomerates, in the trading companies, which he thinks are fantastic, and he started investing in them a while back. They pretty much doubled since he started. And now he's looking at
Japan and he's saying, I'm buying more there. I'm staying in. Not to do all the becaus is Warren Buffett. This is not to do with him expecting a bull market in the next next month, two months, three months, so then he can sell. Obviously he's in for the very long term, and these are now pretty much is only big non US investments, So it's a it's a huge expression of faith in Japan that everyone is generally incredibly
pessimistic about. Not me, John and I have been bills on Japan for so long it's kind of embarrassing now. But now we've got Warren Buffett walking by our side, I think we can feel a bit more confident. So I'm wondering, given that we've just talking about the value market that is the UK, are you also positive with me and Warren on the value market that is Japan.
Yeah.
So whereas Warren Buffett has billions of dollars invested in Japan, I've got a few million invested in Japan and I think that it'll do very well. And you know, when I started my career a long time ago, I was a kind of Japanese analyst. Possibly when you were younger as well, marrying all the you're of the age gap is significant between you and me, But when I was younger, I had to write out all the questions at night for the meeting the next day, and research the company
and do all that sort of stuff. I honestly don't think any junior people and any companies do that anymore. There's a sort of sense of entitlement, entitlement or just like, you know, I don't need to spend my evenings doing this at homework on behalf of the boss. When I was doing that, you could throw a dart on any quick number on the Japanese stock market and it would
be didn't really matter. It was going up. And John Greenwood, who worked at GT at that time, you know, a great monetarists, was you know, propounding the fact that money supply dictated stock markets, and it worked, and then it stopped working in about nineteen eighty nine because the Japanese market went ballistic and it was just ridiculously overpriced. And I think any market that's ridicularly as overpriced you walk away from. And Warren Buffett walks into markets when they're underpriced.
So UK and Japan, Yes, the difference between the UK and Japan is that although there's a talk of activism and you know, foreigners stirring up trouble in Japan and trying to unravel the cross shoholdings in Japan, and the undervaluation of the book values and all that sort of stuff.
Very unlikely.
There will be a lot of takeover activity in Japan for reasons that you're very familiar with, whereas I do think there we're going to see some mega deals coming to the UK PE companies. Anyone with dry powder is going to be coming and snapping up our possibly some of our biggest companies over the next year or two.
And maybe that's why the pound's been relatively strong against the Japanese yen, because actually the yen is much more undervalue than really any major currency in the world, and it just I don't really understand why the yen hasn't mean going up. I don't know, do you have any view on that. I know that they're going to remove YCC at some point in the relatively near future, so I really don't understand.
Well.
With that in mind that there are things that you don't understand, which is unusual. The money you do have in Japan, what kind of stocks is it in?
I mean like you I buy the I buy trust, so the Nipon, the Nipon activist value funders one, even though it's not very active one.
Active value just just a merger announced.
Yeah, they're taking over a small trust, aren't they.
Yeah yeah, yeah, interesting, Okay, that's an actual value fund. I was looking today earlier today at some of the japan trusts, and very few of them have followed the
Japanese market as a whole. I ei they've all underperformed, which is kind of interesting, and suggested to me that when they looked at Japan, they think to themselves, well, we should be in Japan was because of the Japanese trust, but we have very little faith in it as a wholy little faith in the economy and little faith in the stock market, so we'll invest in international and all growthy stuff. And so they've missed the more value end of the market, which is a bit where the air
performance has been, which is kind of interesting. Whereas it live on active value, one hopes has been diving around in active value and not done the same.
Yeah.
I mean I brought into Zenna recently and I bought individual stocks. So I think Sonny is a real cracker of a stock actually, because if you look at it compared to the US media companies, and Sonny effectively is a media and gaming company, it looks very cheap and seems to be quite well managed, and you're you know, buying it about ten or eleven times earnings, and you know, as far as I'm concerned, that's that's a deal. So I've been buying Sonny, and I've got some of the
car companies. I've got Toyota, which you know, when Tesla goes bus, which it will, you know, Toyota will will continue, and it's a very cheap company. Something to note, actually is that two things on electric vehicles. The one is that the Chinese are now producing electric vehicles of as high a standard or higher standard than the Americans and the Germans, and they will start exporting in very large quantities. And there are forty electric vehicle companies in China, so
the price competition is going to be very intense. And secondly, the electric vehicles are not the great panacea that they seemed, because you know, you can't put them on ferries, you can't put them in certain car parks, you can't put them on bridges because the batteries are so heavy and when they catch fire they cause massive destruction.
So I just think we have to be a little bit careful about evs.
But hey, and I need to go back there. You can't put electric cars on ferries.
They are banning electric cars from a lot of ferries now, So.
If you want to drive your car to one of the Scottish islands, in fact they forget that because you'll never find a ferry to get on. That's not really an issue, is it? No ferries in Scotland, So you can't be down from taking an electric car and a ferry that doesn't exist. But let's say you wanted to take it on a cross channel ferry.
Do they still exist?
Cross channel theories do exist, and I don't know whether they're banning them or not, but I do know that there have been recent unextinguishable fires on ferries as a result of EV cars catching fire. And so either they find new batteries, which is probably what they're going to do, solid state batteries, or the other issue is the weight. I mean, electric vehicles are much much heavier than conventional cars.
That's a problem as well.
I don't want to make it stand that this is a very major issue. Maybe it's an issue that can be solved, but it's just another roadblock in the rollout of evs. And you know another thing, the British government is being stupid about is saying that we have to start producing regular cars by the year twenty and thirty, whereas the Europeans have kind of extend and pretend beyond two thousand and thirty five. It's just not feasible. It's
going to destroy our car industry. We really you know, why are they shooting themselves and both feet at the same time.
Well, interestingly, the car industry is one of the areas where UK productivity has fallen the fastest, and again that is blamed on the sort of slu of environmental regulation that has been put on top of our car manufacturers. But be that for good or bad, it's definitely affecting our productivity, which is the bad bit, right, Okay, So Tesla's going bust?
Do you want to just leave that one there?
Well, I mean, look when I say it's going bust, they haven't had a new car for a few years. There's no sign that they're going to introduce a new car. They're cutting their prices and various jurisdictions around the world, and that production rate is way higher on a quarterly basis than their sales rate.
Of course, Elon must talks it up as.
Being a problem about vehicles in transit being in the wrong place, et cetera, et cetera.
But to my mind that's not a good sign.
And yet their market cap can still buy the nearest seven largest car companies, which are catching up very rapidly in terms of quality and evs, and have decades maybe one hundred years more experienced in some cases, of producing cars, and are remarkably cheap on many multiples. I mean, I think, you know, you could do a good trade. You could go long Toyot to short Tesla, or you could go long General Motors and go short Tesla and over the next year or so you'll do well. And I've actually
made money by shorting Tesla. It's you know, very volatile stop so every time it spikes up, you want to short it. And every time it goes it looks like it's an internal decline. Maybe buy it back, but ultimately it's going to end up with a very low value relative to its current market cap.
Okay, we'll get hate mail, you know that, right, you should address everybody.
Well, you don't have my address, so that's good. I'm in Dubai, not mine, Dubai.
On your way to sing, a boy, you're safe.
Leave it all with me. Let's talk long longevity, the other the other topic or met what are the other many topics? I know, very incident.
How long are we going to live?
Jim, Well, we are living longer.
I mean there's a problem here because we're not living longer. Actually, life expectancy is be going to fall, particularly in the US average life expectancy obviously, and in the UK as well. And we've got the very high level of excess deaths in it well and pretty much all Western countries presumably as a result of lack of healthcare during the.
Pandemic, etc.
So we're hitting a bit of a blip in the every one living longer story.
Feels yeah.
I mean I think that the UK, the rate of increase in life expectancy is very low at the moment, but it's not gone backwards.
In the US. There are particular reasons.
I mean, the US is lamentable, you know, by two thousand and forty and we're only talking what seventeen years away, thirty five percent of US GDP will be spent on healthcare. I mean that's outrageous, right, Yet the life expectancy is four and a half years shorter than our own life expectancy in the UK, which is not the highest in the world, as you know, Singapore, Japan, career and some European countries like Spain, life expectancy is considerably considerably higher.
But generally the trajectory is slightly upwards.
But the great gains coming from environmental factors in improvement and life expectancy have have been taken. So now we're waiting for gains from biological intervention. And there is no biological intervention yet that can keep you alive healthier for longer. But I do see that some things are beginning to show promise. It's taken longer than I expect it to, be quite honest, and there's some very interesting stuff happening,
but it's like a duck paddling underwater. Most people don't see it, but you know, there are definitely signs of biological intervention in a poly drug form. So there's lots of different interventions could lead to us living most importantly healthier in later life and secondly potentially for longer, and that would be a great relief because if people just get older and get more decrepit and frailer, first of all, they can't work, someone's got to pay for them, someone's
got to look after them. And then the healthcare costs in the last part of their lives become untenable for most healthcare systems around the world, and so we need to find some way of reducing that burden. So it's an imperative that something is done to improve the robustness of old people. And you know, money's coming into the sector. Jeff Bezos has invested three billion dollars in a UK company, Altos Labs, based outside of Cambridge. Google's invested two and
a half billion dollars. There's money coming in to a variety of other companies and philanthropies and all that sort of stuff, and so relatively optimistic. And we just hired a very top dog from Astrazen to come and head up to in Essence and he's really very good at delivering drugs into the market. And I don't know if you know, Marin, that Estra is now the biggest drug company in the world. It's overtaking the Pizer. So most people,
you know, something that the UK should be trumpeting. We have the world's biggest drug company on the London Stock Exchange and No one's saying that.
I'm going to tweet that the second we've finished talking, and then everyone will come back and tell me it's not true. Possibly be true because it's British.
It's true.
How do how do ordinary people invest in this amazing trend? When I asked you about this a couple of years ago, one of the things you said was just by Google, because they've got fingers in all the best pies.
Well that was more than two years ago, but maybe more than two years ago.
Oh, no, it was, And I think Google probably has gone, you know, is going ex growth like all these big fang stocks.
But no, that's not the way to invest in this.
And actually I don't really know what Google's done in longevity because there's very little information that's coming out of them. But what I would say is that I'll watch this space so you know. For instance, juven Essence has said that as sheets thank god it didn't go public because
the biotech sector has been massacred. Essences said it expects to go public by the end of next year, and I think that's that's entirely possible, and it might even go public in the UK because the center of its operations is in the UK, even though most of its investments are in the US, and.
So that might be one way of playing it.
But there's nothing really that I could recommend for the average investor in longevity yet, but just keep a watching brief on it. I mean, that's that's the best that one can do. The big farmer companies have not yet dipped their toe into this area, and I'm sure that they will, but not yet, And so it's just it's something to keep a watching brief on.
All right, we will watch and wait on that one. And as you will be watching.
Yeah, and you've got a little and ten, you've got plenty of time to make your investments.
Yeah, still got to make my at the right time. Let's talk about the other technology area that you're very interested in, and also have a vehicle for agronomics, so the idea of agritech and changing environment around that. And then they're particularly interested in cultivated meat, which because if you I try very hard to think about it in a positive way, but still find mildly repellent. Let's talk about what you're doing there and what you're interested in that.
Okay, so I'm here in Dubai and the UAE because they important ninety five percent of their food, they happen to have a fairly forward thinking, technocratic view of what they can do, and they also have lots of money, so I don't think it'll be very long before factories are built in the UAE to produce novel proteins. There
are two elements to cellar agriculture. One is growing meat fish materials in laboratories using stem cells as the basis for the development of those products, and then the other is what's called precision fermentation, which is a kind of
brewing process. Precision fermentation is further ahead because it's a long established biotech process now moving into foods and materials, and it's already approved in the United States to make dairy proteins are bioidentical to milk proteins or egg proteins that are bioidentical to albumen used in the industrial egg businesses like baking, confectionery, et cetera, et cetera. So we invest in both of those and actually since we started Agronomics, the nav of the company has gone up by nearly
four times. The share price has been very volatile and now sells like most investment trusts. Of this nature at a discount as NAV. But I can tell you the NAV is genuine and the outlook is very positive. So because of our experience, my experience in biotech in the last twenty years, I know that if you start your own company and back scientists entrepreneurs to develop.
It for you, you.
End up with a much bigger share of the company and a much higher return on your money. So when we started Agronomics and Newer Grari, which is the other fund we have, we invested in other people's businesses and that's great, and those businesses are generally doing quite well. They all have products, some of them are being approved right now, some of them are on sale right now. But starting your own company gives you in a white
space opportunity. It gives you a much bigger upside. So we started a company called Liberation Labs, and that is building fermenting capacity around the world for food companies to share to act as a contract manufacturer for those producers
of dairy proteins or egg proteins. So our first factory will be up and running at the end of next year in the United States, and that's one hundred and fifteen million dollar factory with very very attractive returns, and we will be the first second, third, fourth, fifth, sixth, seventh, eight, nine, tenth factory in the world through Liberation Labs, because no one else is anywhere close to being able to build these factories in the same way as the two people
that we hired who are the world experts in this field. So Agonomics ends up with a much bigger share of that company and also a very exciting industry. Our dog food which is being done in the UK are called Good dog Food.
I hope that company will go public.
Before the end of this year in the United Kingdom, and I'm pretty sure that its product will be on the market, and it's a sell ag chicken product that will be sold on the.
UK market by the end of this year for dogs.
And the dog food market is twenty five percent of the meat market in the UK and twenty five percent of the meat market in the United States and growing faster than the human meat market.
And we got.
Sorry, I just want to interrupt you briefly to be absolutely clear, because there may be people listening to this who do not understand the distinction between what we're talking about and the sort of pretend meat made out of vegetable growthing, you know, the impossible and beyond, etc. So I just want to be clear when anyone's listening, that is not.
What we're talking about.
We're talking about bioidentical meats made in labs.
Yeah, so meats that I just wanted to get that clear.
Right, Meats that don't have the same environmental impact as growing conventional foods, and meats that don't have you know, ten billion animals sorted every year and eighty billion held in captivity waiting to be slaughtered on an annual basis, which is the current situation, displacing the water supply around the world with lots of contaminants, lots of antibiotic use, lots of hormone use, none of that.
So this is what I call clean meat.
Some people might call it Frankenstein meat or you know, synthetic meat.
It's not.
It's real meat. It's grown in a lab. You can't catch cancer on it. It is identical to the best of farmed meat. And the same goes for fish, and the same goes for leather, and the same goes for other things as well, including cocoa, coffee, cotton. So that's completely different to the as that's plant based foods that we don't invest in. So that you and I could set up a plant based company tomorrowle at Merin and James Kitchen, and we'd face huge amounts of competition. We're
producing highly processed foods. We'd be struggling to get space on the supermarket shelves, et cetera.
So that's not and as we've.
Seen from these companies, people don't really want to buy that stuff anyway.
Well, there are there is a market. I hate Beyon Burger for lunch here in Dubai today. I have to say, you know, I've gone off them because they just don't They don't do it for me. But we don't eat meat at home, so obviously occasionally it's quite nice to have a sort of a SATs one. But very soon we'll be to have the real meat produced in the lab. And two companies have had their chicken products approved in
the United States already. I wanted to say just about Good dog Food that pets at home, which everyone in the UK is familiar with. It's a multi billion pound company, a really really good company has invested in Good dog Food and it's going to be its exclusive distributor of the food for two or three years. So that's a really great endorsement from one of the leaders in the industry.
So it seems like a brilliant way to get people used to the idea.
You know, it's a.
Great market entry point, doesn't it. People get used to the idea that they're feeding their dogs real meat, but not meat that is affecting animal lives and the planet, etc. And then it's not much of a leief to move into it themselves exactly.
And I'm going to tell you a very quick anecdote about being in Dubai.
I met a guy.
Who's a senior sort of investment chap and during the pandemic, he and his family were stuck in Dubai and every day they would go to the same sushi restaurant because the chefs were tested there every day for COVID, and so he's eating the sushi every single day. And after the pandemic he goes and gets a medical check up, and his mercury levels were off the scale because tuna fish is full of mercury, so you should only eat it once a week, and also it's got microplastics in it.
Next year, Blue Naliu, the US company that we're investors in, will have a tuna fish product on the market with no mercury and no microplastics and no desipolation of the ocean. So it's not just about meat, it's about all sorts of other stuff and.
No suffering fish. No suffering fish also seems to like a good bit.
Yeah, well, I eat fish, and I try and pretend that, you know, they don't stuffer, and they're all you mainly treated and so forth. But you know, this is not going to be displacing the farming industry, particularly good farming industry, such as is practiced in the United Kingdom for for
a long long time. This is basically taking the margins where the Indians and the Chinese want extra protein, and quite rightly, but if they if they want the protein that they want to get, they're going to collapse the environment. So this is like the this is like the buffer really zone, and it will take many, many many years, particularly in building the infrastructure, for this to take a
considerable chunk out of the meat or food market. But nonetheless it's a very large addressable market, and it's one that is super exciting, and ultimately you can produce food lower than the cost of conventionally farm food. But ultimately, you know, it could be thirty years away. So this is not something I'm suggesting it's going to eradicate farming anytime soon.
Okay, that is very interesting and useful long term information. Now, Jim, I've had you for long enough, and they've got better things to do than continue to.
Chat with me in order to do than to talk to you.
But unfortunately, the Longevity Forum, which I'm a co host, is having its sort of once every two week meeting as we run into the next cycle for this coming November.
And so okay, well.
Let me just ask you one quick final question. Then it's a tough one.
They're all tough.
Now, this is the toughest Bitcoin.
Or gold, oh one hundred gold.
I was teasing about it being difficult.
No, I mean, and I think you'd answer the same way. I mean, if you look at it, gold is very close to its all time high. It's retained value. I mean, you're the big gold bag, so it's retained value all the way through. And Bitcoin maybe at twenty six or twenty seven thousand dollars, but it was at sixty four thousand, so the volatility would kill you. And whereas gold, although
it's volatile, it's nowhere near as volatile as bitcoin. And I much prefer to look at the shiny stuff in my safe than to think about someone trying to hack into my Internet safe and see my bitcoins from me. So I don't think bitcoin's got any real This is more hate mail, right, so not no real validity.
I think that the.
Americans are particularly going to crack down on the exchanges, and there's going to be a lot of announcements over the next year or so about that, and it's just going to be there'll be no contests. A gold, by the way, is going to go to three thousand dollars announces in the next eighteen months. And you've got to get on the bandwagon. You keep on saying this, Maren, You're so right. Everyone has to have an extension to gold. Everyone brilliant.
That was the right answer, and you didn't make it complicated at all. Now, thank you. Now, there is one final thing that we must talk about before you go. We've talked about lots of the wonderful and exciting and interesting things that you do, but we haven't talked about an interesting turn you've taken in your career recently, which is writing a children's book.
Oh, thank you, Maren. Yeah, I wrote this book.
All the process go to two charities, Compassion and World Farming, and not just the profits, all the proceeds and a dog shelter and Abtha that's very close to our hearts. We have seven dogs, as you know. So one of the story is centered around one of the dogs, Juno, and it's her adventure in rescuing not regularly fund but cruly fund animals and then coming across cell agg And it's aimed at eight to twelve year olds. Orthough it's
a kind of wide band. So I really enjoy writing this and you know, hopefully some people will will buy it and read it, and the money all goes to those wonderful charities.
Brilliant, Jim.
Thank you so.
Juno's Ark it's called I have a copy.
My children are not too old to read it.
Thank you so much, Jim. Thanks Baron, thanks for listening to this week's Marin Talks Money. We'll be back next week in the meantime.
If you like us, show, rate, review, and subscribe wherever you listen to your podcast. This episode was hosted by me Maren Sunset, where it was produced by Someasadi A
Mohammad Faruk, additional editing by Blake Maples. Special thanks of course to Jim Mellon, Thank you, Jim, and to John Steppek and of course our weekly reminder to sign up to John's daily newsletter Money distilled the linkers in the show notes and if you're really lucky, he'll tell you more about the detail of the matters we were talking about our introduction to this week's show open. Why would you not sign up to that