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Welcome to Maren Talk's Money, the podcastings people who know the markets explain the markets. I'm Maren Zumzert Web. This week I'm speaking with Thomas Later, manager at the UK's largest investment company, Scottish Mortgage Investment Trust, something that I suspect an awful lot of you hold.
If you do, you'll know that.
His long term performance has been spectacular. If you've invested in two thousands, your money is up ten times since then. The last five years have not been so great. Twenty twenty two twenty twenty three were not great years for the trust, but things are now picking up nicely again. Over the last year you are up seventeen percent and a year to date ten percent.
Tom's been involved with the Trust for a decade now.
We've first joined Billy Gibord in two thousand and he became a partner in two thy and twelve. So a little more insight in this conversation to how Tom is looking at investing at the moment and how the trust is faring.
Tom. Welcome to Merrin Dogs Money.
Thank you very much for having me.
Now listen in.
The introduction I've said a little bit about Scottish mortgage, but I think it would be super handy given it's such a well known trust in the UK, but maybe not so much outside. Just gives a little rundown of how the trust works, what is invested in and what you do.
Sure, the trust is a portfolio of what we consider to be the most exciting growth companies in the world, and we spend our time looking for these opportunities and where we find them, we try to be really patient long term owners. We're not restricted by geography, we're not restricted by whether a company is public or private. Currently are about three quarters public companies quarter private companies. That the defining characteristic is is having a really long time
horizon of which to assess these opportunities. And I guess the final point is if you look at the portfolio, it has nothing really to do with Scotland or to do with mortgages.
That is simply the inheritance of the name.
Yeah, and it's the name you're going to be.
You're going to have long term, right, a lot of trust with what you might consider to be old fashioned names have begun to change them and shift around the place. But Scottish Mortgage is so well known as a brand that you can probably hang on to this name that doesn't in any way refer to the content of the portfolio.
Fine, well, I think the heritage is really really important in the history. I do think it's sad when these trusts get incorporated into sort of bland corporate nomenclature.
Now, listen, one of the things I said in the introduction is that this trust has phenomenal long term performance, but shorter term things have been a little ropie. So if we go back to twenty twenty one, that was a phenomenal year. The trust was up, the share price was up nearly one hundred percent or so, and then we went into twenty two to twenty three, and the twenty two in particular was a twenty two was an all right year. Twenty twenty three it was a horrible year.
And since then things have improved, but nonetheless but not anywhere near back to the highs of those heady days of twenty twenty one. Just explain quickly for people who haven't engaged with the trust what it is that happened during that period.
What happened I think as we went into the COVID period is that the world came to a lot of the companies that we owned. We owned Amazon, for example, and we all moved to starting shopping online. We owned many of the enterprise software companies that facilitated working from home. So we went through this period where the companies that
we owned had this real boost to their businesses. And then as we exited the COVID period, I think habits reverted to normal a lot faster than we had anticipated, and so the tide went out for a lot of
our companies, and that made things pretty difficult. And in the period you're describing, I think if you wind the clock forward to today, what we've seen is these companies dealt with very rapidly rising interest rates and changing demand patterns, and the best among them really took those signals seriously, and they thought pretty carefully about what they were going to do with their costs, with their headcount, and prioritized
within their business the projects. You know, in an environment where capital had no cost, you do everything and you pursue growth. But as soon as the interest rates rose rapidly, they started to think much more carefully about prioritizing what they were doing, and so you've seen this recovery and profitability across the portfolio companies moving from sort of break even by choice to earning really pretty good margins today.
And I think that's real source of optimism as you look forward, that you have that degree of robustness and adaptability that's come from that challenging period in the aftermath of COVID.
And would you say that as a result of that challenging period that you've been through and your companies have been through, you have shifted anything in your investment process. I mean, looking back, for example, the investment process is very influenced by a piece of research that suggested that nearly all the returns in the stock market come from four percent of companies, right. I remember this fascinating bit of research that came out and Billy Gifford really looked
at very carefully and reacted to. But one of the things possibly about looking at the market like that and thinking well, we must have those four percent of companies was thinking we must have those four percent of companies at any price, yep. And so possibly going into twenty twenty twenty twenty one, there was less of a focus on valuation inside your portfolio than there might have been.
So I suppose the question is, since then is there a different approach to the valuation of companies, regardless of their amazingness.
I think the philosophy that you've mentioned is core to what we do. It is just a fact of life that if you extend the timeframe through which you look at stock markets, you get a skewed distribution of returns. It's not the normal distribution that we're taught in our financial analyst training. It's that a small number of companies drive the returns, and so for us, it's how do you identify companies with that opportunity and how do you hold on to them for long enough that the return
acruise for our shareholders? And in a way, it's that simple. But it also is really important that when you go through a period of tough performance that it triggers some introspection that you look at process and think about, well, what could I have done differently. One of those process
outcomes for me is thinking about resilience and robustness. So it's all very well to imagine where a company will be five or ten years from today, but the conditions that it encounters along the way will be faced with today's business, So do you have the resilience and robustness to get through that in order to achieve that bigger pay chairman. That's why I started with this point that actually you've seen significant improvement and profitability in the companies
we own. That for me is really encouraging because it says you have the resilience and robustness to go after that bigger picture dream. And then another point about valuation. Valuation has always been a part of our process and a really important part of our process. But what we don't do is look at short term price earnings ratios and say, well, this stock is valued at twenty times its earnings, Therefore it's cheap or it's expensive. We think
there's very little information in that. So the timeframe that we think about valuation is how do we make our required level of return over the next five years, And at any given point there's a high degree of uncertainty
in that. So if you take that back to what was happening in twenty one twenty two, with the benefit of hindsight, yesumber of companies had got ahead of themselves, but you also have to remember that valuation is always a relative game, and so with interest rates at zero, with growth rates that were being delivered by some of these companies revenue growing fifty or sixty percent, then actually the relative valuation didn't look particularly challenging, and with the
benefit of hindsight, the sensible thing to do would have been to have gone into a lot more boring types of stocks, which themselves look pretty expensive relative to their history. But that for us isn't That doesn't fit the philosophy of what we're trying to do. It would not have been consistent with the very clear objectives that we set
out for shareholders. So yes, it was a mistake, but it's I think staying true to the philosophy is really important and deviating from that would have been a bigger mistake.
Yeah. Well, you could also say that it's a little early to say whether it was a mistake or not. We'll see the benefits have been long term, exactly, and I suppose.
Yeah.
The other question to ask really is that we know you're answer to this, but a lot of people would say that if it is true that four percent of the companies drive the majority of returns, which moment of course it is because you've done very long term research into this. Then the answer is not necessarily to hold a trust or put your faith in a manager who believes they can find that four percent, but simply to hold an ETF that covers the whole market, so you
definitely get them. So you have to have a lot of faith in a manager to believe that they're the ones who can find the four percent. So I think what we should do now is move on to talking about how you find those companies. How do you look at the market and say this is the one that will survive. I mean, even in something like AI, which obviously going to be a phenomenally transformative thing already is transformative for the economy and for our for everyone's lives,
there are a lot of companies doing this. How do you look at a company and say, this is the one that will be in that four percent that will almost definitely drive the returns that we've promised are invested.
I suppose the first thing is that I agree with your your premise there. I think either you just stone the whole market, and that's a pretty sensible thing for people to do, especially if you can do it at a very low cost. You will capture those companies. But you do have to accept the price of doing that is that you will be diluted by the other ninety six percent of companies that don't matter.
So in the way you should you should do one or the other.
You shouldn't. You shouldn't mess around in the middle. You should either have either have as someone who has the whole market or have someone who's making a genuine effort to have that that four percent.
In my view, you should do both.
You know, I think it's a perfectly sensible thing to have that broad exposure at very low cost. And then I think depending on your risk appetite, we are a volatile portfolio. We embrace that volatility in the pursuit of long term growth. But that's not for everybody. But we do think for those that want to go after that higher level of appreciation, that there's the role for both, you know, concentrated active management and index exposure.
But key in this is keeping costs to a minimum.
You know.
It's it's if you're going to pay for active management, then pay as little as you can and get genuinely active portfolio for your money.
Yeah, okay, so how hell.
First of all, it's it's it's go back to what is the scale of the opportunity and is it growing or shrinking? And what is the likelihood of capitalizing on that opportunity? And is that increasing or falling? I think those are the two starting points for process. There are lots of great businesses out there, strong franchises, great combative positions, But can you really say there is the opportunity for this business to be many times at size in the future.
And so for us, that's a question that narrows down the universe pretty quickly. And then is that opportunity growing or shrinking. So if you take Amazon, which is one of our most successful investments of the past twenty five years, I think we bought it in two thousand and four, two thousand and five, so that's twenty years, not twenty five. But if you look at that business and through our ownership, what we were continually able to say is that the
opportunity was increasing in size. It started as a bookseller, it went into ebooks, it went into media more broadly, it went into general merchandise, it went into selling computing infrastructure. Every time we revisited the case, you could say, I think this opportunity is big, and it's getting larger. And then as you went through time, you could also see that its competitive position was getting stronger. We talked about its competition relative to Bonds and Noble and other physical
book retailers. We talked about its competitive position relative to eBay in online commerce. But over the years it just became clear and clearer that this was business which had a higher and higher likelihood on capitalizing on an opportunity that was growing. And so when you looking at opportunities today, some of the companies we've bought in the past year would be New Bank and Revolute to digital online banking businesses. New Bank focused on Latin America, more focused on Europe.
And it seems to us that for the next billion consumers who are going to have a bank account, they're going to come through one of these digital platforms, not one of the traditional banks. They have a huge advantage over traditional banks with the in terms of their cost structure, not having branches and all that goes with that, and their digital tools have a huge reach, so they can get better faster than those that are limited to a single market and a smaller number of customers. So that's
an opportunity that's big. It's an opportunity that's growing, and the longer time goes on and you don't see any competitive response from from those traditional regional branch based banks, the more likely it is we think those companies will capitalize on that opportunity.
Okay, so when we look at themes, a lot of what you invest in is obviously at tech. So it's around the AR revolution, it's around digitalization. Where are the most interesting parts inside that tech revolution? It seems to be moving faster I think than even you might have thought a few years ago.
The way that I look at this is that it's tech is not really a very helpful label. You know, we could talk about the companies that are using electricity or the companies that use telecoms. The fact that they are using technology is neither a helpful way of categorizing them or really understanding their advantages.
The way we prefer to think.
About it is, if you take stick with the example of Amazon, it's part analyzing the resale business and it's part analyzing the infrastructure business.
If you look at.
Meta, the owners of Facebook and Instagram, it's more about media and share of attention than anything else. It's about selling advertisements. But I think you know, where tech becomes really relevant is in the in the leadership of these businesses and the understanding of how technology is driving change in their industries.
Take your example of AI.
If you think about how a typical enterprise encounters AI and thinks about deploying it, senior management will say, right, there's something to this whole AI thing. Let's find somebody from the I T department who knows about it, and then you know, if they get increasing conviction, they maybe bring in a consultant to tell them about AI. Then perhaps you do an experiment. Let's find some little bit of our business where we can develop some of these tools,
and let's see what happens. And you know, maybe we can take some people out of the customer service department because we can use some of these tools to blow AI and that whole process, that feedback loop just takes a long time. Now you compare that to let's stick with Meta and Mark Zuckerberg, somebody who has a real deep understanding of this technology. You can see immediately where it has application in the business. You know, how do
we gain competitive advantage from deploying these tools? How do we drive revenue in the business from deploying these tools, and then you can see all these projects that are springing up the way that they're transforming what they're doing.
So if you look at time spent on Facebook, for example, which is a pretty mature platform at this point, it was up about eight percent last year, and that's because they were using AI tools to surface content that their users love them, were engaged with, and so you can see the immediate impact in the business. Shopify would be another great example. That's a business that creates tools for
retailers to operate their business. So whether that's having their own website, you know, selling through platforms like metas platforms, Instagram, et cetera, helping their physical stores doing point of sale. But what you have as a technical leader who immediately understands how AI can make the business better and deploys the technology to increase the relative advantage that they have to other players in that industry. So go back to
the philosophy. It increases the size of the opportunity because you can do more with this technology, and it increases the likelihood of success because you deploy it faster than your competitors. And so when we're looking at technology, we don't get excited about you know, this is a great widget or this is a you know, a great tech. It's more, these are great businesses and they can deploy this to improve their relative position.
That's what gets us really excited.
Okay, interesting, And one of the things that you've written about and talked about before is how if we want this gen rational AI to be truly transformational, which we do, we want it to drive or expecting it to drive a productivity revolution across the world. Finally, thank goodness, we've been wasting a long time for that productivity revolution, haven't we. That If that's to happen, it's got to be ubiquitus. So everyone has to have chips, So you can't have
these very expensive chips. It's not going to continue that the producers have these very very high margins. And one of your most successful positions over recent years has been a video of course, but that's going to suffer as a consequence of the commoditization of the products right well.
And video is absolutely at the heart of this AI revolution that we are seeing and we're going to see. But I do think that we have to bring down the cost of these systems massively. If you look at the deployment of technology in previous waves, whether that was the mainframe computer, the personal computer, mobile devices, online, the cloud, and all of them brought prices down and that was a really important component of the spread of the technology.
Now that has been happening in AI.
If you look at the you know, the cost of processing tokens in these models is coming down very rapidly, but there is this real constraint, this bottleneck in that we just don't have enough compute and that's led to
two very high chip prices. You can see it in Nvidia's margins because they have been almost a monopoly provider of the silicon that's needed for this and for me, I think if if we're really going to see this technology reach its true potential, you are going to see more than one provider of the silicon to do it. As you move from the training phase for these systems to the deployment phase, so you're running in who are
actually using the technology. It's not clear that Nvidia's edge is as strong in that inference market as it has been in the training market. So inspite to how much exposure do you want to have, and the decision we took last year is that we would reduce our direct exposure to Nvidia. We bought and then grew a new holding in TSMC, which is the biggest manufacturer of these chips and is a bit more agnostic to who is
designed them. But we're also putting money into companies like Matter, so we don't want to reduce our overall exposure to this area, which is is you know, it's going to define the next twenty years of investing, but it's we don't think it's going to be as concentrated in Nvideo as it has been over the past two or three years.
Yeah, I mean the other big bottleneck in the AI story is the energy part of it, right, So we're going to have all these huge data centers and this is incredibly energy hungry. I'm sure become less energy hungry over the years, but nonetheless we do have this constraint on it at the moment to overlook at investing in
the energy sector. And we've talked on a podcast a few weeks ago about how extraordinary it is that people are paid to the moon and back for a company that is connected to AI, but absolutely nothing for the mining companies that produce the materials, without which none of these things can exist.
Yeah, I think energy is a significant constraint, and we're moving from an environment where you've seen very little growth in energy demand for quite a sustained period in Western economies to one where you can see that demand growth coming through. And actually it's pretty easy to pick up on because, particularly in the US, the utilities have to submit these ten year plans, and so you can see the assumptions in those plans changing over time.
I think the piece.
Of that that gets us most excited is the renewable energy generation part of it. You've seen the cost of energy generation with solar continue to decline. You've seen the cost of solar plus storage also decline quite markedly. With the progress that's been made in batteries, we recently took a new holding in c ATL, which is the world's biggest battery manufacturer, I think we'll see the deployment of this technology at an increasingly rapid rate at the moment,
and I think more driven by geopolitical reasons. The US is more oriented towards natural gas deployment. But the challenge there is that you've seen huge cost inflation in turbines, for example, over the past few years. Which has made solar plus storage more competitive. And then there are huge constraints on the supply chain. So if you order a new gas turbine today, it's going to be well into
the twenty thirties before you take delivery of it. So those things, to me, say, solar plus storage, which continues on this declining cost trajectory, is just going to get more and more important.
I think that's a really exciting area.
Yeah, okay, interesting.
The other area that you invest in that I think when people look at your portfolio they find vaguely unexpected or the Ferrari in particular is being quite a big driver of returns. And now you've got Ames as well. These people will look at these and go, well, that doesn't fit with my perception of Scottish mortgage. What's in these luxury goods companies? Because I think we can call Ferrari a luxury goods company, can't we? That works with your ideas?
Yeah, absolutely, you call it a luxury goods company. And I think when you think about growth, and remember we're a growth fund, we're not a tech fund. When you think about growth, there are some companies that will deliver transformational growth in short periods of time, and there are others that will exploit their opportunity more gradually, but for very long periods of time, and everything else is on
a spectrum in between. And I think what's exciting for me about those luxury companies is that you can foresee growth not just for the next two or three years, but for the next twenty or thirty years, and you can see the governance structures, the ownership structures that are going to facilitate that, whether that's that family involvement, and the time horizons there exceed even the ones we have at Scottish Mortgage. And what that means is a patient exploitation.
It means these companies can make their own weather. We worry less about what's going on in the economy or interest rates because it's at that operational execution, the low capital intensity, real understanding of their consumers and where we can find those assets that we think are underappreciated. You know, we're absolutely delighted to have them in the portfolio.
Okay, so Tom, quite a lot of the portfolio is invested in in companies based in China, right of fourteen fifteen percent at the moment, there's been all sorts of conversations about the relationships between the US and China. We've got the tariff larvas, We've got the erratic nature of President Trump's behavior around geopolitics, etc. Are you happy with your investments in China and with the extent of the portfolio that is exposed to it.
Well, it's been a pretty difficult environment investing in China over the past five years. Most of that actually has come from the approach of the Chinese authorities to the private sector. Many people, in fact, most investors, have really given up on China in that period. But we have stuck with it, albeit at a reduced scale within the portfolio. But what's allowed us to do that is that these companies are some of the most dynamic, exciting businesses that
we can own. We think they're some of the best management teams that we can get exposure to, and we can own these businesses at very attractive valuations. As I look at it today, there are genuine concerns from a geopolitical standpoint. I'm just back from a week in the US and it's clear that there is an intense focus on competition with China with you know, within the US. But I think you've got to stand back and say, well,
where is that coming from? And for me, it's coming from the fact that China is very successfully moving towards being a high tech economy.
It's it's moving away.
About the balance of exposure, is moving away from low tech mass production to becoming a leader in a science technology oriented, high tech manufacturing economy, and that that's what's that's what's threatening to the US and others. But those things are are interesting trends to be exposed to as an investor. If you take a holding in Mayitwan, it is one of the leading companies globally, globally and providing
local services. It operates at a scale that no one else does, has a level of sophistication that you can't get exposure to elsewhere. And you know, Byte Dance the owners of TikTok again one of the world's leading AI companies that we're seeing Western companies scrabbling to imitate because it is the leader and where we can find those opportunities at attractive prices. We're very happy to be the long term supporter of owners. I think the challenge is
the top down one. How much of the portfolio in aggregator you prepared to have exposed to China because there are some homogeneous risks there, and that's something we spend a lot of time discussing in board meetings.
So we're probably not going to see the Chinese exposure go up much in a hurry.
It's significantly higher than you will find in most global portfolios, but we are cognizant of the challenges that may come from owning Chinese assets as a West investor, and it's just how much risk are you prepared to take? And if I can put it a slightly different way, one of the ways we've thought about it is if I'm going to take that risk, what is the return threshold
that I'm looking for? And so when you look at some of the very big Chinese platform companies that we've owned in the past, we've decided that if we're going to take China risk, then it's going to be challenging for those companies to deliver the type of returns that we would expect to compensate for that risk prodject and we prefer to own companies like BYD the auto manufacturer, like c ATL the battery manufacturer, where we think that that potential upside is just higher.
Tom.
The other part of the portfolio that's been causing you some bother and not everybody is one hundred percent comptrol with is the percentage that is in private companies as opposed to listed companies. That's about twenty five percent of the portfolio. And I know that it makes sense to you as an investor because you say that it doesn't make any difference to you where you find the growth. You're agnostic as to whether something is listed or not.
But of course there are issues for investors around the extent to how those are valued, how often they're valued, and how that works inside the portfolio. But you're still comfortable with this right still, where you're finding or believing that you're finding fantastic opportunities.
I would frame it a little bit differently.
I'd say these are some of the most exciting opportunities that we can find, and it's very difficult for individuals to get access to some of these large private companies. If you do find structures that get you access, you have to pay extremely high fees to do it. So I think it's a really central aspect of what we're doing to get access to these companies that in previous areas would have been listed companies, and to do so within our existing cost structure. And I think that's such
a crucial part of the proposition to our shareholders. If I look at SpaceX, there's not some listed equivalent of SpaceX that you can buy. It is a singular opportunity. If you look at Stripe, the payment processing business, it carries about two percent of global GDP on its platform. These are huge, really important, really exciting growth companies, and so I think it's essential that we get this exposure for our shareholders. There's a couple of prices to pay
for that. One is that because we sign non disclosure agreements to these companies, we can't be completely transparent with what's going on there. They are private for reason, because they want privacy, so we disclose as much as we can. We've also put a lot of work into making the
valuation process as transparent as we can. We value these things very regularly, hundreds of times a year for the portfolio and aggregate, and we keep the accounting rule is that our nest asset values should have these assets in the books as close to what they would trade at today as we can get it, and so there's a
whole infrastructure third party valuation companies internal valuation processes. That means we keep the navas as live as it is possible to do, and that's very different from what happens at many private equity firms. So the first price we pay is the one of transparency. The second is these assets are aquid. If we want to buy back stock in the trust, you can't easily sell these assets to
do that. But we think both those prices are absolutely worth paying because we think the returns that we can deliver to shareholders from investing in these companies justifies that.
And you have been just to pick up what you said about the difficulty of buying back when you have a big private element to the portfolio. You are buying back in scale at the moment to try and close the discount that's come arrived in the last few years.
Yeah, Well, we have a very long standing commitment to keep the asset value and share price of the trust as close together as we can. If you look over the past twenty five years, we've bought back close to half the shares outstanding and in pursuit of that aim, So there is a discount that's opened up in recent years. The board put out a really strong statement about that just over a year ago, and we've been very active in buying back shares since then. That commitment remains remains unchanged.
So it's.
It is absolutely in Shell's best interest to try and keep that share price and now as close together as possible. But equally, the capital you spend on buying back shares, you can't be spending on putting into into new opportunities. So you know, the sooner we can we can make progress with that, the better, Quite.
Right, Tom, You spend a lot of time, maybe all your time, looking to the future. I mean one of the one of the slogans of the trust is that the future be there first, right, So you're always looking ahead and we all think that we're trying to look ahead. But when you look out the next ten years, what change do you think will come that the rest of us haven't seen yet?
That we're not ready for that?
You know, I'm sitting here at my desk and I add, there's things that I simply haven't seen that you have.
What would be the big one there?
That's a that's a tricky question.
I so I think that the challenge with this question comes because people have always overestimated change in the short run, but massively underestimated in the longer run.
That's why I gave you, That's why I gave you ten years.
Yeah, exactly.
I think the framing of the question is is dead right for me. I think it's probably a combination of things. That technology doesn't move forward because of breakthrough inventions, these these sort of dislocations. Instead, it's the combinatory effect of lots of different technologies coming together into new products and services. And so if you take generative AI, which we've talked a little bit about recently, it's what can you do with that technology in combination with all sorts of other
technologies which are developing. That opens up this whole new set of possibilities. So healthcare would be a great example. We own some businesses that have fantastic data assets in healthcare, and when you combine that with the power of these a itols, I think you're going to lead to some really transformational changes in what's possible over the next ten years. I think you see it in autonomy that there's a topic that we've talked a lot about for ten years,
but it's really starting to happen now. If you look at Google's Weimo, it has second only to Uber in delivering right hailing in San Francisco, rolling rapidly out into new geographies. Our own holding in Aurora innovation in autonomous trucking is now hauling loads in Texas with no driver in the cab. So it's AI and combination with transport. But I think you can you see this in electric
aircraft happening today. We're expecting Jobi or flying taxi company to start delivering commercial rides in Dubai by the end of this year. So there are just all of these areas where you're seeing this combination of technologies leading to really big changes. I don't think there's sort of, you know, one thing that's not expected, which is which is people haven't fully appreciated so much as it is the combination of of all of those technologies coming together for new services.
If you were really going to push me on what's the one, then I guess I would I would think about holding inside quantum and what would happen if quantum computing becomes available within the next ten years. Because there are so many problems, particularly biological problems where our models are totally inadequate, and where if you could actually do simulations that were really accurate, you know, simulating molecules with a quantum computer, you can achieve a degree of accuracy
that's just not possible with conventional technology. Then I think that enables you to solve some of the biggest scientific problems that we're grappling with today, and I think that will blow away almost anything else that's happening.
Tom, We've talked a lot about AI.
We've talked a lot about how generative AI is going to change the way companies work and the way the world works. So with that in mind, graduation season at the moment, that was saying, lots of kids graduating this week, last week, next week, what should they do. What's the right thing for a kid to study in the right career, for them to look into going into.
Well, I think it's clear that we're going to go through a transition here that there are all sorts of jobs that humans do today that these AI systems are going to take over.
You know, Autonomy is.
A great example of that in the in the physical world, you know, but the truth is that's not something that scares me. I mean, the challenge that we have in transport is that we don't have enough human drivers. They can't get people into the profession. So the fact that we're going to have autonomous systems is going to be a really helpful thing. You know, I don't worry about it displacing jobs, and you're going to need both humans in AI systems in that area for many years to come.
In white collar work, I think there is going to be massive disruption of many of the jobs that people do today. But the way this works is that it's going to take over the most drudgerous and boring tasks.
Fist.
It's going to relieve humans of having to do this work. And you know, people get pessimistic about this because they can't imagine the new jobs that are going to be created. But I I absolutely think that will be the case. And so to this, what what would you know? What should people be thinking about from the point of view studying these things is you're getting as much exposure to these tools as possible. How do you how as an individual are you going to be the best suited to
two rules in the future. It's going to be your ability to operate this co intelligence, this, these these tools that help you be more effective in your role. And so I I think that the you know, the stem subjects are absolutely as relevant as as they've ever been. Even though this technology can can automate many of the tasks in those areas, you know that the ability to understand these systems, so understanding physic understanding applied mathematics is just going to be ever more important.
Final question toem my, promise what do you reading at the moment.
I've been reading The Master and His Emissary, which is a book on brain hemispheres. So the right hemisphere of the brain is the Master and the left hemisphere is the Emissary. And why it's interesting is because when you look at the jobs AI can do. The cognitive tasks that performs well at they are left brain tasks, which you can think of ours, language, logic, reasoning. But the challenge for the left brain is that it can only represent the world. It doesn't see the world as it
really is. It builds models of the world, which is really efficient for thinking about things quickly, but there's so much that's given up by representing the world in a model rather than seeing as it really is. And that's the preserve of the right brain. And so for me, it's it's really been useful and trying to think through what these AI systems can and can't do, what the role of humans is in a world where we have these these intelligent tools.
To help us.
Thank you so much for being with us today.
Thank you so much for having me. It's been great.
Thanks for listening to this week's Marin Talks Money.
If you like ours show, rate, review, and subscribe wherever you listen to podcasts, and keep sending questions or comments to Marrin Money at Bloomberg dot net. You can also follow me in John on Twitter or x I'm at marins w and John is John Underscore Stepic. This episode was hosted by Meet Marre and zumzetwebs, produced by some Sadi Moses and Amantala Amadi. Sound designed by Kelly Gary and special thanks of course, as always to Thomas Later