“Most American [investors] are not aware of what’s happening beyond the borders of the US. In many ways, the American investor is isolated.”
Dr. Mark Mobius is seen by many as the founder of the emerging markets asset class and as one of the most successful and influential managers in capital markets. Dr. Mobius, with Sir John Templeton, created the first ever emerging markets fund. After 30+ years at Franklin Templeton, Dr. Mobius stepped down as executive chairman of Templeton Emerging Markets Group. Most recently, he launched Mobius Capital Partners, an investment firm with an emphasis on improving governance standards in emerging and frontier market companies.
An eclectic academic career that started in art moved to psychology before eventually landing at MIT to study economics. In 1987, after 15 years in Asia, in partnership with the legendary Sir John Templeton, the first ever emerging markets fund was created. A Templeton hallmark was his open-mindedness driven by curiosity, central to the pioneering nature of investments in emerging markets. That willingness to change was anchored by a strict adherence to an investing criteria. “Templeton said, ‘To buy when others are despondently selling, and to sell when others are greedily buying, pays the highest rewards.’”
Emerging markets face an unfair comparison to US stock market indices because many of the stocks, such as Unilever, are really emerging market stocks- over 50% of Unilever’s earnings come from those emerging markets. Increasingly, China and India are serving as gauges for Asian investors where the US market was once dominant. The Biden administration faces an ever-strengthening China, and in contrast to Trump, will bring less emotionality as it navigates an evolving trade relationship.
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SPEAKER
Mark Mobius
Founder
Mobius Capital Partners
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
EPISODE TRANSCRIPT
John Darsie: (00:07)
Hello, everyone and welcome back to Salt Talks. My name is John Darsie. I'm the managing director of Salt, which is a global thought leadership forum and networking platform at the intersection of finance, technology, and public policy. Salt Talks are a digital interview series with leading investors, creators and thinkers. And our goal on these Salt Talks is the same as our goal at our Salt Conferences which our esteemed guest today has been to many Salt Conferences over the years. Our goal at both the Salt Talks and our conferences is to provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And the man we're welcoming on Salt Talks today, is no stranger to big ideas, he even basically launched an entire asset class. I'm talking about Dr. Mark Mobius, who we're very excited today to welcome to Salt Talks.
John Darsie: (00:57)
Dr. Mobius as I mentioned, is seen by many as the founder of the emerging markets asset class. He has a reputation as one of the most successful and influential managers over the last 30 years in capital markets. In May of 2018, with two ex colleagues, he launched Mobius Capital Partners. The firm utilizes a highly specialized active investment approach, with an emphasis on improving governance standards in emerging and frontier markets companies. Prior to this, Dr. Mobius was employed at Franklin Templeton Investments for more than 30 years. Most recently, he's the executive chairman of Templeton Emerging Markets Group. During his tenure, the group expanded its AUM from 100 million US dollars to over 40 billion US dollars and launched a number of emerging market and frontier funds focused on Asia, Latin America, Africa, and Eastern Europe.
John Darsie: (01:47)
He's the author of several fantastic books, all of which you should read as soon as they come out. His career and influence has earned him numerous industry awards, if I went and listed every award that Dr. Mobius has received, we'd be here for about 20 minutes before we're going to start the episode. So thankfully, he left those off his bio. He received his PhD at MIT and studied at Boston University, the University of Wisconsin, Syracuse University, Kyoto University, and the University of New Mexico. Dr. Mobius is truly a citizen of the world and he's coming to us today from Dubai, a country in the UAE that we're very fond of, and hosted our Salt Conference there in 2019. But hosting today's talk is Anthony Scaramucci, the founder and managing partner of SkyBridge Capital, a global alternative investment firm. Anthony is also the chairman of Salts. And with that, I'll turn it over to Anthony for the interview.
Anthony Scaramucci: (02:38)
Well, Mark, I get to be a little bit of a fanboy here. And first of all, thank you, John, we'll get into John's millennial status in a second. But I want to talk about Mark Mobius for a second. I'm a little bit of a fanboy. You wouldn't remember this, but the first time you and I met, was actually in the gym on the eighth floor of the Shangri-La Hotel. So, you were in there working out, I came over and introduced myself. And at that time, I think you were at Franklin Templeton, you were working for Sir John Templeton, who was still alive at that time. And so here we are 20 plus years later, and what a career you've had. But I think it would be important for people... We have a lot of young people Mark, that listen to our podcast, thankfully. And I would love you to tell people about your upbringing, where you grew up, how you got raised and how you made this transformation into this global, international investment superstar.
Mark Mobius: (03:36)
Thank you very much for that really nice introduction. And it's great to see you again. And I know by the looks of you, you're still working out and so am I. So, let's keep it up.
Anthony Scaramucci: (03:46)
Well, not according to John Darsie. He basically said that my BMI was like a 35 or something like that. He's so lucky that we're in quarantine right now, because he'd have ring marks around his neck.
John Darsie: (03:59)
If you have a comorbidity like obesity, you can get the vaccine earlier-
Anthony Scaramucci: (04:03)
My BMI is not in the obese range Mobius, don't listen to this idiot. Okay, keep going sir. Sorry.
Mark Mobius: (04:10)
I got to do my BMI. But anyway, looking at my background, I grew up not too far from you in Long Island, in Bellmore, on the south side of Long Island, not too far from Jones Beach, which I really enjoyed so much as a kid. My brother by the way, still lives in Shelter Island. And I went to school there and in high school, [inaudible 00:04:31] High School, then ended up studying of all things art. I studied fine arts at Boston University. Then I started learning about mass communications, I looked at social psychology, then that graduated into all kinds of other psychological work. In fact, in New Mexico, I did a lot of work in experimental psychology. And that finally ended me up at MIT studying political science and economics. And it's really amazing because at the time I was there, economic growth was the big, big question that economists were asking. They were asking, why are these so called poor countries not growing? And my professors were all struggling with that question.
Mark Mobius: (05:20)
And of course the answer, which finally, thank God, the World Bank and the IMF, and all these organizations, realized that the way you grow is by having capital markets. In other words, you grow on the backs of private enterprise. So, that's where we ended up. And in 1987, after having worked and lived in Asia for 15 years or so, I ended up with John Templeton, running the very first emerging markets fund listed in New York. And in 1993, Franklin Resources, or Templeton, and of course, that meant like he was attaching two high powered rockets to this engine. And the sales force in Franklin really went to town and started selling emerging markets. And so we grew very rapidly after that. So it's been quite an adventure investing in all these countries.
Anthony Scaramucci: (06:18)
So, the legendary Sir John Templeton passed away over a decade ago now, a brilliant person, obviously, somebody that I looked up to, and what could you say about him, Mark, and some of his great aphorisms to younger people who are saying, "Who the hell is John Templeton?" But you and I know what a legend he is, and how big of an impact he had on all of us, as we were growing up in the industry.
Mark Mobius: (06:47)
Well, I think the characteristic I remember of him the most, is his open mindedness. He was always learning. You'd see him... He was living a life of key, and every noon he would walk in the water. In fact, we treated him like a god with some people saying, always walking on the water reading his research notes. So he was very, very intensely studying everything full time. And also, he kept a very open mind. He was willing to change his mind at a drop of hat, but he adhered to very strict value criteria when he was investing. And probably the most thing that stands out as an investor is his aphorism, when he said, "To buy when others are despondently selling and sell when others are greedily buying requires the greatest fortitude and pays the greatest reward." And that is really the key to investing at view, you have to buy when others are moving in the other direction. So, it was really an incredible experience to work with him and to learn from him. He had a lot of great ideas.
Anthony Scaramucci: (08:04)
Let me ask you this question, because this is obviously an observation that we're all making. The Amazon stock came public in May of 1997. If you put $10,000 in Amazon, and you were able to ride the curve, which was seven NAV drops of 50%, you $10,000 is now we're $21 million. And so I guess my question is, is it sometimes okay to buy with the momentum as well, or is that something that you've tried to avoid? We're going to switch to emerging markets in a second. But I'm just wondering in a zero interest rate environment, or close to zero interest rate environment, tremendous amounts of money printing globally by central banks, has that changed any of your investment philosophy over the years? Have you made any adaptations?
Mark Mobius: (08:58)
Yes, it's made a big, big difference. And we have made big, big changes. For example, at the time when we worked with Franklin Templeton, and with Templeton, the big number was the PE ratio, what's the PE ratio? What's the price to book ratio? Now with interest rates at zero or one, the PE ratio loses a lot of meaning, because if you take the reciprocal of one, that's 100. In other words, you could justify 100 times PE. And of course, if interest rates are zero, it could be anything. So, what I'm looking at now, is more on return on capital employed.
Mark Mobius: (09:38)
So in other words, a company could be losing money now, but its return on capital, return on equity, return on assets employed, is over 20% and rising. Then, in my view this could be a very good stock. And I think that's the case of these companies like Amazon and others like that.
Anthony Scaramucci: (10:02)
So, let's switch gears to emerging markets. And so you had been the father literally of the introduction in my mind to emerging markets in the United States, you and sir John Templeton. The great financial crisis of 2008, more or less opened a chapter of what I would call the loss decade in EM. Am I wrong about that? And if I'm not wrong about that, tell me where we are going in EM from here.
Mark Mobius: (10:34)
There's no question that we had incredible volatility in emerging markets. And one of the reasons why these days, whenever you talk to anybody who's just beginning to look at emerging markets, the first thing they talk about is currency. And as you know, during the age of financial crisis, that was really a currency crisis, because these countries were borrowing in dollars, and they didn't realize that their local currency was going to go down against the US dollar. And of course, that's the way they got caught. But right now we're in a very, very strange situation, because it's not good, or not relevant in my view, although we talked about indices. You say, "Okay, MSCI, EM, S&P 500," whatever.
Mark Mobius: (11:20)
The problem is, that many of the stocks listed in New York, are actually emerging market stocks, because over 50% of their earnings, or profits are coming from emerging markets. You take a company like Unilever for example, that's really in my view, a very much an emerging market stock. So it's becoming very, very difficult to compare these indices to do a fair comparison. Let's put it that way. And therefore, you see in the last 10 years before the beginning of last year, emerging markets really underperformed the US market. But we fail to recognize that many of those US stocks were really emerging market stocks. So, we're beginning to change our view of how we look at emerging markets and how we invest in emerging markets.
Anthony Scaramucci: (12:17)
You look at the world from an American perspective, but also a global perspective, and even an East Asian perspective because of where you've spent most of your time. So I want you to tell us in those three sleeves, an American perspective on what's happening as an investor, a global perspective, and an East Asian perspective.
Mark Mobius: (12:44)
That's a great, great question. Because if you look from an American perspective, most Americans are not aware of what's happening beyond the borders of the US, even in their stock market investments, they tend. And by the way, is very difficult for them to look beyond because with the exception of ADRs, it's not easy to get access to these markets around the world. Of course, many Chinese stocks are in the US market, but many are not. In fact, most by far, most are not. The same thing with India, the same thing as these other areas. So in many ways, the American investor is kind of isolated, and is missing out on a lot of opportunities. And because that was the big message of John Templeton, he said, "If you want to find the best opportunities, you've got to look globally, not just in the US."
Mark Mobius: (13:37)
Now, looking from an East Asian or Asian perspective, the situation is changing very, very rapidly, because of the growth of the Chinese market, and the growth of the Indian markets. In the past, many of these investors looked at the US market to figure out what was happening in terms of stock market behavior. Now, they're looking more and more at their own markets, and using that as a gauge as to what they should be doing. And you can see a lot of divergence between what's happening in India, what's happening in China and these other countries. And that's very important to remember, because if you want to be diversified, you want to be involved in these other markets to get that diversification, because the behavior of the markets are going to be different.
Anthony Scaramucci: (14:31)
Go a little more deeply into East Asia, what are you seeing in East Asia, China, Vietnam, places around the world that frankly, Americans still are not 100% aware of as you're pointing out from their perspective?
Mark Mobius: (14:49)
Well, one of the trends that we're seeing is a much, much closer relationship between China and these other countries in East Asia. So for example, you take Korea, when we invest in a Korean company, we look very carefully at what the company is doing in China. Because more often than not, maybe 20, 30% of their earnings are in China. Taiwan is another good example. There you have TSMC, the largest producer of semiconductors in the world, supplying not only the US, not only Apple, and all these other companies, but China as well. So some degree, they're dependent up China. And by the way, the whole issue of trade with China and a change of technology with China, is something that we have to look at very carefully, because with the Trump administration, the Chinese now have been driven into creating much more of their own hardware and software in the technology space. Then you get to the Philippines. Philippines used to be like an American colony. Now, they've very much like a Chinese colony, much more dependent upon China.
Mark Mobius: (16:04)
Vietnam the same, although Vietnam is doing a lot of independent behavior. But the fact remains that a lot of the Chinese manufacturing is being done there. But interestingly enough, the largest manufacturer in Vietnam today is Samsung, from Korea. So you see a lot of this kind of manufacturing trade going on. Thailand, Malaysia, Indonesia, Singapore, all are part of the ASEAN, and they are doing a lot more trade with China as well.
Anthony Scaramucci: (16:40)
What is your feeling about the current Chinese-US relationship? Where do you think it is going? Is the Biden administration going to warm things up, or are we going to stay in this sort of... I want to call it a staleness, if you will. I don't want to say it's a cold war yet, but there's definitely a stale air in the relationship between China and the United States. Where do you think things are going?
Mark Mobius: (17:07)
Well, I think with the Biden administration, the situation will be less heated. There'll be less emotionality, let's put it that way, between the US and China. But you must remember, the administration that we're talking about, the bureaucracy in Washington, is well aware of the threat that China faces to the hegemony of the US. And the US has got to get used to the idea that China is going to be more and more important going forward. And the best path of course, is some kind of cooperation. But with a firm hand of course. So, I think things with China would be a lot better under Biden. We must remember, this so called Trump trade war, resulted in China exporting more last year than the year before. So, obviously, it didn't harm China that much.
Anthony Scaramucci: (18:01)
The political situation in China, one party systems typically have a life expectancy, or at least if we look at them historically, they last about 70 or so years. You could look to the Mexican one party system, the Japanese one party system, you could look at Russia, 1917 to 1989. Although there's been a reemergence of a one party system now in Russia. How do you feel about the one party system in China, its longevity, and the future of China politically?
Mark Mobius: (18:38)
I think the one party system in China can last for a lot longer than we expect. And the reason why I say that, is that Chinese smartly have adopted a capitalist system. This is quite remarkable when you think about it, because if you look at all these other socialist experiences, whether it be Venezuela, Russia, whatever, they all failed because they didn't have an economy that was vibrant and growing. And the reason why they didn't have the economy vibrant growing, was because they rejected the capitalist system. The Chinese have accepted that, they realized that America is the biggest country in the world in terms of the economy, at least up to now, because of the capitalist system, the enterprise system. So I think the party can probably last for a lot longer because they're producing the results. In other words, the standard of living in China is getting better as a result of the system that they're using.
Mark Mobius: (19:40)
The interesting thing about China is that they are actually copying America. They admire America, they would like to be like America, but they want to have a one party system. But otherwise, everything else they want to copy from America because they know it works.
Anthony Scaramucci: (20:00)
Do you think that we are in a... I mean, we are in this period of uncertainty as a result of the pandemic. But do you think we're about to enter this age of abundance, technological abundance, material abundance, and that it could be a golden age, if you will, or the advent of the roaring 20s?
Mark Mobius: (20:28)
We are in a golden age, there's no question about it. We are... I always tell young people you are so lucky to be in this age, because technology is making things much more accessible, much cheaper, and higher quality. And the technological push is accelerating. It's just amazing what's happening. And in my book, I just did another book called The Inflation Myth, where basically I say, "Look, there is no inflation, there's currency devaluation, but in fact, we are in a deflationary period. And the reason is because of technology." In my lifetime, I can see the incredible strides that have made in technology and how it's reduced the cost of goods and services, and improve the quality of goods and services. And it's continuing every day. It's quite remarkable.
Anthony Scaramucci: (21:22)
I think it's just important for people to recognize that we get a lot of bad news thrown at us during the day Mark, but there's a lot of great things happening globally. There's a gentleman at Prince Street, his name is David Halper, I think you know him well.
Mark Mobius: (21:37)
Oh, yeah.
Anthony Scaramucci: (21:37)
He talks about digital decolonization, that effectively describes the rise of domestic technology companies, within emerging markets to compete with things like the Amazons and the Googles of the world. What is the state of play around innovation and tech in emerging markets and their potential fear of these American behemoths?
Mark Mobius: (22:01)
Well, that's really a great, great development in emerging countries, because what's happening, if they are, what I call leapfrogging over the old technologies, just think about it. When I was growing up, it was old Ma Bell, remember that?
Anthony Scaramucci: (22:16)
Yes.
Mark Mobius: (22:16)
AT&T.
Anthony Scaramucci: (22:16)
Yes.
Mark Mobius: (22:17)
The only way you could make a call was through a landline, no wireless. Now, these countries don't even have to think about putting in a line, they can do wireless. And what's happening is that they're creating things that are really innovative. Probably the best example as you know, in Kenya, the system of transferring money using cell phones wirelessly that was innovated by the Safaricom, which is the Vodacom subsidiary, Mpesa, it's called. Now, that's something that didn't exist anywhere else in the world. And here you have in Africa, a credible innovation. So, I think you're going to see more and more of that going forward, as these countries develop the technology and have the access to the internet and all the rest of it.
Anthony Scaramucci: (23:09)
So, I got to turn over some of the questions now to the millennial and chief at SkyBridge, Mark. He's been Googling who will Sir John Templeton for the last 20 minutes to try to get himself up to speed. But go ahead. I know you're dying to ask the legendary Mark Mobius some questions. So, go ahead, John.
John Darsie: (23:30)
Of course, it's a rare opportunity to have an audience with Dr. Mobius. So, Dr. Mobius, you've written a ton of great books, your most recent book is called The Inflation Myth. You talked about what you mentioned earlier that we're actually in an era of deflation and the measures that we use to measure inflation today are sort of foolhardy, and tools of government. How are those metrics broken, and what's the right way to think about inflation?
Mark Mobius: (23:56)
Well, first of all, the CPI, which is the most widely used inflation index, is faulty because the basket of goods and services they use is changing from time to time. So it's crazy for us to say, inflation in 2001 is the same measure as inflation in 1995, or whatever. So, that's number one. Number two, the basket that they use is not including a lot of illicit material. Drug use, sex, you name it, all these things that people don't want to talk about, they're not going to tell the researchers that they're spending money on. The third thing is that it's a very, I would say a socialist measure, because how can they say inflation for me is the same as inflation for you? It's crazy. We have different styles of living and different ways of living. So I would say we should throw out this inflation measure and most of all, do not make policy based on inflation numbers.
Mark Mobius: (25:03)
I just was listening to an interview by Christine Lagarde, and she said, "Oh, we have to get to the 2% inflation number." How did they come up with this number? There is actually... There may be some information which indicates 2% inflation will generate economic growth, but the numbers are very, very scarce. So, that's number one. Number two is, yes, prices are going up. That's true. But that is a reflection of currency devaluation, not inflation. Currencies, as I point out in the book, devalue without exception, every currency devalues. And interesting enough, I was talking to the young man about Bitcoin. And he said, Bitcoin should not devalue because there's a limited supply. It's a very interesting point. So intuitively, there's a whole generation of people who realize that currencies are really... The normal currencies and not a good way to have your money, but it's better to be in a more scarce currency.
Mark Mobius: (26:14)
But the other thing that I point out in the book, is that, okay, let's assume that you accept the inflation numbers, then you've also got to accept the measures of income and salaries. And if you look at a number of countries which I quote in the book, you'll see that incomes and salaries have kept pace with the so called inflation, and in fact, have actually exceeded the inflation numbers.
John Darsie: (26:42)
Right.
Mark Mobius: (26:42)
So, we really shouldn't be worried about inflation. That's the conclusion.
John Darsie: (26:47)
Yeah. So, you sort of took the next question out of my mouth. But what is the long term impact of this sort of historic monetary easing and liquidity that's flooded into the market? Do you have a view on things like Bitcoin and how these alternative currencies are springing up? What do you think the ultimate outcome is if you look decades down the road of this just historic liquidity pump that we've seen?
Mark Mobius: (27:13)
Well, one of the things that we've found, and it's clearly evident when you look at Japan, the Japanese have been pumping yen into the Japanese market with no tomorrow. They've just been pumping and pumping. And what's happened to inflation? Nothing. Nothing's happened to a patient. So clearly, the theory that more money results in inflation, does not hold true. So we have to forget about worrying about the quantity of money in the system, but more importantly, where the money is being spent. Because it is being spent by governments, it's probably being spent very inefficiently. If it's being spent by private enterprise, it's probably being spent very efficiently, which will result in higher productivity. So if you read about modern monetary theory, I agree with a lot of points of that theory. And that is they say, "Look, if a government has a debt in the currency that they print, there is no debt." They don't have to worry about debt, they just keep on printing.
John Darsie: (28:19)
Right.
Mark Mobius: (28:20)
But what's missing in that theory of course, is where that money is going to be spent. Because if it's going to be spent by government, then productivity will not be enhanced. And you may see a decline in the price and the quality and the quality of goods and services.
John Darsie: (28:39)
So, what should government do? Should they be basically zapping money into the pockets of consumers and triggering a consumer cycle? Should they be dramatically slashing taxes and corporate taxes to allow companies to be redeploying capital? If we want to avoid the Japanese deflation trap in the United States, how do we do that from a public policy perspective?
Mark Mobius: (28:59)
The latter. In other words, cutting all of the bureaucracy number one, cutting taxes. By the way, Dubai here is booming, there are no corporate taxes and no personal taxes here. So you can see the results. If you reduce taxes to let's say, 10% of incomes, a flat tax, you would see America go through the roof, there will be an incredible boom in the country. Now, I'm not saying that the government should not coordinate things like infrastructure, there's things like that, the infrastructure, law enforcement, military, these are the areas that the government should be involved in. But other than that, everything else should be privatized.
John Darsie: (29:45)
Yep. So I want to pivot a little bit to ESG. So, we run the Salt Conference, which you've been to many times, and we have sponsors and speakers and participants at those conferences, and we run surveys about trends that are happening in the industry, and that phrase, or acronym ESG comes up in almost every conversation. There's different names for impact investing, sustainable investing, ESG. But it pervades so many investment mandates that are coming from major investment institutions, even family offices and high net worth individuals. How are you incorporating ESG into your investment process, and how do you sort of put into application what is sort of an amorphous idea around improving governance and social and environmental factors?
Mark Mobius: (30:30)
Well, it's really interesting because from the very beginning, when we started investing, of course, we always had to think about risk. And if you look at risk, you have to look at the environment. For example, we owned a mining company in Brazil, we had to make sure that this company was not going to pollute the environment where they were living, because they'd get in trouble with the government and with the people around them. Number one. Social, how are the workers being paid? Are they unhappy? Are they going to strike? Another risk factor. And then you look at governance, how are they treating us as shareholders? Are we being properly informed of what the company is doing, et cetera? So in other words, we did look at these factors in the past, but the beautiful thing now, in this new age, it has been codified.
Mark Mobius: (31:20)
In other words, social, environmental, corporate factors are now very much in the fore and being measured. So when we invest, we definitely sit down with the company and ask them, "Are you willing to engage with us on governance?" Because we believe that governance is the number one priority. Because if you don't have good governance, you're not going to be able to do anything about the social environmental factors. But we also added one other factor, and that is culture, corporate culture. Because we've found and a number of studies have shown that if the corporate culture is poor, in other words, let's say if the workers in the company are not happy, don't feel engaged, then the performance of the company will not be good. So we have in all the companies in which we invest, we're looking at ESG+C, culture.
John Darsie: (32:18)
Right. Yeah. Now, it's fascinating. And the interesting part is that it's not just an altruistic thing, it's actually helping to drive returns, which is something that ESG oriented investors that we speak to is that, it's not just because we want to help the planet, or help people on the planet, it's actually materially driving better returns. I want to go back to the point you made about inflation, deflation, the future of the global workforce. You wrote a fascinating piece on your website, Markmobius.com, about the rise of artificial intelligence and robotics. And the narrative around AI and robotics is that it's going to drive people out of jobs, it's going to reduce wages, it's going to create sort of this existential crisis for the global worker, because robots and machines are going to take their jobs. You have a different view on that. What do you see as the future? We're going to have a lot more AI and a lot more robotics status for certain, but what impact is that going to have on people on the planet, especially workers?
Mark Mobius: (33:16)
There's no question that robotics and information technology, artificial intelligence is going to have a big impact on many, many employed people. And it's already happening. So the trick now is how do these people get transferred into another area of activity, mostly, it will be service, there'll be incredible demand for services, and also for creative work. In fact, right there in Long Island, I have a little scholarship from my former high school. And it's for art and for entrepreneurship, two scholarships. And what I'm telling people today is that the young kids should be studying art and creativity, something that a machine cannot do. And certainly, the young generation is got to think about how to be an entrepreneur for themselves. In other words, how to start something on their own without having to rely on a big organization. So these two factors are going to be more and more important going forward. And you can see a lot of individual creativity and individual enterprise coming to the fore.
John Darsie: (34:35)
Yeah. And in a lot of ways AI and robotics are going to tackle a lot of the jobs that people don't want to do and free people up to engage in more productive jobs. I think it's very well said, and I would recommend people not just read that article on your website, but great writing that you guys do on a variety of different subjects on your website, Markmobius.com.
Mark Mobius: (34:54)
Thank you.
John Darsie: (34:54)
I want to talk about sectors a little bit. So, you obviously deal a lot in emerging markets, but you look global trends, we have the vaccine now that's taking hold in a lot of countries. If you look at the chart of COVID cases in the United States, it's in free fall, as it is across a lot of the world. We've seen this boom in technology companies, especially ones that cater to sort of a work from home environment. You've seen just a massive boom in those types of stocks, eCommerce, teleconferencing, things like that. But as you look around corners, which is what you're so talented at doing, do you see a shift in terms of sector rotation, in terms of value orientation, versus technology and growth? Do you think those trends are just going to continue to run and we're going to adapt to a more hybrid, work from home, work from the office type of environment? Or do you think we're going to see a little bit of rotation into a value factor and into more capital intensive sectors as we go out in the next year or so?
Mark Mobius: (35:51)
Well, I think one thing is very clear, technology is hitting everybody, you just can't get away from it. Any company, I don't care what their business they're in, whether it be mining, whether it be retail, medical, whatever, has to deal with technology. And if they're not doing that, they're going to be in trouble. So, that's number one. Number two, what we have seen is that, yes, COVID has resulted in a change of behavior. In other words, people are now willing to communicate the way we're communicating. And that's going to be pretty permanent, but face to face, can never go away, you will never be able to replace face to face communication. Because there's a lot of body language, there's a lot of environmental factors that you have to have.
Mark Mobius: (36:36)
I myself, I'm itching to get out and visit the companies in which we invest. Because that's the only way we're going to really understand the company fully, although we're doing a lot of conference calls.
John Darsie: (36:45)
Yeah. We've been through the same thing. We're a fund to funds Mark and, and we do so much due diligence that involves in person evaluation of personnel, processes, and we've had to adapt to that environment. We've done it well, I think, but it's still challenging and different.
Mark Mobius: (37:01)
Exactly. So, that's the other thing. But I think one of the more interesting factors is how certain industries are changing. And what we're doing is focusing on the origins of this technology. So for example, you have the largest manufacturer of semiconductors in the world, TSMC in Taiwan, where we're investing in the so called fabulous companies that supply TSMC and their clients with the software within the chips that they're producing. So, that's one of the things that we're looking at investing in. The other area in healthcare. Of course, healthcare is going to be continuing to grow as we go forward because of this COVID. But what we're looking at now, is that remote healthcare, in other words, let's say one of the companies we invest in is a company that is testing. So they have records of the tests of all these people.
Mark Mobius: (38:04)
Well, they can now move to the next step in giving these people advice on how to keep healthy, or how to solve various medical problems they have. So, this medical remote kind of system, I think is going to be growing at a very rapid rate. So, that's another area that we are very interested in working with.
John Darsie: (38:23)
The last question I have for you is regarding emerging markets, obviously, that's a very broad category. It ranges anywhere from Latin America to East Asia. Are there any particular markets within that EM bucket that you're most excited about?
Mark Mobius: (38:38)
Right now, India. India is amazing, what's happening. And I would say India, you might say is maybe where China was 10 years ago. And they're accelerating their growth, they're changing their policies, they're privatizing a lot of [inaudible 00:38:56] enterprises. And it's a very much free enterprise environment in India. If you've ever been to India, you can understand that. So, I'm very excited about India.
John Darsie: (39:07)
All right, fantastic. Well, Anthony, do you have any final words for Dr. Mobius? It's such a treat for us to have you on.
Anthony Scaramucci: (39:13)
It's a pleasure to have you on. I'm glad that you're still dressing for success, Dr. Mobius. I love the look at your signature profile. And we're very grateful and we got to get you back to Salt. And since I'm not as smart as you, I have to bring baby Yoda with me on most of these Salt appearances. Every once in a while the baby will whisper a good question. But we're very grateful to you and hopefully we'll see you live soon. And John and I would love to get out to Dubai again as we start the planning for our Salt Abu Dhabi event.
Mark Mobius: (39:47)
Great, I'd love to be with you there, and hopefully in Las Vegas and maybe Macau, if you think of Macau. [crosstalk 00:39:54].
Anthony Scaramucci: (39:55)
We've looked at the sites of Macau as well, that will be another amazing place to do this. We're just-
John Darsie: (40:00)
We'll be back in Asia.
Anthony Scaramucci: (40:01)
Yeah. One step at a time. We got to get ourselves out of the pandemic and we definitely want to be I Asia somewhere so. Thank you again for joining us.
Mark Mobius: (40:12)
Thank you very much. Bye, bye. Bye.
John Darsie: (40:15)
Thank you, everybody for tuning in to today's Salt Talk with Dr. Mark, Mobius. Again, he's been at our conference several times over the years and it's always just a fantastic treat to be able to pick his brain on what's happening, not just in emerging markets but around the world. And just a reminder, if you missed any part of this episode, or any of our previous episodes, that you want to watch of Salt Talks, they're all available on our website at salt.org\talks, also on our YouTube channel, which is called Salt Tube, we host all of our episodes for free on demand on our YouTube channel. Please follow us on social media. We are most active on Twitter @SaltConference is our handle, we're also on LinkedIn, Instagram, and Facebook. And please, spread the word about Salt Talks.
John Darsie: (40:56)
We love exposing new people to sort of the educational resources that we provide here at Salt, in extension of our conference which is a little bit smaller and more exclusive but we love sort of spreading the message to our broader audience. But on behalf of the entire Salt team, Anthony Scaramucci and our producer who's here, this is John Darsie signing off from Salt Talks for today. We hope to see you back here soon.