Mark Mobius: Finding Opportunities Where Others Aren't Looking
March 10, 2021 12:30 PM
Register for this event
Mark Mobius: Finding Opportunities Where Others Aren't Looking
March 10, 2021 12:30 PM
RegisterSpeaker(s)
Mark Mobius
Founding Partner, Mobius Capital Partners
Moderator(s)
Mo Lidsky
Principal & Chief Executive Officer, Prime Quadrant
Biography
Dr. Mark Mobius 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 last 30 years. In May 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 Market companies.
Prior to this, Dr. Mobius was employed at Franklin Templeton Investments for more than 30 years, most recently as Executive Chairman of the Templeton Emerging Markets Group. During his tenure, the group expanded AUM from USD 100m to over USD 40bn and launched a number of emerging market and frontier funds focusing on Asia, Latin America, Africa and Eastern Europe. His career and influence has earned him numerous industry awards.
Dr. Mobius received his Ph.D. at MIT and has studied at Boston University, University of Wisconsin, Syracuse University, Kyoto University and the University of New Mexico.
A prolific writer, Dr. Mobius is the author of books translated into several languages including The Inflation Myth And The Wonderful World of Deflation (2020), Invest for Good (with co-authors Carlos Hardenberg and Greg Konieczny, 2019), The Little Book of Emerging Markets (2012) and more.
Mobius is a recognized global emerging markets expert, appearing frequently in the media including global networks Bloomberg, CNBC, MSNBC, and CNN and has received numerous industry awards.
Episode Transcript
Mo Lidsky 01:05
Now without any further ado, I'd like to introduce our very special guest today. The legendary Dr. Mark Mobius. Dr. Mark Mobius is regarded as certainly by many as the founding father of emerging market investing, he has spent over 40 years and manage over $50 billion in emerging and frontier markets. Prior to launching Mobius Capital Partners Mark spent over 30 years with Franklin Templeton investments, where he was Executive Chairman of the Templeton Emerging Markets Group. During his tenure, he managed a number of emerging market and frontier funds focused on Asia, Latin America, Africa, and Eastern Europe. Prior to joining Templeton Mark was the chief executive of international investment trust. Now aside from his professional pedigree, he, he was equally prodigious as a student receiving his PhD at the Massachusetts Institute of Technology MIT and having studied at Boston University, University of Wisconsin, Syracuse University in Kyoto University and the University of New Mexico. Mark has also been a key figure into developing international policy for emerging markets serving on the World Bank's Global Corporate Governance Forum, its private sector advisory group and as Co-Chairman of its Investor Responsibility Task Force. As well, he's a member of the Economic Advisory Bboard of the International Finance Corporation and serves on various other boards. His extraordinary depth in emerging markets have made him a regular on global networks such as Bloomberg, CNBC, MSNBC, and CNN. And he has been the recipient of numerous industry awards such as the Lifetime Achievement Award in asset management, he has been recognized as one of the 50 Most Influential People, and one of the Top 10 Money Managers of the 20th Century. Furthermore, he's the only legend that we've ever hosted, whose fans produced an illustrated comic book about him, called Mark Mobius, an Illustrated Biography, which has been translated into six different languages. Mark himself has authored at least 13 books that I'm aware of. Some of my favorites include invest for good passports for profits, the investor’s guide to emerging markets, and most recently, he completed another jewel, which I am really glad to have finished over the weekend and titled The Inflation Myth and the Wonderful World of Deflation. Ladies and gentlemen, it gives me great pleasure to welcome our very distinguished guest, Dr. Mark Mobius. Mark, thank you so much for joining us.
Mark Mobius 03:48
Thank you for that incredible introduction. I really feel very humbled by that. Thank you very much.
Mo Lidsky 03:55
We're the ones who are humbled, but really glad to have you. Let's start at the beginning. You grew up in Long Island. From what I understand, you started studying art at Boston University, then went off to study psychology at the University of New Mexico. How did a nice boy from Long Island get into the far-flung corners of the world? And why did emerging or Frontier Markets appeal to you?
Mark Mobius 04:17
Well, when I graduated from MIT, it was really strange because I've been a professional student. As you mentioned, I've been to many universities, studied many of the universities. When I got my PhD at MIT, I really didn't know what I wanted to do. But I do one thing as a result of my study in Japan, I spent a few months three to four months in Japan, under a Syracuse University scholarship. I was bitten by this bug by this culture shock of being in Japan. This would be in the 60's. And of course, in those days, Japan was an emerging country. Of course, no one talked about emerging countries those days. It was the "underdeveloped" or the "poor", and so forth. The emerging market name came in 1987. At that time, I was really hooked on Japan and wanting to get back. That's how I ended up going to Japan and getting a job as a survey researcher, which was more or less in my line I had the training in social psychology and economics. That's how it began. And that was the beginning of a big adventure, which took me for to Korea, Thailand, Hong Kong, and all over Asia. Finally, I ended up in Hong Kong, inside my own business, and then got into the securities business. So that's really the history by life. Since that I became an expatriate, let's put it that way.
Mo Lidsky 05:53
You've been at this for 40 years. How much has investing generally changed since you first started in the 80's and how has investing in emerging markets specifically changed since then?
Mark Mobius 06:07
All investing has changed dramatically, because of us. Remember, when I was working with John Templeton, he always talked about looking globally for opportunities. In those days, you really could not invest in any of the Latin American markets, except Mexico through ADRS. Asia was completely closed, except for Japan, Hong Kong, and Singapore. Latin America was pretty much closed as well because you had socialist governments, dictatorships. There just was no opportunity for people to invest in these countries. So, it's really changed dramatically in the years since 1987, as these markets opened up, and most importantly, we have to thank the World Bank, the IFC and these organizations, because they told these countries "look, if you want loans from us, and if you want to grow, you got to adapt the market economy". And that was the secret to tremendous growth in these countries. And of course, our ability to go in and invest, because they developed a market economy, with the stock market, with a bond market, and so forth. Big, big changes have taken place.
Mo Lidsky 07:26
To contextualize those changes, and maybe dive into the opportunities that when you started investing in emerging markets, right, the Soviet Union is behind the Iron Curtain. China and India were much poorer countries and Latin America, like you said, have dominated military dictatorship reigns. One could argue that the potential in these markets at that point was extraordinary. Then when we look at the last 10 or so years, where emerging markets seem to have underperformed us or North American equities. Is that a signal that the opportunity set today is weaker than it was then? Or is it something else in play? How do you see the opportunities that going forward?
Mark Mobius 08:11
You must remember when we started the emerging markets funds, in 1987, there was a clear differentiation between emerging market countries and developed countries. In other words, there were very few emerging market companies listed in New York or London, they were particularly in London, they were a few, but not many. If you wanted to invest in emerging markets, you had to go to these emerging markets and invest. Then what happened is that more and more of these emerging market companies got listed in the US, London, and the developed market markets. More importantly, many of the companies, American companies, British companies, European companies, began to invest and sell their products in emerging countries. The breakdown of profits, the majority for at least over 50% of their earnings was from emerging countries. We have a situation you have to ask question, okay, "why did the US market outperform the emerging markets index, in let's say, the last 10 years?" Because things are changing now. But the emerging markets are now coming ahead. The reality was that because many of these companies in the S&P or in the US index were actually having a big part of their earnings from emerging countries, and therefore that rolled their profits.
Mo Lidsky 09:59
In the backdrop of the pandemic, how has that affected emerging markets and what unique risks or opportunities has that created?
Mark Mobius 10:11
Yeah, the Coronavirus situation has really created an incredible, dramatic change in many of these countries because, with the lockdowns, it became necessary to have deliveries. In other words, internet selling has boomed in these countries. The good news is that these countries now have more and more internet connections. Large part of the populations has a simple cell phone, even in the poorest countries, but more and more have the smartphones which have dramatically increased their ability to access various apps and various other subsidies. The Coronavirus situation has accelerated the participation of these companies, countries, and people into the internet spectrum. For example, before this Coronavirus situation, FinTech was beginning to make headway in these countries. Now, with the Coronavirus situation where people are restricted and there's a necessity to transfer money and to make payments online, the FinTech revolution has really hit these countries. More and more people have access to money so to speak, whereas previously they never had a banking.
Mo Lidsky 11:49
You have the benefit of a global view. Could you share with us how investors, investors who are sitting in India or China or perhaps even South America, are looking at the investment world differently than the way that we in North America might be looking at it? Are they thinking about risk and opportunities any differently than we may be?
Mark Mobius 12:15
Oh, yes, most definitely. They do look at it differently, in the sense that very often, they're suspicious of investing in their own country. Of course, that's changing. Now more and more are getting involved in the local markets. People with big amounts of money, I'm talking about millionaires, would tend to want to be in the US, London, Switzerland, or here in Dubai, to have some nest egg that would escape by any change in government in their own country. Then, therefore, risk the loss of these assets. Of course, that varies from one country to another. The growth of these local markets is so good that more and more locals are investing in their own market. But there is definitely a fear among the very rich to be locked in their own country.
Mo Lidsky 13:23
There's a maturation process that's emerging internally, and therefore it's attracting internal capital. For us who are sitting in North America, where do you see that, among that cohort? Where do you see the greatest opportunity set today? In other words, are you still able to find opportunities where others aren't looking? Where would be the most compelling market sectors or strategies that are perhaps being ignored by investors in developed economies?
Mark Mobius 13:54
Well, in terms of sectors, I would say, the impact of the Internet, and the technology that has hit these countries provides tremendous opportunities, because you have traditional, let's say, retail companies are now for the first time selling online. And that's creating an incredible boost to their earnings, and profitability. So, this is one very, very big opportunity for people who want to invest in these countries. Because whereas let's say in Canada, the US, Amazon is pretty well established and so forth. But in some of these other countries, that kind of Amazon type company is just beginning to develop, it's developing very fast, it provides an incredible opportunity. So, in terms of sectors, I would say, you'd have to look at the technology impact, whether it be a traditional industry or a strictly online kind of company, but you've got to consider that Then in terms of countries or areas, obviously Asia is the biggest in terms of emerging markets. And then when they within Asia, China is the obvious choice, but India is coming up very fast. And I would say India probably provides more opportunities. And in fact, our portfolio, the largest country allocation is India, not China, not any other country.
Mo Lidsky 15:30
And could you maybe give some examples like whether within India or, or other markets that you are, have high conviction beds in Could you talk a little bit about the nature of more than just generally technologies or anything else that you could speak to, or the evolution of the capital markets that's occurring there?
Mark Mobius 15:54
Oh, yeah, we're just giving an example, let's say, in India, we're not we're, of course, invested in a software company that's providing software for enterprise all over India. But then we also invested in a company that makes pipes and tubes, because the infrastructure spending, and spending on housing, for example, in India is growing at a very fast pace. So, this company is doing very, very well in that space. Those are two examples of where in some of the traditional industries, but we're also in the technical side of things as well. In Brazil, we've invested in a company that does Amazon type sales, online sales, they are affiliated with one of the big department store chains, supermarket chains in the country. And now you're seeing in my way, that's a good example of where you have the traditional company that has stores all over the country. And now you have a new entity that's creating an Amazon type service, and putting these together will really power the company going forward?
Mo Lidsky 17:09
And let me ask you, question a little differently. What have you found to be most over your long career? What have you found to be most difficult about investing in the markets in which you're investing? And it may be easiest to think about it from the perspective of your instructive mistakes, or the greatest lessons that you learned, perhaps the hard way from investing in the markets in which you've participated and benefited from?
Mark Mobius 17:38
It's not only emerging markets, but it's markets all over the world. Looking at companies, the most difficult thing is to understand the management. To get a detailed look at how the company is managing, who is actually controlling the company, who is actually driving the company. Can you trust these people? In other words, can you find out their ability to manage and to properly strive for growth in the company. That is the most challenging thing. You can look at balance sheets, you could look at all kinds of reports, but it's only when you get insight into the management, that you can really make a success of your investment. You can look at so many examples, not only in emerging markets, but in the developed countries where the management was crooked. They stole from the company, and it resulted in a big disaster for the company, or they were just mismanaging, and not informing shareholders properly about what was happening. It's interesting, very often we go to potential clients in America or Europe, and they say, "Oh, God, emerging markets isn't safe, they cheat, they steal, it's a problem". I was recently in Germany, talking to an investor there. They had a big scandal. I said, "What about wire card?" They had nothing to say. The German gentlemen I was talking to, he said that wasn't us, that was the Austrians. I would say this is the biggest, biggest challenge we have. Which is why we always emphasize the culture of a company. We have what we call E, S, G plus C: Environmental, Social, Governance, which is very important, and Culture.
Mo Lidsky 20:00
How do you apprise that? And how does that help you identify good value? Cultures are different n every country, company, and every jurisdiction. How are you able to appraise a culture that's actually creating value versus a culture that's not?
Mark Mobius 20:16
Usually, the first step is to look at the board of directors, who is on the board of directors? Are they independent? Are they truly independent? Are there some women on the board? Are there people on the board that represent different sectors of society? That's one thing we look at. Then we try to assess, directly or indirectly, what is the morale of the company? What is the culture? Do the workers feel engaged with the company? Do they feel that they're part of the company's achievements, and are really truly part of the, the environment of the company? That's another thing we look at. Very often, the only way you can get that information is by visiting a company. That's one big disadvantage we have during COVID, that we're not able to visit companies. But we can assess a lot on the phone and interviews like this, where we speak to people on Zoom or some other method.
Mo Lidsky 21:26
How much of that assessment do you think is gut, an instinct that you've developed over many years? How much of that is scalable to others that could go out and do these trips and meet with his management and actually run a checklist?
Mark Mobius 21:47
Interesting question. It's true that given the thousands of interviews I've had with management of the businesses, you get a feel when you walk into a company that something may not be right, in one direction or the other. That experience helps me a lot. But I would say anybody can do it if they're a good reader of people and environments. If they're sensitive to what's happening, they usually can do as just as good a job without necessarily having a lot of experience doing it.
Mo Lidsky 22:25
You've introduced ESG plus C. You've talked a little bit about that it's no longer balance sheets, and kind of fundamental immediate. The various trends that you've talked about, which are exponential growth and technology, increased sensitivity around governance and ESG, heightened valuations, low interest rates. Have some of these changed your views on what it means to find and measure value? When you go into a company, other than assessing the culture, how do you figure out what's a good company and what's good value for that company?
Mark Mobius 23:23
That's a great question. Let me remind you that before we even step into a company, we've looked at the balance sheet, we look at the profit and loss statement, going back five years or more. We've done the homework in terms of the accounting. If the company does not meet criteria, we probably won't even go see them. The groundwork is incredibly critical. It's only when you finish that that then you look at these other factors, cultural factors, ESG, and so forth, and so on. Now, there's been a sea change in valuations. When I was working with John Templeton, first and foremost, we would look at the price earnings ratio. That was the be-all-end-all evaluation. We'd look at price to book we'd look at balance sheets, so forth, but you know, price earnings were the sort of key indicator. Now I don’t look at that at all. Why? Because interest rates have come down so dramatically, that the P/E begins to lose its meaning. For example, if you have an interest rate of 5%, you should take the reciprocal of five, five into one would be 20. So, you could justify a P/E ratio of 20 times if the interest rates are one or less from what we're seeing now. You can justify a PE of 100 times. Of course, if it's zero, no, no interest rates are negative, then the interest rates can be sky. I found that it's not a good idea to focus on PE. What we focus on now is return on capital or return on assets. Because with a return on assets of 20% or more, you know that this company can produce earnings going forward. Then combine that with a look at their balance sheet to make sure that the debt equity is below 50% and combine that with growth, whether it be revenue growth, or earnings growth. I the company has a record of growth in earnings, then you're in pretty good shape. In other words, with those factors, you can do fairly well and then go progressing and going into other factors surrounding the company. Our views have changed pretty dramatically.
Mark Mobius 26:16
Another thing that has influenced us is a whole new generation who are looking further ahead than we did in the old days. Let's say, because in the old days, we were always looking through the real rearview mirror, mirror, we look at that country, or the history of the company and we said, "Okay, they've done pretty good. In the future, they'll probably do as well". Now, there's a whole generation of people who say, "Hey, Tesla is a great concept, I'm going to invest in Tesla, even though they're losing money". That's a big, big change that we've seen in the markets. Now, I'm not saying I've completely converted to the idea of buying companies or losing money. But there's no question that there's a new force in the markets, and probably says a few things. First of all, it says there's a whole generation of people who are not afraid of the future. You must remember John Templeton, and the people who developed the price earnings ratios and other ratios, were children of the Depression. They are always afraid of what might happen. The new generation has got enough food, enough clothes on their backs, and are really not afraid of the future. That is a big, big change and added to that is the fact that you have a whole new supply of money called cryptocurrency. If you ask what the money supply of the world is today, nobody knows. We know how much dollars are out there, but we have no idea of what's happening in the cryptocurrency world, and of course, other currencies around the world. That's another big change that's taking place.
Mo Lidsky 28:26
If the if price earnings, ratios don't really matter, how are you adjusting your return expectations? Let's just say a company is trading at 50- or 100-times earnings. Are you readjusting your bogey, your hurdle, your expectations of returns from those investments? Do you think dividends are completely going away? How are you thinking about, you know, returns and cash flows from public companies as we have seen them until now?
Mark Mobius 29:04
Good you mentioned dividends, because one of the gold standards, I would say, is a company that has, return on capital of 20% or more, and is paying a dividend and is paying increasing dividends. That's a goal set as far as I'm concerned. But it's true that I don't care what the P/E is because if the company is growing at a good rate, if earnings are growing at a fast pace, that P is going to come down. If the prices income stays the same where it is. It's a matter of looking at the way the price is going, but more importantly, where the earnings are going. That's the reason why I say you should focus on growth of earnings, what kind of history this company has. Most importantly, the return on capital will give you an indication of what the company can do and when the company can actually grow.
Mo Lidsky 30:11
You mentioned that we don't actually know the supply of money in the world. But the one thing we know definitively is this past year, we printed billions upon billions of dollars. If we just look at money, like dollars, we're talking about, I think, like a 20% increase in the global money supply. How does that bode for inflation, which is the topic that you wrote your recent book about?
Mark Mobius 30:51
There's no question with more money in the system, prices will rise on many products. Two things I pointed the book. First of all, yes, prices are going up. But wages, salaries and incomes are going up as well. As I point out in my book, wages, salaries, and incomes are rising faster than the prices of goods. Why is that? Well, technology that's being applied to the production of goods and services is creating a deflationary situation where actually, many products are going down in price, in terms of the quality, so forth. That's one thing.
Mark Mobius 31:39
The other thing is, don't look at the CPI, Consumer Price Index, simply because it's a very bad measure. It's not an accurate measure. It's based on a basket that is created by interviews with people. You ask people what they're spending money on, they're not going to tell you that they're spending it on some illicit activity, a gaming or liquor, or whatever. You're actually having a distorted basket to begin with. Then that basket is changing from period to period. The basket in 1950 is very different from the basket today. You're comparing apples and oranges. That's why I say it doesn't make sense to even talk about these statistics, the CPI numbers, but I don't deny that prices do go up. That's because of money devaluation. One of the other things I point out in the book is that no money in the history of the world has kept its value. All currencies devalue, and many just disappear. Now, one of the appeals of Bitcoin and some of these cryptocurrencies is that the investors say that actually, there's going to be a shortage. The amount of crypto currencies is going down. That's very appealing to many people who know that other currencies, sovereign currencies, are increasing in quantity.
Mo Lidsky 33:33
Let's assume that the measures of inflation and CPI in particular, are fundamentally flawed. If that's the case, how should we be thinking about inflation? How should the average person, particularly the average investor, be thinking about the role of inflation in their portfolio, or the impact?
Mark Mobius 34:00
That's very important because as I pointed out, money loses its value over time. All currencies devalue. As an investor, you've got to make sure you're keeping ahead of this devaluation. The only way you can do that is by investing in companies whose profits are based on increased prices of their products and services. What happens is a company that's producing a can of beans, or a company that's as a software product is increasing these products and services faster than the devaluation that's taking place of the currency. That's the only way to keep up with this kind of situation.
Mo Lidsky 34:54
That makes sense certainly in the in the developed world, but if we look at emerging and frontier markets. You go to some of the various South American countries, whether it's Brazil or Venezuela, where inflation was in the thousands of percentage points. No matter how you price those products, you can't keep up. How have you historically managed and hedged that kind of exposure?
Mark Mobius 35:27
During the period in Brazil and Argentina, when inflation was 2000, or 3,000%, companies either price their goods in dollars, or they constantly changed. The price is in line with what the, the trend in the devaluation of the currency was taking place. I remember going into a supermarket in Brazil and I noticed on the products, they add a tag with a number. I said, "What is the price?" they said "Well, go to that wall, there's a table, which is constantly changing, and you can get the price, you line up your number one your product, then you get the price at that point". Now, every day they would put in a new list. That's the way these companies kept up with it.
Mark Mobius 36:27
Another interesting point is that I asked my Brazilian friends and colleagues to do a calculation. If I had put money in the bank in, let's say, 1980 and went through all the evaluations, up to 1990-95, Would I have lost money? The answer was no. I was breaking even or actually making some money. Why is that? Well, it's because the banks were giving very, very good interest on these deposits. In fact, people had to be patient. You had to hang on to all these different devaluations and changes in currency. If you were there, you would have been at least maintained the value over those years because the banks were constantly increasing interest rates.
Mo Lidsky 37:32
The audience are most entirely private investors and family offices and they're thinking again, from a portfolio construct. Even in a deflationary regime, we've seen central banks and governments overshoot their inflation targets and you know, print out more money and you've said that eventually all currencies tend to inflate. Other than cryptocurrency, what assets are you investing in to hedge out any possible risk of inflation eating away at the returns and, and even the value of the of the current portfolios that people have?
Mark Mobius 38:19
The first thing you've got to do is don't stick to one country. If you're Canadian, you should not be buying only Canadian companies, you should look globally. In Canada, they are great companies. But there are many great companies around the world to try to diversify globally. Another reason for doing that is not only will you find more opportunities, but you will not be exposed only to the Canadian dollar, you will be exposed to other currencies, which may perform better than the Canadian dollar. You've seen recently, in many of these emerging countries, even a place like Turkey, the Turkish Lira has gotten stronger against the US dollar. This is something that no one would be expecting. So, diversification is very important. Now, I'm not saying you know, you just put in money in any country, willy nilly. As long as you've done the homework, you can do much better if you're working in a global environment.
Mo Lidsky 39:22
How are you viewing commodities in that regime? We haven't seen massive sort of inflation in commodities, but I'm curious how do you position commodities in portfolios.
Mark Mobius 39:37
Actually, the only commodities that I think should be part of the portfolio would be the high value commodities that could be a replacement for money. That would be gold, palladium, platinum. Those would be the ones that you know, make sense to have in your portfolio in physical form. It should be a physical form. That could be 5%, 10% and not to worry about the price. Just keep that as a long-term value parameter. You've noticed that recently these commodities have gone up in price. Many of the mining companies are doing quite well. Interesting enough.
Mo Lidsky 40:29
Let me now come back to turn the conversation back to cryptocurrencies. The reason I didn't go there to begin with, because in the past when I've heard people ask you about Bitcoin, and I think you used to say something along the lines of "I don't talk about religion in public". I think you felt that it wasn't so much based on either blind faith or believed that there was a Ponzi characteristics to it. Have your views on cryptocurrencies changed?
Mark Mobius 40:59
Not really. I've met a few billionaires here in Dubai, who are cryptocurrency billionaires. And they're very smart people, very nice people. My view has not changed. In fact, I've got an intern here from New York, Cornell University, who is very convinced about cryptocurrencies, but he hasn't convinced me yet. I mean, it's a matter of faith. Don't misunderstand me. People have faith in the dollar. You can't go to the US Treasury and count all the dollars; you can get rough statistics. So, it's a matter of faith, but it's also a matter of convertibility. Because well, you create a cryptocurrency and the price in dollars goes up, but then try to convert that with no big cost into money that you can spend on the street, on money that you can pay your taxes with. Can't do it. This is one of the big failures of cryptocurrency at this stage. Now, I'm not saying it's not going to happen. In fact, just today, I read that there was an exchange app where you could trade your cryptocurrencies for dollars, or for some currency. This is where you separate the event and voice, so to speak.
Mo Lidsky 42:39
You mentioned earlier that it's hard to gauge the total money supply in the world because of other forms of cryptocurrencies. It's relatively nascent. What long term impact do you imagine cryptocurrencies having on the market?
Mark Mobius 43:08
It's not only long term, it's having an impact on the market now. I believe that we've got to watch the price of bitcoin very carefully, because it could be a leading indicator of what's going to happen to the stock market. Just think about it there's so many people who've become multimillionaires, with Bitcoin, at least on paper, and they believe that they can invest in the stock market. If those prices of Bitcoin and other cryptocurrencies come down, are they going not going to feel so rich, and thereby may sell stops in the market. It's very, very important to keep an eye on that going forward and see how this this develops.
Mo Lidsky 43:58
Recently here in Canada, there's a cryptocurrency ETF that was launched. How do you view that changing the dynamic? That just brings up another question that I meant to ask you earlier. The increasing growth of ETFs, either emerging market ETFs or country specific ETFs, how are you viewing those versus some of the fundamental work that you've historically done in these markets? Is there any reason why somebody can't get most of the exposure through the some of those index or ETF products?
Mark Mobius 44:47
Yeah, the ETF market is quite remarkable. It's amazing how that's developed. And I believe that it's a very good development because it meant that you could eat get exposure, very quickly exposure to indices, to markets to technologies, whatever, there's an ETF nowadays for almost everything. So, it's very convenient for the investor. And I, myself have bought ETFs for my personal account, because I can't buy individual stocks. So, I have to buy funds of except my own, like I have to divestment my own fund. But ETFs are really a good vehicle, I would say, and I have nothing against them. It's just an easy way to get exposure to many, many sectors. And if you have an ETF in a Bitcoin or some cryptocurrency, why not? I mean if the assets are there, then is a reason why it can't be sold.
Mo Lidsky 45:58
How do you view that differently than some of the fundamental work that you're doing? What are what are the ETFs, or index products not capturing that, that you may be capturing in the work that you guys are doing at Mobius Partners?
Mark Mobius 46:13
We do not follow the index. If you look at our portfolio, we're very different from many index, whether it be an Asian index, country index, or whatever. So that's one thing that's very, very different. Now, here are some actively managed ETFs that manage the portfolio, just like we manage actively. The difference with us is that we now actively engage with the companies in which we invest. In other words, we try to influence them to improve their ESG. There could be other managers that are doing the same thing, but that I would say would be the difference.
Mo Lidsky 47:05
I don't think it's a secret, but you're 83 years old, as active as ever, and, and you have lived and experienced more than most of us will in 10 lifetimes. So just with the benefit of this rich experience, what risks, or global issues are you most concerned about today? Similarly what trends or global dynamics are you most excited about today? We'd love to hear the contrast on both.
Mark Mobius 47:40
Well, it's interesting, it's one of the same, actually, because it's all about technology. It's all about the incredible advances made in artificial intelligence. And, and there is a danger, and an incredible opportunity. So, you have really two parts of the coin, two sides of the coin, so to speak. I see the, I mean, I try to tell young people, you guys are living in the most incredible period of mankind's history, you are so lucky to be living in this period, because technology is making things so much better, so much easier, and so much more interesting in so many ways. But then on the other side, there is a danger. Because if governments, for example, begin to control people's lives, through technology, then it can be really a debilitating factor in the development of civilization. Because first, remember, the reason why we're making these incredible technological strides is because of creativity and freedom, that people have to create new things, new ideas, and if the heavy hand of government and bureaucracy shuts that off, then we're going to be all in trouble. So, I would say that we're in this in this conundrum, where we have to be very careful about the impact of technology on people's lives.
Mo Lidsky 49:17
Given how you view the world today, are there any books or people that you credit with having materially shifted or perhaps transformed your worldview? Maybe I can even ask this question a different way. It's such an honor to have lunch with you, Mark and I know in Dubai, it's not exactly lunch, but if you were to have lunch with your favorite legend, who would that be?
Mark Mobius 49:54
Well although he's passed away, I'd love to have lunch with John Templeton again, because he was, he was a real guru. He was an incredible man. And also, I actually don't know where the where he is now. But John topo, since partner of who really developed the sales organization for Templeton and did incredible job would be another one. But I would say, if you look at the global situation, and where I would probably like to sit down with some people, would be the young people, the people that are now coming up, the young college students, who are now experiencing a whole new way of life, that was not my way of life. When I when I was a student. I would say sitting down with a group of high school students, or college students would be the way I would go. Not necessarily some guru or some world leader.
Mo Lidsky 51:02
In terms of the values that you attribute most of your success to, that you would want to pass on to these young people, what are some of those values that kind of have brought you tremendous success you'd like to see perpetuated?
Mark Mobius 51:26
I think, first of all, keep an open mind. Don't stop learning. Just because you've graduated, your learning should begin from that point, because hopefully, when you got into college, or high school, you've learned how to learn. In other words, you learned how to analyze incoming information. So, the adventure then begins, that's when you should begin to really become a student. I try to keep that in mind all the time. I have to be humble, be willing to accept new ideas, and begin to learn from other people. That's very, very important. We never have to stop learning.
Mo Lidsky 52:29
Thinking about offering the parting piece of advice as your parting words, can you share with us what you think makes someone a great investor? Whether it's advice you've received from others, whether it's something you learned along the way, what do you believe are kind of the key ingredients of exceptional allocators of capital, that all of us on this call could be mindful of going forward?
Mark Mobius 53:00
I think it's not only for investors, but it's for everyone in any walks of life walk of life. And that is to not accept the common knowledge. And know it's a willingness to challenge what everyone else beliefs, and a willingness to go your own way, and find new opportunities and new ideas. I never forget what John Templeton used to say to us, he said, to buy, when others are despondently, selling, had to sell, when others are greedily, buying creates the greatest rewards, but requires the greatest fortitude. And that's really summed it up very nicely, because basically, you've got to be willing to go against the grain. That'd be willing to go against what other people are thinking or believing or acting upon. But that does not mean you close your mind to what they're saying. They're thinking, you observe all this, but then you got to be willing to strike out on your own in your own path. I think that's a sign of a really great investor, and a great innovator.
Mo Lidsky 54:22
Well, Mark, who was just fabulous. Thank you so much for joining us today. Thank you for sharing your incredible insights with us. And I can't tell you how much we appreciate your generosity of time and wisdom and certainly hope to do it again soon.
Mark Mobius 54:38
Thank you very much. It's a pleasure. And you're a great interviewer.
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Mark Mobius: Finding Opportunities Where Others Aren't Looking
March 10, 2021 12:30 PM
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