The Smattering Podcast 70: Bill Mann: International Man of Weirdness

The Smattering Podcast 70: Bill Mann: International Man of Weirdness

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Jason Hall: Hey everybody. Welcome back to The Smattering where we ask the hard questions about investing. I'm Jason Hall joined by Giuseppe, "don't call me Jeff" Santoro. Wait, is that right? Close enough. We're just going to go with it. The voice of the people, Jeff, how's it going, buddy?

Jeff Santoro: It's good. I love that you carry this joke on that literally three people in the world are in on.

Jason Hall: And two of them are on this podcast. So one of them is a regular listener. So this joke is for you, SH. Yes it is. It is for you.

I'm excited. We have a great guest. We have a guy, one could call him Billy Guy, William Dude, who's coming on here with us, Jeff. We've got Bill Mann with us today. We do.

 Jason Hall: Bill Mann: Jeffseppe and Jason, how are you guys doing?

 Jason Hall: We're wonderful.

Bill Mann: Who's the good guest? I can't wait.

Jeff Santoro: Yeah, he'll be here soon. Thank you.

Jason Hall: Yeah, as soon as… Well, you know what? Bill Mann, since you're here. Maybe, maybe you could say and do a podcast"?

But no, so Bill Mann is with us, Jeff, you and I both know [00:01:00] Bill pretty well. Spent some time in person with him a few times, spend some time with him on Motley Fool live. If you're a Motley Fool member, you know Bill from the Motley Fool morning show. If you listen to the Motley Fool's podcast, Motley Fool Money, or any of the previous iterations of Motley Fool podcasts, you have heard Bill. if you've been a Motley Fool member for a, any length of time, you've probably seen this Mann with two N's.

Bill Mann: I've been inflicted upon you at some point. I think it's fair to say if you've been, if you've been with the Motley Fool anytime with a date (year) that starts with a two, I've been part of your life.

Jason Hall: That is, that is, that's it. That's exactly it. So Bill, for those that don't know who you are and don't know your bona fides besides seeing you on clips and seeing you on, on the Twitters and that sort of thing. They may not know much about what you do for your actual day job. The thing that the Motley Fool actually pays you for. And there's a couple parts of it, but one that we'll [00:02:00] spend a good bit of time talking about today is. You've made a career knowing about investing outside of the U. S.

Bill Mann: Yeah, yeah, I would describe… So my title at The Motley Fool, and yes, there are people with titles at The Motley Fool, is the director of small cap research.

And it's, it's kind of a catch all, simply because guy who looks for weird stuff is not a great title.

Jason Hall: That is a great title. It just doesn't fit on a business card well. That's the issue.

Bill Mann: Who has business cards anymore?

Jeff Santoro: We can put you in the show notes as that, if you'd like.

Bill Mann: I think that would be great. I- like a lot of companies, the Motley Fool, like we have multiple titles and none of them really matter that much. But guy who looks for weird stuff is, if you really want to boil down what I do and how I invest and how I got a job at the Motley Fool in the first place, that's it. Right. I'm not, I'm not coming to you with a big [00:03:00] opinion about Apple.

I know I,I fish where people don't fish very often and yeah, so that's my job and I've been doing it for a long time.

Jason Hall: Speaking of fish, we might talk about a fish company a little bit here later at some point.

Bill Mann: Heck yeah, man! Ready to talk some salmon!

Jason Hall: So, so one of the things you do is you run a service at The Fool called Global Partners. (If you’re interested in subscribing to a Fool service, please go through our special link) We'll talk a little bit about that later too as we talk about, finding small companies. And a lot of what I want to talk about with you, Jeff and I, is... The idea of investing in international businesses. How do you do it? How do you do it? Well, two very, very different things.

Bill Mann: When does that guy come on?

Jeff Santoro: We'll answer one of those two questions here today, everyone.

Jason Hall: Something, something SoftBank. Sorry. Couldn't. That's that's been an interesting one. So let's let's do this. But as a starting point, let's, let's... we're where we are today.

Let's go back in time to the little boy [00:04:00] called Billy, who would eventually go to Andover, you know, the college preparatory school, not far from where I live, actually go off to college. Begin traveling the world and making investments. How did you, how did you get to where you are now? What's, what's the origin story?

Bill Mann: So, it was interesting, interestingly enough, when I was at Andover, which is a boarding school, yeah, not too far from you. There were people at the school who were from everywhere and a huge number of people who go to boarding schools in the United States are diplomat kids, right? Their parents are in, there was a, there, there was a girl who, who I knew whose parents were at the U S embassy in Mogadishu. So she didn't stay to go to Mogadishu high or anything, you know, or the sort. Came back to the States for, for her high school education.

So I was always fascinated by these people and, coming from where they came from and, and doing the [00:05:00] really super cool things that, that they did. And it, and I decided when I was there that I wanted to go into the foreign service. And so I went to American University and the school of foreign service was preparing to go into the state department.

And lo and behold, I met a girl. And this girl said, Hey, dude I'm going to law school. So I'm not coming to Chad with you or wherever it is that you're, you're going. And so I ended up choosing her. But I was still fascinated by everything international.

Jason Hall: Let's correct that right now. She, she chose you.

Bill Mann: I don't know about that.

Jason Hall: Yeah, she settled for you.

Bill Mann: She settled for me. So let me tell you, okay, hold on, hold on. I'm going to tell you my pickup line. And then you tell me the answer to this question.

I had, I talked with her like one time. I was like, well, this girl's kind of cute. So she was out like waiting for the bus one day. And I was like two [00:06:00] days later, I was walking by. I was like, Hey, where are you going? She goes, well, I'm interning at the justice department this summer. And so I've got to go down for it to take a drug test.

And I said: Did you study?

Jeff Santoro: I was laughing, but I was on mute. I love that.

Bill Mann: You tell me she chose me, right?

Jeff Santoro: Like, could you hear her eyes roll into the back of her head?

Bill Mann: Deeply. I heard synapses exploding inside of her brain. And she was trying to figure out if I was serious or not. So yes, she did not choose me.

Jason Hall: That is the kind of goofy thing that guys say to girls that they're really, really into.

Bill Mann: Yeah. So yeah, yeah, it worked out. We've been married now for 28 years and she works at the State Department. So that, that all worked out very well.

So anyway, I was always fascinated by things international. I was a German and a Japanese major. I almost completed the Axis Powers. But, I think I needed [00:07:00] Finnish and Romanian and Italian and I'd have been set.

Both of your Finnish listeners right now, they're like, we're not Axis. But, you know.

Jeff Santoro: You only had to start learning Italian, then you could have stopped halfway through.

Bill Mann: Halfway through, exactly. Jeff Santoro, ladies and gentlemen, can be reached at ... .

Jeff Santoro: That’s a deep cut for my World War II buffs out there.

Bill Mann: Exactly. So my my grandfather worked his way up from, from after college and after the Navy, he worked at a company called Cannon Mills and he ended up as the CFO of Cannon Mills.

Maybe you have. Yeah, maybe I've still, yeah, exactly. Company's long gone, but the brand still exists. But he gave us shares of stock for every birthday when I was growing up. And so that was my interest in the market. So I, I basically combined the two. And decided since I'm not going to see the world as a, as a representative of, of the government, maybe there were opportunities [00:08:00] to, you know, to explore the world in other ways.

And, and so I, as I was becoming interested in investing and this will be a theme, I came to realize that almost everyone was fishing in the exact same waters and almost nobody was interested in investing outside of the United States. And so I thought to myself at the time, if you know, any para mutual game, if there are fewer people playing, it may be that there's opportunity.

And so I went about a, you know, a, a course of just learning about different economies, learning how different markets worked differently. And that's, that's what I did. That's that, that's how I got into international investing. It was sheerly out of interest.

Jason Hall: So. You start, you, you build your career, you begin establishing some bonafides and you traveled [00:09:00] internationally. You've done some private investments internationally.

I've heard some of those stories in the past. How does, when does that transition into, again, the early two thousands to joining up with the Motley Fool, Tom and David Gardner, becoming a part of that, of that universe where actually you're going from out there investing to actually telling other people.

You're sharing your ideas and trying to help other people figure out how to, how to do it.

Bill Mann: Which is way more terrifying.

Jason Hall: Oh, it's not even close, right?

Bill Mann: Like let, let, let all of your listeners hear that. What we do for a living, whenever we make a recommendation, any sort of recommendation, it's terrifying.

Jason Hall: Yeah, this is, Bill ,this is like, and, and so look, I want to build on that for a second here, because I think it's really important thinking you're familiar with Dalbar and their, what's the survey?

The QAIB, the quantitative, quantitative analysis of investor behavior. And it says, okay, here's what the market does. Here's [00:10:00] what funds do, which is basically the market less their fees, right? Here's what retail investors do way, like way below it, right? And that's just looking at like investing in the S&P 500.

If we're being honest with ourselves, like, like the easiest way to do it, basically, it's like, all you gotta do is just get in a rubber boat and float and you're going to make eight to 10%, right? That's all you gotta do.

And we still managed to fucking swim up upstream. Against our own best interest, like we're just so bad at it. So like, and that's in the U S and then you start getting outside of the U S with markets that can be more volatile. You don't know what you're doing. You don't know what the regulatory regime looks like. You don't know how well the auditing actually happens with financials, like all of that kind of stuff.

And Bill, what you guys do when it comes to running these services is the equivalent of telling someone how to fly a 747. And you're telling them how to do it via email-

Bill Mann: While I'm still reading, while I'm still reading the manual.

Jason Hall: While you're still reading the manual.

Bill Mann: [00:11:00] Okay. Step 63. How's it going so far?

Jason Hall: Right? Right. So, but, but seriously, it's in, so it is, it is a complicated, complex, hard job that you have to do. So yeah. How do you, how do you, first of all, how do you start doing it and why the hell would you want to?

Bill Mann: So, so actually my, right prior to my coming to the Fool, I was in the telecommunications industry, and we, we were the back office for MCI, WorldCom, here's a theme, LDDS, none of these companies exist anymore. And this was in the late 1990s, and we were working for them, doing what are called private data networks in places like China and Nigeria and Indonesia and Pakistan, India, Egypt, places like that.

And in the process of, of doing this, whenever I would be in a country, I would try and get to know [00:12:00] what made that country tick. And I try to be a tourist in every place that I go. I try to meet up with people every everywhere I go. And so what I was doing this during this period of time, was I was building up my knowledge bank. And I was building up my knowledge bank for my own edification.

But I was also building up my own knowledge bank because I knew very well that what we were doing in the telecommunications industry had a sunset because there was this crazy thing out there called the internet that was going to change everything when it comes to telecommunication.

So, so, I was actually in Pakistan when I, when I applied for a job that popped up at the Motley Fool and was ready to come and be home.

And I don't know if you know, I, I, I don't know if it makes any sense. But I had a pretty comfortable thing there in Pakistan, but it turns out that that the Motley Fool was, was located two blocks from where I lived at the time. And so I [00:13:00] decided to trade, to trade one for the other.

Because what I had discovered as, as a business person, was that most of the people around me in the telecommunications industry in the 1990s were terrible at making decisions when it came to allocations of capital, right? I could clearly see that the industry was going to change. And I was, and I was a nobody. It was not like I was I was a super high, you know, high profile guy. I was I was under 30 years of age, but I could still see-

Jason Hall: To crib Buffett a little bit here, the, "being an investor made you better in business, being in business made you a better investor." And you were able to observe this massive fracture in one of the most important jobs of leadership in a business. And that's to effectively allocate the resources.

Bill Mann: Thank you. Back to you.

No, that's what I mean. That's, that's essentially it. That's what I wanted. That's what I wanted to say. So as someone who was in a business [00:14:00] that I recognized had a fuse on it, I thought that it would be a much better, that my history, my, that my future was going to be much better tied to an area where I could make decisions for allocations of capital. And and, and that turned out to be investing.

So I had this deep international experience, but then I also had this idea that everybody in an entire industry was basically doing it wrong. And it's, I mean, like, it's an arrogant thing to think, right? Like everybody's doing it wrong?

But people spent upwards of a trillion dollars trying to trying to grow the telecommunications industry and there was nothing to grow. The internet was coming to change everything. And it was as if they didn't see it.

So I, you know, so I said to myself, why is it that I see this? And if I do see this, where are the other places where I can [00:15:00] apply it to?

Jason Hall: One of the things that Jeff and I talk a lot about, Jeff, and I think this is just an excellent example of that is we talk about incentives and we talk about, we did an episode, what my job taught me about investing, recently.

And one of the things we talked about is how common, frankly, it is when you see somebody within, within an industry, we use the automotive industry as an example. It was like nobody in the automotive industry saw Tesla coming, right? They all saw it coming, but like, they had this idea about how you do cars, right? And the way Tesla went about doing an electric car was completely, , diametrically opposed, and so nobody saw it. So that's so common when you're in the industry, all of your incentives and all of your biases are that the way that we're doing, it's perfect and it's going to win.

And then somebody does something totally different and you never see it coming.

Bill Mann: There was a great interview one time with the CEO of a Canadian oil producer called Penn West. And he [00:16:00] came in and he took over for, he took over for the old management team and he said, look, if you were to have taught, if you, if, if you were to have talked to all of our, all of our technicians all at the time and ask them what they do for a living, they would tell you that they go and prospect and drill for, for oil. Which to me is the wrong answer because what they do for a living is they are trying to drill for oil in a way that makes money, right?

Like, to someone who's like, whose job it is to go find oil. They might not think their job is to make money. They may think that their job is to find oil, but if you're losing money on every extra barrel of oil, what good is it to have to have found it? And-

Jason Hall: You obviously don't need more oil. You need cheaper oil or a better business.

Bill Mann: Right. You need a- your better, and your business, [00:17:00] and your own incentives might be different from each other. Your incentive is I am, I feel like I am most valuable if I find more oil. Where the answer actually is I am more valuable by leaving oil in the ground right now. And that was his point.

So, yes, the deployment of capital in industry after industry is made incredibly inefficient by the fact that people are irrational. They have an incentive not to believe reality. And I just figured that if if in, if I am someone who can identify people who are good at it and businesses that, that are good at it, and I can do so looking in places where nobody else is looking, I feel like I'm going to do okay as an investor.

And so that's why my job ended up as small caps where very few people look and international [00:18:00] where very few people look.

Jeff Santoro: So that's like a perfect segue into something I wanted to ask about, which is like the elevator pitch for why investors should consider looking internationally with their investments.

And I think it's a two part question. If you were going to make an elevator pitch to someone like who's skeptical about it, like, why do it? But my second question is like, how has that, how if, if any, in any way has that changed over the last 20 or so years?

Because it seems like now every American business is international to some degree. And does that make it less important to fish in the international waters to use that analogy again? Like, how do you kind of see that evolving over the last 20 years?

Bill Mann: Can I give you the world's worst elevator pitch?

Jeff Santoro: That's why we asked you to be here. Yeah.

Bill Mann: Thank you. Good. You, you don't have to invest internationally.

Jeff Santoro: That's, yeah. Okay. Cause that's that kind of, I was wondering.

Bill Mann: Yeah. Yeah. You don't have to. Coca Cola makes 70 percent of its money overseas. Aflac makes 92 percent of its money [00:19:00] overseas. Most of the United States-

Jason Hall: You can find Bill Mann's latest international stock recommendations at...

Bill Mann: No, exactly, exactly right. You can do fine investing in US companies and you get a ton of international exposure. But the way I view it is this. There are about 5,000 US companies. There are about 150,000 companies globally.

So let's do the math real quick. What's that about? Three and a half percent of all companies are in the United States. The United States is about 41 percent of the world's market cap. That means that 59 percent is outside of the United States. Are you telling me that all of the most valuable, I mean, actually maybe valuable, but the most innovative, promising companies are in that, in that 5,000 company batch in that three and a half percent [00:20:00] or in that 41%. And I think that the answer is no.

So, so when you talk about, and by the way, this is a long elevator ride, isn't it? Okay. Let's start the elevator now. Someone's forgotten to hit the button. Okay. We've hit the button. The reason why you would invest overseas is because you are, you actually have an opportunity to find to find companies that are promising that have not been discovered by the general public.

I mean, it's the same reason why people think they're, they want to invest in IPOs to get in first. When in reality, yes.

Jason Hall: In penny stocks.

Bill Mann: In penny stocks.

Jason Hall: You think you're getting in early. You think you're getting in, in front of people.

Bill Mann: Yeah. And in reality, most of the people invest in IPOs, most of the people who invest in penny stocks, lose money.

What if I were to tell you that the same exact thing exists, [00:21:00] with a lot less risk than doing those kinds of things, which people instinctively want to do, and that is investing overseas.

Jason Hall: All right. So I'm going to, I'm going to hit that, hold the elevator button because we should keep talking.

Jeff Santoro: Okay. So here's a follow up question based on the little bit I've learned about international investing over the last couple of years. So, and you can tell me if I have this wrong, but I view it as there's like three ways you can get exposure international stocks with individual companies.

So one is just to have a broker that allows you to buy international stocks.

One is if the company has American depository ADRs, right.

Bill Mann: American depository receipts they're called.

Jeff Santoro: Which is a way to buy international stocks on US exchanges if I have that correct.

And then, or sometimes they also are on the pink sheets, right? So OTC. So. Are there any, given those three buckets, am I missing anything? And also like, what are the pros and cons of, of approaching it through any one of those means?

Bill Mann: So,[00:22:00] each has a pro and each has a con. So to, to buy companies, international companies directly on their exchanges, you have to be at a broker that allows that. And for individual investors there are basically only three. Schwab does it, Fidelity, Fidelity does it, and Interactive Brokers do it.

So those are basically the only ways that you can get access to even a limited number of countries buying, buying companies directly. So but that expands your horizon by thousands of, of, of companies. I mean, that gets you into Turkey, for example, in Japan and Sweden and, so you get a lot of exposure that way.

Any almost any U. S. broker will be willing to sell you an ADR. And in a lot of cases, people buy ADRs, not even realizing that is it is an ADR rather than a [00:23:00] stock. So like, for example one of our favorite companies that we talk about all the time is MercadoLibre, which is a an Argentine company that trades its primary listing is in Argentina. It trades in the U S through, through an ADR.

Now the difference to you as an investor is functionally nothing. There's a tiny fee that comes with it, but it's it's functionally nothing. A lot of companies don't have ADRs, but they offer pink sheet listings. And there's a lower level of access and a lower level of information that you get. But those, those ways are absolutely fine to invest with, with most companies.

Jason Hall: So Bill, just to kind of get in the weeds a little bit on that. So again, what we're talking about, really, these are, these are really just functional tools to invest, right? And when you move from one to one to one, these different methods, some of the implications that are most common, like if you're looking at the pink sheets, like the company hasn't like sponsored and like [00:24:00] worked with a bank that deals with the ADR, right? That's so that's one. So I don't want to say it's like an unofficial way to buy the stock, but it's, it's when you run, when you're buying on the pink sheets, typically you're running into far less liquidity. That's the biggest thing is that far, far fewer of the shares trade hands.

And you have to be really careful about using things like using limit orders to buy and sell versus using market orders, because you can screw yourself pretty quickly. So like that's a risk if, if a company is big enough and it has ADRs, there's probably enough volume that that may be a little bit less of an issue.

But again, having access to the company's direct market where the stock actually trades on their home exchange it's usually where you clear up liquidity issues. You have more volume, but you have to trade when those markets are open, though. I mean, that's another issue that you have to do. I mean, you

Bill Mann: Yeah, but you could, yeah, but you could put in a limit order you know, overnight there daytime here.

So let's stay in the weeds for, for, for a minute, [00:25:00] because a lot of times when we hear pink sheets, we think penny stocks. With international companies, it's a little different, an international company that has a pink sheet listing, the only thing that that means is that they have not registered with the SEC, and the reason they would register with the SEC is generally because they'd like to raise money in the United States.

So like, for example-

Jason Hall: That could be debt, right? That doesn't necessarily just mean equity.

Bill Mann: That could be equity or debt, but Nestle, for example, one of the largest companies in the world is a pink sheet listing, which is, is only a function of the fact that Nestle is neither raising debt nor equity in the United States.

So it's a little bit different than every other component of the market where you can almost certainly say a pink sheet company is riskier than, you know, a micro cap, even a micro cap that's listed on one of the major exchanges.

Jason Hall: So just to be clear, to make sure I understand it. So, by, by [00:26:00] not registering with the SEC, they don't have to file anything with the SEC, right? So that's, that's a significant difference.

Bill Mann: It is a significant difference, but in order to even have a pink sheet listing, you have to have filed with your home country.

Jason Hall: Right you, so that's, so Nestle, you shouldn't be worried about, right? Because they've got a pretty good-

Bill Mann: They filed in Switzerland, which I don't know if you know, this is pretty good at money.

Jason Hall: I've heard that. I've heard that over the past eight or nine decades, they've proven their ability to money quite well. So, that's an important part of it, right? Is, is what is the home market and are you comfortable with the regulatory environment?

Bill Mann: Right, right. And you have issues and, and, and, and I would imagine. We're going to talk about China in a little bit, but there are certain choices that you have to make, like, do you consider a Chinese company that's listed on the pink sheets here, so they have listed, so they have, they are current with their filings in China, do you consider that to be a trustworthy [00:27:00] situation?

And that's kind of up to each person. And it is on a company by company basis. I generally think the answer is no, but it is, , there are people who may want to take on that type of risk.

Jeff Santoro: So you, you said earlier that your true elevator pitch about international investing is that you don't really have to do it. But if someone was interested, so we know that you're not going into international like sales right now. .

Bill Mann: Whatever. Yeah.

Jeff Santoro: But if someone, so if someone's listening to this and they're like, I've never bought an international stock. I've been solely in US markets, but I'm interested.

Do you have any recommendations for like a first step? Like, should someone test the waters with an ETF or an index fund? Or if they do want to go straight to buying an international stock on any one of the ways we just talked about? What's your recommendation for kind of a first a first step into that?

Bill Mann: See, I don't know if you know this, Jeff, but there are more [00:28:00] ETFs on the U. S. exchanges than there are stocks on the U. S. exchange.

Jason Hall: It's kind of bonkers, right?

Bill Mann: It's nuts. So there are, there are, ETFs that give you exposure to a lot of things. And one of the great things about international ETFs is that they give you exposure to stocks and to countries that have zero ADRs in the U. S. Zero listed companies.

Like, for example, well, they have one now. Korea. Korea has Coupang or nothing in the U. S. But there are plenty of ETFs where you can gain exposure to, to Korea. It's a great way to do it.

If you want international exposure through either a mutual fund and index fund or or an ETF, I would suggest that one of the best ways to do it is to is to find something that is a broad world instrument, right? One that just gets everything outside of the United [00:29:00] States. And, and if you, if you go to-

Jason Hall: An ex- US world index.

Bill Mann: Ex-US , it's exactly the term you should look for. And so like, for example, a lot of people know about the S&P 500. Do you know about the S&P 1200?

Jason Hall: I've heard of it.

Bill Mann: Yeah. So the S&P 1200 is the 1200 of the largest companies that are in developed markets. And so then there's also the S&P 700. And I know you guys are good at math, which is basically the S&P 1200 minus the U. S. 500 companies.

Jason Hall: It's the, it's the S&P 1200 ex- U S.

Bill Mann: The S&P 1200 ex- U S, which they define down to the S&P 700, right? These things, these things-

Jason Hall: Man, that works a lot better for marketing doesn't it?

Bill Mann: Wait. You're not going to believe this.

Jeff Santoro: None of us are salesperson or marketers. All right, moving on.

Bill Mann: We aren't even good at talking. [00:30:00] 

Jason Hall: No, no, we're good at that. We're, it's how, how good are we at saying things? That's a different story.

Bill Mann: So I'm wordsing.

Jason Hall: So I think, but so, okay. So at this point, what we've talked about with, with these, the 1200, the 700, again, these are developed markets that we're talking about, right? So we, a lot of people, when they think international investing, again, they're looking for the hidden gems. They're looking for emerging markets, right? They're looking for kind of what's coming next, what's going to be the next thing, right?

And we're going to, after, after we talk about this, I want to talk about China. I want to set that up, but I want to do, I do want to talk a little bit about, if you're looking broadly around the world right now, and you see Europe, you know, where Europe is, you know, what's going on there.

We know where Japan is, Korea to a certain extent. There's a lot of great things going on there, but the demographics are maybe not wonderful in terms of, I don't want to, I'm [00:31:00] not even going to compare Japan, Japan and Korea. I'm not even going to do that for a lot of reasons.

Thinking about the rest of the world, what internationally out there is exciting to you?

Bill Mann: Well, we actually have hit a hit upon a couple of them. I mean, I, to me, the best market in the world and I include the U. S. And this is Sweden. And I don't know if we could get a social scientist scientist on here and be like, Hey, why is Sweden so great? You know, like, you're so great, Sweden. Why? What's going on there?

What you have to know is the instincts that people have when they think about international as a component of their portfolio, their, their initial instinct is to say that's a riskier part of my portfolio, right? Like international equals more risk.

And in almost every case you are talking about, you are [00:32:00] talking about companies and countries where as an American, you have currency risk, which is not something that you tend to have for US based companies.

So. In, in, in that regard, they're not necessarily wrong, but if you were to have an argument with me and say, okay, if you could choose right now, would you take all of the companies from Florida? Or would you take all of the companies from Sweden? That's a really, really, really easy decision for me on a risk adjusted basis.

So I think when we talk about when we talk about things like this, Okay, I think people's first instinct, because they are thinking of these markets being smaller, maybe being less diverse, that they are riskier than the United States, may have to do with the fact that a lot of people, when they think about investing internationally, immediately go to, we're talking about investing in Mexico or China or, or you know, any [00:33:00] of a long list of a laundry list of emerging markets.

And so I, I don't know that you really even need to do that. If you are going to invest in, in emerging markets, I would be very careful to, to pick a company that that that has proven itself. And we talked about MercadoLibre a little bit earlier, which is an emerging markets company. Full stop. Meaning all of their business, all of their management is in, is in Latin America. The risk profile for that company is probably deeply different than the risk profile of Argentina.

So, so when we are talking about international investing, I don't want people to come away from this, you know, thinking that the thing that you have to do is to, is to take as much risk as possible by going to go find some, you know, some mining company that's in Zambia. Right. I [00:34:00] apologize to the Zambians. You're fine.

But like you, you don't need to do it, right? There are fantastically professional companies in countries like Finland that are in things like video gaming, that are growth industries where you're not taking risk on some sort of commodity or a regulatory authority that is not something that is, that is not up to the levels that we as Americans are used to.

Jason Hall: Bill, you're basically, go ahead, Jeff, go ahead. I

Jeff Santoro: was going to ask like a clarifying question based on that. So, cause I think within US markets, what a lot of investors try to do is look for that, that, you know, that hidden gem, that company that no one's heard of that's, that mining company, right? Whatever it is. But they're doing that within the US markets.

Would it be fair to say that by simply going international, you're already fishing in a smaller pond and don't need to go so deep. To get that-

Bill Mann: Absolutely right.

Jeff Santoro: That early advantage and you can stick to sort of like playing the hits of Finland [00:35:00] versus looking for the obscure mining company of Finland. Is that it?

Bill Mann: Yeah. And if you think about it, we were talking about ETFs earlier, but if you think about an ETF for that, that is country specific, the ETFs for emerging markets will generally speaking, have some sort of like mining or extractive industry plus their banks. Like that'll be 90 percent of the, of, of the index. Right?

And that's not even just an emerging markets country, company, country, excuse me. That's Australia. It's Canada. They are, they, they are the same. So yes, you don't have to take a huge amount of country risk or company risk to invest in an international market that offers the types of companies and opportunities that don't exist in the United States.

Jason Hall: Bill, you're blowing up preconceived notions here. And I'm loving it. Well, no, I I'm serious. But so [00:36:00] here's, I want to, I want to kind of boil this down to how I'm thinking about it.

So to me, if I were just to distill this down, what I'm hearing is you're talking about political stability, monetary stability, access to capital, and potential to grow economic returns. Like those four things just in, in ponds that other people aren't fishing.

Bill Mann: That's exactly right. Yeah, that's exactly right. Like I'm, we, by, by investing internationally, I'm not saying that, hey, we found an, a lithium mine in Oman. Who's in?

What we're saying is, hey, it turns out that Volvo is a really good company and they do all of these things that we don't even really think about here in the United States, they have an entirely different exposure to labor. They have an entirely different exposure to, to materials. If you're [00:37:00] invested in GM, why would you not also not consider Volvo as a place to put your money, right? I'm not, you know, you're, you're, you're not taking a huge amount of risk investing in a lot of companies that are in a much wider list of countries than we might think about.

Jason Hall: And this is, this is the last follow up question I have to this before we talk about China. This gets back to a question we wanted, we wanted to bring up and that's thinking about what's changed.

And it seems to me that one of the things that certainly changed over the past 20 years in a lot of international markets. And I think even, you know, some of the Nordic countries may be part of this too, is access to capital on a global basis. It's a wealthier world. And businesses that in the past would have come to the U S markets with a hat in hand, simply because there wasn't a lot of choice, I don't really have to do that anymore.

Is that something, am I, is that a, am I overgeneralizing there?

Bill Mann: But yeah, that was a terrible question.

No, it was fine. It's exactly right. It used to be that the [00:38:00] primary source of capital in the world was New York. And then you had other satellites. You had, you had London, you had Frankfurt, you had Tokyo, you had Hong Kong. That was basically it.

A Middle Eastern company now could raise money in Dubai and never have to come to come to the U. S. An Indonesian company can raise money in Singapore and never come to the United States. So, so I don't know if you want to describe capital as having been democratized, but it absolutely has been you know, it has been the access and pools of capital have been broadened in a lot of places outside of the U S. So that's why you see companies like Nestle never coming public in, you know, in the U S they don't have to.

Jason Hall: That's why you see companies like Apple issuing debt outside of the U. S.

Bill Mann: Yeah, absolutely. Yeah. That's [00:39:00] that, that, in fact, I love that example because it be, because it shows that one of the most sophisticated companies in the world and they have what now, $150 billion in excess cash sitting on their balance sheet. What's a couple hundred billion between friends? I think that's basically right.

Jason Hall: Directionally correct is what Bill Mann would say.

Bill Mann: Thank you. That guy sounds smart. Yeah, they don't need, they don't need to depend on Wall Street to raise money. And many companies have figured that out.

And so in order to go and buy these companies, and that's one of the most interesting things, and that's why I start, why I focus so much on capital allocators.

People don't really think about this, but being public is expensive. Right? It is, it is not something that is there as, you know, as a convenience to you, the investor. It is there as a convenience to the company itself. So companies that limit those [00:40:00] costs by staying public in their home markets or only at one place, that to me, in some ways is awfully interesting, right? They're, they don't, they, they don't see the need to have an ego listing on the New York Stock Exchange because it costs annually for the big companies, millions of dollars to have one.

Jeff Santoro: And it has human resource expense as well. Because there's now other layers of compliance and you, you know, look how many companies just on US exchanges that are newer to the markets screw up their accounting and they have to put out statements that they're out of compliance. Now you magnify that by, oh, we're public in three different countries.

Bill Mann: Yeah.

Jeff Santoro: There's, there's financial and just capital, you know, human capital costs to that.

Bill Mann: Yeah. And it is absolutely the case- now, a lot of- the U S markets will accept international accounting standards for foreign companies. So that it is, it is lesser.

But, [00:41:00] you know, like, for example, in a company, let's take MercadoLibre, which apparently I want to talk about a lot today. So in this country we have depreciation, right? You buy something and it depreciates. What do you do in a country where nothing depreciates as fast as the home currency? How do you depreciate something that on a nominal basis in the home currency is worth more than you bought it before, right? How, how do they treat that?

So there's this, there's this strange difference between, between the laws and regulations and accounting standards for each, for each country. And so just, just squaring that circle, that's just an expense. And so when companies aren't listed in the United States, to me that right by itself, it's just interesting. And I'd like to, you know, I'd like to figure out you know, what it is that I'm missing.

Jason Hall: Intellectual curiosity right there. Bill, [00:42:00] earlier, you, you mentioned the, whether, whether you want to call it the diversification of capital or the democratization of capital, I think that's a perfectly terrible segue to, to talk about China.

Bill Mann: The people's Republic. . Yeah. So, I think when people, definitely in the last 20 years, but when people think about investing overseas, it almost always defaults to investing in China right? And China basically opened its doors in 1974. And here we are 49 years later, and they have, I think you could very, very clearly say that the economic advancement that's happened in China has no precedent in human history, right?

Like you can, you can like the Chinese government, you can [00:43:00] dislike them, but you know, you, I think the reality on the ground is that more than a billion people have been brought out of subsistence living into something else. And for some of them, that something else is very squarely middle class.

So that's, that's China up until today. And that's all great, but you don't get to invest in China in 1974. It's, it's 2023.

And what's happening in China right now? There's a, question, and this happens in any environment, but I think in China, it's, it's somewhat amplified, trying to figure out whether it is the malaise in China now is cyclical or whether it is structural.

China has been growing at about 6%, whether you believe the numbers or not, let's just say that, you know, six with asterisk over, for years, can't grow anywhere close to that now. Isn't growing close to that right now. Has an unemployment rate for people who are 25 and below [00:44:00] something close to 40 percent. Has basically generated its wealth by undergoing these fantastic capital projects, infrastructure projects, and infrastructure-

Jason Hall: Stuff that absolutely nobody's using.

Bill Mann: Well, that's exactly, that's, that's exactly it. Infrastructure projects are fantastic if they then get used. But once you have built an infrastructure project, building another one, when the first one is not getting used, that is a terrible allocation of capital. So I think we are at the point where China for political reasons is no longer allocating capital well at all.

And they probably haven't been doing so for the last 10 years, but they've gotten away with it. So China is not-

Jason Hall: It happens when you're in charge.

Bill Mann: Yeah. Yeah. Yeah, when you've got someone in charge who is-- not even that he's unaccountable- he doesn't, [00:45:00] he doesn't really have much in the way of counsel now. You've got someone who gets the good news and maybe not the reality. So China to me is a largely uninvestable country at this point.

Jason Hall: So, go ahead, Jeff.

Jeff Santoro: No, I was just going to say I, every time I think about China, it, the phrase that pops to mind is like, it's going to be really great till it's not. But that's sort of like, that's how I view the risk.

You know, like, I understand why people are drawn to it. There's enormous potential. And you look at some of these companies that you hear, the big names you hear bandied about when people talk about investing in China, you know, JD. com and Alibaba, and you see the appeal. But what's scary is like, you could have, you could buy that stock. It could be a 10 bagger. And then next week it could not be.

Bill Mann: Exactly.

Jeff Santoro: That, that's, that, that's the scary part to me.

Bill Mann: And not, it could not be, it could no longer exist.

Jeff Santoro: Right.

Bill Mann: Right.

Jason Hall: Right. [00:46:00] So I think about, I think about China and so I've got, I've got two different questions.

And this is, so let me ask, let me ask the investing one first. And this is, I'm going to, I'm going to tell you what I think. And then I'm going to ask you, well, what do you think about what I think?

So we know that intellectual property theft is a thing in China. We that's well documented. This is nothing about that statement that's inflammatory. However, it seems that companies that have, like their moat is brand power, that have China as part of their thesis, I think it's something that can be additive for investors.

So I'll use the obvious example here is Starbucks, right? This is a company that has continued to prove that the Chinese consumer loves the Starbucks brand. As they've gone, as the Chinese economy has opened back up, they're basically back to like 2019 levels plus some growth. And it seems like that [00:47:00] brand value is there.

Is that a fair statement to say that if you're interested in benefiting from whatever there is for China in terms of just the sheer size of the middle class, a half a billion people with extra money to spend on stuff. Is the smart way to do it, find well managed companies that have a powerful brand that's appealing to the Chinese consumer? Is there, is there another way to do it?

Bill Mann: So, a couple of years ago, I talked with a friend of mine who's a venture capitalist who lives in Tokyo. And he said that the entirety of his universe of companies that he invests in are companies that produce something that, that young Chinese women are buying.

That's it. I mean, that, that is his thought process. I mean,

Jason Hall: That is a simple thesis.

Bill Mann: Yeah. It's a smarter guy than that, but, but yes. If you think about things that are, that are difficult to, to co opt, brands are kind of at the top of the list. And so that's why Starbucks has [00:48:00] done so well in China.

That's why LVMH has done so well in China. It's why Canada goose has done so well in China. It amongst other reasons is why Tesla has done well in China, right? They have, they, they have a certain cache to them and they have something that is in demand by a moneyed class you know, with, within the people's Republic of China.

So, yeah, what's your, what you're saying is actually spot on, but again, to get back to that incentive and, and the conversation that we were having earlier and also the poor use of capital, a whole lot of companies have lost a whole lot of money thinking that they could go into China, open their doors, and capture 1 percent of the market, right?

How many times have you heard this? Oh, if we could just capture 1 percent of the Chinese, that's 16 million people. That's pretty good start, right? Like it does not work that way.

Jason Hall: There's simple and then there's easy and [00:49:00] they're rarely the same thing. So that's the key.

So this is my second question. And this is kind of a bigger picture question about China. So before you were talking about, is it, is it the cycle or is it structural thinking about China. One of China's clear structural problems is the implications of decades of the one child policy where you have a whole lot of dudes, not a lot of women and a lot of old people getting older, right?

And my question is, in this period of economic decline, whether you call it recession, however, you want to describe it, how does China dig itself out of it, and can it as an, and can it, and if it can, how long will it take? And as an investor, how should I be thinking about China with those very real material threats to future economic opportunity, even for that large middle class?

Bill Mann: So I had a conversation not that long ago with a guy named Peter Zion, who is he, he's an [00:50:00] internationalist and he is someone who has called out China as being in a terminal decline. And one of the reasons that he believes that this is the case is because of that demographic, that demographic issue that you, that you talk about, where very soon a small amount of, of working people will be supporting a huge amount of non-working Chinese people. People who are in retirement or are, you know, or are simply not working.

And he asked a very simple question. How do you, how do you fill a demographic hole? Like, even if the Chinese birth rate turned around tomorrow, it's not like they're giving birth to 22 year olds, right? It is, it is a hole that is intractable. Japan is going through this too. And other countries are as well. The answer is actually immigration.

Jason Hall: I mean, that's the secret sauce for the United States.

Bill Mann: It is, yes. And that's, and that's exactly [00:51:00] right. It is the fact that the U. S. has for centuries at this point, taken the best and brightest from, you know, from some other so many other countries is a cheat code. They also took in me, but you know, so the cheat code doesn't always work. But-

Jason Hall: Is this the part, Bill, when- We can edit this if we need. Is this the part where I'm supposed to challenge that and say, oh no, no, Bill, you're a value!

Bill Mann: I was fishing for compliments. That's fine. No, no Bill. You are at best a neutral.

Jason Hall: Bill, you're great.

Bill Mann: That's right.

Jeff Santoro: Yeah, absolutely the best. You, you do things.

Bill Mann: No, that's right. Don't sell yourself short. You're a tremendous slouch.

I don't think China has that move. I don't think China has that shot in its bag. I mean, Japan, Japan has been resistant for, you know, for nationalist reasons for a long time.

Jason Hall: And Japan is an amazingly appealing place that [00:52:00] lots and lots of people from all over the world would love to go. And they will just simply say no.

Bill Mann: For the most part, becoming a naturalized Japanese citizen or resident is very, very difficult.

China is a country that is still facing net out migration. And they, you know, they can stop it by putting, you know, by, by putting limitations on on, on, on movement for their citizens. But there are not that many people who are excited to move to China, which is the way that you fill in those demographic holes. And that's just, that's just reality.

So I think Peter Zion was exactly right in that regard. So, given that they've had this one, this one child policy, because they were attempting back in the day to prevent China from becoming a country with 3 billion people who they couldn't feed, it was something that on certain levels [00:53:00] made some sense. But at the end of the day, when you have a very small percentage of the population that is supporting the remainder of the population, that begins to break down. And it's even more, more so exacerbated by the fact that so much of the economic gains in China have happened in ways that are not really repeatable, or they have a marginal decline in economic utility. Like, I don't know how you fill that.

Jason Hall: So, they paid a lot of people to build a lot of shit that they are doing a lot of nothing with.

Bill Mann: That's right. Yeah, that's right. And a lot of that stuff is now getting knocked down so they could do it again, you know. So, so, you know, I don't know what your opinion is of the broken window theory and, and Friedrich Hayek, but, but rebuilding something over again, that was perfectly fine before, does not seem like that is going to solve a massive problem.

Now, I always want to be [00:54:00] really careful because you're talking about an incredibly complex, incredibly dynamic unit, which is a national economy and the second largest-

Jason Hall: We are over oversimplifying to the point of absurdity. That's, yeah.

Bill Mann: Yeah. This is the, this is the, yeah. Dr. Seuss right now is going, man, that's pretty simple, right? The butter side landed down. It's over, right?

Yeah, so it is always, I think a mistake to bet against a country that has done what China has done over the last 50 years right? They've got additional things that they can do, but I don't know that they have the political will to do them until they, until whatever the current path they're on becomes completely untenable.

Jeff Santoro: Yeah. And the, and the bottom line is worth, we're, we're talking about China in a lot of different ways right now, but we're trying to think of it through the lens of someone who's looking to invest [00:55:00] internationally. And all the things we're talking about to me are just enough to say, like, there's a lot of other countries in the world.

Bill Mann: Exactly. I mean, think about what I just said, right? This is a guy, you know, the, this venture capitalist lives in, in Japan and invests in Japanese companies that are selling stuff to China. Okay, that, I mean, that's pretty good. You know, you want to invest in China, go buy LVMH. That's Louis Vuitton, Moet Hennessy, and they got other stuff.

Jason Hall: Durable, durable, powerful brands that people- and you know, here's the cool thing about LVMH. And Starbucks. And Coca Cola. There's lots of people that are not in China that are buying that stuff that's really super high margin too.

Bill Mann: That's right.

Jason Hall: And that's, that's pretty great. That's pretty good. So we, so we have let China- the show- I want this, the country that I want to point out, Bill, you said that you basically think is, I don't know if your exact words were uninvestable, but you certainly say you can't trust their regulatory regime, which says a lot about whether you think it's investable or not.

Bill Mann: Yeah.

Jason Hall: We've spent the [00:56:00] majority of our time talking about individual countries talking about that country. So let's talk about something else. Jeff, you had something.

Jeff Santoro: So we we're going to do in a minute, we're going to do a lightning round. We'll just do some quick questions for fun at the end here. But I had one more question I wanted to ask.

So when, what do you think are common mistakes that investors make when they're first stepping into the world of investing internationally? So again, if we have some people listening who are like interested, anything you would caution them to be careful about?

Bill Mann: Basically, be careful about everything that we've talked about.

Jeff Santoro: Perfect. Go back and listen. And take notes.

Bill Mann: I would, I would say this. A lot of people get interested in international investing because they, because they hear themes, right? Do you remember maybe 15 years ago when all of these supermodels wanted to be paid in gold and Euro because Euros, because the U S dollar was gonna collapse.[00:57:00] 

Jeff Santoro: Yeah. I think a lot about supermodels, but it was not for that reason.

Bill Mann: Yeah, top five reasons you think about supermodels.

Jason Hall: There's a, there's a, there's a version of that, there's a different verse for that song that gets played about every seven to 10 years.

Bill Mann: Exactly. You know, I mean, there are versions of that song that are getting played right now.

Jason Hall: Right now. Yeah. With the potential next government shutdown with what we saw this spring with potential, you know, the, the U S is the global reserve currency, right?

Bill Mann: Yeah.

Jason Hall: And there's always something that's going to blow that up and then gold or the renminbi that you want, whatever you want to call it.

Jeff Santoro: Well, there's, there's sports players getting paid in crypto, you know, like it's,

Bill Mann: Yeah, yeah, that, that, that worked.

Jason Hall: You remember when you remember when -

Bill Mann: If you hate money, I've got a great idea.

Jeff Santoro: No, it's, it's like, it's like-

Jason Hall: New york's mayor, Jeff, New York's mayor wanted to be paid in Bitcoin. They said, no. Like seriously.

Jeff Santoro: That's another thing that works till it doesn't.

Jason Hall: Yes. Right.

Bill Mann: [00:58:00] Yeah. So I would be very careful. I would be very careful in investing in international companies based on the things that you hear in the news.

So, I mean, I'm joking a little bit about, about, about the supermodels, but six years ago, all people talked about where the BRICS companies- countries, right? And here's how I think about the BRICS countries. You've got China, which is, you know, which is the economic powerhouse on some level. And then you have basically three other countries that are dependent on natural resources. And natural resources are almost all priced in dollars, right? So, but what you hear is that, oh, they're going to take the place of the U. S. They are going to be, they're, they're going to be the next big thing.

So I would, I would caution you any, anyone who wants to invest internationally about doing so on macroeconomic [00:59:00] themes, I just don't think it's necessary. And I think when you, when you say, well, I think I need more exposure to China. I need more exposure to Brazil. Generally speaking, I think that it's being done for, you know, for, for macro reasons.

And when you're talking about macro, we have to understand, you know, and come to that game with a whole lot of humility. Which is that if I know something, I have to think first and foremost, that the market has long ago discounted at this into, into its reality and into its pricing. I think that is the primary mistake that people make when they're investing internationally is they think that they have an insight based on what they've read in CNN or whatever. And that stuff has long been priced in.

Jason Hall: Bill, I want to make that personal here because I think, and hopefully this is a way that other people can relate to.

It's like, When you're, [01:00:00] it's a macro thing, and that's, and you, you say international investing mistake, I say investing mistake. Because people do that with macro stuff with the U S all the time. The war in Ukraine, they said, okay, well, let's buy defense stocks. You know, interest rates are going up. Look what, it's always kind of a thing that people do.

You also talked about IPOs, right? People want to get on the IPOs. And you're not getting in on the IPO. Somebody else is getting out of the IPO.

Bill Mann: That's right. Exactly. IPOs are sold.

Jason Hall: Yeah.

Bill Mann: Not bought.

Jason Hall: That's the thing. And then you talk about penny stocks. You're probably buying it because a water cooler conversation or you get a penny stock newsletter for some dumb ass reason. Again, all of those things, you are, you are carrying somebody else's bag. Somebody is selling you their luggage. Every single one of those situations. They're all the same thing, every fucking one of them, they're all the same thing.

Bill Mann: Yeah, I couldn't agree more, which is why I say, you know, which is why I say that one of the key elements that you [01:01:00] can have, this isn't just a, again, just to take what, what you were just saying, this isn't an international investing principle. This is an investing principle. Which is to take anything that you think, you know, with, with humility, right? The advantage that we have as individual investors is not in 99.9 percent of the cases an informational advantage. It's a mindset one. It's a- the fancy way of putting it is time arbitrage, right?

Like, I am investing now in certain companies because nobody believes in them. They're not paying attention. And that's the power of investing internationally. Not, not, Hey, I can figure out, you know, that, you know, that the dong is going to go up against the dollar. I don't know. Right, that is, that is speculation and if I'm hearing about it, it's probably because some Vietnamese person has whispered it to someone else and it's shown up in some blog [01:02:00] where I think I'm being very smart by reading.

Jeff Santoro: All right. Here is lightning round for Bill Mann. We'll, we'll hit these as quick as we can.

Tell us the time, tell us about the time you made fun of Elon Musk.

Bill Mann: Oh, it was an accident. It was an accident. And, and, you know, a lot of people make fun of Elon Musk and he doesn't notice. Although...

Jason Hall: You did it to his face.

Bill Mann: I did it straight to his face. So in 2013, he was in the Motley Fool offices and I was interviewing him.

And I was a very inexperienced interviewer at this point. And so I put together what might best be described as a movie script. Where I ask a question, and then I predicted his answer, and then I had like, a next question. I think I even had like the diacritical, like, here's where we laugh. He says something, and then I respond, and then we go, ha ha ha.

It turns out that someone who has an IQ of 180 does not follow a script that he doesn't know exists. So [01:03:00] he answers my first nine questions in his first answer.

And so, I have 10 questions, and 45 minutes left to fill. And it is, and I am incredibly impressed by Elon Musk. I'm incredibly impressed by his brain, but Elon Musk does not have a huge amount of, of a sense of humor about Elon Musk.

So I am trying to formulate questions that, that prevent me from looking like an idiot. And so we're talking about SpaceX and the, the period of time was this. They had successfully done the third launch, the test launch, and it had been successful. So there had been two prior and they both blew up.

And so I thought a really good question was to, to start exploring the failure of the second launch. And to ask a question that was something like this: When the [01:04:00] second rocket blew up, did you know then that the next rocket was going to be successful? What made you go back? Which is, I have to give myself --imaginary me-- a pat on the shoulder. A really good question.

Jason Hall: That's a great question.

Bill Mann: But that's not what, that's not what I asked. What I actually asked the Bill Mann asked. No. What I actually asked out loud to Elon Musk is, did you think it was cool when your rocket blew up? Those were the words that came out of my mouth.

And Elon Musk goes, no, it wasn't cool. It was 99 percent of my net worth. I had just gotten divorced. Like he went bazonkers. And I'm trying to reel it back in, and get him, get him back to a point where his nostrils aren't flaring like this.

And I didn't really succeed. And I don't blame him for thinking that here's this guy who's really trying to take a bite out of me, right? Like, who's really trying to make me look like an idiot. It was not a fair question. It was a fair [01:05:00] thought of a question. But the words that came out of my mouth were at best, disrespectful.

How's that for a lightning round?

Jeff Santoro: You have a great story though.

Bill Mann: It is a great story. And that is why my Twitter, my Twitter page is a picture of me interviewing Elon Musk. And I'm not, I think that he's smiling. So I'm pretty sure this was before the terrible question.

Jason Hall: So I, I want to say Bill Mann, Tesla stock is up 11,910 percent since then. So you get, you get a lot of credit for that.

Jeff Santoro: Well done.

Jason Hall: Yeah, that was the challenge that Elon Musk needed right there.

All right, here's, here's our, here's our second question here. We got three of them for you. So reckless prediction time, which is going to do better over the next 10 years. I'm going to make you pick between your two favorite children here. U S small caps, or international stocks. And I will let you decide how to [01:06:00] bracket that cohort of international stocks. Which is going to do better over the next decade?

Bill Mann: As a group, I think inter- excuse me, as a group, I think US small caps will do better.

I see some of the values that we see in, small caps right now are pretty astounding. David Einhorn early this year, is Greenlight Capital, absolutely phenomenal investor, was talking about the death of value investing. And I think that we've seen a real, a real inefficiency in small cap markets because so much money in the United States right now is geared, is put in passive investing in index funds and things like that.

And if you think about the basic, the basic premise of index investing is that it's investing that's done on a know-nothing basis. So if a company is already expensive, it's going to get a larger percentage of each nominal dollar that comes in that's indexed. At some point, this is going to be paid attention to.

So I do happen to think [01:07:00] that small caps as a group will do better than interna- than international stocks. I do think that there will be many more 10 and 100 baggers in international investing that I do in small caps.

Jason Hall: That's a good way to put it. Jeff?

Jeff Santoro: All right. Last one, Bill, which international market, country, part of the world, that's not on people's radar now, do you think will be really prominent in our minds in 10 or 20 years?

Bill Mann: So I don't know that Mexico is off people's radar, but I think that it might be the answer for one really, really big reason. You know, a lot of people are talking about the risk right now of China invading Taiwan, and they're all worried about Taiwan Semiconductor.

What about Apple? It has 93 percent of its manufacturing in China and 25 percent of its revenues coming out of China. So, what a company like Apple can't do is simply announce, hey, we're pulling out of China. But they can choose over time to near [01:08:00] shore or reshore any additional manufacturing.

I believe particularly the West Coast of Mexico, you are going to see an incredible advancement and increase in manufacturing, even high tech manufacturing. And so, you know, a lot of people don't really think of Mexico as being anything other than, you know, a place that's mildly dangerous. It actually has a really highly developed commercial code. Investors are quite well protected in Mexico.

I think we're going to turn around 10 and 20 years from now saying, why in the world did I not invest more in our neighbor to the South?

Jason Hall: That's fantastic. I want to say my takeaway from this is that you're saying that Apple is going to basically Baltimore Colts, right?

Bill Mann: I mean, I'm sure there are certain nights Tim cook wishes that he could get the Mayflower trucks to show up and and pull out. They can't do it. I [01:09:00] mean, there's no, there's absolutely no way that Apple can say, Hey, our plan is to pull out of China.

Jason Hall: No, can't do it.

Bill Mann: No. So, Mexico is a, you know, is a market that has a huge amount of attractiveness to US manufacturers. And it is no longer simply a market where, you know, where low tech things are being assembled. There are some, there, there is an incredibly highly educated workforce in many places in Mexico, and so that's. The market that I think will replace China Faster than any other.

Jason Hall: Boat's not required. Love it. Absolutely love it Bill. That's great.

Bill, thank you so much for coming on. Looking forward to getting you on here again in the future

Bill Mann: All right. Thanks so much for having me, fellows.

Jason Hall: Okay. Jeff, we did it.

Jeff Santoro: We did it.

Jason Hall: We did it. We have once again said words about things. Thank you for listening. And as always, we love to give our answers to these hard investing questions. Get really smart [01:10:00] people like William Guy on to give their answers to these questions, but it's up to you to answer the questions for yourself. You can do it. I continue to believe in each and every one of you.

All right, Jeff, we'll see you next time.

Jeff Santoro: See you next time.

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