BRUCE GREENWALD 00:00
Okay, so what about the market today? I mean, it seems highly valued. I mean, if you look at fixed income, it seems unprecedented. That said, does the market today remind you of any historical periods you lived through in good ways or bad? And would you have advice for anybody on how to navigate it?
LI LU 00:23
Well, we usually don’t study too much about the market except when they are really extreme and this happens to be one of the more extreme periods of time. It is truly, in many ways, somewhere in uncharted territories. The amount of liquidity that’s been printed, the level of interest rates, and also the slow pace of growth. All of those are quite really remarkable in this period of time. So how do you really deal with them?
We don’t necessarily think that history would repeat. And so every time is slightly different. Instead of guessing the patterns of history and whether they would repeat, we focus on selecting companies that can really live through the thick and thin, whatever the environment, business will continue. Somebody will do well.
So we just want to really invest in those companies who are capable of dealing with those extraordinary set of uncertainties. (Inaudible)
BRUCE GREENWALD 01:41
And how much is management a part of that. And how do you look for managements that have that capability?
LI LU 01:48
Well, in a lot of the companies, the management will make a big difference. The culture of the management were produced will make a big difference. But in a small set of experiences, management really matters almost nothing. The strength of the business itself really has a dynamic of its own that really almost anybody can run it and run it well, relatively.
Now, those businesses are really rare, not that many. You can probably put them in one hand or two hands. And so each – again, I come back to the situation, each time is different. You have to really look for each specific company in specific ways and ask all kinds of appropriate questions and study them over a long period of time in order to really honestly say that you actually understand them. Understand them enough that you could predict the outcome in 10 years, even given all the up and downs in the macro environment.