FOCUS 2025: The next wave of growth: Where innovation meets opportunity – Mark Schmehl

[00:00:03] Glen Davidson: Mark, are you there?

[00:00:04] Mark Schmehl: I'm here, can you hear me?

[00:00:07] Glen Davidson: I can hear you and there you are. I don't see you but they do. I feel very lonely on the stage but I'm glad you're here. We can feel you, we can feel your presence. There you are. Good of you to be able to join us today. This is wonderful. I think we've got 40 minutes and we've got lots and lots of things to talk about. I wanted to start with a discussion about the last time I saw you, which was last month in Boston. I want you to tell everybody why you were in Boston in September.

[00:00:37] Mark Schmehl: September was my 25th anniversary at the firm and it felt like a good time to do a little presentation to everybody about what I've learned and the lessons that I think are important. I did a presentation to the research department and that coincided with a marketing event that we were doing so that worked out well too. Yeah, 25 years at Fidelity, it feels like it was just yesterday I started, actually.

[00:01:03] Glen Davidson: Well, congratulations. I don't know if everybody can hear you but big round of applause through my microphone. I also found out on one of our Boston trips that you are one of the biggest consumers of technical research. Mark Dibble had said that. How do you couple that with what you do every day?

[00:01:22] Mark Schmehl: It's just another input. Nidhi was just talking about using AI, I use charts as a method to look at what's going on in the market. I do think that the technical analysis speaks to what people are thinking in the marketplace. It's a great barometer of sentiment. It's also a great barometer of what does the market know that maybe I don't know, which is a lot of things. The market knows a lot of things I don't know. A lot of that information is encapsulated in the chart action so there's information there. I use that information all the time. I use it a lot for what I currently own, like what are my current positions and how is the market treating them, what does the market think about my current positions, and that all shows up in a stock chart. I also use it for new ideas, what's working, the market has found something.

[00:02:18] One way to think about it is like there's 100,000 really, really smart people every day trying to pick stocks and beat the market. There's a really good chance that they found some stuff that I had never looked at, and that's reflected in how the stock is behaving. If the stock's going up 10 people may have found this great idea and done all this work and decided this is the thing I'm going to buy and now the stock's moving. So why not leverage that information and all that hard work by those 10 people and go do my own work on the same sort of stock. Technical analysis is a great idea generation point. It contains a lot of information that we may not know or might not be thinking about. I think that it is a very important part of any investor's process. Most portfolio managers I know all look at charts.

[00:03:05] It's funny, we come through school and they beat it into us that technical analysis doesn't work, and it doesn't by itself but it's just another input. The more inputs you put into your process the better your process is going to be, the more robust your process is going to be. Different things work at different times and it creates flexibility and change within the process that you've got. I try and use as many different inputs in what I'm doing as possible and technical analysis is a good one.

[00:03:34] Glen Davidson: Well, I wanted to have you talk about the inputs because Fidelity is made of quantitative, fundamental and technical research and there you are doing what you do but you have access to whatever you need. It's not siloed and I think that cross-pollinization is important for everybody to understand. Final question about Boston because we just had Will Danoff on stage. You worked in Boston for a long time when you were an analyst and then as you became a portfolio manager moved to Toronto and now you're in San Francisco. When you were in Boston Will was there, Peter Lynch. Neal Miller, can you talk about the influences that were on you?

[00:04:06] Mark Schmehl: Absolutely. All of them had big influences, less Peter Lynch because I didn't talk to him very often. Neal, Will, I've learned so much from those guys, I cannot tell you. A lot of the core tenets that I have in my investment process, Will mentioned it just now on stage is you've never missed it. That's one of the core things and I've learned that from Will t's really important to have that, what's the word, that length of time. We have this 70 year depth of knowledge that a lot of firms don't have. You can go to someone like Will who's been doing this for a long time, or even older, and say, you know what, what happened when and why did this happen?

[00:04:53] I feel as though Fidelity is a bit of a temple to active management, or just equity investing in general. We have a lot of just latent knowledge that's kind of lying around on the floor that we've developed over our 70 whatever number of years of investing. We just know more. My colleague Hugo says this very well. He says investing is a game of experience. We have a lot of experience and not just individually, me or Will or whoever's on stage, but collectively with the sheer number of portfolio managers and the depth of time with which Fidelity has been investing and the amount of experience that we have institutionally built up, it's remarkable. It's sort of like having that muscle memory. You do something, you don't know why.

[00:05:46] That sometimes happens in investing too. You'll be doing something, I don't know why I'm doing this but something in the back of your brain, some experiential moment in time, or in the firm's time, is the reason you do that. It's important to have that. Again, not many firms have that really deep institutional knowledge that they can share. That's part of why I wanted to do that 25-year presentation. Will does one of these every year and they store them, you can go download it. You can look at it forever, it's an evergreen thing. I can go back and look at any presentation that some of the guys have done in the past. Although I don't think I can get Neal's because I don't think we were recording at that time. But in general it goes into the institutional knowledge of Fidelity which then is shared and all this experience gets spread around like breadcrumbs.

[00:06:43] Glen Davidson: Great, thank you for that. Now, let's talk about your portfolio. Top 10, of course. When you think about earnings that are coming in now, and last night in particular, you must be fairly happy. Could you talk about that, please?

[00:06:57] Mark Schmehl: One of my big positions ... I think you've been talking about AI with some of the previous folks on stage and I think one of the most difficult things when you're thinking about AI is it's gotten more complex from the production standpoint. Initially when AI was sort of first born even Nvidia was the horse, you just you just Nvidia. They had all the stuff, they had all the miracles, they had Jensen, they had the whole story. It was all Nvidia all the time. It was a relatively easy investment choice. I'm going to own Nvidia and nothing else and it's going to be great. What's happened is as we've gone farther into the AI cycle there's more and more moving pieces. AMD is now a little more prevalent and you've got Broadcom with their weird chips and you've got Google with TPUs and you've got everybody and their brother with some fancy thing. It's gotten a lot harder to analyze who's winning. I have no idea. Anthropic or OpenAI, they'll come in-house and they'll say we're using Tranium, which is Amazon which is Marvell. You could just listen to me. You can hear how crazy it's getting. You don't really know who's wining and who's losing. I think it's fair to say Nvidia still has the best stuff, I think that's unquestionable, but there's a lot of different other things going on now.

[00:08:24] One of the ways that I'm trying to sort of simplify the process, I'm a big believer in simple wins in the market because the market is a narrative and simple stories are always the best stories. For me, the simplest way to play AI right now [audio cuts out] I just own TSMC. They reported last night, the quarter was unbelievable. For those that don't know, TSMC has a monopoly at the leading edge for semiconductors. Every single phone, every single AI data centre thing, pretty much everything that you use that is in any way complex, they make the CPU for. They don't care if you're Nvidia or AMD or Broadcom or Marvell or Samsung — well, they do care about Samsung — but they don't care about a lot of the different ones. They basically have a monopoly on AI, literally have a monopoly on the production of AI. It trades at half the multiple of all those other fancy companies because it's in Taiwan.

[00:09:36] My experience in these sorts of things is that as we progress towards the peak a lot of the stocks start to sort of come together in terms of their valuation metrics. I can remember in 2007 when we had the global growth thing and I was running money, again experience, all these crazy stocks in Brazil, they were farming stocks and sugar plantations and sugar refineries and Bunge soybean factories, I remember I owned all this stuff. Those multiples all got to developed market multiples. They were no longer emerging. They were now growth stocks. The multiples expanded and all this crazy stuff in Brazil or Indonesia or wherever, this could happen this time too so why wouldn't TSMC's multiple expand and get to where Nvidia's multiple is? You've got a stock that is a monopoly on AI globally trading at 40% the valuation of its peers that's blowing out numbers and I don't have to worry about the competitive forces. It seems like a dream scenario. The only pushback you ever get when you talk about TSMC is, oh, they're going to get invaded by China. Well, if they get invaded by China everything is going to go down, every stock we own, gold's going to go to 12 million, everything's going to go down so that's not really a risk case that I think is valid.

[00:11:15] My bet is AI continues to work for all the reasons that we can talk about, and we can talk about AI all you want, and this is the primary beneficiary because it's the cheapest with the best growth and the best business model. I think that the market will get there eventually and figure that out. That's where I am. That's my big AI bet. And they did, they reported last night and they reported great numbers and I think it's going to be a great stock. But who knows? Maybe they get invaded by China and it's not a great stock. I don't know.

[00:11:49] Glen Davidson: AI for you is broadening a lot, for a lot of investors it is because you're able to now work at data centres, all the inputs there. Can you talk about the breadth of ideas that are coming to you from an AI theme?

[00:12:02] Mark Schmehl: It's all over the place. The problem we have with AI right now is that the winners are very well known. We're later in the cycle, we're no longer like early in the cycle where I can go discover, hey, here's a cool AI play no one's found. Everybody's found all the AI plays, we know who they are. There are ways to play them. One of the ways that we played this earlier is we were buying Bitcoin miners that were long power and had the ability to transform themselves into AI factories. That trade has now become very well known over the last six months. All those stocks have done very well. It's hard to find something that's similar to that trade, or that was similar to the buy Nvidia trade two years ago, or similar to the buy the guys who own electrical workers trade a year ago. We've been kind of moving through this process. We're now at the point where we know all these guys. The trick is to find who's using AI and who's using it well. I think the answer there is nobody.

[00:13:11] The AI models have only just very recently gotten to the point where you can use them in sort of an enterprise setting and go, hey, this is really great, because they weren't that great. You asked a simple question and I don't have a good answer for you because the AI winners are so well known and that's where the market's going to struggle because we're at this point where everybody knows the winners, they all have huge multiples, they all had huge expectations and now what do I do with these things? That's a tough market to really win in. I would say that the strategy I have developed over the years in these sorts of situations is you own huge positions in your favourite ideas because the market volatility will rise because sentiment is just too bullish. The market is going to continually test investors over and over again as we go higher in this AI trade so you want to own the very best stocks that you have the most conviction in and take really big bets.

[00:14:14] Then what you do is you hunt for the stuff that you find, oh, I think this one's a little bit cheaper, I think this is a slightly better play, here's a company that's using AI really well and I want to own a lot of it. I have yet to find the ones that are using it really, really well. I have some theories. One of the stocks that I like is Roblox. It's a big position in the portfolio. It's not using AI yet to make their business great. The theory is that AI is going to proliferate through the platform, it's going to allow creators to make games faster, better, cheaper, it's going to let players find games faster, better, cheaper, it's going to let them monetize faster, better, cheaper. We're starting to see the inklings of that but it hasn't really impacted the results yet.

[00:15:01] At the moment, it's still just a theory. I have a bunch of those theory stocks where I can't just point to it and say, hey, they made $6 billion because of AI. I think that if we do get to that point where you can point to this is the cost savings, this is the revenue generated and it's all because of AI, I think that will give the AI trade even more legs.  I do think that moment is coming. I haven't seen it yet, I keep looking. I do own some companies that I think are going to benefit from that AI usage. Roblox is one, I would argue that Meta is probably another one, I think Google is another one, I think AppLovin is another on, but we haven't really seen it. We're still trying to hope it shows up. Anyway, we're in a tricky spot where a lot of investors believe but we haven't really seen it yet.

[00:15:53] Glen Davidson: Let's talk about AI in relation to jobs. There's a lot of people that you'll see on the media that say we're all going to be out of work. Do you see it as augmenting people's current roles and also creating new opportunities?

[00:16:07] Mark Schmehl: Absolutely. Here's my example that I sort of use with people. My son is a software engineer, ground zero for AI obsolescence. He uses Claude for code every day. He says it makes him so much more productive. A lot of the really grindingly dull tasks, the testing, the compliance stuff, the general boring stuff, the AI can do it really well. The AI can use all these tools effectively and do more things than my son can do by himself. I think that's what we're going to see broadly speaking. I think software engineers are a really good initial point to watch what happens with that cohort because that's the first cohort that AI is really going after. I think what you're going see is you're gonna see the productivity of these guys explode and they're going to be able to do more things, ship more code, better code, faster, and accomplish more things, you know, each engineer may be a 10x engineer so that they can do so many more things.

[00:17:13] I think what you're going to see is initially we're going be in this transition where companies are going to be like, I don't want to hire anybody, I'm going to use AI, da, da, da, da. But then what they're going to do is they're going to realize that they can do so many more things so much more quickly and they'll say, wait, if I hired 10 employees I can get 100 employees out of those 10 so I'm going to go back to hire them. I think, ultimately, this unemployment idea I don't think happens. I think the initial phase is we reposition and then we start hiring people because they're so much more efficient and what you really need is you need those computing costs to come down, which is going to happen, so that AI is cheaper so that you can deploy it to more people and more people can use it more quickly and better. I really do believe in this productivity boom and the way we use AI and how it makes our jobs so much better as researchers, how other people are using AI to make their lives better, I do think there's going to be a productivity miracle and I think that we're just going to able to go faster.

[00:18:16] Typically, how business works is these benefits ultimately get passed down to the consumer so it could very well be that everything just gets better, all the products get better. Your customer service gets better or your banking systems get better, everything you do in your life gets better because it all comes down to you as companies compete away all of those great benefits. That's what's happened forever. Ultimately, I think what we're going to see is we're just going to see better products, cheaper products, faster products, that make your life better and it's going to be business as usual. There's no Armageddon scenario. You'll have all this productivity and that's going to feed through to the economy so that inflation isn't necessarily a huge problem. I see it proliferating and being a good thing. Is there a transition point? Absolutely, we're doing that right now and it could go on for a few years but I think, ultimately, all of this progress is going to just feed through to our daily lives and it's just going to make everything better.

[00:19:23] Glen Davidson: I'm still amazed with the fact that you've been involved with AI, and I don't remember if it goes back to 2022, and it's because of the story that you told about proximity of where you are and the people that you work with. I don't know if it was a piece of paper stuck to a lamp post or something that said, hey, there's an AI conference. You said, I don't what that is, let's go check it out. That's kind of the the story, isn't it, hat led you down this path.

[00:19:51] Mark Schmehl: I would say, arguably, AI really burst on the scene in 2017. I think I remember doing a presentation at Fidelity Canada around that time about the impact that AI was going to have. Then it kind of went fallow. We didn't really get much out of the AI move. Then yes, that 2022 story of my colleague seeing a stapled newspaper on the telephone pole, please come to our AI conference in Hayes Valley. We showed up and it was the most amazing thing I'd ever seen. It was so obviously going to be the biggest thing in my investing career. All of the current billionaires were all there and they weren't billionaires yet. It was truly just because we were in San Francisco. Annie, I think, was going to get groceries and she saw this thing on the wall. That's the San Francisco advantage. That's why we're here. That's why it's so important to be based here if you're investing in tech. If you're investing in AI, like Anthropic, I can see the buildings right there. Everybody's so close, it's such a huge advantage.

[00:21:03] My wife is an artist and I was at this thing with her on the weekend, the fellow artist, her husband runs Walmart's tech stack. For six hours I had this tech CEO or whatever to myself just because organically we were all in San Francisco. There's incredible power to being located here especially if you're a tech investor. It is such an advantage but it is hard to quantify. People ask. I was talking to Will about this, are you seeing companies? It's not really that, it's more just the random discussions you have with random people who are all immersed in what's going on. Yes, the proximity to go visit these companies quickly should something come up, I can walk across the street and go see Anthropic. That's an important part of why being here is so important.

[00:22:00] Glen Davidson: You just said the word quickly and that's something that you're able to execute on when it comes to changing your mind on positions within your portfolio. You can change on a dime. You're a very, very, very good seller, if not the best one, and a question has just come in saying, what are your thoughts on valuations and the potential risks that you are monitoring?

[00:22:19] Mark Schmehl: Valuation is not part of my framework. I don't think about valuation ever. If you're making a decision based on valuation, at least for me, it's a mistake. I focus on fundamentals. Fundamentals always lead to valuation. Valuation is like a lagging indicator. I don't care about that. I am always looking at what's risky and I'm always thinking about when it is time to leave the party, so to speak, but I will always leave the party late because the key is to stay invested in your best ideas. I will never ever get the top, ever, I will always ride it over the cliff a little bit. The key is that once you've hit the cliff there's usually a pretty big sign that says, hey, you've gone over the cliff and it's time, you've got to cut and run. I'm very good at cutting and running, and I'm very quick at it. I think that's one of the reasons that my funds generally sort of fall in line with the market. Whatever the market's down I'm sort of down. I tend to do much better when markets are going up so I'm doing much better right now.

[00:23:34] The key to being a successful investor over time is to not blow up your clients. If you lose all their money they're never going to trust you again. I run 50-some-odd billion dollars, there's no way many Canadians would be willing to give me that much money if I was blowing them up on a routine basis by not being able to control risk. Controlling risk is a very important part of the process. I sort of build my portfolios to be a little more robust than I think most people realize. I have a lot of strange things in there that sort of offset each other. Portfolio construction is an art, it's not a science. You can't science your way to making a great portfolio. It's really about assembling the pieces so that the whole portfolio moves the way you want it to move. The idea when I'm building a portfolio is I want it to be moving in the direction but I want to keep the volatility to the point where I can sort of manage it so you just put different pieces in. One of the reasons I own so much gold is not because it's up a lot. I've always owned gold because it's a really nice portfolio diversification tool. It's got negative beta, it doesn't move with tech. It smooths out my portfolio in times of carnage. At other times I'll own oil. It's the same sort of thing, it's inversely correlated to software.

[00:25:05] Building a portfolio and constructing it to be robust is the real secret. It's not so much selling fast, although that's very important, it's also having the right portfolio at every time. That's an art and you can't teach that. I've had this discussion with our risk team before, you can look at all the factors and all this stuff together, the world is way too complex and changes way too quickly for you to use a mathematical approach to come up with this, or maybe it is and maybe some hedge funds got it and I've never seen it. All I know is the Fidelity experience and I think it's more of a humanistic thing. Portfolio construction for me is something I spent a lot of time on. It's sort of a special skill. It's one that I've developed over time. As I've gotten bigger I've had to get better at it.

[00:25:59] Will's a master at it, Will's portfolio construction is incredible. I look at his portfolio every day and I go, how is that thing working? It just works. I think that experience allows you to build better, more robust, interesting portfolios that leverage all of the fun stuff, all the investing that we talk about so that you get the results you want. That allows you to control the risk in the way you want. Again, my portfolio is always going to move more than others. I'm up against the NASDAQ, the NASDAQ moves all over the place, but the portfolio construction is such that I'm very comfortable with where the risks are and I know where they are and I know what to do when things start to shift.

[00:26:46] Glen Davidson: Neal Miller, when you worked with him in Boston he taught you a long time ago to read everything all the time and learn about everything. You're not a geologist but you do know a lot of stuff about a lot of things. Can you educate us on rare earth minerals? That's sort of topical these days.

[00:27:02] Mark Schmehl: It's funny, it keeps coming up, they're not rare, they are everywhere, but what's happened is it's a really bad business and the Chinese are willing to invest in the process to get them out and nobody else was. Everyone else was like, this is a terrible business, I'm not going to mine for whatever these things are. The Chinese did it and they ended up having all the supply. The ability to go and find rare minerals is pretty easy. We know where they are. It's just building the process. Ultimately, this is a three year problem and they'll go build some mines in Nevada and start making this stuff but in the short term, yeah, it's clearly a negotiating tactic and it's a problem. What happens is it gets solved by price. If you're in a business and you need to use these rare earths you'll get them, it'll just be more expensive and that will, ultimately, pass through to everybody else. Who knows?

[00:28:02] I don't know anything about negotiations. I know that they're not actually rare, I know it's a solvable problem, but I know in the near term it's not a solvable problem. Who knows what happens? I don't think it's going to impact the AI thesis that much. I think that, again, it's just going to be a function of price. People who have access to rare earths will charge more and the data centre and TSMC's and Nvidias, they can afford to pay whatever they want and it won't care, it won't matter at all. But it will certainly impact some other things. It might impact, I don't know, GM's car volumes or whatnot but, ultimately, from a stock market perspective I really don't care so much about cars. They're not adding a lot of value to the stock market. I care a lot more about AI and I, ultimately, don't think that rare earths are going to impact that in any meaningful way, even if they get shut down and prices go back up.

[00:28:55] Who knows? I could be wrong. Maybe it's like Armageddon. Maybe the whole world stops because we can't get, I don't know, whatever the metals are. I don't even really think about it. I don't spend a lot of time thinking about geopolitical nonsense. It's too hard to predict, it changes. I'm really trying to just focus on the big secular trends. What's going on, is this continuous, will it continue? The topic du jour is usually not ... it's pointless. By the time it's the topic du jour we're onto something new. So yeah, not really too worried about it.

[00:29:30] Glen Davidson: Good insight. I'd like to ask you about robotics, something I haven't heard you talk about before, I don't think. I was reading that China, I guess, a month ago had the Robot Olympics. They're building humanoid robots. In fact, I think there was a race of a whole bunch of them. One of them lost its leg, it crawled across the finish line and everybody was crying because they were so sad for this robot. That's a weird new reality that it looks like we're getting into. What are your thoughts on robotics and what that means for everything?

[00:29:58] Mark Schmehl: I think it's too soon to really make a business analysis about robots. We're starting to do private investing in robots. We've done a couple of robotic privates. The computing power and intelligence is the key part of robotics not the design of the physical part. Making the robot think and take actions is hard and it requires intelligence. AI really is what unlocks robotics. I think it's far enough away that I don't really have to think too much about it but I am starting to see some of the early inklings of what we can do. The big thing in the Valley right now is everyone's making a robot to fold laundry. There's 12 companies that fold laundry, there's two companies that make the software that fold  laundry. If you ask anyone, my wife folds most of the laundry, I asked her, she's like, I don't want a robot, it takes me no time to fold laundry. This is sort of the state of the art, we're folding laundry.

[00:31:02] Tesla, they show up with their  big Android and they're tele-operated and there's a whole bunch of not so real applications. I was at another one where they were showing me the robot doing auto manufacturing but they had a big harness and they had some guy holding it. I'm like, so do you have to hold it all the time? He's like, no, no, no, no, I'm only holding it for testing purposes. I'm like, no, that's total crap, these things fall over all the times. I was in China, we did a robotics tour and one of the robots fell over and they had to get a crane to lift it up. Anyway, it's fun, it's a little science fictiony. I think that the key is intelligence and I think we're getting there on the intelligence curve because these models are getting really good. The whole unlock is software and, hopefully, we'll see it in a lot of these little private software companies that we're investing in right now. Maybe in a year or two years I'll come and tell you, hey, we invested in this amazing thing and it's going to change the world. I don't think we're there yet, at least I don't think we're there yet. Who knows?

[00:32:09] Glen Davidson: I knew you'd have some thoughts on robots. We just have a few minutes left but let me ask you about crypto. Are you still excited?

[00:32:15] Mark Schmehl: I like crypto. I do think that crypto, certainly with the current administration in the United States, has a chance to evolve and actually show some value that's beyond just trading meme coins. That's exciting to me. It's sort of like AI in that it's one of those technologies where you can see it being great for things and it's just not quite there. I'm excited to see how crypto evolves. As an asset class it's certainly hot but a lot of that right now is just people trading coins and they're worried about fiat currency. I don't know. Bitcoin is definitely a gold proxy. Ethereum is being used for lots of different things so it's not really a gold proxy. In general, it's the same cohort of people that kind of like gold. Gold and Bitcoin, they kind of own both.

[00:33:14] I think one of the reasons you're seeing so much gold strength is there's a bigger pool of capital now that will naturally want to buy gold. All these retail people who are in Bitcoin are like, I'm going to take some of that and buy gold. That is definitely a factor so as crypto goes up gold is going to go up with it because that's the natural owner of I hate government and fiat currency and that's a gold investor. So yeah, I like crypto. I think it's going to evolve. I don't know what the great applications are going to be. I think stablecoins are a good one. I think that that could really disintermediate a lot of financial systems, but it's going to take time. It's like robots, it's going to take years. It's not going to change everything overnight but I think it is exciting.

[00:34:04] Glen Davidson: A question's just come in about other themes or sectors that are making a turn from bad to not so bad. Areas of diversity in your portfolio, themes, sectors, things that you're keeping an eye on, could you let us know?

[00:34:18] Mark Schmehl: I am definitely keeping an eye on consumer because it's been awful. Those stocks, it'd be nice if the consumer would get off its back a little bit, at least in the United States. I know Canada's not great either. I'll be very interested to see what's in the budget coming out in Canada and how that impacts psychology. I think one of the things, and we've been talking a lot about this in the States, I think people are just depressed. I think that a large chunk of the spending populace in the United States is located in all these blue states and they're all depressed and they don't want to spend. I think that that's weighing on consumers, not that people don't have money, the stock market goes up every day, they just don't want to go and buy a house or a car and they feel despondent from their political point of view. Who knows?

[00:35:09] I'd love to see the consumer turn, especially the U.S. consumer because they're not healthy. Lower rates will help. It would be nice to get some animal spirits on the consumption side and maybe less animal spirits in the stock market because it seems as though everyone is not buying houses, they're just buying stocks. Who knows? I am watching consumer names. You keep an eye on transports and trying to find retailers where maybe business is bottoming out. Oil is another part of the market that I'm very interested in. It's not working at all. Typically, it works after gold works just because they have the similar drivers, and it's just not working. I'm spending a lot of time thinking about energy but so far there doesn't seem to be anything there that is that particularly exciting.

[00:36:00] Health care continues to be a nightmare. I'd love to invest in it but I just can't, it just seems uninvestible. There's so much complexity at the top and the FDA commissioner really drives the bus on valuation and that's not going to change. There are definitely some sectors in the market where things aren't great, and it doesn't look like they're going to change anytime soon, but I'm always paying attention because I do love a house on fire. I love houses on fire as long as they're getting less hot. At the moment I think all the houses that are on fire are still on fire.

[00:36:34] Glen Davidson: Quite a visual to end with. We could go on and on and but we have run out of time. It was wonderful for you to set aside the time for all of us today. Thank you so much and congrats again on 25 years. Thank you, Mark. Great to see you.

[00:36:45] Mark Schmehl: Thanks, guys.