RAOUL PAL: As you know, there's an incredible amount going on and it's becoming increasingly difficult to make sense of it all. What's real, what's not? The question we're all asking is, is this a bubble? I don't even know if that's the right question to ask. I'm trying to process all of this. One thing I know is that I don't have the answers. I don't know everything. I'm not a guru. I'm just trying to figure it out, like the rest of us.

I'm lucky I've had 30 years' experience, but that doesn't make me more right or wrong than others, and our own perceptions can become our investment biases as well, where I don't like crypto, therefore, it's a bubble, or I don't like US equities, because they're very expensive now, they're a bubble. Mostly, these things are shades of grey. Many reflective trends, which many identify as bubbles can go on for a lot longer than many of us imagine, or maybe we're secular shifts. Those things happen too.

We've got to make sense of all of this. We did talk about this in the past in one of the two-week campaigns, Has Everything Changed, but really, what's happened since then is many more things have gone to extremes, and I want to make sense of it. What I wanted to do is get two or so weeks of incredible content, where we asked real amazing experts, some of the best in the world, whether it's Mark Cuban or Lacy Hunt, whoever it may be, to come and talk to us how they're seeing this, what their perceptions are, what they think the bubbles are, what they think are the real opportunities, what's the signal and what's the noise.

As you know, I did that piece recently on Real Vision where I explained my concerns about the speculative risk that I think is excessive in the US markets. I looked at this and saw the record speculation auction activity, the record amount of volume on Pink Sheets, the most speculative stocks, dwarfing anything of the past. We've seen the massive explosion of the rise of companies like Tesla, of PE ratios that were unprecedented that they were going in the past. Amazon's traded off PE ratios of 800. It never really corrected. The business caught up.

I don't know how much is speculation and how much is a true shift, how much is the game changing, but I see it everywhere, where we've got these record extremes. The future expected returns from equities by most people who use structural analysis to look at this is negative 10%, negative 5% over the next 10 years. That concerns me that maybe is a bubble. Maybe this is unsustainable, but within that, I think we're going to see a bifurcation-- my favorite word as you know-- the bifurcation of some things that aren't, that these really are real trend changes.

When we look back at the WallStreetBets, and I alluded to this in my piece recently, is that I think was a signal change, and not noise. That was a signal change of the democratization of finance, something that we built Real Vision on the back of, and it feels that the average person is taking control of their finances in their lives. What does that mean? It can mean all sorts of things. It could mean broader participation in crypto markets, which has a place for them because of the higher expected future returns.

It could be that speculative activity just because of the sheer numbers of millennials entering the investment place means that the numbers go up anyway. Because before, it was traditionally the baby boomers who were driving the activity, and now you've just brought in another 80 million people into the investment world. Maybe valuation is changing again on demographics. We've also talked about perhaps the pensions industry when those baby boomers come out, whether the asset price is clear between boomers and millennials.

We're seeing it with housing now as more people stop participating in the housing market again. These are things that often they take us by surprise, so the first reaction is to call it a bubble. Again, I don't really know. I do see risk. As I said before, I see a lot of risk in the US market because even if it's not a bubble, the speculative activities is just monstrous. When mutual funds have no cash, the lowest cash they've ever had in history tells me there's no buffers in the market.

Could that just create more volatility? Is the long volatility bet a bubble? Because there's a lot of people in there. Again, these things are interesting me. Crypto, we're looking at that. Many of you have seen by now that I've been using stuff like Metcalfe's Law to try and get an understanding of that. Because, again, with stocks like Amazon and Facebook, everybody said they were bubble stocks, until they realized it was all about network adoption effects, everyone's, oh, God, we didn't value this correctly. Maybe that's right with crypto. That's my personal view. Maybe that's right for the stock market overall. Could it be that there's a Metcalfe's Law effect as this new generation comes into the market?

Real estate, what does that all mean? You get a real estate has gone batshit crazy in this environment. That, to me, is something that is interesting. What happens if interest rates go up? Can all of these people suddenly afford this? I don't know, it's not clear. These things are really of concern but they're also a ponderance, because I don't want to miss the signal from the noise by using my old biases.

Also, there are certain things that are definitely not a bubble. We've talked about this, or I've talked about this in the past, which is stuff like emerging markets. They've underperformed developed markets for about 15 years now. It's one of the longest divergences in history, and one of the largest. Our developed markets, the bubble, and the baby boomer generation coming out, pop it over time, doesn't have to be a sharp fall. We've seen it in things like oil companies that over time, people just want to own less of them, and so over time, they just underperform.

That doesn't mean you can't have cyclical performance, but these things are really, really interesting, because we're going to find the performance of that. Is ESG investing a bubble? Again, all I know is regulation is forcing more and more people into that, whether it's in Europe, and it's going to come in the US, more stimulus that's related to the green economy is going to put more money behind that. How big does that bubble get? Is it a bubble, or does it actually have productive uses of capital that changed society forever?

I think it might be a mix of both, as it always is. Usually, there's something behind the narratives that create the reflexive loops that cause bubbles, and also to be real about it is, as George Soros has talked about in his book, Soros on Soros, it's that reflexivity as people build onto a narrative that is actually all powerful. We can make a lot of money from investing in that. My own bias is I'm terrified of the US stock market, and I have been for a long time, and I've been wrong for that. I'm short it.

I recently bought some puts, but that's about as scary as I'm going to get in trying to pick a top in that thing, because I don't really want it because the reflective loop is huge, the money printing is massive, the new participants coming in is enormous. I know it's a worry but that will be offset. That's why that for me, I find Real Vision so valuable. I first did this several years ago when I saw something going on in the oil markets and I didn't understand it. I reached out to Twitter, and said, give me the best experts on oil, and I did a whole bunch of programs picking their brains.

Since then, it works super well, because people who come with experiences that I don't have and perspectives I don't have, came on. We try and do that periodically for Real Vision. This whole idea we've got coming up is, can we get other people to figure this out? I've already done some of the interviews before doing this piece and there's some really, really interesting stuff. There's the wide eyed optimism of Silicon Valley and technologists, there's the pessimism of the value investor, and the anti-central banker.

There is a narrative about modern monetary theory that is going to create inflation, and the world's going to blow up. I don't know, I don't know, we've not done this before, but I'm not sure the answers are ever going to be black and white. That makes it even more important for all of us to sit down and try and pick apart all of the narratives and work out what works best for us. What are the risks, because really bubbles are about, can I invest in them and make money? I.e. is crypto in the middle of a bubble? Will it go much further? My view is probably and yes.

The other thing is, where do I have risks that I shouldn't have? For me, it's the US equity market, but again, I can be dead wrong. I'd rather allocate to something else. My big bet was the crypto bet. The crypto bet, I said, it is the asset that's going to be the super black hole that sucks in all other asset performances. To this day, it's true. Ethereum was another bet of mine, and at time of recording this, Bitcoin's up 30% of the year, Ethereum is up 120% on the year, and we've only just started February.

It's extraordinary. There's no other asset, nothing, no commodity, nothing that has come close to any of this. That narrative as it builds creates that reflexive narrative. What it is in this is finding out where we can make the best bets in a slightly risky, unclear world. The bubble of central banking is the narrative that almost all of us share. We can see it dwarfing most other macro factors these days. It makes it really difficult for those of us in macro to even use economic variables any longer.

We need to think through those things that are all part of this equation of understanding this framework. People like Lacy Hunt is super useful to really find out how this all interconnects, and to try and get a combination of views within all of this, too. We don't want just the one view "central bank printing is bad". It's bad from some perspectives, and good from others. It's been good for the housing market, so if you're in real estate, it's been great for you. It's been good for your 401k portfolio, but it's been bad for your savings, in cash and other things.

It is a level of complexity that most people don't really know how to deal with, and nor do I to be honest. That's why for me, to do something like this, to get these people together really helped me. I've been through many booms and busts, and I've seen bubbles. I started my career in the bond bust in-- well, I started before that. The bond bust in 1994 was the first major event that I saw, and that was also the Mexican crisis around that time, where the emerging market bubble first popped.

The next bubble that I dealt with was the 1998 and 1997 Asian crisis that morphed into the long term capital crisis. That was a huge bubble burst as excess capital had been allocated to countries that couldn't really afford to pay and they had these pegged currencies to the dollar. That was a massive deflationary wave that occurred roughly when China entered the WTO as well and the bubble of globalization happened. That seems to be unwinding now in front of our eyes.

The next bubble that came straight out of that, because again, the Federal Reserve jacked up everything into that, and drew the line and said, we can't have assets falling, and we can't have too big to fail falling either, so we're going to prop it up. That led to a green flag to say, go for it, the equity market. What we saw was an enormous speculative bubble that came out of the tech stocks, particularly, but equities overall. That also had a backdrop against the start of the indexation bubble, as most of the big pension funds and asset allocators were able to use futures in their asset allocations to passive funds, and there was a lot of passive fund vehicles. That created that.

The next bubble that I was part of was then the commodity bubble and the China bubble, which happened over the early phase of the 2000s. Everybody's eyes went to, where's the next big opportunity? It's China. China exploded, anybody who sold anything to China exploded, copper, oil, anything because there was a marginal new buyer of some magnitude. In the end, I was writing pieces about the fact that the China miracle was driven on debt, and that there was going to be a payback.

We've seen that within the Chinese economy, and the performance of Chinese assets over time. They've not done as well as they were back then. It remains to be seen whether the end of that financial bubble gets popped, or whether it's a slow workout, Japan style. Even though the Japan equity bubble fell, but then the economic bubble in the debt bubble has been trying to be worked out over time.

The bubble that came straight out of the China situation also was a domestic bubble in most economies, and that was property. Because people thought, well, interest rates are low forever, we can start buying property, so they leverage, and leverage has been a feature of almost every bubble in history. We saw record leverage in the property market, and that bubble burst too when the debt markets couldn't stand up with all of the debt that was there and then we had to pick apart the carcass of the financial system.

The next part of the bubble, well, I don't know but social media has been a big part of it. The size of Facebook and Google Amazon and all of those new tech stocks have seen truly extraordinary returns. Are they the bubble? It's not clear. Is it the passive bubble? Possibly. Some people say the bond market's a bubble, and I don't think of that because I don't see speculative activity in the bond market. All I see is everybody fighting me every time I say I'm bullish bonds, and I have been for 30 years, everyone calls me an idiot, and say inflation's coming, but it never comes.

Maybe there's a bubble in inflation narratives. Maybe there's a bubble in the reflation trade right now, which is one of the things that I think is out there. Those bubbles are interesting, but then we can think of the world in the anti-bubble terms. I think, by the way, sorry, crypto will become a bubble, but in anti-bubble terms, well, crypto is actually an antidote as well, which makes it very interesting to me. That's what makes it have this weird S curve that keeps going up and has these boom, bust cycles.

Gold is a clear anti-bubble. It's certainly not in a bubble, so anti-bubbles as Diego Parrilla talks about, I think are really interesting things. Anti-bubbles are the long vol trade. I remember the long tail risk trade as well that came out in, let's say 2012, 2013, 2014 and 2015. That blew up and almost everybody who had long tail risk blew up. Now, there's different types of long vol structures. Does that change the dynamics of those markets? Again, I don't really know, but I do think it's interesting.

I also know where there isn't a bubble. There's not a bubble in commodities, there might be a short term bubble in the positioning of commodity prices, but commodities have been held down over an extended period of time as they've worked out the worst excesses of the last bubble. I think gold miners and things like that are at the later phases of that. Other companies, I'm not so sure, I'm not sure copper really got rid of it all, but we'll see. We'll see, but that's interesting to look forward to future expected returns.

The same, I think it's true, as I said, of emerging markets, but maybe I'm wrong. Maybe there's a new trend change to inflation too. How do we play that? What does it mean for the valuation of SaaS stocks? What does it mean for the bond market? Again, I have more questions than I know the answers to. I'm with you guys on this journey of trying to figure this all out.

I've got my own biases. I've got my own perspectives on where the opportunities lie. There'll be other opportunities coming along. I think one thing that people don't really think about is the pharmaceutical sector is something that people-- everyone's in biotech, and blah, blah, blah, but really, pharmaceuticals if you think, you've got 76 million baby boomers in the US alone, and then you've got about the same again, in Europe. The pharmaceutical sector is going to have an enormous amount of demand just from the aging population.

I don't know, that's probably priced into regular pharmaceutical stocks. Ignore the vaccine thing, but it also shows how flexible and incredible these companies can be. That was as impressive as one of the technology companies creating an entirely new platform. This was something truly amazing, and how fast it's got done, how science and the pharmaceutical companies came together and scaled rapidly to solve a problem. That tells me maybe they're underpriced, and there's something interesting within that, too.

Anyway, let's see where we get to over the next couple of weeks or so. Let's have some really interesting conversations. Let's keep our minds open. Let's check our own biases at the door, and let's find out is everything a bubble or is that really not the right question to ask at all?

I hope you enjoy it. Get involved in the Exchange. Let's get some conversation going. Again, we've all got perspectives. Many of you in the Exchange, for example, actually work in different industries and you can add your perspective to this too, because we don't know but I do know that the hive mind, including our experts, and all of you watching this are going to help us discover what's really going on, where the opportunities lie, and where the risks lie. That's the best we can do.