Brookfield’s $1 Trillion CEO Bruce Flatt: 3 Megatrends Driving the Next Fortune Wave

Summary

Bruce Flatt, CEO of Brookfield, discusses the transformation of investing over the years, emphasizing the importance of identifying and capitalizing on megatrends such as digitalization, low carbon transition, and reindustrialization. While passive investing has reshaped market dynamics, Brookfield focuses on infrastructure investments that are pivotal in the global economy, opting for long-term, sustainable growth. Flatt also highlights the evolving role of private enterprises in managing sectors traditionally run by the government.

Highlights

• Brookfield invests in essential infrastructure like water, energy, and transportation, as these sectors evolve and digitize 🌍
• 50% of investment opportunities today didn't even exist 20 years ago, highlighting the rapid pace of change 🚀
• Private enterprises are increasingly managing infrastructure previously operated by governments 🏗️
• Passive investing has changed market dynamics, creating unique opportunities for private investments 📈
• Brookfield successfully capitalized on mismatched market valuations by taking certain companies private 💼

Key Takeaways

• Megatrend Alert: Brookfield identifies digitalization, low carbon transition, and reindustrialization as the next big investment areas! 🌟
• Bruce Flatt emphasizes the enduring value of long-term investments and the shift to private management of infrastructure 🏢
• The evolution of passive investing has reshaped markets, offering unique opportunities for shrewd investors 💡
• Flatt discusses how AI and digitalization are revolutionizing industries, with massive infrastructure investments leading the way 🤖
• Brookfield's approach to risk involves diversified asset financing and a focus on sustainable, long-term growth 💪

Overview

In a world where half of today's investment opportunities were unheard of 20 years ago, Brookfield is navigating the future with a solid grip on today's evolving market. CEO Bruce Flatt sheds light on how digitalization, the transition to low-carbon energy, and the shift towards reindustrialization are reshaping investment landscapes.

Brookfield stands at the forefront of managing essential infrastructure—from the water we drink to the roads we drive on. As these sectors rapidly digitize and innovate, the company is leveraging new opportunities presented by these megatrends, ensuring its investments remain pivotal in the global economy.

Under Bruce Flatt’s leadership, Brookfield adapts to market changes by acknowledging the shifts in passive investing and the potential of privatization. The focus is on strategic, long-term investment, protecting downside risks while seizing viable opportunities irrespective of market volatility.

Chapters

• 00:00 - 10:00: Introduction and Changes in Investment Environment The chapter discusses the unchanging fundamentals of investing despite significant changes in the investment environment. It highlights that 50% of current investment opportunities did not exist 20 years ago, marking a substantial evolution in the market. The chapter suggests we are at an inflection point with expected unprecedented productivity advances over the next two decades and notes that future winners in the investment space are currently unknown. The text also hints at a discussion about the Machinery of Brookfield.
• 10:00 - 15:00: Rise of Passive vs Active Investing The chapter titled 'Rise of Passive vs Active Investing' begins with addressing the criticism that investing is super complicated, challenging the notion that this statement is entirely accurate. Despite the complexity often associated with investing, the discussion highlights that there is over a trillion dollars under management, emphasizing that while this figure represents a substantial amount, it may not be as significant as perceived in the vast landscape of financial management. The chapter introduces the discussion on the evolution of investing strategies and practices, particularly focusing on the comparison between passive and active investing over the past 23 years.
• 15:00 - 20:00: Private Companies vs Public Companies The chapter 'Private Companies vs Public Companies' explores the fundamentals of investing that remain constant over time, which involves buying great businesses, holding them for long periods, and earning cash returns. However, what has transformed is the environment surrounding these fundamentals, particularly emphasizing the prevalence of publicly traded businesses.
• 20:00 - 40:00: Three Key Investment Themes The chapter discusses three key investment themes, focusing on how indexing and passive investing have transformed publicly traded markets. Although the nature of investments remains unchanged, how they are traded and whether they are included in indexes has significantly altered their behavior in public markets.
• 40:00 - 50:00: Real Estate and Interest Rates The chapter discusses the evolution of investment asset classes over the past 20 years, highlighting that 50% of the assets invested in today did not exist two decades ago. The focus is on infrastructure investments that form the backbone of the global economy, such as water delivery, roads, power supply, and data centers.
• 50:00 - 60:00: Risk Management and Investment Strategy The chapter titled 'Risk Management and Investment Strategy' highlights the concept of backbone investments rather than innovative venture capital. It discusses the evolution of asset classes over the past 20 years, noting that 50% of the backbone assets owned today didn't exist two decades ago. The text briefly touches on the privatization of services once delivered by governments, suggesting a shift in investment landscapes.
• 60:00 - 70:00: Future of Brookfield and Industry Trends The chapter titled 'Future of Brookfield and Industry Trends' begins by reflecting on the infrastructure development over the past 25 years, noting that Brookfield was among the pioneers in anticipating a shift toward privatization by governments. However, the expected sell-off of assets by governments hasn't fully materialized; instead, the lack of government investment has opened the door for private enterprises to step in. The chapter highlights that the most significant investment opportunities currently lie in transforming the world's digital backbone, suggesting a major industry trend towards digital infrastructure.
• 70:00 - 80:00: Conclusion and Reflections The chapter discusses the digitization of the world and the rapid technological advancement that has made it possible to access global information and media through devices like phones and computers. It highlights how there was a time before the existence of laptops, the internet, and cellphones. Today, technology allows individuals to listen to podcasts on their phones while jogging, an advancement facilitated by data centers storing content, fiber networks delivering it to cell towers, and finally to the phones themselves.

Brookfield’s $1 Trillion CEO Bruce Flatt: 3 Megatrends Driving the Next Fortune Wave Transcription

• 00:00 - 00:30 the fundamentals of investing hasn't changed at all what's changed is the environment around it 50% of the things that we invest in today did not exist for investors Like Us 20 years ago we're in a period of time where this is a major major build out it sounds like you think we're at an inflection point the productivity advances we see over the next 20 years probably will be unprecedented the winners that are unknown today are the can you spend a few minutes walking me through the Machinery of Brookfield one of the
• 00:30 - 01:00 criticisms is that it's super complicated I'm not sure that's actually a true statement well you have over a trillion dollars in management now it sounds like a lot of money it is a lot of money it's a trillion dollars but it's not that much when you do what we [Music] do I want to start with how investing has changed over the past 23 years I think since you've been
• 01:00 - 01:30 CEO look on the first level I'd say it hasn't changed at all what investing is about is to buying great things or great businesses holding for long periods of time earning cash returns and uh that hasn't changed at all so the fundamentals of investing are exactly the way they were before what's changed is the um environment around it uh and I mention a couple things first one is um many uh businesses are publicly traded
• 01:30 - 02:00 and the indexing of um and passive investing has changed the publicly traded market for Investments it's very different than the actual Investments the Investments are still the same and what we do is still the same how they trade in the market and whether they're uh included in indexes has changed how they trade in the public markets so I think that um is pro probably the fundamental biggest thing the second thing and and this is um
• 02:00 - 02:30 I I'd say maybe the most simple way to say it is 50% of the things that we invest in today did not exist as an investment asset class for investors Like Us 20 years ago 50% and and we invest in the backbone of the global economy like these are simple things we deliver your water in the morning we so the road you drive on in the afternoon we deliver your power uh to your house we um the data center that
• 02:30 - 03:00 powers your phone um we own um those are all really backbone things so what we do is backbone this is not Innovative Venture Capital that we're doing but 50% of the backbone of what we own today did not exist as an asset class for investment 20 years ago what percentage of that would you say is a new um new things versus governments may be um privatizing some of the services they used to deliver when we started uh in
• 03:00 - 03:30 infrastructure 25 years ago we were among the first um we thought that it would be governments privatizing and to some extent it is and it's not they're not privatizing because they have a hard time selling assets um what they do is they're just not investing therefore private Enterprise takes it up but the biggest area of um investment today is really just the whole backbone of the world is changing so um the digit
• 03:30 - 04:00 digitization of um the whole world between behind your phone or your computer um as you know laptops didn't exist before the internet didn't exist before cell phones didn't exist before today you can have this podcast on your cell phone and go for a run in the morning how that gets delivered to you is data center storing it uh fiber delivering it to you going to a tower and bringing it down to your phone
• 04:00 - 04:30 wireless and all of that needs enormous amounts of infrastructure and all of that is built by private Enterprise virtually every all in fact not not virtually all of that is delivered to you as an individual and this is 8 billion people in the world getting that delivered to them in various forms it's all delivered by private money and and that's what's changed it's um before historically that was built out by governments today it's being built out
• 04:30 - 05:00 by um private Enterprise you know to use an example we own all of the Telecom Towers not all but we own a very substantial portion of the Telecom Towers in India um they deliver all the phone and wireless infrastructure to uh many individuals in India and that was originally built by Reliance Industries Geo um we bought it from them and we support their and other telecom companies activities through those Telecom Towers
• 05:00 - 05:30 and um historically that would have been built by government um but it was that's built by private Enterprise let's go back to the rise of passive U maybe versus historically more active investing what implications do you see what opportunities are created look in every uh in everything when there's a when I say there's a problem there's always an opportunity and I think that's the Chinese symbol right problem and opportunity for some companies smaller size don't fit indexes they will be lost
• 05:30 - 06:00 within um public markets investing because active uh investors may not be investing in those sectors anymore and if you don't fit the indexes you have no buyers um increasingly though what it's doing is it it's creating a a large disparity in some Securities at points in time between the price of them in the market and the value of the underlying assets back to you asked me first
• 06:00 - 06:30 question what has changed in the investing world and I said nothing that's related to Value right what's changed is the price of some things trades up and down if over the last 18 24 months if you've been one of the big technology stocks in the world everyone needed or wanted to buy you in the indexes and therefore their multiples traded very high but if you were something that um didn't neatly fit the IND indes um it traded at a low price
• 06:30 - 07:00 the opportunities are that we can take those companies private so we took a large container Shipping Company private it had one it had one analyst and nobody following it it fit in no indexes it was a $6 billion company uh and we took it private and it's been an exceptional investment um so we continue to I'd say capitalize on opportunities where the where understand the value and the price
• 07:00 - 07:30 is not trading at that in the markets success in business isn't just about having a great product it's about having the right systems behind it the businesses that scale efficiently that grow Beyond expectations all have one thing in common they make buying effortless and when I shop online I notice the businesses that get it right more often than not they're using Shopify Shopify Powers millions of
• 07:30 - 08:00 businesses with the number one checkout on the planet and with shopee I can check out in seconds no typing in details no friction it's fast secure and helps businesses convert more sales but Shopify isn't just a tool it's an entire e-commerce platform built to scale with you whether you're starting small or growing fast Shopify makes it easy to sell wherever your customers are on your site in their feed in stores or anywhere they're already scrolling and buying and
• 08:00 - 08:30 the numbers speak for themselves businesses using shopay see conversion rates up to 50% higher than other checkouts fewer abandoned carts more completed sales and a seamless experience that keeps customers like me coming back upgrade your business and get the same checkout I use with Shopify sign up for your $1 per month trial period at shopify.com Shan all lowercase go to shopify.com Shan to upgrade your selling today
• 08:30 - 09:00 shopify.com Shane if you want to get something done right you need the right system our team learned firsthand when shipping out my books it sounds simple print a label send a package but when you're handling orders at scale the complexity adds up fast that's why I use ship station you can focus on other parts of your business because you never have to worry about shipping and fulfillment again with ship station help elimin at the busy work instead of jumping between
• 09:00 - 09:30 platforms I manage everything in one place it automatically finds the best rates prints labels in a click and track shipments without thinking about it ship station lets me focus on what actually matters writing thinking and running my business it scales with demand so whether I'm shipping a few books or a few thousand the process stays smooth and with discounts up to 90% off major carriers it saves money too over 130 companies have grown their e-commerce
• 09:30 - 10:00 business with ship station and 98% of companies that stick with ship station for a year become customers for life calm the chaos of order fulfillment with the shipping software that delivers switch to ship station today go to shipstation.com knowledge project to sign up for your free trial that's shipstation.com knowledge project what can you do with a private company that you can't do with a public company well firstly you don't have to
• 10:00 - 10:30 look at what the price is versus the value you just know what the value is and you run it for what it is but secondly um we can operate differently Finance differently invest for the future and run a business like somebody should just run it if you and I owned a business privately we wouldn't care about the markets we wouldn't care about whether the stock went up or down tomorrow morning we just run our business cash comes out we decide should we div it out
• 10:30 - 11:00 to ourselves to use together or should we keep it in the business and invest and um and that's really the the the difference is all you look at is the fundamentals of your business if you're private and uh if you're public people tend to get distracted by the trading price of the security when it's not really relevant um some businesses need access to Capital and have to raise capital and
• 11:00 - 11:30 therefore their price is uh important but most businesses that are listed don't need access to Capital they're only listed because they're large um and they happen to be just they need owners and therefore they're in the public markets they're never issuing equity and therefore the price of the security in the market really doesn't matter and in fact it's a distraction which is why when um people often ask me what what what happened with the Alterna industry and why did it
• 11:30 - 12:00 grow the extent that it grew over the last 25 years and it's it's really grown that way because um private assets uh are the fundamentals are exactly perfectly match to the fundamentals of what institutional investors want to have in their portfolios and maybe even more importantly by owning them privately they don't have to have the distraction of the public market they don't have to get confused that you
• 12:00 - 12:30 and I bought a telecom Tower business it generates a 6% yield it grows at 4% every year and um we don't have to invest much cash flow into it so it's free cash flow and uh if it's privately owned it's just we just watch the cash flow and keep growing and try to enhance the business and grow it and that's what we do privately if it trades in the public market and today it's worth $20
• 12:30 - 13:00 and tomorrow because of whatever happens in the markets it's worth 10 nothing changed in the business and uh and that distraction is what causes people um issues they sometimes make rash decisions and uh and I'd say that's maybe the biggest um enhancement to long-term investors uh by having private assets I tiet you're not an efficient market hypothesis person you know I I no
• 13:00 - 13:30 the answer is no um the uh the markets are never efficient in fact very seldom do they ever trade at the at the actual um value of Securities either most of the most of the time they trade above or below very seldom do they trade at at the value but yes I guess there are many theories in life let's talk about some of the trends going on in the world today that you see from your aperture that you think a long Runway that we're
• 13:30 - 14:00 maybe just beginning on or maybe in the middle endings on so we uh generally have three sort of themes that we invest around or we have a few themes we invest around at all points in time today we have three um the first one is uh just the digitalization of everything and the amount of capital that's being invested um behind that digitalization uh and and and really what it is is there are many many many
• 14:00 - 14:30 many trillions of dollars going into um the uh movement of information into the cloud onto your phone and just the digitalization of everything behind it and um that has been uh enhanced increased enhanced by artificial intelligence and the networks being set
• 14:30 - 15:00 up now to harness artificial intelligence and um maybe the most simplest way to explain it is everyone thinks of artificial intelligence as chat GPT yeah I'm going to get it to write my uh cooking class uh memorandum uh but really what what the where the money is going to be made is the application of artificial intelligence into business and simply stated that's
• 15:00 - 15:30 taking processes in service and Industrial businesses and making them more efficient by using Advanced robotics who have learned how to make how to run those processes from uh models run on artificial intelligence and we're in the very very early stages of that but um from an infrastructure standpoint the amount of money being put behind
• 15:30 - 16:00 this uh is uh in amounts which have almost never been seen invested before so that's sort of the First theme we have in of investment and it both affects our operating businesses because we're we're now applying artificial intelligence in our businesses to make them better and they'll be more productive uh and we're also investing and supporting many of the technology companies with their um funding for the the red digitalization of the world what let's spend a few minutes on
• 16:00 - 16:30 digitalization before we move on in the sense of you know there's uh vast data centers being created today I would love to hear your thinking on whether that investment is going to be where winners are AC cruded or we overinvestigation centers you walk me
• 16:30 - 17:00 through how you see that so um there's no straight line in investing to success and usually at points in time people will lose money because they get over excited um but uh there's we're in a period of time where this is a major major build out of what's going on um the clear winners uh in this um AI Revolution are going to be the major uh technology company that that's sort of easy they're very
• 17:00 - 17:30 sophisticated they have large balance sheets and capital to deploy um they they've already developed models and they're going to be very very uh they're going to win they're going to win there's and they have the data and they have enormous amounts of data so all of they're going to they're going to win up that that's easy like I'm not sure um there's anything that I would that that's helpful to you to anyone listening to this if I tell you oh you should buy Google um these are going to be great companies and they're going to
• 17:30 - 18:00 continue to be great the winners that are unknown today are the companies that are going to figure out how to apply artificial intelligence into their businesses and make them better and um there are many businesses today where uh you cannot get people to operate the the businesses there just aren't enough people and if you can therefore deploy robotics into into businesses and um shrink the amount of
• 18:00 - 18:30 Labor you need or there plants that are being operated in Asia that um had high dollar value that's why they went there but the reason high dollar value products but they went there because there was high labor component if you can shrink the labor component um many of those plants can come back to where the demand is um specifically I'd say the United States so the the unknown winners are going to be the companies
• 18:30 - 19:00 that can apply artificial intelligence um into their businesses and make them more efficient and more profitable and I and I I think um those that do it will win those that don't some will fall behind um but the productivity advances we see over the next 20 years probably will be unprecedented for a period of time um certainly one we haven't seen it for a long time uh in business uh across America is there anybody you're tracking
• 19:00 - 19:30 externally that that you would never acquire that you're you admire how they're applying sort of Technology you know we're in the early early stages of this and uh so we're we're trying to learn from everybody um we're talking to many we of course given their scale we have access to um very significant resources uh and we can talk to most people so we talk to all the technology greates we deal with all of them um in our fundamentally in our business um in addition addition to that
• 19:30 - 20:00 uh we're continuing to learn and apply these Technologies within our business and what I can tell you is the early learnings of our business some of our industrial businesses are and why I have why I can why I say the things I just said to you is that the early learnings are that um the ADV the advancement of productivity is very very significant and you see that in your battery like you guys make half the batteries in the world don't you look our uh we make just under half of
• 20:00 - 20:30 the car battery so we we make the little car battery that starts your car you know when you uh get up in the morning it doesn't start you have to go get a new one so that normally the half of those in Winter half of those will come from us yeah uh that are out there and uh it's an amazing business and we continue to re you know we're always trying to optimize businesses our job is to uh invest in businesses and make them better so that they will grow greater
• 20:30 - 21:00 amounts of cash flow so we can continue invest in the businesses and and um provide dividends to our owners and so we as we try to make these better we're we're applying artificial intelligence into all our businesses including that battery business which is and why it's a perfect one for these type of applications is we have 25,000 people in 20 plants we do very repetitive process and as a result result and we have $9 billion of costs within the
• 21:00 - 21:30 business if you can uh improve those by 30% that's a lot of money to the bottom line and um and it can be very significant for the company is there another example that stands out about how you're applying AI to the businesses that you control you know every single business we have um we have a health care uh business where we have um we approve your Healthcare uh in the United
• 21:30 - 22:00 States if you need a back surgery and you need to authorization from your insurance company to do it we take the phone call uh from you and we approve it online uh we approve your $150,000 operation uh or not and uh our agents do that and today the amount of information we can put up when you call in is incredible uh even from two years ago is incredible and that just helps us make better decisions quicker and serve our
• 22:00 - 22:30 clients who are the the healthcare companies better and uh but it's everywhere you know the the the putting we're you know we're applying these type of things in all the businesses but we're in the we're in the first inning of this so it's um anybody that hasn't started should start uh be and it's not too late we're in the early Innings of the application this it's exciting to see where it's
• 22:30 - 23:00 going so we have a trend of digitalization what other big trends do you see the second one is that there is a transition of the world to low carbon energy and uh and I say it that way because what what's really important here is we just have less carbon out there and and but what's what's even more important today is that solar and wind which is where we're um which is what's filling the gap are the lowest
• 23:00 - 23:30 cost energy sources for power in the world in most countries today and why that's really important is it doesn't matter whether you choose to have less carbon or no don't care about less carbon what you do choose is to pay less for your power yeah and uh and that that that's the the simple economics are today if you go to somebody and say do you want to pay more for your power they will say they will say no I don't want
• 23:30 - 24:00 to pay more for the power I'd rather pay less and and as a result of it the lowest cost power and most countries of the world is solar and wind therefore you going to choose solar and wind so it's inexorable that we're going to build out most more solar and wind in the world um in the United States today there's no doubt we're drilling more oil which is remember oil is not used in power oil is used for basically cars chemicals and um planes they it goes into jet engine fuel goes into car
• 24:00 - 24:30 engine fuel and it goes into chemicals and that has nothing to do with power uh oil is not used for power natural gas is and natural gas is one of the great assets the United States has um it's going to export it for a long time it's going to use a lot of it in America eventually batteries and nuclear will be the Bas load and it won't be natural gas but it's being shipped elsewhere in the world and where it's going to is needed for
• 24:30 - 25:00 base load because they they um they they need that that base load power or it's replacing coal which is hugely beneficial to the world so natural gas is an incredibly important Bridge fuel in America and long-term fuel in many other places in the world so the LNG Market uh in the United States is extremely important and very lucrative for a long period of time so let me make sure I understand this so wind and solar
• 25:00 - 25:30 low cost and then gas is sort of the Basel load when there's no wind or solar because we don't yet have the batteries to time shift you know we have we have base load capacity in the US which is nuclear um that will continue to grow we can talk about nuclear if we have time later um what's happening uh in in grids is that you need something to stabilize the grids and to store when because remember remember solar the sun only
• 25:30 - 26:00 shines during the day it's usually dark at night and wind actually usually only blows at night but you normally don't have the the um incidents of both together are not always the case and you have to have something to bridge one of those and uh increasingly in past nuclear's done that and gas has done that increasingly battery restorage uh at scale distributed will
• 26:00 - 26:30 help both with trans transmission bottleneck but also with the um the two offsetting uh amounts H how do you see the trend with like data centers in terms of electrical use do you see that continuing to be because these take a long time to permit to get into place or do you see that reducing uh in time so so the reason why uh one of your questions earlier which I really didn't answer was um are data centers are we
• 26:30 - 27:00 like are we going to get in trouble with the amount of money that's going into Data Centers and the answer is no and it's largely because it takes a long time to permit a data center you need to find power to power the data center and the needs of the technology companies are very significant and on top of that energy usage everywhere is going up and as a result of that it just takes time to bring sites on and and most sites
• 27:00 - 27:30 today that are available to be built are already contracted to somebody for the next 20 years so um we're in a we're at a a point in time where it's it's we're now trying to entitle new sites and we're because of our vast real estate business our vast power business our vast Data Center business we're as skilled and as um integrated as they are to entitle new sites but it takes time
• 27:30 - 28:00 and um we've got some really exciting large sites coming but these most the the earliest big one that's going to come on that's brand new that we're entitling will and even though it has enormous advantages because of it already has power it'll be years away and so your like all your risk is your drisk because you're not doing it unless it's contracted out is that generally yes we're not uh we don't we've we've NE in past we never have and
• 28:00 - 28:30 uh I don't think we um we need to take risk on that and therefore it's like when we build an office building you know you're you you let it to a bunch of tenants then you build it for them and uh you don't have to take the risk on that in particular in these because of the um demand for it and what's the third Trend that you see so so the the third Trend that we um identified a long time ago and I'd say it's it's uh changed even more but is more relevant
• 28:30 - 29:00 today than ever which is just the Del globalization of industry and I or I'd call it the reindustrialization of countries because of what's going on in the world and uh that started with covid it started with um uh the Asia West issues which as you can imagine that one has only um the the uh since we coined that four
• 29:00 - 29:30 years ago five years ago it's only increased given what's been going on um but increasingly many companies are moving uh industrial capacity back to Western markets where on balance they can um make sense of putting plants there part of it's for supply chain Pharmaceuticals uh need now need to be next some of it needs to be next to
• 29:30 - 30:00 customer um because they get caught during covid that all of a sudden all my manufacturing is in China how do I get it here it can't get out of China what am I going to do so increasingly those type of things um but but also with tariffs and with other things um you're going to uh relocate manufacturing capacity back to to other markets and and be L more local and um what I would
• 30:00 - 30:30 say is things many things went to Asia and a lot of them will stay there and the Asian markets will be fine with this because they've they've now matured to the point where they are service economies in themselves but um many products that have been developed there will move back to America America because the labor components with robotics coming in are becoming less and less and less so the reason for them to be in Asia is um less there today than
• 30:30 - 31:00 it's ever been and on top of that if there happens to be a tariff long if there is a tariff longer term then um then it's even going to Quicken that process up what do you see as the second order either opportunities or challenges to that sort of call it repatriation of manufacturing look I think China it's a it's an economy in itself today
• 31:00 - 31:30 it's 1.5 billion people they're getting richer every day they're turning into a consumer service Society there's not that much of manufacturing that's relevant to them I think they will they will do extremely well as a country uh on their own but there are some countries in the world where they haven't yet transformed themselves to be service economies and they're reliant on jobs that were from Outsource man manufacturing and if you can do that closer to
• 31:30 - 32:00 Consumer those um countries may have some issues on balance for Western countries I'll just take the us as an example you're bringing some jobs back maybe not as many as left before to make the product but if that product comes back you've actually added jobs and uh and that's very positive which sort of leads to the long-term story of America which is the long-term story of America is
• 32:00 - 32:30 extremely strong because um the us today has uh energy capital and Technology dominance energy capital and Technology dominance there's nobody in the world that has the technology businesses that the US has there's nothing in the world that has the capital markets the US has and the US just by Nature has
• 32:30 - 33:00 dominance nature and some hard work has dominance in oil in gas in solar and in wind and it has dominance in nuclear and those five things together give it energy dominance in the world for a long long period of time and um so I think those three those three things are going to make on top of one of the greatest gdps in the world an entrepreneurial Class Manufacturing
• 33:00 - 33:30 moving back at least to some extent a lot or to some extent on balance is going to be positive for for growth um the US has a pretty good Runway going forward it sounds like you think we're at an inflection point for productivity and some of the the job losses will be offset by sort of the remanufacturing uh coming back to the US H how do you where do you think we are in that Trend like that game I guess
• 33:30 - 34:00 there is no straight line in anything everyone always thinks that uh somebody says something and it's going to happen tomorrow morning usually usually it happens uh in Greater amounts but it takes longer periods of time and takes slower than you think it would happen um I I would say we're in the early stages of all of this uh we're seeing going to see productivity advances and nobody just flips a switch thing is nobody ever flip a switch these are incremental
• 34:00 - 34:30 changes over very long periods of time but it's what it means is that is that the application of Greater intelligence into businesses is going to um make business better more efficient more productive and um and better better better for the world frankly um that that just makes us all uh smarter you mentioned real estate how has that changed over the past I would
• 34:30 - 35:00 say 10 but specifically five years you know again I would say uh over the past uh 25 30 years 10 years 5 years um these things always just evolve and uh you know industrial capacity used to be just used for manufacturing storage of goods and today it's used for transportation of many Goods that are delivered to homes so industrial has CH enormously changed as a business over the past 10
• 35:00 - 35:30 years retail has changed because people used to all their shopping uh uh in stores today what they do is they do very bespoke shopping in stores and they want experiences in stores but if you want to buy paper towels you usually don't go to the mall you just order it online and um but but if you want to have a meal and you want to go and try on a shirt or pair of pants or have some fun for the afternoon
• 35:30 - 36:00 you go to the mall and that's that's what's changed is that commodity Goods if you own commodity if you own almost today commodity anything it's bad if you own commodity office bad if you own commodity retail bad you own commodity industrial bad in fact if you own commodity hotels bad yeah um if you what's great today is all of those things in the top 25% and our our view always has been bu the best uh own the
• 36:00 - 36:30 Best Buy the best continue to reinvest into the best and so our real state is among the best in the world um and we continue to um experience some some great numbers uh look over the last five years because of covid and because of other things and because interest rates went up by 4500 base points um all of that disrupted the real estate market but the the worst is uh behind us by far
• 36:30 - 37:00 we're looking in the rear view mirror by by um uh what happened in real estate and in fact this time the fundamentals are actually pretty good in most things um it's just there are some people that have uh Capital structures that aren't built for these financing markets uh and therefore they'll have to put capital in to be able to deleverage or whatever they have to do or or somebody else so take over the asset um
• 37:00 - 37:30 but that's not a a huge issue across the world I think a lot about systems how to build them optimize them and make them more efficient but efficiency isn't just about productivity it's also about security you wouldn't leave your front door unlocked but most people leave their online activity wide open for anyone to see whether it's advertisers tracking you your internet provider throttling your speed or or hackers looking for weak points that's why I use
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• 38:30 - 39:00 knowledge project our link will also give you four extra months on the 2-year plan there's no risk with nord's 30-day money back guarantee the link is in the podcast episode description box maybe spend a few minutes and sort of like take me behind the scenes in how you think about risk and how you think about interest rates and how you think about debt when it comes to assets our uh our fundamental thesis of investing is that you should put a prudent amount
• 39:00 - 39:30 of debt on assets that can withstand markets um if you can then you should fix it because you know your cost and um and from time to time if you got it wrong you put a little make sure you have a little more money around to put it in and and support your asset so um we've always conservatively financed our businesses and assets all of our financing is asset by asset by asset by asset or business by business by business by business so any debt that we
• 39:30 - 40:00 accumulate onto our Consolidated balance sheet is just the accumulation of a whole bunch of single asset financings and um and it's not that we ever want to or think that we will give back assets or not live up in fact our reputation is with our lenders is that we're one of the best sponsors in the world to borrow uh lend money to because we support our businesses but buying have having asset
• 40:00 - 40:30 by asset by asset financing allows you to just deal with the situation one by one by one and and its duration mean they're spread over long long periods of time and um and with interest rates um I think the most important thing to remember is we don't borrow the treasury rate only the government borrows at treasury rates and uh what we borrow at is Treasury rate plus spread yeah and
• 40:30 - 41:00 historically spreads were 200 basis points and interest rates were uh 300 basis points and therefore you borrowed at five and when Co when covid hit interest rate uh the treasury rate went to zero yeah and what the Bor most of the lenders said to us is n I'm not going to lend you it at 200 over and give you three I'm widening that out to to uh 350 so I'll give you five and or four and a half and uh therefore
• 41:00 - 41:30 before we were boring at five and in Co we were boring at four and a half so when people say oh geez you got all this financing and covid um yes maybe some people did and some people got very ex low rates because rates were zero and they might have borrowed at two at an extreme point in time but not very much and most of it lenders just widened the spread out today base rates are high we're back to five guess what spreads are the lowest
• 41:30 - 42:00 they've ever been in history we just did a 30-year Brookfield Corporation financing so we're borrowing money for 30 years fixed for that time period and is 125 over so it spreads spreads basically all in coupons are important and um and that's really important to remember about um investing
• 42:00 - 42:30 in real assets real estate but also infrastructure Renewables Etc what distortions do you see by sort of like historically low interest rates and even by today's standards you mentioned they went up they they have gone up quite a bit but historically they're still well below average yeah look I think the that's that that maybe is the most important point to note here is that um interest rates aren't that high they're they're higher than they were because
• 42:30 - 43:00 interest rates went to zero and for a number of years after the financial crisis they were close to zero and uh now they're actually in a normal a relatively normal range I'm sure we're going to see another few hundred few another 50 100 base points off of the short rates and we're going to settle into just a regular range of rates but these rates are actually pretty normal and for our business very
• 43:00 - 43:30 um constructive and the things that we can do and we're refinancing it because the coupons aren't that much different than what they were before people we talked about sort of dislocations providing opportunities and you know maybe spend a few minutes walking me through how you think of positioning to manage the recycle but not only maintain your assets uh but also take advantage of dislocations in the market market so the first thing one has to do when there
• 43:30 - 44:00 dislocations in the market is make sure that you have been you were prepared for it so the one thing you should do always when times are really good is ensure that you're preparing for the down markets that's coming uh the ones that don't uh usually aren't successful in the fullness of time but if you are prepared the first order of business is let's double down and make sure that we're fully prepared but then secondly
• 44:00 - 44:30 and and and and um I'd say coming out of recessions or Cycles coming out of the bottom what's most importantly is just have everything you have intact do not lose anything do not lose too much and keep going because there'll be many people who will lost stuff what's even better to enhance the business is at that point in time as the market starting to to recover and once you're comfortable we've taken care of
• 44:30 - 45:00 all the things within our business that you can then invest Capital um into new businesses at that point in time and add to your entity and if you can that's the difference between the great winners and long-term investing and the um and those that are just in the middle you have almost well you have over a trillion dollars in management now now how do you fend off the pressure
• 45:00 - 45:30 to deploy that money it sounds like a lot of money it is a lot of money it sounds like a lot of money it's a trillion dollars but it's not that much when you do what we do a couple years ago we bought Deutsche telecoms half a Deutsche Telecom Telecom Tower business in Germany uh and Austria is $20 billion transaction we're building for Microsoft $13 billion of power plant plants um we're building with Intel a $32
• 45:30 - 46:00 billion uh fabrication plant in Arizona um you know I can go through the list these are large transactions that consume significant amounts of capital that earn excellent long-term returns and um I would just use that to say we're we're we've been doing this a long time um what we promis our investors and our clients is that we will take moderate amounts of risk um not no risk
• 46:00 - 46:30 but moderate amounts of risk and earn um good good returns over long periods of time we won't shoot the lights out you're not going to get 45% returns every year um and we're not trying for that but average returns over an above average period of time equal outstanding returns yeah and that's the point the point is we've earned our parent companies earn 19% return annualized returns for 30 years uh when you
• 46:30 - 47:00 compound up which doesn't sound like very much 19% returns annualized for 30 years like it just when you say that in that line doesn't sound like that much but I think that's a million dollars became almost $200 million over that period of time or $1,000 became $200,000 it's a lot and uh so so the point is success in investing isn't about making a lot of money in a short period of time what it's really about is earning
• 47:00 - 47:30 reasonable returns over very long periods of time and and look look that's Berkshire Hathaway Berkshire hathway is successful because um uh they have been able to deploy Capital at reasonable amounts of turn over very long periods of time and uh and that's the success of long-term investing is that a company you look up to look they've done an incredible job in uh in their business over a very long
• 47:30 - 48:00 period of time maybe you mentioned over 30 years walk me through a little bit of the history of Brookfield and then the future where we're going so we started as an operating business we just invested for ourselves um we had the businesses that we basically have today uh infrastructure real estate Renewables and Industrial Service we call Private Equity day businesses and credit lending those were our five businesses we did it
• 48:00 - 48:30 for ourselves and we lent money and um 25 years ago we decided that we could take those skills we had and turn them into a business to be able to um manage some of our money and some of our institutional or other clients money and um and offer Alternatives into those funds when it started nobody wanted to invest with us because they didn't really understand Alternatives and today
• 48:30 - 49:00 um that's turned into a trillion dollar business um it's been extremely successful largely because um these products are ideal for institutional and Retail clients to invest into and the the past 25 years has been about institutional and and this comment is not meant to say that they won't be investing but their their increase from going from
• 49:00 - 49:30 zero to some of them are at 30 40 50% Alternatives um when you go from 0 to 50 it can't go to 100 so a lot of them are at their numbers but what's happening today and and to your question of the future is that the same phenomena is now happening in retail uh retail being individuals 401ks in the US are going to open up to alternatives I think plans around the world will open up to
• 49:30 - 50:00 Alternatives uh alternatives are ideal products for retail as well in fact they're almost more ideal because you're saving for your retirement and uh what better to have in there than a product that earns a reasonable return over a very longterm T long period of time and can compound and so the the future of our asset management business is really about um that um the opening up of retail and
• 50:00 - 50:30 continued growth of retail wealth uh with our products doing the same things that we do for institutions exact same but now just opening up in different types of products that are suited or tailored for um individuals what does that mean maybe walk me through it because you know I've always thought you've had these available to people I could go by Brookfield infrastructure on the public market you you can buy it in the public market that fits in a stock
• 50:30 - 51:00 portfolio but you to date we haven't offered you a product for your 401k in the private Market okay that was open to you to say do you want to buy um infrastructure with us and just own a bunch of data centers and different things like that um we happen to have a couple of listed ones that are very unique but but the what people want is private assets
• 51:00 - 51:30 within their portfolios and that's going to increase I'd say exponentially over the next 20 years so retail is sort of the future but another big area that you're investing in is Insurance maybe walk me through some of the opportunities you see over the next 20 or 30 years in Insurance yes so outside of our asset management business uh we decided to um take a portion of our capital and um put it into Insurance five years ago was for two at his time because we bought some
• 51:30 - 52:00 um excellent insurance companies uh at a point in time where they weren't doing very well because interest rates were extremely low and they weren't earning very high Returns on their Capital fast forward four years later the companies are doing extremely well we're making $2 billion doar a year of cash flow within the business and um and insurance for us is is um I I'd say the following firstly and maybe just to go back our goal was
• 52:00 - 52:30 get in the insurance business not not because we wanted to be an insurance what our goal is is our clients come to us because they um they want our investment skills what we have is a very unique offering is a bunch of investment skills that can create products um for long-term investors uh our insurance company now being $120 billion do of assets is a
• 52:30 - 53:00 perfect long-term uh investor into all of the things we do from our asset management business so we have a special um special expertise to be able to offer because we have access to our investment products or great we have greater access or greater comfort with all the investment products to be able to put into the insurance companies than most other uh uh groups out there maybe there's a few other others like us but
• 53:00 - 53:30 not very many and um therefore we have a special benefit for that so we we've chosen annuities um in the United States largely so far we've now just got licensed in the uh United Kingdom um but why anties what appeals to you it's just because they're they're lowrisk liabilities we we we're not taking on high risk on the liability side our goal originally was in getting into this was don't take risk on the liabilities earn our money on the asset side and um and
• 53:30 - 54:00 we have this unique ability to earn excess Returns on the asset side and our goal was put very significant amounts of capital and over capitalize the businesses which allows us to do things in the on the asset side of the balance sheet which is very um different than many insurance companies and what you know we we can own real estate uh to a greater extent we can own alternatives to a greater extent we can own
• 54:00 - 54:30 infrastructure to a greater extent um we can own high yield bonds as opposed to just uh fixed income on the market um all the things that we do for our clients um we can put them into the insurance company and they may take more Capital but we've over capitalized the company so we started with4 billion we've increased the capital I think to seven 16 17 billion do of book Equity um within the business we continue to over
• 54:30 - 55:00 capitalize but on top of that we have another 100 billion 150 billion dollars of capital up top that if we need more money we'll put it into the insurance companies to ensure they're healthy and better than any that are out there and um and we have an excellent relationship with The Regulators um and explain all these things to them and are very transparent with all the transactions we do with them um and we happen to have some very unique things that we can do because you know for example if we own an office
• 55:00 - 55:30 building and somebody owns the other half and they want to sell and we know that's a really cheap uh price they're going to sell at um that's a great real estate investment for our in for our insurance company very seldom do people have that opportunity with our knowledge and access to Opportunities so it's a pretty unique um offering and and that's what we what we bring to the table do you think you'll get out of annuity well
• 55:30 - 56:00 stay in annuities but expand into other businesses I'm imagining short duration stuff is probably the Property and Casualty is is not doesn't lend itself to that type of investing but maybe reinsurance or yeah look I I would say we wanted to start this is a 25y year Adventure uh we're five years in um we wanted to start to make sure that we uh uh knew what we were doing we met all our Regulators we uh earned their respect um and we um we operate we could
• 56:00 - 56:30 operate and figure out what were all the risks um we've been in it five years we're very comfortable over time uh we may Branch out into other types of uh other products that we can understand that fit our skill set and um and that's really what's important to us so first we're expanding internationally writing annuities or pension risk transfer annuities which are both are
• 56:30 - 57:00 very similar uh so instead of instead of going out of our uh Comfort Zone on the type of liability what we're doing today is we're expanding to the UK and which is a big uh pension risk transfer market and that that's just a different way to expand are the pension risks defined benefit or Define contribution these are uh P pension risk transfer means which happens in the US Canada and the UK
• 57:00 - 57:30 largely those three places in the world um what it means is that if there's a corporation that has a defined benefit plan that wants to get it off their balance sheet so they they have A1 billion plan there's 10 billion assets 10 billion liabilities they can commute that plan to us and we can our insurance company can take it so they're no longer on the hook for the plan they're no longer uh at risk on the assets or the liabilities we've assumed that risk we will now pay
• 57:30 - 58:00 their pensioners and they gave us the assets to earn overtime hopefully the the amount of money to pay all their pensioners and if not we're on the hook for it not them can you spend a few minutes walking me through the Machinery of Brookfield and why you've structured it the way you have look I I would just say um like one I I'll preface this with like one of the criticisms from the outside in is that it's super complicated there's a lot of different entities and moving Parts how do you think through that so I would just say
• 58:00 - 58:30 that uh yes there are probably more pieces of Brookfield first I'm not I I I I might disagree first by saying there there are many companies in the world that are large like us and they have as many many pieces as we do that's first point so I'm not sure that's actually a true statement but I'll take your uh I'll take your uh points at at face value and I would just say each one
• 58:30 - 59:00 of the pieces we've set up has been highly thought through and contributes a lot to the business these are not random things we've done they're very specific and they contribute enormous value in the long term to the company and because of that um we have to explain them more to maybe sometimes have to expl exp them more to investors but for our uh friends they understand
• 59:00 - 59:30 exactly why those pieces are there and what they do for us and um and what each accomplishes in the short term I could we could wave a wand and get rid of all those uh as you denote complicated parts we could wave a wand and get rid of them all in the in the long term it would be bad for shareholders less less returns would be earned we would be more at um
• 59:30 - 60:00 Financial Risk we would have we we have the maximum amount of flexibility within our structure to be able to go through deal with opportunities risks and everything that's out there so I I just I I uh I look we can always do better on explaining the pieces and and we try all the time and it's incredibly our in our reputation's incredibly important to us um so when people criticize us about our
• 60:00 - 60:30 structure our different things that are there um we try to double down and make sure we explain it all to people um but what I I would just say that each of those pieces is really important and uh and contribute a lot to the business hypothetically if you were to all put it under one umbrella how would that change the opportunity set available to you it would just mean dilution to some shareholder and and and for example we
• 60:30 - 61:00 spun off our asset management business uh two years ago there's a whole group of us investors largely that buy asset management businesses that only want to be invested in Asset Management they don't want to own assets that we own they don't want to be invested in insurance they don't want to do all the other things we do um they don't want to change like our our parent company Brookfield Corporation it has changed in 35 years
• 61:00 - 61:30 in many different ways and many different times for the benefit of all of us but you need to you need to trust us when we're changing Brookfield asset management is a pure play Asset Management business that's asset light that will probably never be anything different you can trust us for that and that's what it is so there's just they're just different audiences and um and it just allows us
• 61:30 - 62:00 to have a security which is tailored to that audience and if we want to offer it to somebody in the public markets or to an or to another alternative manager we want to merge in or something it gives us the opportunity to do that and not have to deal with all the other issues that we have what about your insurance business or what about your Investments or what what are you going to do next and uh and it just allows us to do that so I don't we could do it it just would take
• 62:00 - 62:30 away a lot of the great benefits we have in the organization if you put your investor Bruce hat on which of the businesses do you think is the best positioned for the next 15 years and I'm not asking returns I just mean which business do you think is the best competitively positioned I just think they're all different they're they're all totally different everything we invest into has enormous opportun going forward as long as we execute properly um but they're each one of
• 62:30 - 63:00 them's different uh I I get excited I could I could get excited about having all of my net worth in every single one of them and uh and they're all pretty exciting going forward maybe spend a few minutes on talent and people Brookfield is known to take really big bats with what from the outside looking in would be young people what what do you see in people that gives you the confidence to take bets in them how do you build a
• 63:00 - 63:30 culture where uh meritocracy Rises and people can take big bats so we've always had the view that um well firstly we're in extreme meritocracy uh this is a partnership it's Partnership of individuals uh when when we leave the partnership our sharers that if you're an owner or controller of the partnership they go away they go on to somebody else so um nobody's family will ever uh will ever
• 63:30 - 64:00 be part of this partnership it's a meritocracy second we've always had the view that um a cross between uh uh wise older people and smart aggressive young people both um give you the gravitas to deal with situations which you need a little history but also allow you to be um
• 64:00 - 64:30 allow you to know more about what's going on today I'm positive our 30-year-olds today and the business know more about technology than I do because they've grown up with it differently um it allows us to be faster better quicker to every new trend in the world and what's going on out there and it also I say creates a culture where people want to be here and get ahead
• 64:30 - 65:00 because they know they can and um and so I look we uh brought to the partners and to our senior people uh three years ago we brought Connor tesy forward as the next person that will be the CEO of the asset management business um that was internally uh vetted it was an externally vetted and today we're in the process of him uh
• 65:00 - 65:30 continuing to meet clients and investors and all those kind of things and I think he's 37 years old today um he's incredibly passionate talented and uh and he'll bring through a whole new group of people within the company and re-energizing businesses is what makes them better and different walk me through some of those meetings where you're making big investment decision what goes on behind the scenes how do you quantify risk where do you
• 65:30 - 66:00 spend your time on deals our uh our investment process is we only invest in things that we deal with and know um we have people on the ground and our knowledge of the business and um and we're our investment committees are normally only focused on downside protection upside will always take care of itself and whether you shoot for 16% 22 29 18 none of those matter they're all
• 66:00 - 66:30 great what's really important is what are the risks how what can go wrong how bad could it get and um and how do we deal with it if that happens and so we spend virtually all of our time on townside protection at our investment committees and that's all that's important to us when you're wrong where you typically wrong and you haven't been wrong a lot no no look we make mistakes we try to
• 66:30 - 67:00 make small mistakes I'd say that's it when we're wrong where Are We Wrong we're wrong in increment in small ways um which aren't have you you don't know about them very much because in the last 35 years we've been right generally on the large things and nothing has been uh irreparably harm uh harmful and um and that's because the
• 67:00 - 67:30 things we do are small incremental and when we make mistakes we we we make them along the way and we encourage people to keep learning and and growing because if you don't make some mistakes you never advance but do not make big mistakes and that's I'd say that's the biggest thing we try um to impress across the organization you mentioned the investment committee I just wonder
• 67:30 - 68:00 behind the scenes are investment decisions signed off by by one person or is a committee that signs off and if it's a committee how do you hold people accountable or responsible for those so our uh usually what happens is some a transaction came into the company some way or we had an idea and we don't talk to somebody and the transaction came about uh it's then approved by today because we have these vast businesses it's approved in the business but then we have one committee that it's almost
• 68:00 - 68:30 like an allocation committee up top because we want to know how many across the organization we want to know how many transactions are happening at any one point in time so we're not compromising like you said how could you make a mistake if everybody made a massive transaction at the same point in time what we're probably betting on is a cycle and you may not want that and if you do you better knowingly do it and um so uh in addition to all the deals being
• 68:30 - 69:00 approved down below where accountability comes from uh we have an oversight committee that approves everything that goes on in the organization which includes six or eight of us and uh and that approves everything really just to be a final Governor over the entire organization are there patterns to cycles that you notice in advance of them happening where you're like we're
• 69:00 - 69:30 at the first inning or we're at the late stages what are the signs that you look for I would just say that uh Cycles are never the same but they sort of rhyme and they look similar so um the one thing of having wise older guys around I'll consider myself off that today uh uh I used to be a young unwise individual uh I'll try to
• 69:30 - 70:00 consider I know I'm old just not sure I'm wise but uh I um some of the reason for having the the wiser individual around is is having the um elongated knowledge of what goes on in cycles and what goes on in periods and and we've seen this before is helpful sometimes it's a hindrance but sometimes it's very
• 70:00 - 70:30 helpful for context and uh and therefore that's that that's what makes great organizations I think in our view is that you have um the combination of the tenacity and passion to make investments and be successful tempered by um the uh Knowledge and Skills of past and what's
• 70:30 - 71:00 gone wrong to be able to bring together risk management and drive to succeed I I'm curious like how you would teach me to that knowledge of Cycles like how would you pass that on to somebody in your organization or me if you were to sort of here are the things I look for or don't look for or you know I I would say uh in general we don't do training quote unquote but every day every single
• 71:00 - 71:30 person in this organization is learning and it's a it's a learn by osmosis process we have open plan uh in the place including myself never had an office and uh and people talk to one another and it's very interactive and therefore well I started off by saying we don't train any body uh we train them every single day and uh it's just different than sending people
• 71:30 - 72:00 to school do you do like post-mortems after an investment and what's the key oh yeah especially the bad ones what goes into those like walk me through that take me behind the scenes and we try to look at look the the uh successful ones you can usually identify and know what happened the unsuccessful ones are harder to identify what happened um but often there are there are reasons why and it either comes down
• 72:00 - 72:30 to execution uh you didn't you didn't execute properly um you had um you mtim the market or you just made a bad bad flawed investment decision and those are the worst you mtime the market n you know it's okay um but uh uh making fla investment decisions is really bad is that where you you've got the business strength wrong the
• 72:30 - 73:00 competitive Dynamics wrong you don't understand I I just sometimes it's we're sometimes we're pushing out into areas which are adjunct to what we do and we probably shouldn't have we really didn't know what we were doing and um not often does it happen but once in a while how how much of your investment decision you focus on the downside but how much of it is like we're modeling it the next five years and then we're tracking to that model or the only thing I tell you about a
• 73:00 - 73:30 model is produced in an investment committee is it will never be exactly what happens um but uh I'd say if you get the we're trying to get the trends right is is really what it is is in investing it's can you get the trend right and and I would say most of our investing is uh we're trying to get the Price Right for value and therefore often we're buying at a discount to what we think is the
• 73:30 - 74:00 value of something and um and therefore that's an an important uh thing to note how do you think about the geopolitical risk we we invest in backbone infrastructure largely and even our private Equity businesses are backbone infrastructure type businesses therefore what's important for us is to go to good countries with good people that you can operate with the standards we operate
• 74:00 - 74:30 with and that those countries respect rule of law and will over time be good places to invest we don't really sell over borders so in the United States where we are um we own data centers and Telecom towers and real estate and Industrial facilities and all of the things that we own in the US and we make batteries and we Etc all all of those are consumed by individuals or companies in the United
• 74:30 - 75:00 States they're not shipped we make Power it's used within State um so politics don't really matter to us you know they do in the margin but on balance as long as you invest in a good country um you're going to be fine and by good I'm assuming you mean stable rule of law how do you think you're good good means um for us it has to be large enough to be able to invest like we
• 75:00 - 75:30 can't have small countries just not because they're not good they're not good place to invest it's just not meaningful to us when you have a trillion dollars things the benefit or the um uh the or the yeah the drawback is that uh is that you can't go to a little country like we just we can't invest th100 million it's not relevant to us right um so we need large places we'd like them to have uh we need
• 75:30 - 76:00 to operate with a standards that we operate globally with um we need to be we we'd like to have large GDP we'd like to have it growing uh and we'd like to have a currency that's relatively it doesn't have to doesn't have to grow better than everyone else just has to stay consistent if it's highly volatile not good if it goes down over the long periods of time bad um so we' we'd rather pick countries with those um those
• 76:00 - 76:30 factors and but it all comes down to price like some some have all that and then you you you invest uh when you can but but for us we have to have people on the ground so we pick those countries very methodically we put people on the ground we invest from time to time new Investments when we find the opportunities but we don't randomly go to countries like this is not a random business this is hard work therefore we
• 76:30 - 77:00 have to be in country be able to action an opportunity when it comes and therefore if we're not in a country and somebody calls us with an opportunity we just say sorry we're not set up to do that can no can do it seems like part of your secret sauce is not only doing that in advance but also you seem to prove the model before you take outside investors into it you know I like I would say we have a large amount of capital ourself we've always invested ourself we want to make
• 77:00 - 77:30 mistakes with our own money first not with others our reputation with our clients is the only thing we have and uh and that's really important to us and and we try to incrementally grow to places for example we we have a massive platform in the United States so we started Insurance in the United States now we're going to the UK to do the same thing we did in the United States and we just got a license to do
• 77:30 - 78:00 that but it um we now have all the experience we have from the United States we probably couldn't have started there right because we just didn't have the same presence there as we had here and we always end these interviews with the same question which is what a success for you Brookfield uh is one of the great investment uh management groups in the world today and 20 years from today
• 78:00 - 78:30 success is that it is um bigger broader um more relevant to clients uh and continues to do exactly what it does today for everybody and earn re earn reasonable returns with with downside risk protected and if we can do that we'll have felt success uh of all of
• 78:30 - 79:00 this thanks for listening and learning with us for a complete list of episodes show notes transcripts and more go to fs. Blog podcast or just Google the knowledge project recently I've started to record my Reflections and thoughts about the interview after the interview I sit down highlight the key moments that stood out for me and I also talk about other connections to episodes and sort of what's got me pondering that I
• 79:00 - 79:30 maybe haven't quite figured out this is available to supporting members of the knowledge project you can go to fs. blog SL membership check out the show notes for link and you can sign up today and my Reflections will just be available in your private podcast feed you'll also skip all the ads at the front of the episode the fom street blog is also where you can learn more about my new book clear thinking turning ordinary moments into extraordinary results it's a transformative guide that hands you the tools to Master Your Fate sharpen
• 79:30 - 80:00 your decision making and set yourself up for unparalleled success learn more at fs. blogle until next time [Music]