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Bubble Trouble: Laying Out Inconvenient Truths About How Business and Financial Markets Really Work
Constructing Bubbles with David Trainer
This week we’re going to keep on pricking bubbles with a fellow cynic of the sycophants and stenographers. Here to help us is David Trainer of New Constructs, whose company makes “robo-adjustments” to the reported accounts of 1000s of listed companies and tries to unearth the real financials behind the content marketing from company investor relations teams.
For more on Bubble Trouble, including transcripts of the show, visit us online at http://bubbletroublepodcast.com
You can learn more about Richard at https://www.linkedin.com/in/richard-kramer-16306b2/
More on Will Page at: https://pivotaleconomics.com
(Times below correspond to the episode without considering any inserted advertisements.)
In this episode of Bubble Trouble, guest David Trainor, the founder of New Constructs, delves into his background in economics and statistics, his time at Credit Suisse, and his perspective on market bubbles and financial accountability. The discussion ranges from the detrimental effects of rapid, superficial analysis and reporting pervasive in today's investment industry, to the importance of rigorous fundamental analysis in discerning true business value. The conversation also touches on companies' strategic overstatement of profits, the ill-effects of unchecked capital allocation, and the role of artificial intelligence in future financial analytics. As the founder of New Constructs, David highlights how his company is helping investors uncover the real financial situation behind companies' reported accounts.
00:00 Introduction
00:57 Part One
01:02 Guest Introduction: David Trainor
01:26 Understanding New Constructs
02:22 The Cynicism in Wall Street
03:02 David's Backstory and the Tech Bubble
04:11 The Role of Accounting in Business
05:37 The Reality of Wall Street
07:42 The Boy Who Cried Wolf: A Market Perspective
08:27 The Intentionality of Market Bubbles
15:44 The Impact of Algorithmic Trading
18:28 The Difference Between Investing and Speculating
23:49 The Challenge of Limited Company Disclosure
26:12 Part Two
27:34 Discussing the Spectrum of Corporate Ethics
27:42 Highlighting Notorious Corporate Scandals
28:05 Elon Musk: Genius or Snake Oil Salesman?
28:46 The Reality of Earnings Distortion
29:09 The Unsettling Truth About CFOs and Wall Street Analysts
29:40 The Role of Investor Relations Firms
30:37 The Problem with Superficial Analysis
33:43 The Art of Investing: A Touchy Feely Approach
35:55 The Role of AI in the Future of Financial Analysis
47:18 The Dangers of Overstating Profits and Zombie Stocks
50:57 Closing Thoughts and Future Predictions
50:59 Credits
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128. BT 128 Labour’s 100 Days: No Bubbles, Some Troubles
33:43||Season 1, Ep. 128We thought we’d get a little political on this week’s show. Are we serving up a bubble that was a landslide UK election, or is the new government trouble a bubble? And we want to deconstruct Will’s Pessimism Paradox as it applies to the place we most often seen bubbles, in high finance where the less certain the outcomes to higher the markets go.For more on Bubble Trouble, including transcripts of the show, visit us online at http://bubbletroublepodcast.comYou can learn more about Richard at https://www.linkedin.com/in/richard-kramer-16306b2/More on Will Page at: https://pivotaleconomics.com(Times below correspond to the episode without considering any inserted advertisements.)Deconstructing Economic Pessimism in the Wake of a New GovernmentIn this episode of Bubble Trouble, hosts Richard Kramer and Will Page discuss the political and economic landscape in the UK following the first 100 days of a new government. They analyze the concept of political and economic bubbles, questioning whether pessimism dominates current narratives. The discussion spans issues like the impact of the cloud on GDP measurement, tax policies, and the importance of attracting talent over traditional economic metrics. The hosts also delve into the role of economists’ outlooks during different economic conditions. The episode underscores the significance of focusing on new strategies and the long-term impact of political decisions, highlighting the government and economic system's current challenges.00:00 Introduction to Bubble Trouble00:44 Part One00:50 Analyzing the New Government's First 100 Days03:56 The Pessimism Paradox Explained14:13 Debating Economic Growth and GDP18:59 Part Two19:19 Tax Policies and Economic Challenges25:23 The Talent Competition and Immigration28:57 Reflections on Political Labels and Strategy32:47 Conclusion and Listener Engagement33:25 Credits127. Open AI: For What It's Worth
44:07||Season 1, Ep. 127We always try to flag the smoke signals of mischievous market behaviour that gets society and stock portfolios into trouble. Are we about to get fooled again by the hype and hysteria surrounding the poster child Open AI? Or maybe, just maybe, it’s worth joining us for 30 minutes to find what really sits behind a 150bn valuation and ask whether beauty is in the eye of the beholder?For more on Bubble Trouble, including transcripts of the show, visit us online at http://bubbletroublepodcast.comYou can learn more about Richard at https://www.linkedin.com/in/richard-kramer-16306b2/More on Will Page at: https://pivotaleconomics.com(Times below correspond to the episode without considering any inserted advertisements.)In the latest episode of Bubble Trouble, co-hosts Richard Kramer and Will Page dive into the hype surrounding OpenAI, now valued at $150 billion. They examine the risks of market hype and hysteria behind this soaring valuation, discussing the broader implications for society and the tech industry. The episode explores the nuances of company valuations, comparing public versus private market insights and the lack of transparency in the private sector. With references to past tech bubbles, the hosts analyze the potential conflicts of interest among investors and question the sustainability of current trajectories in tech valuations. As they await the next bubble to burst, Kramer and Page emphasize the importance of scrutinizing underlying business fundamentals in an era of outsized market valuations.00:00 Introduction00:49 Part One01:04 The AI Hype and OpenAI's Valuation03:25 Understanding Company Valuations06:32 Public vs Private Market Valuations10:56 The Transparency Challenge in Tech15:26 Reflecting on Past Episodes and Lessons21:12 Part Two21:49 The Role of Central Banks in Market Bubbles25:32 Exploring OpenAI's Valuation and Market Dynamics36:09 Smoke Signals and Future Predictions43:46 CreditsYou Can't Lead If You Don't Know Where You're Going: Big Tech vs Big Gov Tech with Bill Raduchel
50:37|This week we speak with Bill Raduchel, who has served as a high-level executive and strategic adviser for organizations such as Sun Microsystems, AOL Time Warner, Xerox, McGraw-Hill, and the Salvation Army. Over half a century working with systems, software, and networks, he has remained at the forefront of the technology revolution in media, education, and corporate governance including recognition at Sun as CIO of the Year and the top CFO in the computer industry and at AOL as CTO of the year. He holds more than fifty issued patents as well as a PhD in econometrics from Harvard, where he taught for five years with John Kenneth Galbraith. He has been writing software in some form since he turned fifteen years old in 1961. He is also the author of The New Technology State. This book is about society—how it has changed and what technology is enabling us to do to ourselves. [Repeat from April, 2024]For more on Bubble Trouble, including transcripts of the show, visit us online at http://bubbletroublepodcast.comYou can learn more about Richard at https://www.linkedin.com/in/richard-kramer-16306b2/More on Will Page at: https://pivotaleconomics.com(Times below correspond to the episode without considering any inserted advertisements.)The New Technology State: Redefining the Tech and Government Landscape00:00 Welcome to Bubble Trouble: A Skeptical Conversation00:46 A Journey Through Tech and Economics06:23 The Evolution of Technology and Its Impact on Economics08:02 The Writing Process and Insights into Bill's Book11:21 Exploring the New Technology State and Government Challenges17:43 The Intricacies of Tech Talent and Government Staffing19:53 Tech Debt and the Challenges of Modernization25:55 The Global Tech Landscape: Government and Private Sector Dynamics25:55 Wrapping Up Part One and Teasing Part Two25:55 Simplifying UK Government Websites: A Double-Edged Sword25:55 The Dangers of Centralization and Cybersecurity26:10 Big Tech, Government, and the Quest for Regulation27:59 The Talent Gap in Government and Tech Regulation Challenges29:15 Innovative Solutions andthe Power of Decentralization30:15 The Role of Startups in Tech Innovation and Employee Motivation31:59 Google's Management Revolution: Lessons in Innovation34:45 The Complexities of Regulating Big Tech40:05 Navigating the Future of AI and Government Regulation42:19 Economics, Education, and the Future Workforce44:56 Smoke Signals: Warning Signs in Tech and Regulation50:06 Credits126. Law Without Lawyers: A Conversation with Damien Riehl
49:31||Season 1, Ep. 126One of the first casualties of the AI race may be lawyers, and that’s where we go this week with Damien Riehl who is at the front line of disrupting the legal profession. Law without lawyers? Really? Are we moving from if to when this tipping point becomes reality. Damien's company: https://vlex.com/vincent-aiDamien's TED Talk: https://www.ted.com/talks/damien_riehl_why_all_melodies_should_be_free_for_musicians_to_useAll The Music: https://allthemusic.info/All the Patents: http://allthepatents.info/For more on Bubble Trouble, including transcripts of the show, visit us online at http://bubbletroublepodcast.comYou can learn more about Richard at https://www.linkedin.com/in/richard-kramer-16306b2/More on Will Page at: https://pivotaleconomics.com(Times below correspond to the episode without considering any inserted advertisements.)The AI Revolution in Law: Disrupting and Democratizing Legal ServicesIn this episode of Bubble Trouble, hosts Richard Kramer and Will Page delve into the disruptive potential of AI in the legal profession with guest Damien Rio from vLex. The discussion explores the transformative impact of AI on access to legal services, the operational overhaul of legal tasks through large language models, and the future implications for lawyers, courts, and clients. Damien shares insights on his groundbreaking work in automating legal processes, addressing the challenges of legal backlog, and the potential for AI to democratize access to law worldwide. The episode also touches on the impact of AI on litigation strategies, private versus public legal data, and the future landscape of legal arbitration.00:00 Introduction and Guest Welcome00:44 Part One00:52 Damien's Background and TED Talk01:30 Part Two01:30 Introduction to V Lex02:30 The Role of AI in Legal Research03:41 Disrupting the Legal Profession07:54 Democratizing Access to Law09:13 Challenges and Opportunities in Legal Tech17:59 AI's Impact on Legal Disputes23:58 The Role of Non-Lawyers in Legal Services25:28 Democratizing Access to Law25:58 Part Two26:08 Economic Impacts of Legal Tech26:59 Jevons Paradox and Legal Work28:35 AI in the Judicial System34:55 Global Implications of Legal Tech38:18 AI's Limitations and Future in Law46:45 Copyright and Patent Innovations48:28 Conclusion and Future Prospects49:12 Credits125. AI Supremacy and Ethical Dilemmas: A Conversation with Parmy Olson
52:35||Season 1, Ep. 125Today we’ve got a page turner…not that Page, our co-presenter…but a book that brings the AI battle to life: Supremacy: AI, ChatGPT and the Race That Will Change the World, Written by our guest, Parmy Olson. Buckle up as it's going to be a wild ride. For more on Bubble Trouble, including transcripts of the show, visit us online at http://bubbletroublepodcast.comYou can learn more about Richard at https://www.linkedin.com/in/richard-kramer-16306b2/More on Will Page at: https://pivotaleconomics.com(Times below correspond to the episode without considering any inserted advertisements.)AI Supremacy and Ethical Dilemmas: A Conversation with Parmy OlsonIn this episode of Bubble Trouble, hosts Richard Kramer and Will Page sit down with Bloomberg columnist and AI expert, Parmy Olson, to discuss her new book, 'Supremacy: AI, ChatGPT, and the Race that Will Change the World.' The conversation covers the ethical challenges and regulatory gaps in the AI industry, the role of big tech corporations in AI development, and the societal impact of AI on various sectors including healthcare, education, and law. Olson also shares insights on the bias and unintended consequences of AI technology, the psychology of tech innovators, and the future prospects for the technology.00:00 Introduction00:51 Meet the Guest: Parme Olson01:08 Parmy Olson's Journey in Tech Journalism02:25 The Fascination with Silicon Valley03:26 The Metaverse Debate04:16 Investigative Journalism in Tech08:05 The AI Hype: Reality or Exaggeration?10:57 The Race for AI Supremacy14:29 Unintended Consequences of AI20:18 The Ethics of AI Development22:55 Closing Thoughts on AI and Tech24:49 Part Two25:23 The Competitive Landscape of AI26:07 The Shift from Openness to Secrecy27:42 Meta's Approach to Open Source AI28:55 The Role of Open Source in Tech Development30:57 The Allure of High Salaries in AI31:09 Capitalism and AI: A Cautionary Tale31:55 The Distinction Between Business and Markets33:49 AI's Potential in Public Services36:49 The Future of Law with AI41:24 The Psychology of Tech Companies48:06 The Bubble and Reality of AI49:38 The Future of AI and Human Roles51:47 Conclusion and Final Thoughts52:17 Credits124. Definitely (Maybe) Dynamic Booms and Busts
44:12||Season 1, Ep. 124We’re back from summer break and we want to revisit some past pods as they get dragged into the current of current events, making our predictions as good - or even better - than the AI led herd. Today we’ve got a slew of stories to unpack, from AI Fakes and our podcast with the now-under-threat CEO of Boomy, the unwinding of the greatest money making machine you never heard of, and in Part Two revisiting our Ticketmaster / Live Nation show and the current fiasco of dynamic pricing for Oasis tickets. For more on Bubble Trouble, including transcripts of the show, visit us online at http://bubbletroublepodcast.comYou can learn more about Richard at https://www.linkedin.com/in/richard-kramer-16306b2/More on Will Page at: https://pivotaleconomics.com(Times below correspond to the episode without considering any inserted advertisements.)In this episode of 'Bubble Trouble,' hosts Richard Kramer and Will Page dive into two major topics affecting today's financial and entertainment markets. They discuss the recent fraudulent activities surrounding AI-generated music streams, detailing the $10 million scam involving fake fans and manipulated royalties. Moving on, they shed light on the Oasis ticketing debacle, where surge pricing and market manipulation led to skyrocketing ticket prices and public outcry. Throughout the episode, they revisit past discussions, particularly focusing on market turbulence and the intricacies of carry trades. The hosts promise more exciting content and insights into market dynamics as they kick off their autumn season.00:00 Introduction and Welcome Back01:08 Part One01:33 Reflecting on Past Episodes02:11 Summer Break and Market Turbulence03:42 Understanding Carry Trades09:46 Nvidia's Market Impact13:07 AI Music Fraud Scandal23:41 Part Two23:41 Oasis Ticket Fiasco24:59 Ticket Demand and Dynamic Pricing26:30 Surge Pricing vs. Dynamic Pricing30:58 The Role of Ticketmaster and Market Manipulation36:03 Potential Solutions and Future Outlook43:07 Concluding Thoughts and Wrap-Up43:48 CreditsReddit and Weep
40:44|So let's look forward and prepare you for the next big sexy blockbuster tech IPO, you’ve read all about it - that’s right. Reddit is going to ring the bell.For more on Bubble Trouble, including transcripts of the show, visit us online at http://bubbletroublepodcast.comYou can learn more about Richard at https://www.linkedin.com/in/richard-kramer-16306b2/More on Will Page at: https://pivotaleconomics.com(Times below correspond to the episode without considering any inserted advertisements.)Reddit's IPO Adventure: A Deep Dive into Valuations, Trends, and Future ProspectsIn this episode of Bubble Trouble, hosts Richard Kramer and Will Page dissect Reddit's impending IPO, examining its valuation, user base, and revenue streams. The podcast begins with a discussion on the evolution of Reddit and its business model, focusing on the challenges it faces as a business primarily driven by advertising revenue in a competitive digital advertising landscape. Kramer and Page delve into the nuances of Reddit's user engagement and its niche position in the internet culture, juxtaposing it against giants like Meta and Google. They critically analyze the hype surrounding tech IPOs, emphasizing Reddit's $800 million revenue and its struggle to become profitable amidst a sprawling digital advertising world. The episode also covers the broader implications of down rounds and the valuation bubbles that tech companies often face. Through expert insights and a candid conversation, the episode offers a comprehensive view on Reddit's IPO, the tech industry's valuation practices, and what the future holds for user-generated content platforms.00:00 Welcome to Bubble Trouble: DeepFakes and Bubbles01:02 Part One01:06 The Fascinating Shift from Hong Kong to Singapore02:52 Reddit's Upcoming IPO: A Deep Dive03:25 Exploring Reddit's Niche and Financials06:04 The Cultural Impact and Controversies of Reddit08:58 Reddit IPO Strategies and User Dynamics10:43 Inside Reddit: Culture, Compliance, and Future Prospects16:00 Part Two16:00 South by Southwest Festival Insights20:04 Back to Reddit: IPO Details and Expectations21:22 Technical Difficulties and Starting Off21:24 Exploring Down Rounds: A Deep Dive23:48 The Reality of Valuations and Market Corrections24:42 Tech Companies' Valuations Post-Pandemic25:41 Reddit's Revenue Diversification and Data Deals27:15 The Creator Economy: Expectations vs. Reality29:48 Reddit's IPO: A Case Study in Market Dynamics34:49 Smoke Signals for Future IPOs38:21 Reflecting on Reddit and the IPO Landscape40:20 CreditsKill the Chicken to Scare The Monkey with guest Linda Yueh
01:00:57|This week we talk with Linda Yueh, author of the book The Great Crashes. Since America's Wall Street Crash of 1929, the global economy has weathered the most tumultuous century in financial history. From the currency crises of the 1980s, to Japan's housing meltdown, the dot com boom and bust, the global financial crash and the COVID pandemic, crash after crash has sent shockwaves through our world. The Great Crashes tells the stories of ten of these historic financial events. They serve as a series of cautionary tales, each with their own lessons to be learnt. With clear-eyed analysis, renowned economist Professor Linda Yueh uses these meltdowns to extract a critical three-step framework to help recognise the early signs of a crash, mitigate the effects and even prevent them in the future. There is very little that is certain in economics, except for this: there will be another financial crisis. [Repeat from March 2024]For more on Bubble Trouble, including transcripts of the show, visit us online at http://bubbletroublepodcast.comYou can learn more about Richard at https://www.linkedin.com/in/richard-kramer-16306b2/More on Will Page at: https://pivotaleconomics.com(Times below correspond to the episode without considering any inserted advertisements.)Understanding Economic Bubbles and Crises: Insights from Linda YuThis episode of Bubble Trouble features Richard Kramer and Will Page in conversation with Linda Yu, the author of 'The Great Crashes', discussing lessons from historical economic downturns and ways to prevent future crises. Yu shares her unique perspectives drawn from her experiences in journalism, academia, and having been a witness to several economic crashes. The conversation covers the dynamics of bubbles, the role of banks and debt in triggering financial crises, regulatory challenges, the impact of policy decisions on economic inequality, and the specific case of China's impending financial instability. Throughout, the importance of understanding human nature's role in financial markets and the necessity for credible crisis management strategies are underscored.00:02 Introduction00:47 Part One00:47 Introducing Linda Yu: From BBC to Authorship01:34 Linda Yu's Journey: Academia, Books, and Economic Crashes02:06 The Making of 'The Great Crashes': A Deep Dive into Economic Meltdowns06:04 Understanding Crises: The Three Phases of Economic Downturns08:47 The Role of Banks in Economic Crises: A Critical Examination15:12 Regulatory Challenges and the Shadow Banking System22:06 Educational Insights: The Importance of Economic History26:52 The Eurocrisis and Bail-Ins: A New Approach to Banking Failures29:58 Part Two30:10 Preview of Part Two: Further Explorations into Economic Crises31:16 Exploring Economic Festivals and the Humor in Economics32:06 The Serious Side of Economic Crime in China32:14 Navigating the Iceberg: China's Economic Challenges33:07 The Next Great Crush: Predicting China's Economic Future33:39 The Intricacies of China's Banking System and Property Bubble34:56 China's Influence on Global Markets and Emerging Economies35:30 China's Unique Approach to Big Tech Regulation39:25 The Consequences of Financial Penalties on Banks41:03 Preventing the Next Great Crash: Policy Levers and Their Effectiveness46:13 The Unintended Consequences of Economic Policies55:10 Crisis Management and the Importance of Credibility59:19 Final Thoughts and the Future of Economic Crises01:00:30 Credits