Principles of Dealing With The Changing World Order

[Music] your highness your excellencies fellow guests and alabi who is something else alabi you're amazing a nine-year-old who I want to invest with and I hope you're able to let me Mentor you she and she and I are here to talk about the great transition principles to guide us through it and of course Capital after all this is an investment conference and I'm a global macro investor so we should talk about what investments will give us the best returns to begin in this session I will talk about the biggest and most important things in other talks in the conference I will get more into the more immed immediate and more granular stuff but the big things are what I want to bring forward here to learn my most important principles for Global macro investing I studied all the major markets economies and countries over the last 500 years and thought about how they worked if you're interested in my in-depth examination of that you can get my book or my more entertaining video which is called principles for dealing with the changing World orders but you don't have to do that in order to get the punchline which is that without a doubt the best Capital to invest in is human capital all good Investments come from people who are productive and the best places to invest are those that have environments that enable those people to be productive more specifically history has shown that there are only two things a society needs in order to be successful the first is the ability to provide a good education to most people that teaches them skills and civility so they can be productive in other words the development of human capital from the start this teaching typically comes from parents and teachers who instill good values and principes to be productive with others the second is an environment that gives people the resources that they can be productive at its best that environment provides Financial Capital that comes from investors Banks and capital markets to invest in those who are capable of being productive this environment must be a civil place to live work and raise one's families ideally one in which there are many exciting people doing many exciting things so that it is a creatively stimulating environment in other words having the right people in the right environment that supports productive creativity throughout the life cycle is what it takes that's why I look forward to discussing these things and also in investing and mentoring others there's a life cycle of an individual so I want to just touch on that for a bit to me the life cycle of a typical individual looks like this in the first phase you learn and you're dependent on others who guide you most importantly your parents and teachers this is the phase that alabi was in in the second you work and you you work with others and you try to make others who are become dependent on you successful this is the phase when work life challenges become the greatest because you want to be successful at work and successful in taking care of your family this is the phase that most of you are in then there is the third and final phase when you are free to live in peace and free to to eventually die in peace ideally knowing that you did your best to contribute to the evolution process that started an eternity before and that will go on Way Beyond you in this phase of life you are free you are free of your obligations because you are Beyond working to be successful and you're free of your family obligations because your children have become independent adults and your parents have passed away he I'm in this phase and I found that it is natural and rewarding to pass along what I've learned to in symbiotic relationships with those who want to learn like alabi that is why I mentor and why I'm here today that is what I believe is the most important thing to do in that phase of life I have seen that the most important events in almost all life cycles transpire in a pretty scripted way and the biggest differences in people's lives come from how they handle these things for example most children are born then they are raised by parents then they go to school and they're taught by teachers and then physically and psychologically they change to become young adults and eventually graduate from school get married and raise children and so on and so on until they die of course people who are born into very different circumstances that gives them very different advantages and disadvantages but when we see how and where people end up it's clear that whether they end up in the best possible places or the worst possible places given where they started from depends on the choices they make M it is also true that while individuals going through life can know ahead of time the experience that they're probably going to encounter they can't know exactly what going through that experience is going to be like until they go through it however they can get good guidance and good principles for dealing with them from those who have successfully gone through them before that is why mentoring is so important to navigate this life cycle well it's important to know where you are in that life cycle where the people you who matter to you most are in in their life cycles and then seek out good principles for dealing with the most important things that will be coming at you and them I suggest that you look and see where you are and what's likely to come over the next 10 years which you probably can pretty well visualize by seeing how the typical life cycle goes and also modifying the picture for your own circumstances you can gain good principles from dealing with most of the things that are going to come at you because they happened to many people before and many lifetimes before and good principles are available from many wise people who have successfully gone through these things so now let's talk about the life cycle of a country as for all good environments there are essentially uh there are for all good environments that are essential for people living up to their potentials there are um countries's leaders who have to provide these things in other words the environments are provided by the country's leaders history has shown that good leaders have good principles that provide the two essential ingredients that I mentioned earlier in other words education and the resources to be productive these lead to society's flourishing and history also showed that leaders who fail to provide these things have failed societies however because each leader is limited to one Lifetime and great societies exist over several lifetimes great leaders also must pass their their good principles on to their successors who employ successfully these principles and improve on them over several Generations if they can do that great cultures will naturally develop in which people abide by these principles and that makes societies work well looking back we can see who the great leaders were and what their great principles were for examp example shik Zed and his successors obviously have deployed great principles because they use them to shape Abu Dhabi to the place that has brought us here today consider that the majority of people who live and work in Abu Dhabi are from other countries and are here because the things that they want most are more reliably available here than in their own countries I've been coming to Abu Dhabi for over 30 years so I've seen it change a lot without seeing and I've seen the principles behind its success evolved but not much they were the same basic principles there were Timeless and Universal principles for making a g a great country The Story of Lee Quan Yu and Singapore is a similar story these are the Renaissance States like Florence Venice Lisbon not to be confused with the great Powers who control the world orders these are the states that successfully navigate between the great powers to prosper Abu Dhabi is a classic Renaissance State now let's turn our attentions to how the world order is changing history shows us all World orders and all great Powers have multi-gen generational archetypical life cycle that transpire for logical reasons to explain them I'm going to show you a 4-minute clip from a 40-minute animated video that I mentioned called uh changing World Order it'll be in this animation I hope you'll bear with me I studied the 10 most powerful Empires over the last 500 years and the last three reserved currencies it took me through the rise and decline of the Dutch Empire in the Gilder the British Empire and the pound the rise and early decline in the United States Empire and the dollar and The Decline and Rise of the Chinese Empire and its currencies as well as the rise and decline of the Spanish German French Indian Japanese Russian and ottoman Empires along with their significant conflicts as measured in this chart to to understand China's patterns better I also studied the rise and fall of Chinese dynasties and their monies back to the year 600 because looking at all these measures at once can be confusing I'll focus on the four most important ones the Dutch British us and Chinese you'll quickly notice the pattern now let's simplify the form a bit as you can see they transpired in overlapping cycles that lasted about 250 years with 10 to 20e transition periods between them typically these transitions have been periods of great conflict because leading Powers don't decline without a fight so how am I measuring an Empire's power in this study I used eight metrics each country's measure of total power is derived by averaging them together they are education inventiveness and Technology development competitiveness in global markets economic output share of World Trade military strength the power of their financial center for Capital markets and the strength of their currency as a reserve currency because these powers are measurable we can see how strong each country is now was in the past and whether they're rising or declin by examining the sequences from many countries we can see how a typical cycle transpires and because the Wiggles can be confusing we can simplify it a bit to focus on the pattern of cause effect relationships that drive the rise and decline of a typical Empire as you can see better education typically leads to increased Innovation and Technology development M and with a lag the establishment of the currency as a reserve currency you can also see that these forces then declined in a similar order reinforcing each other's decline let's now look at the typical sequence of events going on inside a country that produces these Rises and declines in a nutshell the big cycle typically begins after a major conflict often a war establishes the the new leading power and the New World Order because no one wants to challenge this power a period of peace and prosperity typically follows as people get used to this peace and prosperity they increasingly Bet On It continuing they borrow money to do that which eventually leads to a financial bubble the Empire share of trade grows and when most transactions are conducted in its currency it becomes a reserved currency which leads to even more M at the same time this increased Prosperity distributes wealth unevenly so the wealth Gap typically grows between the rich Haves and the poor Have Nots eventually the financial bubble bursts which leads to the printing of money and increased internal conflict between the rich and the poor which leads to some form of Revolution to redistribute wealth this can happen peacefully or as a civil war while the Empire struggles with this internal conflict its power diminishes relative to external rival powers on the rise when a new Rising power gets strong enough to compete with the dominant power that is having domestic breakdowns external conflicts most typically Wars take place out of these internal and external Wars come new winners and losers then the winners get together to create the New World Order and the cycle begins again as conveyed In that clip it appears that the world order is approaching a difficult transition period of the sort that we have seen many times uh throughout history this doesn't mean that the world order necessarily will be uh painful or difficult um the times that we have ahead still depend on how we are with each other history also shows that even if the world does have the worst of times of this sort uh that what was experienced in the past uh that there are still places and experiences that have uh places that have U peace and prosperity and or good places to be in fact history shows that even during the worst wars those in the neutral productive countries did exceptionally well for these reasons there are always ways to have peace and prosperity it all depends on how we are with each other just as there are always some people in places that are bad there are always some people in places that are good you just have to find them go to them and be good in them when considering your Investments and investment environments that you want to be in which are for all purposes the purpose is to give you the lives that you and your family wants I believe that these are the most important principles to follow in one sentence what's most important is how we are with each other I wish you a good conference and I look forward to discussing these items with you and to conclude I will conclude this session with my partner Al dbby bring her back [Applause] please