Ken Griffin on US-China Tensions and AI
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You'll never manage your portfolio for every possible tail end, but you should stay very focused on what is the worst case scenario, can I tolerate that loss, And monitor and maintain your exposures? Suck that loss is a tolerable loss. It may be an extreme loss, but it's still tolerable.
Welcome to another episode of Goldman Sachs Exchanges Great Investors. I'm Raj Mahajan. I recently got the chance to catch up with Ken Griffin, the founder and CEO of Citadel at Goldman Sachs' APEX Symposium. Ken and I discussed the implications of AI, his approach to hedging portfolios, and the competitive landscape for the hedge fund industry. We hope you enjoy this conversation. Welcome back to Goldman Sachs, Ken. It is great to be here today. This is our third public conversation in the past seven years. I know you well enough to know you think way beyond the numbers and you're a student o
So two things jump out with that question. The first is we were extremely early to bring everybody back to work. And in some sense, it was almost countercultural to demand your team to come back to an office five days a week. And yet I think that was an incredibly important part, not only of the success that you spoke of, but more importantly, of continuing to develop our human capital. I think as a country, the amount of human talent that has been underdeveloped because of working remotely has had a significant damaging impact on our economy. And recently, the Fed published a paper where they
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a positive result from the FDA. The vaccine works. Your time to market is going be measured in days, not first do your studies, wait for the FDA results, then move to manufacturing and lose three to six months. Now it's an incentives problem. That's an incentives problem, right? Because how do you get big pharma to spend potentially billions of dollars on producing vaccines who ultimately may not work and therefore will be literally flushed down a sewer system? So this was all about the US government taking the risk to fund the manufacturing of vaccines, efficacy of which was not known. We spe
part of that I'm most proud of. It's amazing. The track record also was accomplished at the same time of multiple wars. You had this global pandemic. And so let's move it to the current moment where we are. We have a conflict in The Middle East. We have potential energy and inflationary implications from that. At the same time, the S and P is at the highs. The IPO window has opened up and there's a robust pipeline. Allocator, how do you think about this moment in time? What's the market getting right? What's it mispricing?
So big picture, not only is there a war in The Middle East, there's still a raging war in Europe. And the peace that you and I grew up with for most of our adult lives is clearly not on the table right now. And for anybody following the situation in Cuba, there's obviously the potential threat of what would be a reasonably small skirmish in Cuba, but yet another war. And at some point, do you encourage other countries around the world to increase their use of military power? We're going to get to that. Okay, we'll get to that. So why are we seeing all time highs in the S and P while there's a
You run one of the biggest commodity traders. Did you guys see that coming?
Not the degree of the elasticity of demand destruction. So yes, of course, China will find ways to curtail their need for crude. But the magnitude of that curtailment has been stunning. Number two, is this strategically a decision by Iran or this just happenstance. But there has been a constant, not const
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