Carl Kawaja - Dealing with Regime Change

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts and you can access all our podcasts including edited transcripts, show notes and other resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:30)
Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of Positive Sum or O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:03)
My guest this week is Carl Kawaja. It's the second time I've had Carl on the show and my first conversation with him is one I go back to often. Carl's a portfolio manager at Capital Group where he's quietly overseen a huge portfolio for decades.
He's one of the top investors operating today as well as one of my favorite people. The investing world has changed quite a bit since Carl and I first spoke in mid-2021, so this was a great chance to use Carl's curious mind and wide range of experiences to discuss the regime change taking place across capital markets.
In true Kawaja fashion, we go all over the map, discuss Apple, the Amazonian rainforest, baseball, the oil and gas industry, Muhammad Ali and more. Please enjoy my great discussion with Carl Kawaja.
Carl, it's been kind of a shockingly long time since we first did this. Time really goes fast as you get older, which is terrifying to me. A lot has changed in the world and in the market. Definitely, we are in a different regime. And so I thought after revisiting our last discussion, that the best place to start would be really just to ask you about what the market feels like to you today. You've seen a lot of markets, you've been through all sorts of different regimes in your career, looked at a million companies through all those regimes.
And I always love with investors like you that have seen so much to just know what this feels like. Does it feel like some other part of your career? Does it feel a certain way to you? Do certain things feel more important to you than others in this environment? We're recording in January of 23 How does the world feel today?

**Carl Kawaja** (3:29)
Thanks, Patrick. And it's fun to be on the show again. I was kind of hoping you might have a little jacket for me like they do on SNL for returning guests.

**Patrick O'Shaughnessy** (3:39)
How do you know it's not in the mail?

**Carl Kawaja** (3:41)
Yeah, waiting for that. And have my eye on Michael Moveson, of course, who's the all-time record holder of Thor. I do feel like we've had regime change. And I feel like regardless of whether we're in a bull market or a bear market now, or if the bear market is conclusively over or not, I don't know. But I do think that the environment and the regime has changed irreparably. And probably for the better. We're seeing a variety of companies, Amazon, Meta, Alphabet, Wayfair, kind of across the board engage in significant layoffs and reduce their flexibility to sort of fund things where the NPV or the path to profitability is uncertain.
And of course, in the private arena where you obviously have so much expertise and positive sum looks, it's probably really interesting and exciting because there have been a lot of big wipeouts.