Despite U.S. stocks falling Thursday, 2025 has been a banner year for equities. Earlier this week, the Dow Jones Industrial Average hit its 17th record of the year and the S&P 500 is up nearly 15% since the beginning of the year.
Though there are plenty of investors trading on news of the day and every piece of economic data getting released, there are others who take a longer view. Kirsty Gibson, an investment manager with Bailee Gifford & Co, is one of those people. Her job is to find investments that might not pay off for five to 10 years. She spoke with “Marketplace” host Kai Ryssdal about how she does that job in an uncertain macroeconomic environment.
Kai Ryssdal: Would you explain what you do for a living, just in nuts and bolts terms.
Kirsty Gibson: Yes. So I am an investment manager. Basically, in really simple terms: I have clients — so other people, whether that be pension schemes and things like that — and I try to make the money that they provide to me grow over long periods of time.
Ryssdal: And so “long period of time” is how long?
Gibson: So our average holding period is five to 10 years. But there are some names or some companies that Baillie Gifford, as a company, owns, that we’ve owned for a lot longer than that.
Ryssdal: As you peruse then, in no particular order, the global economy, the American economy and and the way the American political dynamic is playing into the market now, how are you thinking about things?
Gibson: Ultimately, as a long term investor, the economy obviously plays a role in how I think about companies and how I think about investing, but it’s not the singular thing that I’m focused on. And I think the way I would frame it is, I am looking for businesses that have the resilience to be able to navigate the short term challenges. And some of those businesses, some of those short term challenges, will be things like the macro or who’s in power at the moment, or various other bits and pieces. But I’m also looking for businesses that have the adaptability to navigate the long run, and that’s much more to do with who’s running the business, what their vision is for the business, what problem they’re solving. So we’re much more focused on the kind of structural changes that we believe will drive company fundamentals over the long run. We’re not spending all of our time trying to second-guess what interest rates are going to be in two years time.
Ryssdal: Interest rates are one thing, but there’s policy things that are happening, certainly in the United States and elsewhere, that are happening on the turn of a dime, you know? And I guess, how does one have the intestinal fortitude to manage investments through that?
Gibson: Yeah, I mean, it’s hard. It’s not easy. It means that you have to have the resilience as an individual to spend significant periods of time looking pretty stupid, and be willing to tolerate that. But I think that we know as a firm that when we look back at history, and we look at the companies that we have invested in, they go through these periods of ups and downs in their share prices. And if you’re willing to ride out those periods of ups and downs, you can deliver significant returns. And I think that ultimately, like you say, the challenge at the moment is that things can change on a dime, but ultimately, we’re looking for companies that we believe are driving structural change — regardless of who is in power.
Ryssdal: So let’s talk about some of those structural changes. I’ll roll a couple off, and you tell me what you think about them. One is artificial intelligence. The other one, obviously, is climate change. There are big systemic things that are happening that are affecting a five or 10-year time horizon like you have.
Gibson: Exactly. I mean, something like AI is a really interesting topic, because it feels like a paradigm shift, right? This is something that is fundamentally affecting businesses from the very large all the way through to the very small. But we’re very lucky as a firm to have access to the management teams and the visionaries that are leading these companies, to spend time with them, to understand how they’re thinking about investing in artificial intelligence, for example. And that helps us to piece together this broader puzzle of how we think the world might be changing over a five- to 10-year view.
Ryssdal: Not to get all Rumsfeldian on you here but, but what are the unknown unknowns out there?
Gibson: One of the challenges that I think at the moment actually is connected to that discussion we just had on artificial intelligence is, I think it’s really difficult to know exactly what the future of something like the internet is going to look like right now. So historically, we’ve had an internet that’s based on you as an individual visiting websites and deciding to consume content from them, to make purchases from those websites. What happens if we’re all going through an AI or we’re using an agent to do our shopping? What does that mean for the underlying companies? And that is an unknown unknown, from the point of view that we don’t know exactly how that is going to play out. It’s all about hypotheses as opposed to certainties.
Ryssdal: Maybe you’re right about AI being in this structural moment here, but what if you’re wrong? I mean, you know, we all had the dot-com bust of 2000, and it took a good long while for everybody to wrap their brains around what the internet could do.
Gibson: We are probably grossly underestimating the potential of artificial intelligence in some areas and potentially overestimating it in others. Like I say, it is a hypothesis. There will be parts of it that you get wrong. But there will be parts of it that you get directionally right. I think the challenge is that people will want certainty, like, “How is this going to play out? How exactly is this going to happen?” And I think you’re right that when you look at something like the dot-com bubble, it’s easy to draw analogies and say, well, it’s like it was last time, etc. But the reality is, some of the most successful companies of today were born out of that period of time. It was painful at the time, but those companies have gone on to flourish and be very successful.
Ryssdal: What’s the monster under your bed? What keeps you up at night?
Gibson: I think it’s grappling with that sense of acceptance around that you’re not always going to be right, and that as much as you can hope and you can want companies or technologies, etc., to succeed, that sometimes that just won’t be the case. And I think that the longer I have done this job, I think the more comfortable you feel with being wrong. But it doesn’t necessarily make it easier when you are.
