AI Is Changing Everything You've Ever Learned About Investing

Episode #359 | April 29, 2024

Episode #359 | April 29, 2024

AI Is Changing Everything You've Ever Learned About Investing

In This Episode

On this week's Stansberry Investor Hour, Dan and Corey are joined by David Trainer. David is the founder and CEO of New Constructs, an investment-research firm that analyzes thousands of stocks, mutual funds, and exchange-traded funds with robo-analyst technology.

David kicks off the conversation by describing how his company takes value investing to the next level with artificial intelligence ("AI"). He explains that the days of buying stocks and holding them forever are gone. Today's investing landscape requires investors to be more agile, and AI helps with this. David specifically mentions how he uses AI to sort through millions of financial filings, footnotes, and data points to give him an edge and produce better results. However, he warns that AI is only as good as the data that goes into it...

Think about the AI and the technology as the engine... Data is the fuel. AI is a great technology. But if you're pouring low-grade gasoline into it, you're not going to do very well.

Then, David talks in depth about how humans are still involved in the investing process, including making decisions when the AI is unsure how to interpret certain findings. He breaks down how New Constructs' technology is giving clients a competitive advantage and augmenting the rest of their strategy. Plus, David discusses the importance of using both technicals and fundamentals when investing, and he shares why expectations matter so much to valuation.

Lastly, David names the two sectors he finds most attractive and two that folks should avoid. This segues into a conversation about a recent pump-and-dump scheme used to take advantage of retail investors, why the U.S. Securities and Exchange Commission doesn't take action even when it should, and the damage done by years of low interest rates...

When money is cheap or effectively free... what we lose that I think is so important to society at every level is discernment. If we're not discerning about where we allocate our resources, society is ruined... If we become a society that keeps throwing good dollars after bad, where does all that go? It goes to all the bankers and CEOs that are robbing from you instead of the companies that are creating real value.

Dan and Corey close things out by discussing inflation and the hotter-than-expected numbers for the personal consumption expenditures index. They cover unrealistic investor expectations for rate cuts, the government's misplaced priorities, and the very real consequences of this persistent inflation. As Dan points out...

There's a reason why people suffer in times of inflation. It's not just things cost more – it's this extreme sense of uncertainty. People can't plan things... Most people work in small businesses, and [those businesses are] the ones who are going to get hit the hardest by all this. All the small businesses trying to plan anything, trying to buy anything, trying to pay any amount of employees – they've got it really hard.