AI and Your Money: Separating Hype from Opportunity

This episode explores the current state and future potential of artificial intelligence (AI) in markets and industries. Experts discuss whether AI is a bubble or a long-term shift, its economic impact, and how investors can navigate the hype with discipline.

Transcript

The AI Boom: Reality vs. Hype

Announcer 0:00

Views expressed are solely those of the speakers and do not represent this show or its team. The AI boom is enabling us to transact and to do real things in the physical world where we live that impacts our day-to-day lives. And that I think has significantly more revenue and cost savings opportunities than something that's a self-contained virtual world.

Wade Lopez 0:28

Welcome to Built to Last Conversations about Wealth, Work and Life. I'm Wade Lopez, and I'm joined by our Chief Investment Officer, Gary Aiken. Today we're talking about something that is suddenly everywhere: artificial intelligence. Investors are hearing about it nonstop, business owners feel pressure to figure it out, markets are reacting to it, entire industries are trying to position themselves around it. But the challenge right now is separating what is real from what is simply hype. And that gap between the hype and the actual opportunity is significant. It is also where a lot of money gets lost. So today it's not about predicting the future and making wild claims. It's about helping investors, business owners, and anyone paying attention to think clearly about where AI may actually matter over the next several years and where the noise is drowning out the signal. Gary, let's start with the question everyone is really asking. Is AI becoming another investment bubble? Are we watching the beginning of a legitimate long-term shift?

Gary Aiken 1:30

Wade, I don't think that we're in the beginning of a legitimate shift, but there's no doubt that it is a legitimate shift. That uh it it's not an investment bubble as far as I can tell just yet. Um, we think here that uh that AI, you know, we are probably in the fifth or sixth inning of it, but what we've said before is that we expect this game to go into extra innings.

Wade Lopez 2:01

Well, now before we start talking about where the real opportunity is, I want to make sure people understand the market environment around AI right now because the enthusiasm's hard to overstate, and the enthusiasm has a history of getting people in trouble. So why is AI become such a dominant market story so quickly? And is the pace of that dominance itself a warning sign?

Gary Aiken 2:24

Well, I don't think that it has become an overnight sensation. I think maybe uh some retail investors are picking up uh that that sense that it is a it is now you know something they should be focused on. Um, but just because certain investors have figured this out or have uh have have heard about it and are now interested in it doesn't really impact you know the way that we would think about investing in it. Uh again, as always, what we're focused on as investors is the cash flows, the earnings, and what those earnings look like into the future. And so as we think about the dominant trends going on today, we can see that uh that build out for AI data centers continues, that the shift from training to inference to uh the next step, agentic AI, is is ongoing and is accelerating. And um, and so that's leading to demand for other types of segments of technology that you know we thought or uh some market participants thought might have been dead. Um you know, we see PCs coming back, we see CPUs coming back, we see a massive demand for memory. Um, and and also with that, a massive demand for other things like steel and copper and aluminum. Uh, and we've talked about energy. Um, so it's not just that AI uh in and of itself is you know affecting markets, it's that the entire American economy, it seems like, is participating in this boom. And that boom is being accelerated by two things. First, there are accounting and tax policies that make it uh efficient for companies to continue to invest. The bonus depreciation uh from the One Big Beautiful Bill Act is making it so that companies can depreciate in one year the full investment that they that they made in uh building building new capital assets. Um and then the second thing is that there's an insatiable demand

Market Dynamics and Investment Strategies

Gary Aiken 4:52

for the ability to process more and more legacy data for the purposes of uh exploiting that data for the purposes of creating new revenues and cutting costs. And those two things together uh make it so that this is this is not um something that's gonna stop anytime soon, in our view.

Wade Lopez 5:13

So then do you think investors are getting ahead of reality? And if they are, uh or if they're not, how would you know?

Gary Aiken 5:23

I don't think there's any real way to to know whether you're getting ahead of reality. I think we're we're living in a reality where the facts seem to be undisputed that there is demand baked in that is there with pretty good certainty through the end of 2028 at this point. Uh now that is getting factored into stock prices today, but um we tend to see more visibility the further out we go. Um and and so one of the things I think we would be looking for is any sign that that that there's a slowdown in investment in this in uh in AI and AI related infrastructure. Um but but until we see that uh the you know the the likelihood that this continues to accelerate is greater than the likelihood that it uh decelerates.

Wade Lopez 6:30

Does this remind you of uh other technology cycle, for example, if it does, which one do you think fits best to this cycle?

Gary Aiken 6:38

You know, I think this probably and and this is not a novel thought for me, um, but I think what this probably most resembles is the uh the advent of railroads. Um really that the amount of technological innovation going from uh from from nothing to the steam engine and then the the necessity to build rails, to build rail infrastructure, to build cars uh for both um for both uh you know uh raw raw goods or or dry goods and also for human transport. Um you know that continued to be something that continued on. And then around the railroads, you had telecom buildup, right? Right. Because the once once the once you could have a telegram, well, it made natural sense to put the telegram poles right alongside the railroad and they grew up together. Um I think it's it's more akin to that than you know the comparisons to the dot-com boom and bust in the 1990s.

Wade Lopez 7:51

Let's compare it to crypto or metaverse, and we talk about crypto all the time, right? We don't really know what it is. It seems like you have a really good understanding, at least maybe for our investors and our business owners out there, where you think infrastructure should be and what you know, like you just said, the railroad. I think that's a great description of, you know, it kind of talks about infancy right now. So what do you think in comparison? Like we're not hearing about as much about crypto, we're not hearing so much about the metaverse. So what do you think moving forward that we need to think about when we think about, you know, where we are today versus where we might be in a you know in 12 months?

Gary Aiken 8:32

Well, I guess the the difference that I would point out between, say, the crypto sphere and uh and the rest of AI was that um you know crypto was a good starting point for generating um the demand for GPUs, uh graphics processing units, um, because you needed excess compute. Um so it was it was good to see um a fair amount of compute available so that when the first uh AI related software products, um chat GPT came out, there was a base of compute power enabled to enabled for you know the layman or or for others to to start to to use that in a broad way.

Wade Lopez 9:24

Right.

Gary Aiken 9:24

And I think that spark enabled us to to really uh to see the power of this. The other thing that we we saw, I think different from the metaverse was that the metaverse was supposed to be this self-contained virtual universe uh where you could transact inside of that. Um the AI boom is enabling us to transact and to do real things in the physical world where we live that impacts our day-to-day lives. Um

AI's Impact on Industries and Productivity

Gary Aiken 10:00

and that I think has significantly more revenue uh and cost savings opportunities than something that's a self-contained virtual world.

Wade Lopez 10:10

I totally agree. Do you do you think markets are pricing in perfection right now? And and what happens if we have one or two of these big players disappoint?

Gary Aiken 10:20

I think we've seen certain players disappoint, and the uh the markets today are definitely levered up. Uh you have a lot of high frequency trading, you have a lot of retail trading, um, you have um market participants that uh that are gambling a little bit. And so when companies disappoint, we see that uh those companies' share prices fall dramatically. But on the other side of things, when we see a company that you know comes out and says, hey, uh sorry, our revenues are going to be 50% greater than we anticipated. And we have visibility for the next two years that that growth is going to continue, um, we see astronomical share price increases as well. So um so certainly there's there's more volatility, but there's more volatility around the fact that the landscape continues to change in the favor of uh winners being being bigger winners than we expected them to be, and losers being uh greater losers than than we expected them to be.

Wade Lopez 11:32

Yeah, and I think one thing that is critical for people to understand is technology can absolutely change the world and still become a terrible investment if your expectations and valuations get too disconnected from reality. The internet changed everything. It also wiped out trillions of dollars of investors' capital in the process for people who bought in at the wrong price, right? So, Gary, do you believe we saw that pattern play out during the internet boom? And are you seeing echoes of what that is today?

Gary Aiken 12:03

I think there's a couple of differences between the internet boom and today. Um the first thing I would probably point to is the way that markets are structured today is a little bit different. In the in the dot-com boom, you had more, I want to say, unsophisticated uh venture capital players. And because of that, they were able to take uh you know companies that probably never should have gone public public very quickly. Right. Exit capital, uh, because you would run out of people who uh could supply you with more money to keep some failing venture going, the the quickest way to do that to get more money was to go to the public markets. And so you had a lot of IPOs of companies that were never ready for prime time, that were never going to make any money uh going into the public markets. We don't see that today. The the uh private market players, uh the venture capital players are much more sophisticated. They have a better understanding of what they actually own and what the potential for that is, and they're keeping that private for longer. Yep. Um I agree. They're also keeping that private for longer because of another thing that helped the the dot com bus be different, which is public accounting rules and and uh securities and exchange uh rules and laws changed as a result of the dot-com malfeasance that went on. There was a lot of fraud um perpetrated in the dot-com uh boom of the 1990s. You know, we saw that with WorldCom and Enron. Um, and and uh as a result of that, you know, it got much harder to take a company public in the first place, and there was, and now you know, there's personal liability for CFOs uh to sign off on their financial statements. So you don't you don't have the kind of potential for fraud that you did in the past. Um I agree. The the you know the last thing that I think is different is you know, when I sort of I graduated from college in 2001, and I got a job with a you know an insurance company, you know, pretty steady. Uh, but my my roommate got a job at a uh at a startup. And he came uh he came home to our apartment one day and we were talking about our days, and uh he said to me, Hey, you know, our company just uh had this uh great presentation on how well we're doing. And he was and he said, you know, our burn rate is really fantastic. And I said, What is a burn rate? And he said, and he explained it to me. And I

Navigating Investment Risks and Opportunities

Gary Aiken 14:56

said, Well, that sounds like the amount of cash you're you're burning through. Uh and and basically, if you take that out, all you're doing is projecting how fast you're gonna go out of business. And it sounds like you're going out of business at a really, really fast rate, unless you can get more suckers to put in more money. And uh, and I think that happened sort of across the board. At some point, there were there was no more money going in, the IPO market dried up, and you had a lot of people holding the bag on companies that had no business no revenue uh and lots of expenses, and uh, and and it failed. I that is not where we are today.

Wade Lopez 15:38

Yeah, that brings up the the next question about you know, how does an investor, a disciplined investor at that, avoid confusing a you know great technology with a great investment opportunity? Because I think they're feasibly different.

Gary Aiken 15:54

You can have great technology and poor management, uh, poor capital allocation, um, and uh and poor cash flows. Um so I think if you look at those three things, if you have uh good management, you have uh you have uh solid capital allocation going on within that framework, and that you have growing cash flows. Um I think those three things are the hallmarks of any solid business, whether it's great technology or something else. Just having good technology doesn't make it. You have to have those other things.

Wade Lopez 16:36

What should people be watching, you know, to determine whether their AI, the AI investment is actually uh translating into real economic value. And I think you just touched on some of that. You want to continue down that path?

Gary Aiken 16:49

Yeah, I guess for for business owners, as you're exploring utilizing AI in your business, you know, it's not always going to be clear that it's that it's going straight to the bottom line.

unknown 17:01

Right.

Gary Aiken 17:02

And I think as you're as you're experimenting with these things, um I wouldn't be surprised that you don't find that you can replace employees immediately or or that AI is going to be a panacea um of of saving saving you time and and money elsewhere. I think what what this what what it can do is make repeatable processes um uh uh easier to accomplish and faster to accomplish. That that will free up your employees who are smart to do other things. Um and and when they when they are doing more with less, that is like a cost savings. It's hard to quantify because it's not dollars and cents related. Uh, but but your product but productivity when you can be doing this and that at the same time, um uh I think we all know that we can't be in two places at once, but now with agentic AI, we kind of can be in two places at once. And I think that's sort of the revolution.

Wade Lopez 18:17

I agree.

Gary Aiken 18:18

I agree.

Wade Lopez 18:19

You know, one part of the story that tends to get overlooked is that AI doesn't have to replace industries, wholesale to still be one of the most transformative forces in our modern economic history. The value doesn't need to require, you know, an apocalypse. We're already seeing very practical applications like you talked about in the day-to-day business operations, and they're genuinely improving how we get things done. Gate, where where are you seeing legitimate, measurable productivity improvements, you know, with AI for you right now?

Gary Aiken 18:51

So I think uh, you know, for us and our business processes, um, we're seeing it in a couple of places. Um, you know, we manage individual uh bond portfolios, and our software for that hasn't been fantastic in the past. Um and now we've been able to sort of create our own uh internal uh software to or internal, you know, uh Excel functions uh to have us be able to monitor those and and create trades a little bit better than our software system would allow in the past. That's one. When we're creating financial plans for people, one of the uh one of the uh you know the hardest points, the most data intensive points was you know, you collect all these statements from people and you have to um you know, you have to decipher, you know, all these different uh these different statements, uh, you know, where the assets are and what

The Future of AI: Trends and Predictions

Gary Aiken 19:49

their cost basis was and what the current market value is and what the asset allocation looks like. Uh now AI can read the statements, can put all that stuff together for us so that we can focus on really doing more of the of the actual work of taking a look at you know how we want to manage money going forward, how we can add value for clients. Um so the the the the things that we're putting AI to work on are the grunt work things that that are of almost no value. Um and and if and if we can spend time, spend less time on things that are of no value, that means we can spend a lot more time on things that are of value. And that's that's I think what what we're focusing on in our business.

Wade Lopez 20:35

You know, there's certain businesses that are positioned to benefit the most. Which ones do you see just off your cuff that that you think are going to benefit or have so far and and why have those businesses done that?

Gary Aiken 20:48

I don't know. I think this is why you sort of need to be broadly diversified when we get back to thinking about the stock market as well. Right. That yes, technology now accounts for something like 38, 39% of the S ⁇ P 500. Um, but but the reason it does is because this this uh AI value AI technology is going to be beneficial in so many other areas of the market. Um, when we get into talking about the impact with robotics, for instance, um, you know, distribution warehouses, having having uh AI robots being able to help uh the people that work there in streamlining those processes. Think about how much faster you can sort packages if you're a FedEx or a UPS, um, or if you're a Costco with a massive warehouse or a Walmart, um, you know, and you've you've spent all this money on putting together all this infrastructure. Um, you're gonna continue to spend money on the infrastructure to move goods and services around your distribution sites. Right. Um, we're also seeing it in in healthcare. I think that's something that we talked about maybe a long time ago. Ago, or I've written about that healthcare costs are growing, and they're growing because the population is aging. But we're we're going to start to see AI, or we're already starting to see AI implemented in uh you know helping helping robots do routine surgeries or assisting doctors with with surgeries. Uh, we're seeing AI going through old data sets of discarded drugs that failed to determine to look for signals that maybe you know the data scientists who are working on it 10, 20 years ago um uh might have missed or clues that that we can suss out because we have the ability to compute so much more data faster and have it, you know, think about it a little bit. Um uh and and so you know that plus, you know, we've we've talked a little bit about in the past the idea that you know you combine the AI and the data analytics with with something like a uh you know a motion sensor in a room in in a healthcare facility, you know, the number one cause of excess uh cost in in old age homes is falls. But if you can detect that a fall is likely to occur, you can have a nurse proactively go down there and assist a patient and prevent them from falling. That means you need fewer nurses and you also need uh to pay for fewer falls, which are catastrophic in in some cases and just and just costly in others. Um so you know, these are just some of the areas. And so I've just mentioned industrial cases, consumer, uh, consumer staples cases, healthcare cases. Um, you know, and so I I I think that we there's so many use cases out there, and and there's so many more that I can't even think of today. That this is the reason why I think you need to be broadly diversified still.

Wade Lopez 24:08

Well, do you think it disproportionately helps large corporations with resources that that they can deploy, or does it actually level the playing field for smaller entrepreneurial businesses as well?

Gary Aiken 24:20

You know, large businesses are going to be able to devote more resources to it, but but small businesses um can also benefit um you know with without a huge need to hire a bunch of additional resources. Um you know for a small business to to use AI, they just need to set aside a couple of hours a

Implementing AI in Business: Practical Steps

Gary Aiken 24:49

day uh and some dedicated employee to solve some issue that's been a thorn in the side of their business. Um and the other thing is that anybody with an idea in your organization becomes an agent for for change because they're empowered with this, with this ability to combine skills that they didn't, they don't have with the skills that they do have. Um so so I I don't know. There's a it's it's hard to answer whether whether it benefits small companies or large companies more. I guess if you're a large company, it benefits you more just because you have the scale. But as a percentage of your business, whether you're a small business or a large business, it probably benefits you the same percentage if you're able to use it.

Wade Lopez 25:36

Well, I think we're we'd have to be considered a small business. And we see areas where AI is genuinely improving how we operate. Like you said, it organizes information, summarizes meetings for us, it's improving communication workflows, accelerates research, um, handles repetitive internal processes. But none of this replaces judgment or relationships, but it absolutely improves productivity for the people who embrace it. That's what I'm finding. My personal observation is that the AI is amplifying kind of the most productive people, it's not replacing them. The people who are adapting are gaining a meaningful competitive advantage, and the ones who are ignoring it are falling behind. And I think they may be doing it in ways we may not even realize yet. So ultimately, does AI become a productivity tool, or do you believe it becomes a genuine labor replacement story over time?

Gary Aiken 26:33

I think it's a productivity tool, not a labor replacement tool. Um certainly there are companies that are going to use AI as an excuse for why they're making caught why they're why they're cutting employees or or doing layoffs. Um and uh and it's it's a good excuse, I guess. I mean, if you have to have an excuse, why not use the one that's that's on the forefront of everybody's mind? You know, um, you know, but but companies have been laying off people because of technology improvements for the better part of a hundred years. And uh, you know, we we in a capitalist society, we find a way to to put those people back to work in more productive ways. Um and it's it's it's very painful to lose a job, it's painful to have to lay somebody off. Um, but um but you know the that's that's capitalism, unfortunately.

Wade Lopez 27:31

Yeah, I agree. So how would you suggest business owners think about implementing AI without overreacting and without underreacting?

Gary Aiken 27:42

I think the the first thing to do is to try it yourself. Um it doesn't cost that much to implement it. You can choose any of the any of any or all of the uh of the tools that are out there. And I would say don't don't be afraid, you won't break anything. Uh you're not gonna destroy yourself. Uh make sure you spend 15 minutes to set it up so that it doesn't like send your you know private confidential data to your competitor. Um but uh but you know don't be afraid to try it. Then I think there's there's a whole ecosystem evolving. You know, we talked about, you know, is it going to create jobs? There's a whole ecosystem evolving of people that have created AI skills or AI consultation and ability for to help people who don't know where to start or who have an idea but don't know how to implement it. Um, there's a whole ecosystem of new consultants and new um new businesses uh being created. And you see them on Facebook, you see it on Instagram, you see it on LinkedIn, uh, you know, X, wherever, wherever you're going on social media, you see these people advertising about how to use AI for your benefit. Um you know, click on a couple links, talk to a couple people, and see, see what you can come up with. Um, and you know, when we talk about large companies, right? We're we're, you know, this is this is the business that um a company like Palantir has has you know created and and uh has has gone for, you know, helping the government understand how to use AI and how to organize its data. Um uh, you know, and now going to the corporate sector on that. Um but we'll see we'll see the other consultancies uh you know get into this business as well because uh you know it's not necessarily intuitive, um, but you have to you have to take the leap forward, um, whether you take it in a small way or a big way. Um you know, there's there's ways to dip your toe in. And and once you do it, I think you you you immediately realize you know what what everybody's been talking about.

Final Thoughts: Discipline in AI Investing

Wade Lopez 29:56

You touched on one thing. You know, you don't want to see people make mistakes. And I think one of the ways people can make mistakes is not setting up those silos or you know, protecting themselves, right? And I think that's a big deal. You want to touch on Snowflake and some of the things that have happened here this week, just and talking about securities and the things going on?

Gary Aiken 30:15

So we don't we don't own Snowflake for our our clients. So I I don't know that story as well as I probably should. Um uh I I wish I did. You know, we were talking about companies that are that are falling by massive amounts, but Snowflake, you know, reported reported earnings, announced a uh a partnership or a buy-in with Amazon using Amazon GPUs, um and uh and talked about how they're using how they're using customer data, helping customers with their data to to um to to come up with better better solutions. Um and uh the stock was up 30%. Um is Amazon the largest?

Wade Lopez 30:57

Um I'm I'm not 100% sure. Are they the largest cloud storage facility in the world today?

Gary Aiken 31:05

I think Amazon is, um, but closely followed by Google and Microsoft. And Oracle, of course, is is trying to play catch up here.

Wade Lopez 31:14

When you think about all these technological shifts in history that create opportunity, but it also creates speculation, um, emotional decision making, and eventually it will create some serious issues, right? So when we think about that, do you see anything going on today that we might need to be thinking about when it we talk about these shifts and and decision making m moving forward?

Gary Aiken 31:39

What we're thinking about here at Concord right now is how to make sure that we are positioned um to to keep up with the markets as they as they go up without necessarily chasing things. Um it's it's very it's very hard in this market, frankly, to not be seen as chasing something when it goes up 30% and you sort of have to buy it for your portfolio. Um but at the same time, you know, when I look at companies that maybe we didn't own that that were on my list to own, but we, you know, we just didn't, we don't, we didn't own them, or they didn't, we didn't need need to own them to optimize portfolios at the time. And we say, well, now we sort of need to own that uh for our for our uh for our investors. I go back to that statement that I made at the beginning uh of the conversation, which is we are in the middle innings of a game that is probably going to go into extra innings. So being, you know, you talk about a risk, you know, I think a risk is to at this point, the risks are still on the side of uh you know not owning something that is likely to be an important, excuse me, an important value creation tool, yep, just because it has gone up a lot. You know, I think I think back to companies that compounded over many, many years, you know, you know, you could have missed out on the first 20 years of Apple's growth and bought in and still made a lot of money. You could have missed out on the first 20 years of Walmart and still made a lot of money. And you said, well, it went up so much, aren't I buying it at a massive valuation? And the answer is, you know, compared to where it was 20 years ago, sure. Yep. But if you look at the growth that is likely to come, uh then you're buying it at a reasonable price. And I still think today that given where where things are likely to be in the future, that prices for a lot of these companies are not out of the realm of possibility and in some cases may even be cheap. Um, you know, hard hard to think of some company that's that's gone up, you know, uh that's doubled or tripled in the last two or three years to to still be cheap. But uh but but that is possible. And frankly, that's the history of of winners in the stock market.

Wade Lopez 34:24

I just think there's a handful of companies that are carrying a disproportionate share of this narrative and a disproportionate share of the major index weights, right? And so how concerned are you about that concentration risk?

Gary Aiken 34:39

I I'm not terribly worried about concentration risk um uh you know for for our investors. I think I think what we're trying to accomplish is taking a look at, you know, making sure that we are in line with market trends and in line with what our thesis is and in line with where cash flows and earnings are coming from. And you know, I don't think we need to penalize a company uh, you know, in our allocation to its to its stock because it's growing three times faster than the rest of the market is. Um and and I don't think we need to buy something that you know isn't growing or is shrinking uh because for diversification's sake.

Wade Lopez 35:33

Um Okay, but I've I've I've got I've had this conversation this week with a client. You know, we've seen this before, right? You got great technology, real adoption, uh investors still lost money because they pay too much. How do how do you think about valuation in a space where the traditional metrics feel irrelevant?

Gary Aiken 35:54

I don't think the traditional metrics are irrelevant. I think if we take a look at the traditional metrics and we look at you know price to price to earnings for price to earnings, you know, a lot of these companies' valuations seem still reasonable. Um uh you you always have to think, you know, when you're investing in growth companies, and this is a this is a you know, we I've got a picture uh or I've got I've got uh you know the the intelligent investor behind me, uh a book by Benjamin Graham, the father of value investing. And you know, we we tend to want to buy things that are that are cheap um uh because we think that we're getting a bargain. And um and I don't think that that's necessarily always the case.

Wade Lopez 36:45

So Gary, is there a point where the infrastructure spending behind AI has to show up in actual earnings? And what happens to markets if it's never shows up?

Gary Aiken 36:55

If the earnings start to slow down, I think that's where that's where we get into trouble. Um and uh and so that's something that we're looking for. Um, when you talk about valuation and being disciplined around that, I think that's that's where our investment guidelines come in. Um, you know, we're even though we're bullish on AI, even though we're bullish on the stocks that are benefiting from it, and even though we uh you know we have our allocation of technology in the portfolio, we uh we still have investment guidelines around that. And so we have still been you know selling at the margins when things get expensive in the interim to buy things that are that are cheap. Uh we've been, you know, we are we are looking at rotating within the sector. Not every company does the same thing. Um and um, you know, and so we are we are focused on you know where the winners are and where the losers are. Um, and you know, we're not gonna get everything right. Nobody ever does. Um, but but I think uh, you know, in broad strokes, um, you know, the AI technology, the infrastructure build-out, the translation to revenues and cost cuts is currently happening. And unless we unless we see you know a revolt amongst, you know, uh amongst investors in the bonds of these companies or the ability for them to raise money for new data centers, um, you know, unless we see you know capital allocation fleeing the sector, I I I just think that it continues to go because it's it's uh it's something that one, the government is encouraging uh through both policy and uh tax law. Um and it's something that you know every company in the world doesn't want to be the last one uh to not be using it for their business. I gotcha.

Wade Lopez 38:59

I agree. So for people who consider themselves disciplined, how do they avoid the hype and look at it from a long-term standpoint? How do they avoid this hype when they're making their decision making? Because that's still considered a lot of things happen that way, right?

Gary Aiken 39:15

The thing to do as an investor with a financial planner is to just make sure with your financial planner that your risk tolerance is appropriate. You know, and and we design portfolios that are in line with an investor's risk tolerance. So investors that you know have the tolerance to be 100% in stocks, they're gonna be 100% in in stocks. Um, but you know, so if this thing, you know, if the market does roll over and we get a uh you know a 20% decline in stocks, which happens, right? Every investor in stocks has to know going in that every now and then the stock market goes down. Um if your if your asset allocation is less in less in stocks because you're a more risk-averse investor, then um you're naturally gonna have less uh uh less less of a decline in your portfolio uh when when the downturn comes. And we can't always predict when the downturn will come. Um you know, we we all have different tools, uh different different things that we're watching. We talked about some of the factors that we're watching for when we would make it, when we would want to make a change. Yep. Um, and that comes down to those discussions we've had about having an investment thesis and all that kind of stuff. Um, but you know, uh, is there a chance that we get it wrong? Of course. We're we're human beings. Um that's why that's why we have the discipline of our investment guidelines and parameters around that um to make sure that each investor's risk tolerance is is reflective of their actual level of risk.

Wade Lopez 40:57

Yeah, some of the largest investment losses in history came from investing in real trends at irrational prices. The trend was correct, the timing and evaluation weren't. That's the trap to avoid here. So, Gary, let's let's bring this home. We've talked about the market environment and the hype, and we talked about where AI is actually creating real value, and we talked about what discipline looks like in the middle of all that noise. As you know, always close with three questions. Given everything we've covered today, I think these may be the toughest versions of them so far. And Gary, the first one is you know, what is the single most important thing that matters right now regarding AI and investing? The one thing.

Gary Aiken 41:42

The one thing that matters most today uh with AI is user fear of of of breaking something. Don't be afraid to break something. Um don't be afraid to try. I think that's the biggest thing.

Wade Lopez 42:01

Second question. What are you watching over the next say six to twelve months that every person in this audience should also be paying attention to?

Gary Aiken 42:11

I think the thing that we're watching over the next six to twelve months is the pace of data center build-out. Um and uh and making sure that that that continues to go a pace. Um, you know, and we'll be watching that with you know, looking at, you know, the raw materials that are going to it. If there's a slowdown in raw materials, that is going to be a tell that that demand is starting to wane.

Wade Lopez 42:37

Yep. Good good answer. I like that. And finally, what's the one thing investors absolutely need to avoid right now?

Gary Aiken 42:44

The one thing investors need to avoid right now is their fear of uh their fear of their fear of missing out. Um this this train is continuing to move and being afraid of buying uh great stocks at decent prices because the price has already gone up a lot is something that that uh unfortunately we need to sort of avoid at this point.

Wade Lopez 43:13

I think the biggest takeaway today for me is that artificial intelligence needed the end of the world and it's not a magic solution to everything. Like most transformational technology, there's going to be real winners, real productivity gains, and real opportunity. And there will also be a tremendous amount of noise, speculation, and disappointment. Investors and business owners who come out ahead will not necessarily be the ones who moved the fastest or took the most risk. They will be the ones who thought clearly, stayed disciplined, and focused on fundamentals when everyone around them were chasing headlines. The goal is not to react emotionally when you're building something. You want it to last for your family, for your business, or the community you live in or you serve. You need to stay thoughtful, disciplined, and focused on long-term decision making. That has never changed and it never will. Gary, great conversation as always, and that is exactly why we call this Built to Last. See you next time.

Announcer 44:15

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