AI Productivity Is Real. 83% of Stocks Are 10% Off Highs. Why Does Barry Ritholtz Like Bonds Again?

SPEAKER_1 (0:00)

AI is changing how we work, but is it changing how we should invest? On the latest Click Beta, Barry Ritholtz joins Dave Nadig and Matt Zeigler to explore the gap between AI's real productivity gains and the investment expectations surrounding it. We have included this episode in the Excess Returns feed, but if you want to keep receiving new episodes, you can subscribe to Click Beta on all major podcast platforms using the links in this episode description. Thank you for listening. We hope you enjoy the show.

Matt Zeigler (0:26)

Those other podcasts, they're Click Beta, this is Click Beta. Should market professionals ever talk to each other in private with those conversations and then put them in the public? Probably not. But if nothing else except to prove that all we know is that we don't know nothing, we're going to do it here. Anyway, Click Beta has, but of course, three rules. One, we have a pre-agreed upon topic that we pick in advance. Two, while we're live, nobody Googles nothing. And three, everybody brings a surprise topic to the table of which anything goes. Who's with me today?

Move over, Sam Altman. He jams alternative man, less Meta's muse and more Clerks-era Jason muse. My nomination, by the way, for AI. Tsar, but only so I can make AI. Tsar face comments to him. Say hello to my little friend, Dave Nadig.

Dave Nadig (1:12)

That's a good one. I'll be an AI. Tsar. I'll take that.

Barry Ritholtz (1:15)

You have to say that with an accent. Say hello to my little friend.

Dave Nadig (1:18)

Say hello to my little friend.

Matt Zeigler (1:20)

You gotta do it. And a first time appearance in the gothy shadow of Cameron Dawson with less gator boots and pimped out Gucci suits than Jason Seabuck. This guy's got the cure and I bet he's still fly. His podcasts are reeling in the ears at this point. He's got a name even when he loses. So don't be blue about this intro, Deacon, because I talked to your client, Peg. She will come back to you, if you ask her nicely. It can only mean one thing. Put your steely Dan on the shelf and try out a ritzy Barry.

Welcome to the show, Barry Ritholtz.

Barry Ritholtz (1:49)

I love that intro. Was that old human, or did someone help you invert the various Steely Dan song titles?

Matt Zeigler (1:57)

I have a horrible affliction with ADHD.

Barry Ritholtz (2:02)

Well, you could rename this podcast Greetings From The Spectrum.

Matt Zeigler (2:09)

And perhaps we should.

Dave Nadig (2:10)

Greetings From The Spectrum, indeed.

Barry Ritholtz (2:12)

By the way, if it wasn't for these cubes and the timer on the iPhone, I would miss every fucking meeting I've ever supposed to go to.

Matt Zeigler (2:24)

Thank you, Calendar Alerts. Thank you, iPhone.

Dave Nadig (2:27)

Thank you, Pomodoro Timers.

Barry Ritholtz (2:28)

Clock Alerts, too. It's the Clock Alert. Thank you, loving spouse. The last thing I do before I go to bed is, what do I have to do tomorrow? And if I don't do that, if I don't set the alarms, I miss them.

Down the rabbit holes.

Matt Zeigler (2:42)

Down the rabbit holes we go, because I literally, I think there's 12 different directions and 47 rabbit holes for this one.

The big topic we were trading messages about is AI and its actual impact on markets and investors. So let's start with what we actually think about for investors and your best Urkel voice when you say, did AI do that about markets? Dave Nadig, what is AI for markets? What does this mean?

Dave Nadig (3:07)

I mean, I'll tell you what it's really not for, right? I mean, there was a lot of hype maybe three years ago when we were really just kind of getting vibed up on LLMs that this was going to put every analyst out of business and that we were going to end up with a bunch of black box funds that outperformed. None of that's actually happened.

Everybody is using the tools for their obvious use cases like reading prospectuses and summarizing them, reading 10Ks and summarizing them, you know, extracting that data. But that just means everybody got the same tool set at exactly the same time. Just like any other tool set, the folks who are good at it might get some small edge for some period of time. But then that evens out very quickly. We saw that with high frequency trading. We've seen that with just basic machine learning around trade sizing and things like that. So there's a few folks who may have gotten some edge here. But if you look at the actual attempts to put this in a package, of which I can think of really two, AIEQ from Amplify and Patei, which has a couple of products that are doing the whole like we'll use AI to make stock picks. The record is pretty meh.