George Noble Talks ROI on AI, Inflation

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Tom Keene** (0:07)
Joining us in studio, George Noble, who changed investment. There's no other way to put it. This oddity came out years ago. Fidelity oversees fund and was a juggernaut for a decade. Working with Mr. Lynch at Fidelity, he is with Noble Capital Advisors. I got eight ways to go.
I'm going to ask one look back question, and then we got to look at the present tense right now because you're fired up out on LinkedIn and Twitter.
Everybody needs to read 128 pages. John Kenneth Galbraith lived almost to a green span of 100 A short history of financial euphoria. It's an exquisite jewel. I'll put it out on Twitter and LinkedIn. What's the character of our financial euphoria right now, a la JK. Galbraith?

**George Noble** (0:54)
Tom, great to be here. There's really nothing new under the sun and that's human nature doesn't change. The characters change, the names change, but it's fear and greed. We can go back to the South Sea Bubble, Dutch Tulip Bulb Mania.
History repeats itself over and over again.

**Paul Sweeney** (1:10)
Put AI into that context here because people have been positioning AI.
Other than electricity, there's been nothing more important than AI. How do you think about just this whole concept writ large?

**George Noble** (1:22)
I'm not bearish on AI per se.
I'm sure we're all going to use it. Many of us are using it already. The question is, what's the ROI on the AI? It starts out, the way these bubbles all start, there's a kernel of truth that captures the imagination of the individual, whether it's a South Sea bubble or it's Dutch tulip bulbs or its.com, which I've lived through.
And it starts out as a good idea, but what happens is the price changes immeasurably. And the best definition, I've actually heard of a bubble. There are many definitions. The best one I've heard is something that changes human behavior, that people do things that they wouldn't do otherwise, whether it's because of FOMO, fear of missing out or otherwise. And I think that's kind of where we are with AI. I'm happy to change my mind, but show me the money. Where's the ROI? And I don't see it coming either.

**Paul Sweeney** (2:14)
It doesn't seem to be deterring capital from flowing to that business. We've seen extraordinary amounts of equity raised.
Now we're seeing tech companies and everything thought about the bond market raising tens of billions of dollars in the investment-grade bond market. We've got a Korean company listing its ADRs today here in the US. I mean, I've been on global Wall Street for 30 years. I've never seen this amount of money flow.

**George Noble** (2:35)
The things you... I read the same sources you do. I file that under my category on X of things you don't see at the bottom.
We've seen this movie before with Japanese subtitles, housing subtitles, tech subtitles. Go back to.com. I actually think this is much worse than.com, simply because the sums involved are that much greater.

**Tom Keene** (2:55)
This is really important, because the fossil sitting around the table... We talked about Will Danoff a couple days ago. Remember being in meetings at 60 State Street ,.com and all that. What's the distinction right now versus 98, 99, and then what we enjoyed in 01?

**George Noble** (3:13)
Again, I want to elaborate on the sheer magnitude of this.
Julian Garrett of Macro Strategy Partners in the UK, erudite economist, has known many years, has made a calculation that this bubble, this malinvestment is 17 times, 17 times what we saw in the era of.com. And what's a lie to that, what's really important is the sums involved are so much larger relative to the real economy, the fallout from this could really be much more significant.

**Tom Keene** (3:45)
And for Global Wall Street on this Friday, a real treat, George Noble with us. Of course, definitive at Fidelity with Mr. Lynch. A few years ago at his Noble Capital Advisors, he's been on fire out on LinkedIn and Twitter with his criticism of the moment at hand. Paul Sweeney with George Noble.

**Paul Sweeney** (4:01)
Again, another definitive part in this market was the IPO of a company called SpaceX.

**George Noble** (4:08)
Oh my, thought you'd never ask.

**Paul Sweeney** (4:10)
What do you make of that? I mean, I can't imagine sitting in a Fidelity office conference room and the bankers bring Elon Musk in to make this pitch. I would have loved to have been a fly on the wall. What do you make of that?

**George Noble** (4:22)
History shows that buying companies at over 10 times revenues usually ends very badly. We all recall Scott McNally famously in some micro systems. What happens when you have to, what your returns gonna be if you buy something over 10x? This is 120 times revenues.