James van Geelen on Thematic Investing Right Now

SPEAKER_1 (0:03)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (0:20)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:24)

And I'm Joe Weisenthal.

Tracy Alloway (0:26)

Joe, do you think it's fair to say that things seem a little uncertain at the moment?

Joe Weisenthal (0:31)

Well, yes. Why, what do you have in mind?

I mean, of course, yes. And big things going on.

Tracy Alloway (0:38)

So I was thinking particularly of three things. So number one is obviously US presidential elections, and things seem very uncertain on that front. We're not sure who's gonna win in November. And more than that, at this point, I think we're not entirely sure who the Democratic candidate is going to be. There's uncertainty there.

But then secondly, there's uncertainty about the direction of the stock market in a number of ways. So we have seen some of the air kicked out of the tires of big outperformers from earlier in the year. I'm thinking specifically of Nvidia and some of those big tech companies. They've come down recently. There are people talking about how AI is the future of industry, but there are also people talking about how AI is a massive bubble. And I think Goldman Sachs had that analysis out earlier this week talking about how there was no actual use case for AI, which seems to be the polar opposite of some of the enthusiasm in the market. And then thirdly, we still have that underlying economic tension where it seems like there are some signs of a slowdown, but the Fed so far is kind of resisting any pressure to cut interest rates.

So lots of things up in the air at the moment.

Joe Weisenthal (1:56)

Yeah, I mean, like you said, uncertainty is always with us in the market, but there are some really big questions about things that are going on. The AI one in particular, because a lot of people, as you know, it is like, wow, they're really spending a lot of money on all this chips and electricity, and the payoff is ambiguous. And so there are a lot of questions about that.

Clearly the political landscape, although, you know, on questions related to the market, look, the stock market has done really well under Joe Biden, it did really well under President Trump, seems to mostly go up over time. But yes, the age of uncertainty, I would not disagree with you.

Tracy Alloway (2:31)

So all of this had me thinking, you know, if you're an investor, and particularly a thematic investor at the moment, I think you're facing some tough choices, because it's not just a range of uncertainties. In some respects, it's like polar opposite outcomes.

Either you get Trump and everything that comes with it, or you get Biden and everything that comes with that. And some of that is very different.

Joe Weisenthal (2:55)

Totally. Well, the other thing that I've been thinking about, and the AI conversation really has driven this home, which is that if you're a discretionary investor, now me, I'm just spy and die all the way. So I don't have to think about all this stuff, because I own Nvidia and through my S&P 500 index fund. But if Nvidia falls out of favor and something else rises, well, I'll have that too. So I'm a spy and die. But I understand that some people have to like beat the benchmark or beat the index, or justify why someone else would pay them fees to invest money on their behalf.

Then of course, you really have to get the call correct, because the only way that you beat the market over this year or last year is if you've got the AI call. And if you weren't heavy on Nvidia, or some of these other names, you almost certainly did not justify someone paying you money to invest.

And so these are really tough questions for investors who have to like do well, so to speak, relatively to answer.

Tracy Alloway (3:52)

Yes, so I am very pleased to say that we have the perfect guest.

We are going to bring back on James van Geelen. He is of course the founder of Citrini Research. We spoke to him last year about one of his big investment themes, which at the time was Ozempic, and the associated GLP-1 weight loss drugs. That was a huge winner in the month since. We're going to get a handle on what he's looking at now, and also his thought process for developing new investment themes at a time when a lot of things seem to be very uncertain. So James, thanks so much for coming back on Odd Lots.