1 00:00:03,420 --> 00:00:06,000 Sean Aylmer: Welcome to the Fear and Greed daily interview. I'm Sean 2 00:00:06,000 --> 00:00:10,379 Sean Aylmer: Aylmer. Every week we're seeing more stories about AI, artificial 3 00:00:10,380 --> 00:00:14,310 Sean Aylmer: intelligence, ChatGPT, Google Bard, and the rest of them. Some 4 00:00:14,310 --> 00:00:16,530 Sean Aylmer: of the reports are a little alarming, like the industry 5 00:00:16,530 --> 00:00:20,040 Sean Aylmer: experts calling for a pause on developing the technology or 6 00:00:20,040 --> 00:00:23,400 Sean Aylmer: Alphabet boss Sundar Pichai admitting the tech keeps him awake 7 00:00:23,400 --> 00:00:27,060 Sean Aylmer: at night, but clearly it's here to stay. How should 8 00:00:27,060 --> 00:00:30,630 Sean Aylmer: investors think about it? Where are the opportunities in this fast- 9 00:00:30,690 --> 00:00:34,379 Sean Aylmer: changing space? Remember, this is general information only, and you 10 00:00:34,380 --> 00:00:38,070 Sean Aylmer: should seek professional advice before making any investment decisions. Chris 11 00:00:38,070 --> 00:00:41,880 Sean Aylmer: Brycki is the Chief Executive Officer of online investment advisor 12 00:00:41,940 --> 00:00:44,790 Sean Aylmer: Stockspot, pretty much a regular, Chris, at Fear and Greed. 13 00:00:44,790 --> 00:00:45,450 Sean Aylmer: Wouldn't you agree? 14 00:00:45,900 --> 00:00:48,270 Chris Brycki: It feels like it. It's great to be back again. 15 00:00:48,330 --> 00:00:51,360 Sean Aylmer: We appreciate it. Now look, let's start with the basics. 16 00:00:51,450 --> 00:00:54,510 Sean Aylmer: When we're talking about AI, what are we talking about? 17 00:00:55,620 --> 00:00:57,450 Chris Brycki: Yes, it's a term that, I think, a lot of 18 00:00:57,450 --> 00:00:59,490 Chris Brycki: your listeners will be hearing a lot more these days, 19 00:00:59,490 --> 00:01:03,210 Chris Brycki: but AI, or artificial intelligence, it's basically a type of 20 00:01:03,210 --> 00:01:06,720 Chris Brycki: computer software that's designed to learn from data and then 21 00:01:06,720 --> 00:01:09,990 Chris Brycki: use that to make decisions based on that data. Similar 22 00:01:09,990 --> 00:01:12,450 Chris Brycki: to the way that we would make decisions as humans, 23 00:01:12,600 --> 00:01:16,860 Chris Brycki: we learn from experience. AI also learns from experience. 24 00:01:18,060 --> 00:01:20,250 Sean Aylmer: The main example listeners will have heard of and may 25 00:01:20,250 --> 00:01:25,680 Sean Aylmer: be used is ChatGPT, but it's always learning. ChatGPT itself is 26 00:01:25,680 --> 00:01:29,069 Sean Aylmer: always learning, so it's never static, this whole area, is 27 00:01:29,069 --> 00:01:31,589 Sean Aylmer: it, nor is ChatGPT? 28 00:01:31,590 --> 00:01:34,380 Chris Brycki: That's right. I think even before ChatGPT really came onto 29 00:01:34,380 --> 00:01:39,209 Chris Brycki: the scene towards the end of last year, 2022, a 30 00:01:39,209 --> 00:01:41,730 Chris Brycki: lot of people would've already experienced AI in their lives. 31 00:01:41,790 --> 00:01:44,790 Chris Brycki: If you've used a voice assistant like Siri or Alexa 32 00:01:45,030 --> 00:01:49,020 Chris Brycki: or used chatbots online, a lot of these already use 33 00:01:49,020 --> 00:01:53,010 Chris Brycki: AI. But the big innovation that happened and really accelerated 34 00:01:53,010 --> 00:01:57,870 Chris Brycki: last year was around what we now call generative AI. 35 00:01:58,590 --> 00:02:02,820 Chris Brycki: These are new methods of AI that basically aren't just 36 00:02:03,060 --> 00:02:07,560 Chris Brycki: responding to messages or this thing, but they're actually able 37 00:02:07,560 --> 00:02:11,160 Chris Brycki: to create new content. That's really quite fascinating with some 38 00:02:11,160 --> 00:02:15,240 Chris Brycki: of these new software programs that they're intuitive, they're easy 39 00:02:15,240 --> 00:02:18,570 Chris Brycki: to use, and they basically have the ability to generate 40 00:02:18,660 --> 00:02:20,310 Chris Brycki: new and amazing content. 41 00:02:20,639 --> 00:02:22,590 Sean Aylmer: If you are like me and you think, " Wow, this 42 00:02:22,590 --> 00:02:25,290 Sean Aylmer: is something that, for right or wrong, is going to 43 00:02:25,290 --> 00:02:28,980 Sean Aylmer: grow." And you're thinking about investment opportunities. How do I 44 00:02:28,980 --> 00:02:31,530 Sean Aylmer: get involved? How should I start thinking about that? 45 00:02:32,850 --> 00:02:35,429 Chris Brycki: It's very difficult, I would say, Sean, to know exactly 46 00:02:35,430 --> 00:02:38,100 Chris Brycki: what's going to happen like with any new innovation, whether 47 00:02:38,100 --> 00:02:42,000 Chris Brycki: it was the internet or the iPhone. Innovation tends to 48 00:02:42,000 --> 00:02:44,639 Chris Brycki: happen in waves. It comes in leaps and bounds, and 49 00:02:44,639 --> 00:02:47,160 Chris Brycki: then it doesn't happen for a while. I think this 50 00:02:47,160 --> 00:02:49,860 Chris Brycki: will be one of those big innovations, but when the 51 00:02:49,860 --> 00:02:52,500 Chris Brycki: internet came out or the iPhone, it was quite hard 52 00:02:52,500 --> 00:02:54,450 Chris Brycki: to predict what were the websites that were going to 53 00:02:54,450 --> 00:02:57,000 Chris Brycki: be successful or what were the apps. There's a lot 54 00:02:57,000 --> 00:02:59,250 Chris Brycki: of ideas that, I'm sure, haven't even been thought of 55 00:02:59,250 --> 00:03:02,490 Chris Brycki: now that will end up being the enormous successes that 56 00:03:02,490 --> 00:03:05,910 Chris Brycki: come of this. So as an investor, it is quite 57 00:03:05,910 --> 00:03:09,000 Chris Brycki: hard to predict, and there's certainly some companies who share 58 00:03:09,000 --> 00:03:12,660 Chris Brycki: prices have either rocketed due to their involvement in AI 59 00:03:12,660 --> 00:03:16,320 Chris Brycki: over the last six to 12 months. Interestingly, there's also 60 00:03:16,320 --> 00:03:19,019 Chris Brycki: now been a few share prices that have crashed because 61 00:03:19,020 --> 00:03:21,690 Chris Brycki: they've said that their companies have been impacted by people 62 00:03:21,930 --> 00:03:25,770 Chris Brycki: using these AI tools like ChatGPT instead of their own 63 00:03:25,770 --> 00:03:29,250 Chris Brycki: services. There was an education business last week in the 64 00:03:29,250 --> 00:03:32,429 Chris Brycki: US whose share price crashed when they announced their earnings 65 00:03:32,430 --> 00:03:35,940 Chris Brycki: had fallen because people weren't using their program as much. 66 00:03:37,260 --> 00:03:41,100 Chris Brycki: Our general recommendation to our clients is to continue to 67 00:03:41,100 --> 00:03:44,070 Chris Brycki: invest in a very broad way. Because next year's winners 68 00:03:44,070 --> 00:03:46,530 Chris Brycki: may be companies that haven't even been discovered yet. 69 00:03:47,190 --> 00:03:51,360 Sean Aylmer: When you invest in tech companies or, really, industries where 70 00:03:51,360 --> 00:03:55,020 Sean Aylmer: the pace of innovation is so fast, are there any 71 00:03:56,190 --> 00:03:59,730 Sean Aylmer: ground rules that you should think about is about diversification? 72 00:03:59,730 --> 00:04:03,180 Sean Aylmer: Is that the basic one? Can you think it's a bit 73 00:04:03,180 --> 00:04:05,970 Sean Aylmer: like cryptocurrencies not that long ago? If you believed in 74 00:04:05,970 --> 00:04:08,490 Sean Aylmer: cryptocurrencies, how did you know what to choose? For example, 75 00:04:08,820 --> 00:04:11,880 Sean Aylmer: there's many examples over decades, but how should the people 76 00:04:11,880 --> 00:04:12,450 Sean Aylmer: think about it? 77 00:04:12,840 --> 00:04:15,180 Chris Brycki: The problem with picking, trying to pick the winners in 78 00:04:15,180 --> 00:04:18,240 Chris Brycki: any new technology is, you might get the overall trend 79 00:04:18,570 --> 00:04:20,490 Chris Brycki: or you might predict that this is going to be 80 00:04:20,490 --> 00:04:23,370 Chris Brycki: transformative, but you might not actually pick the winners correctly. 81 00:04:23,460 --> 00:04:26,429 Chris Brycki: I think a lot of people have done that and 82 00:04:26,430 --> 00:04:29,279 Chris Brycki: lost money in the cryptocurrency space. They thought that they were onto the 83 00:04:29,279 --> 00:04:31,650 Chris Brycki: next big winner, but it ended up not doing anything 84 00:04:31,650 --> 00:04:35,160 Chris Brycki: or going backwards the same. I remember in the early 85 00:04:35,160 --> 00:04:38,880 Chris Brycki: technology days, I was trading shares as a young teenager 86 00:04:38,880 --> 00:04:40,950 Chris Brycki: in the day and thought some of the companies that 87 00:04:40,950 --> 00:04:42,929 Chris Brycki: I'd identified were going to be the big winners, but 88 00:04:42,930 --> 00:04:46,109 Chris Brycki: they ended up not being so. My view is that, 89 00:04:46,110 --> 00:04:49,020 Chris Brycki: actually, index funds are a great way of investing in 90 00:04:49,020 --> 00:04:51,630 Chris Brycki: the big trends of the future. I know I mentioned 91 00:04:51,630 --> 00:04:54,330 Chris Brycki: index funds quite a lot on your show and ETFs. 92 00:04:54,510 --> 00:04:56,909 Chris Brycki: The reason why they help you get into the big 93 00:04:56,910 --> 00:04:59,430 Chris Brycki: next trends is, when companies are doing well within an 94 00:04:59,430 --> 00:05:02,700 Chris Brycki: index fund, the index fund puts more and more weight 95 00:05:02,790 --> 00:05:06,150 Chris Brycki: or more money in those particular companies. So if you've 96 00:05:06,150 --> 00:05:08,669 Chris Brycki: got businesses that do better and better over the long 97 00:05:08,670 --> 00:05:11,670 Chris Brycki: run due to AI, you'll see them becoming a bigger 98 00:05:11,670 --> 00:05:14,640 Chris Brycki: and bigger part of the portfolio. So you'll definitely have 99 00:05:14,640 --> 00:05:18,000 Chris Brycki: exposure to those companies, whereas those that don't succeed or 100 00:05:18,000 --> 00:05:21,029 Chris Brycki: wither away, they'll be downweighted or you'll have a smaller 101 00:05:21,029 --> 00:05:24,360 Chris Brycki: allocation to those companies. Index funds are actually quite smart. 102 00:05:24,360 --> 00:05:27,690 Chris Brycki: They allow you to keep on increasing your exposure to 103 00:05:27,779 --> 00:05:28,860 Chris Brycki: successful sectors. 104 00:05:29,550 --> 00:05:33,119 Sean Aylmer: Are there any artificial intelligence index funds out there at 105 00:05:33,120 --> 00:05:33,480 Sean Aylmer: the moment? 106 00:05:33,960 --> 00:05:38,010 Chris Brycki: Interesting question. In Australia, there aren't any that specifically invest 107 00:05:38,010 --> 00:05:41,040 Chris Brycki: in AI only. However, over the last five or so 108 00:05:41,040 --> 00:05:43,140 Chris Brycki: years, there's been a whole bunch of new ETFs that 109 00:05:43,140 --> 00:05:47,040 Chris Brycki: have come out to focus on more specific niche areas. 110 00:05:47,100 --> 00:05:49,650 Chris Brycki: There's a couple that are quite close to AI and 111 00:05:49,650 --> 00:05:52,380 Chris Brycki: certainly have a lot of AI- involved companies in them. 112 00:05:52,680 --> 00:05:56,730 Chris Brycki: There's one ETF called the Global Robotics and Artificial Intelligence 113 00:05:56,760 --> 00:06:01,260 Chris Brycki: ETF, and its ASX code is RBTZ. It certainly has 114 00:06:01,260 --> 00:06:03,599 Chris Brycki: a lot of companies in that ETF that are involved 115 00:06:03,600 --> 00:06:07,140 Chris Brycki: in this space. The other one is the Robo Global 116 00:06:07,140 --> 00:06:11,640 Chris Brycki: Robotics and Automation ETF, and its code is ROBO. And 117 00:06:11,640 --> 00:06:15,210 Chris Brycki: both of these have a bunch of companies within them 118 00:06:15,210 --> 00:06:18,330 Chris Brycki: that are exposed to this area. But the big question 119 00:06:18,390 --> 00:06:21,359 Chris Brycki: does still remain, will these be the successful companies of the 120 00:06:21,360 --> 00:06:24,510 Chris Brycki: future, or there'll be other companies that will be the winners? 121 00:06:24,510 --> 00:06:27,900 Sean Aylmer: So in terms of specific companies, there's not a lot 122 00:06:27,900 --> 00:06:29,070 Sean Aylmer: of local opportunity? 123 00:06:30,120 --> 00:06:33,630 Chris Brycki: Not so many in Australia. None of the really big, large- 124 00:06:33,630 --> 00:06:36,960 Chris Brycki: caps, I would say, a pure- play AI businesses in 125 00:06:36,960 --> 00:06:41,070 Chris Brycki: Australia. There's certainly a bunch of technology companies that talk 126 00:06:41,070 --> 00:06:43,410 Chris Brycki: about how they're either using it within their businesses or 127 00:06:43,410 --> 00:06:46,350 Chris Brycki: they're involved some way or another. There are a few 128 00:06:46,710 --> 00:06:49,560 Chris Brycki: bigger companies in the US that have quite a lot 129 00:06:49,560 --> 00:06:52,469 Chris Brycki: of involvement and have seen their share prices do quite 130 00:06:52,470 --> 00:06:56,159 Chris Brycki: well off recent news. There's a company in the US 131 00:06:56,160 --> 00:06:58,169 Chris Brycki: or on the NASDAQ in the US whose code is 132 00:06:58,200 --> 00:07:02,040 Chris Brycki: NVDA, Nvidia, that has done very well out of it. 133 00:07:02,310 --> 00:07:05,669 Chris Brycki: But even some old businesses like IBM and Microsoft are 134 00:07:05,670 --> 00:07:10,260 Chris Brycki: performing relatively well on the opportunity that AI is presenting them. 135 00:07:10,350 --> 00:07:12,150 Sean Aylmer: Stay with me, Chris. We'll be back in a minute. 136 00:07:12,150 --> 00:07:21,240 Sean Aylmer: My guest this morning is Chris Brycki, Chief Executive of online 137 00:07:21,240 --> 00:07:25,680 Sean Aylmer: investment advisor Stockspot. The biggest risk, do you think, apart 138 00:07:25,680 --> 00:07:27,930 Sean Aylmer: from picking the... Let's say you go into an index 139 00:07:27,930 --> 00:07:31,650 Sean Aylmer: fund, which gives you exposure. Say you are diminishing the 140 00:07:31,650 --> 00:07:35,400 Sean Aylmer: risk of not picking the right company. What is the 141 00:07:35,400 --> 00:07:36,690 Sean Aylmer: big risk of this? 142 00:07:37,410 --> 00:07:39,630 Chris Brycki: The big risk of AI if you believe people like 143 00:07:39,630 --> 00:07:42,060 Chris Brycki: Elon Musk is that it might destroy the world, but 144 00:07:42,060 --> 00:07:45,360 Chris Brycki: if you put those risks aside and you're specifically thinking 145 00:07:45,360 --> 00:07:48,750 Chris Brycki: about investment risks, the risk is, I would say, a 146 00:07:48,750 --> 00:07:51,060 Chris Brycki: similar risk to what we saw in 2000, where an 147 00:07:51,060 --> 00:07:54,180 Chris Brycki: area like the internet ultimately is going to be a 148 00:07:54,180 --> 00:07:56,640 Chris Brycki: game changer, but too much money goes into it too 149 00:07:56,640 --> 00:08:01,440 Chris Brycki: quickly. For the internet businesses back in the day, like 150 00:08:01,440 --> 00:08:04,230 Chris Brycki: Amazon, it took a long time for their share prices 151 00:08:04,230 --> 00:08:06,450 Chris Brycki: to recover from the boom and bust cycle they went 152 00:08:06,480 --> 00:08:09,180 Chris Brycki: through. The big risk for investors is, you actually pick 153 00:08:09,180 --> 00:08:13,020 Chris Brycki: the right companies and the right trend, but your timing is 154 00:08:13,020 --> 00:08:15,540 Chris Brycki: wrong. I saw a lot of people do that back 155 00:08:15,540 --> 00:08:19,410 Chris Brycki: in the early 2000s. Amazon is such a brilliant example. 156 00:08:19,710 --> 00:08:22,260 Chris Brycki: Amazon, obviously one of the biggest companies and most successful 157 00:08:22,260 --> 00:08:26,670 Chris Brycki: in the world now, but between 2001 and 2002, its share price 158 00:08:26,670 --> 00:08:31,230 Chris Brycki: fell 96% from its high. It was very difficult for 159 00:08:31,230 --> 00:08:33,630 Chris Brycki: someone that had a big exposure to Amazon in their 160 00:08:33,630 --> 00:08:37,650 Chris Brycki: portfolio to hold on through that turmoil. So I think 161 00:08:37,650 --> 00:08:39,330 Chris Brycki: the great lesson for that is to make sure you 162 00:08:39,330 --> 00:08:42,450 Chris Brycki: are diversified and you don't have too much exposure to 163 00:08:42,450 --> 00:08:45,959 Chris Brycki: any one company, because even if your end result is 164 00:08:45,960 --> 00:08:48,569 Chris Brycki: right, you might never get the opportunity to hold on 165 00:08:48,570 --> 00:08:51,720 Chris Brycki: that long because it's a pretty tough conversation to have 166 00:08:51,720 --> 00:08:53,790 Chris Brycki: with your partner when you've lost 96%. 167 00:08:54,330 --> 00:08:57,300 Sean Aylmer: Now, Chris Brycki, CEO of online investment advisor Stockspot, I'm 168 00:08:57,300 --> 00:08:59,910 Sean Aylmer: just going to move on very briefly. The market, at 169 00:08:59,910 --> 00:09:02,130 Sean Aylmer: the moment, it's interesting. We're getting to this peak in 170 00:09:02,130 --> 00:09:07,290 Sean Aylmer: interest rate cycle, and inflation seems to be coming off 171 00:09:07,290 --> 00:09:11,370 Sean Aylmer: the boil globally. What do you think the outlook for 172 00:09:11,370 --> 00:09:13,920 Sean Aylmer: markets are? And I suppose, how do you invest in 173 00:09:14,040 --> 00:09:15,719 Sean Aylmer: a market where interest rates are peaking? 174 00:09:16,530 --> 00:09:19,350 Chris Brycki: I think you've nailed the answer in your question, Sean. 175 00:09:19,380 --> 00:09:22,260 Chris Brycki: I think the markets are driven by narratives, and the 176 00:09:22,260 --> 00:09:24,780 Chris Brycki: narrative at the moment is that the interest rate cycle 177 00:09:24,780 --> 00:09:28,770 Chris Brycki: is peaking and that inflation is coming down. If that 178 00:09:28,770 --> 00:09:33,870 Chris Brycki: trend continues, then you'd expect markets to remain pretty happy 179 00:09:33,870 --> 00:09:36,720 Chris Brycki: with that outcome. Probably the big risk at the moment 180 00:09:36,720 --> 00:09:40,590 Chris Brycki: is that markets have become a bit complacent and expecting 181 00:09:40,590 --> 00:09:44,130 Chris Brycki: inflation to continue to fall and for interest rates not 182 00:09:44,130 --> 00:09:46,290 Chris Brycki: to need to go up much further. I would say, 183 00:09:46,290 --> 00:09:48,840 Chris Brycki: at the moment, the bigger risk for markets is that 184 00:09:49,200 --> 00:09:54,990 Chris Brycki: investors are underestimating what interest rates are required in order 185 00:09:54,990 --> 00:09:57,210 Chris Brycki: to bring inflation down to the level of 2% to 3% 186 00:09:58,050 --> 00:10:02,130 Chris Brycki: that central banks are targeting. Looking back at history, it's 187 00:10:02,130 --> 00:10:06,929 Chris Brycki: been difficult, historically, to get inflation down unless interest rates 188 00:10:06,929 --> 00:10:10,170 Chris Brycki: come up above the inflation rate. Certainly, in Australia, the 189 00:10:10,170 --> 00:10:12,720 Chris Brycki: interest rates are well below the inflation rate we're seeing 190 00:10:12,720 --> 00:10:15,390 Chris Brycki: at the moment. For me, probably the biggest risk at 191 00:10:15,390 --> 00:10:18,840 Chris Brycki: the moment is that inflation stays higher than people expect 192 00:10:18,840 --> 00:10:21,870 Chris Brycki: for longer, and interest rates need to keep on coming 193 00:10:21,870 --> 00:10:23,430 Chris Brycki: up to have an impact. 194 00:10:23,760 --> 00:10:25,559 Sean Aylmer: Chris, thank you for talking to Fear and Greed. 195 00:10:26,040 --> 00:10:27,540 Chris Brycki: My pleasure. Thanks for having me back on. 196 00:10:27,900 --> 00:10:31,860 Sean Aylmer: That was Chris Brycki, CEO of online investment advisor Stockspot. 197 00:10:31,950 --> 00:10:34,079 Sean Aylmer: This is the Fear and Greed daily interview. Remember, this 198 00:10:34,080 --> 00:10:36,660 Sean Aylmer: is general information only and doesn't take into account your 199 00:10:36,660 --> 00:10:40,770 Sean Aylmer: personal circumstances. You should seek professional advice before making investment 200 00:10:40,770 --> 00:10:43,349 Sean Aylmer: decisions. Join us every morning for the full episode of 201 00:10:43,350 --> 00:10:46,440 Sean Aylmer: Fear and Greed, Australia's most popular business podcast. I'm Sean 202 00:10:46,440 --> 00:10:47,670 Sean Aylmer: Aylmer. Enjoy your day.