WEBVTT - Single Best Idea with Tom Keene: Barry Ritholtz & Gene Munster

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Single best idea, We'll be quick today. CPI report. Lots

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<v Speaker 2>of good bank earnings as well. Secretary Bessett and conversation

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<v Speaker 2>with John Farrell always interesting, particularly on tariffs. We had

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<v Speaker 2>a really interesting and eclectic show. Barry Ridholds joined, of

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<v Speaker 2>course out with his acclaimed book How Not To and Vast,

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<v Speaker 2>and he went all Greek letters on us. He mentioned

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<v Speaker 2>alpha in beta. There are different Greek letters that set

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<v Speaker 2>up the dynamic of our time series moves. Beta is

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<v Speaker 2>your movement relative to a core index. If you have

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<v Speaker 2>a beta under one, you're not as moving as the SPX,

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<v Speaker 2>If you have a beta over one, you're moving more

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<v Speaker 2>than the SPX. Standard ports five hundred elphas. Just making

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<v Speaker 2>money here is Barry Ritholtz. I'm not losing money.

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<v Speaker 1>Stockpickers, other than the handful of the half a dozen

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<v Speaker 1>people we all know, our household names tend to underperform

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<v Speaker 1>a broad index. So you can't get alpha if you're

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<v Speaker 1>not at least starting with beta. So if you want

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<v Speaker 1>to make the core of your portfolio a broad index,

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<v Speaker 1>and then you want to decorate that tree with specific

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<v Speaker 1>stocks or specific sectors knock yourself out. But to strictly

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<v Speaker 1>focus on picking stocks and guaranteeing that, hey, maybe this

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<v Speaker 1>year I'll out perform, maybe this year will underperform seems

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<v Speaker 1>like an excessively risky strategy. Better to at least guarantee

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<v Speaker 1>yourself what the market's going to give you. If you

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<v Speaker 1>want to try and build on that.

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<v Speaker 2>Go ahead. I'll editorialize off that brilliance from Barry Ritholds.

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<v Speaker 2>Another Greek letter's Theta. Theta is for the time change,

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<v Speaker 2>and of course that's the X axis on any chart.

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<v Speaker 2>The more out your investment is on theta, the less

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<v Speaker 2>alpha you want to do. And what Berry's saying is

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<v Speaker 2>on a four to oh one k figure out the

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<v Speaker 2>index you like best, etc. Etc. And stick with it.

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<v Speaker 2>There's a thing called our squared, which we don't talk

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<v Speaker 2>about in July. But the answer is get your basic

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<v Speaker 2>investment in gear and then you can comfortably do Bolt

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<v Speaker 2>lines mister Ridhold suggesting you'll find alpha with quality investments

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<v Speaker 2>wrapped around that foundational beta support. I'm exhausted after all

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<v Speaker 2>of that, never exhausted to talk to Gene Monster of

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<v Speaker 2>deep Water Asset Management. There's a whole different change coming

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<v Speaker 2>on AI. I've really noticed it just in the last

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<v Speaker 2>say two months, a more nuanced discussion Monster an artificial intelligence.

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<v Speaker 3>It turns out that each of these models, with the

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<v Speaker 3>exception of Lama, Lama is pretty weak. And so but

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<v Speaker 3>if you look at the other four primary models, they

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<v Speaker 3>all have kind of different strengths. And so ultimately, is

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<v Speaker 3>that I think of AI as more of like a personality,

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<v Speaker 3>is that the world isn't going to be centered on

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<v Speaker 3>one personality. We won't want that, and so each of

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<v Speaker 3>these models has a slightly different personality and slightly different strengths.

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<v Speaker 3>And so that's what we are seeing is if you're

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<v Speaker 3>gonna say, what's like the best model kind of putting

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<v Speaker 3>everything all together, it's probably open AI GPT today, and

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<v Speaker 3>then Rock and Gemini kind of close behind.

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<v Speaker 2>Gene Monster there as we get to the technology season.

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<v Speaker 2>He was a little cautious here on the opportunities for Microsoft.

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<v Speaker 2>I think that was a surprise of the interview. Look

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<v Speaker 2>for that interview in its entirety out at Bloomberg dot com,

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<v Speaker 2>on our podcast, on Apple, on Spotify, and on YouTube podcasts.

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<v Speaker 2>This is a single best idea