Unveiling the AI Impact on Investments: Redefining Market Efficiency and Value

Good Day,

In the realm of investments, a seismic shift is underway, propelled by the relentless advance of Artificial Intelligence (AI). This transformative technology is not just altering processes; it's fundamentally reshaping the landscape of the investment world, challenging traditional notions and redefining core concepts like market efficiency and value.

The Efficient Market Theory (EMT), a cornerstone of modern finance, posits that asset prices reflect all available information, rendering it impossible to consistently outperform the market. AI is turning this theory into a dynamic reality. With sophisticated algorithms analyzing vast amounts of data at lightning speed, markets and pricing mechanisms are becoming even more efficient. This increased efficiency translates into faster reactions to news, events, and trends, minimizing opportunities for arbitrage and making it increasingly challenging for investors to gain a competitive edge based on information asymmetry.

Warren Buffett's iconic quote, "Price is what you pay, and value is what you get," has long guided investors in their quest for undervalued assets. However, the AI revolution is casting a new light on this wisdom. In today's AI-driven investment landscape, the distinction between price and value is blurring. AI-powered algorithms can swiftly assess a multitude of factors to determine market price, often incorporating complex variables that go beyond traditional fundamental analysis.

This evolution challenges the notion of worrying about fundamental value, especially in markets like real estate and stocks. AI's ability to identify and capitalize on trends and demand patterns makes buying what's in demand today a viable strategy for tomorrow. Whether it's a hot property in the real estate market or a trending stock, AI's predictive capabilities are reshaping investment strategies.

Furthermore, with AI leveling the playing field in terms of fundamental analysis, investors are increasingly turning to technical analysis as a key tool to gain an edge. Technical chart analysis, focusing on price, volume, and time in each market, has gained prominence as a method to navigate the complexities of AI-driven markets. As fundamental analysis diminishes in importance, technical analysis provides valuable insights into market sentiment, trends, and potential entry and exit points.

As we embrace the AI revolution in investments, let's remain vigilant and adaptive, leveraging technology while exploring the growing importance of technical chart analysis. Combining AI's predictive power with technical analysis can help investors navigate the complexities of today's dynamic markets and achieve their financial goals.

Stay informed, stay innovative, and stay ahead in the ever-evolving world of investments.

Warm regards,

Alexander

P.S.

DID YOU KNOW? In January, sold properties across London’s best districts dipped below 90% of their asking prices for the first time since early 2019. (Bloomberg)

DID YOU KNOW? Switzerland is the first advanced economy to cut interest rates following a prolonged period of high inflationary pressures. Switzerland is a country that offers a high quality of life.....even for the not-so-wealthy. Healthcare, transportation, food safety, education, cleanliness, safety, etc are all outstanding. Minimum wage in Geneva is $27/hour thereby reducing demands on government assistance. Lease increases are directly linked to inflation indexes. Switzerland has one of the lowest homeless rates in the world. The wealthiest have a wealth tax in certain areas between 0.3-0.5% annually. But real estate taxes are notably lower than in the US. (CNBC)

DID YOU KNOW? In New York State a prison inmate costs taxpayers around $115,000 per year to house. In Florida it costs under $25,000 per year. In Massachusetts it's over $175,000 per year and California, about $132,000. In North Carolina it's about $50,000.

DID YOU KNOW? The four most polluted countries in IQAir’s ranking for 2023 — Bangladesh, Pakistan, India and Tajikistan — are in South and Central Asia. China’s air pollution increased by 6.3% compared with 2022, after at least 5 years of improvement. Las Vegas, Nevada was the cleanest major city in the U.S. (NY TIMES)

DID YOU KNOW? The average annual Wall Street cash bonus fell 2% to $176,500 in 2023, a little above 2019 levels ($167k), a far less dramatic drop than in 2022, when the average bonus slumped 25%. Industrywide, the bonus pool was $33.8 billion, unchanged from the previous year and far below the $42.7 billion total in 2021. Still, a BIG cash infusion into markets..... (Bloomberg)

“Buyers remain price sensitive and are still unlikely to view or engage with properties they believe are overpriced.”

— Jo Eccles

DID YOU KNOW? In Florida and nationwide, the housing supply is rebounding as sellers get used to elevated mortgage rates and the lock-in effect eases, Redfin found. Active listings, or the total supply of homes for sale, in Cape Coral, North Port and Fort Lauderdale saw the biggest jump in the nation in February. Nationwide, active listings climbed 0.8% from a month earlier on a seasonally adjusted basis and were little changed (-0.1%) from a year earlier — the smallest annual decline in months.

DID YOU KNOW? While many are concerned about the rising demand for electricity to power vehicles, one of the biggest growing demands for power are data centers to help drive all our technology and AI. These entities require LOTS of power. (Barrons)

DID YOU KNOW? If personal interest payments and the higher cost of homeownership were captured by official data, inflation would have been 9% in November, not 3%.....which may imply that higher interest rates are actually FUELING higher inflation? (Barrons)

DID YOU KNOW? Billionaire Adam Neuman - founder of WeWork (now bankrupt) - has a new venture (FLOW) in Florida and will be building around $300 million worth of rental apartments, retail space and small offices, all within walking distance of each other in the city’s downtown area, part of the 20-acre Miami Worldcenter. Supposedly a portion of your rent will go into investing in the company that is renting out apartments. Due to branding, this might allow them to charge a little more for the apartment, the company gets cash flow, the renters build equity like a house and might stay a little longer. At its peak, WeWork was valued at $47 billion: today that's about $120 million. (Bloomberg)