A good day for investors, but a bad day for speculators; Berkshire's 'mystery stock'; I'm amazed by AI; Google's AI push; A 100-year-old set a 60-meter running record

1) Yesterday was a good day for investors... but a bad one for speculators.

All three major indexes closed at all-time highs thanks to the benign inflation report (which I covered in yesterday's e-mail).

Meanwhile, speculators struggled as the two-day frenzy in silly meme stocks started to unwind. AMC Entertainment (AMC), GameStop (GME), Koss (KOSS), and iRobot (IRBT) fell 20%, 19%, 19%, and 14%, respectively (and continued to fall earlier this morning).

I view this as a sign of a healthy market that is responding correctly to a very strong macroeconomic environment (low inflation and unemployment, high GDP growth and corporate profits) and quickly correcting foolishness before it spreads too widely...

2) I was mildly surprised to see Warren Buffett's latest purchase at Berkshire Hathaway (BRK-B): property and casualty (P&C) insurer Chubb (CB).

The Wall Street Journal has the story in this article from yesterday: Warren Buffett's Berkshire Reveals Its Mystery Stock: Chubb. Excerpt:

Warren Buffett's Berkshire Hathaway unveiled a big investment in Chubb, resolving a mystery that has intrigued followers of the Omaha, Neb., company.

Berkshire's stake in the insurer was worth $6.7 billion at the end of March, according to a regulatory filing made public after the market closed Wednesday... Berkshire amended earlier filings to show it had been building the position in the second half of 2023.

Chubb, one of the world's largest publicly traded property-casualty insurers, is led by Evan Greenberg, the son of former American International Group CEO Maurice "Hank" Greenberg. Chubb was most recently in the news as the insurer of the collapsed Francis Scott Key Bridge in Baltimore.

Chubb is an excellent company. I'm a customer myself, as it provides homeowner's insurance for my apartment. And its stock has been a steady compounder over the past three decades – more than doubling the return of the S&P 500 Index. Take a look at the stock's march higher:

In fact, in our Stansberry Data service, my colleagues currently rate Chubb as the No. 1 P&C insurer among the more than 40 P&C firms they follow.

These rankings are part of Stansberry Data's Insurance Value Monitor, where my colleagues use 12 separate financial metrics to rate each P&C company based on five factors:

1. Underwriting discipline

2. How well they treat shareholders

3. Their ability to generate and grow "float"

4. How successfully they use their float to grow their investment base and realize investment gains

5. Their ability to grow book value per share

Now, I'll note that Chubb's ranking in the Insurance Value Monitor is based solely on its performance as an insurer and has nothing to do with its valuation. A top ranking here doesn't mean the stock is a buy or an official recommendation.

The Insurance Value Monitor in Stansberry Data – like the other monitors my colleagues cover – is a "peek behind the curtain." Stansberry Data lets you see the information that our analysts mine for their ideas.

(You can gain access to Insurance Value Monitor and the rest of the monitors in Stansberry Data with a Premier subscription to Stansberry's Investment Advisory. Get all the details – including how to get a 50% discount off the regular price – right here.)

So coming back to what I think of Chubb right now...

There's no question that it's a high-quality business. But Berkshire already has vast insurance operations. And Chubb's stock is hardly beaten up (it's trading close to its all-time high) or cheap (at 3.0 times tangible book value and 11.3 times projected earnings over the next year).

So I wouldn't be buying Chubb at today's price. But I'm not second-guessing Buffett's decision to add a steady long-term compounder to his portfolio, especially given that he's sitting on nearly $200 billion in cash.

3) Speaking of Buffett and Berkshire, here are two articles and a video I've been meaning to share:

• A WSJ article about Tracy Britt Cool: A Warren Buffett Protégée Is on the Hunt for Small Companies. She Now Has Millions More to Spend.
• A WSJ article about Ruth Gottesman's $1 billion donation to the Albert Einstein College of Medicine to cover the tuition of every student in perpetuity: The Friendship With Warren Buffett That Led to Her $1 Billion Donation.
• A 20-minute video of clips of some of the late Charlie Munger's best wisdom about becoming a learning machine, resisting envy, avoiding toxic people, laziness and ideology, understanding opportunity cost, the two kinds of knowledge, and how you can often solve problems by inverting them: Lasting Lessons From Charlie Munger | Highlights 1924-2023.

4) Though I haven't yet fully figured out a way to use artificial intelligence ("AI") in my life, I share the widespread belief that it's important – revolutionary, even – and, as such, I'm following developments in the sector closely.

It's good to see that this is an area in which the U.S. is dominating. Take a look at this post on social platform X from Liz Ann Sonders, the chief investment strategist for Charles Schwab (SCHW):

Almost daily, I'm amazed by what AI can do. Here's a short video showing what Google's new Project Astra can do:

AI-powered chatbots are becoming almost human. For example, OpenAI just posted this video of two chatbots having a conversation and even singing:

And here's a New York Times article about this: A.I.'s 'Her' Era Has Arrived. Excerpt:

A lifelike artificial intelligence with a smooth, alluring voice enchants and impresses its human users – flirting, telling jokes, fulfilling their desires and eventually winning them over.

I'm summarizing the plot of the 2013 movie "Her," in which a lonely introvert named Theodore, played by Joaquin Phoenix, is seduced by a virtual assistant named Samantha, voiced by Scarlett Johansson.

But I might as well be describing the scene on Monday when OpenAI, the creator of ChatGPT, showed off an updated version of its A.I. voice assistant at an event in San Francisco.

The company's new model, called GPT-4o (the o stands for "omni"), will let ChatGPT talk to users in a much more lifelike way – detecting emotions in their voices, analyzing their facial expressions and changing its own tone and cadence depending on what a user wants. If you ask for a bedtime story, it can lower its voice to a whisper. If you need advice from a sassy friend, it can speak in a playful, sarcastic tone. It can even sing on command.

The new voice feature, which ChatGPT users will be able to start using for free in the coming weeks, immediately drew comparisons to Samantha from "Her."

For a deeper look at how chatbots are able to have increasingly sophisticated conversations with humans, I recommend this Hard Fork podcast episode, Meet Kevin's A.I. Friends. Here's an excerpt of the summary:

Kevin reports on his monthlong experiment cultivating relationships with 18 companions generated by artificial intelligence. He walks through how he developed their personas, what went down in their group chats, and why you might want to make one yourself.

As for investment implications of AI, Google parent Alphabet (GOOGL) continues to be one of my favorites among the tech giants, in part because it has been making a big push into AI.

And the company isn't being shy about it, as you can see in this funny mash-up video of Google's presentation to developers earlier this week:

And here's a "Heard on the Street" column in today's WSJ about how Google is catching up with Microsoft (MSFT) in AI: Google Regains AI Initiative by Playing to Its Strengths. Excerpt:

Google made it clear on Tuesday that it plans to play to its strengths. The company kicked off its annual I/O developers' conference with a two-hour keynote featuring a slew of announcements and demonstrations showing how its latest generative AI tools will integrate into its widely used services such as search and Android. These will include a new feature called AI overviews, which will allow search users to generate more conversational answers to certain queries with a single click.

The company also showed how mobile device users will be able to have audio-based conversations with its Gemini chatbot – a day after OpenAI held an event showing similar developments for its latest AI model called GPT-4o...

Investors seem to have more faith in Google now... Alphabet's stock is now up nearly 22% for the year – double Microsoft's performance in that time.

5) I love this guy – and want to be him in 43 years! Check out the video here:

Best regards,

Whitney

P.S. I welcome your feedback – send me an e-mail by clicking here.