Episode 418: The Alternative Way to Invest in AI and Still Win Big

On this week's Stansberry Investor Hour, Dan and Corey are joined by Joe Austin. Joe is an editor and senior analyst at our corporate affiliate Chaikin Analytics. He spent four decades in the financial-services industry and now joins the podcast to share some of his insights and future outlooks.

Joe kicks off the show by outlining his background in finance and how he got involved at Chaikin Analytics. He delves into the usefulness of the Power Gauge, how he combines the tool with fundamentals to make stock-picking decisions, and what specific factors he finds most important. Next, Joe talks about artificial intelligence ("AI"). He says you can invest in the technology either by buying the companies developing AI or by buying non-AI companies that are implementing the technology to improve their businesses. Joe prefers the latter. He notes that certain industry groups are integrating AI more than others, and those would give you the biggest areas of opportunity...

In medical equipment or medical technology, there's probably a high potential for AI to have an impact. In Pepsi or Coke or Taco Bell or something like that, probably not a huge impact on AI, though they could use it to target customers. So you have to really consider both the industry the company's in and the company strategy within that industry to understand whether AI can have a big impact.

Next, Joe discusses the data sets which AI uses and why the companies with the best data will win out in the end. He gives medical-technology company Veeva Systems and tool manufacturer Snap-on as two such examples. Joe then shares how macro influences affect his investing process, what he learned about the insurance industry from working in it, and one particular company he believes will do well in the long term...

[This company is] a broker-dealer, primarily for hedge funds and people who trade a lot and borrow a lot of stocks, but they've also moved strongly into the retail market as well. And they have a very, very sophisticated platform. They're 100% automated. They have the highest margins in the business. No one even comes close to them in terms of their operating margin. And it's also an AI play because they're using AI from beginning to end to manage their customer experience.

Finally, Joe highlights specific industries he stays away from, the importance of understanding where you went wrong with an investment, and how he decides when to sell a stock. He notes that stocks that rise the most tend to fall the most... and that having fresh capital to use on new ideas is crucial. And he reminds listeners that having a defensive strategy is often more important than having an offensive strategy...

The stock market I see today is a loser's game. And avoiding unforced errors, sticking to your knitting, understanding the company, and investing in businesses you like and understand [are] the most important things. That has been kind of my North Star of the way I pick stocks and recommend them to people.

Click here or on the image below to watch the video interview with Joe right now. For the full audio episode, click here.

Additional past episodes are located here.)

The transcript is coming soon.

This Week's Guest

Joe Austin joined Chaikin Analytics in July 2024 as an editor and senior analyst. He began his Wall Street career as a research analyst for the technology sector in 1984. Along the way, he also served as a senior portfolio manager on a $10 billion-plus value-equity product and an $80 million long-short science and tech hedge fund. And he provided research coverage of the tech sector for a $5 billion hedge fund.

In the second half of his career, Joe moved into marketing and business development for alternative asset managers. In this role, his strategies included global long-short equity, distressed debt and activist equity, and a natural resource-focused private-equity fund.