Mario Gabelli: Value Investing In The Age Of AI And Volatility

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In this interview with Pensions & Investments, Mario Gabelli says that in the past, fundamental analysis was about doing research on companies and their industries, going to conferences, and talking to competitors. Today, while the basics of fundamental analysis are the same, the way we gather and process information has changed. For example, artificial intelligence (AI) can now help us gather and analyse information more efficiently. We can also use AI to project future trends. Here’s an excerpt from the interview:

Gabelli: What is different today? What you’re doing is the following: You’re doing fundamental research by seeing a company, reading the trade magazines, going out to conferences, going out to the competitors. You can’t parachute in and see one company in the large industry and understand everything that’s public about that company and how to anticipate change.

So today, we’re going back to that promise, assuming you don’t have some new type of pandemic or some other type of dynamic. So that’s basic fundamental analysis.

How you gather data, however, how you gather the information and array it and then project it, has changed. The example I like to give is, somewhere about a couple of hundred years ago, a pigeon flew over and landed in London.

The Rothschilds got it, went down to the floor, and they bought and sold stocks, and everybody thought that the Brits had lost the battle at Waterloo.

Now, AI is going to let you do it anywhere you want, and I’m going to look up ChatGPT and find out who (Jennifer Ablan) is, what her background is and what they think about you. So the world is changing in gathering information.

You also have to understand the tactics of the daily market. The Securities and Exchange Commission changed the uptick rule. You couldn’t short a stock until it had an uptick. They eliminated that somewhere about 15 years ago. Secondly, you had the growth of ETFs.

And then you had the growth of (momentum algorithms). And so the daily volatility, with no specialist, no uptick rule and all of this dynamic trading. And then you had the following, Wuhan and Robinhood.

So individuals would sit at home who understood how to play Call of Duty and other games like that and then they would go on and trade stocks, and that became a daily, by the moment obsession, and you saw that unfold in things like meme stocks.

You can read the entire interview here:

Mario Gabelli Interview Pensions & Investments

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