AI Warren Buffett Is Finally Here
Before old Warren could hang up his gloves and call it a day at Berkshire Hathaway, a new wave of technology may well have taken his baton and started to run with it.
What do we mean? Well, it seems a new ETF has launched aimed at mimicking the moves of the top investors in the world.
Portfolio decisions of The Intelligent Livermore ETF (LIVR) will be made by a triumvirate of AI solutions, ChatGPT, Gemini, and Claude.
So, is it time to buy?
Key Points
Wall Street AI
With all the talk of jobs being taken by AI, it wasn’t going to be long before artificial intelligence took on the likes of Berkshire Hathaway’s Warren Buffett and Duquesne Family Office founder, Stan Druckenmiller.
Unlike some solutions that aim to copy the portfolios of politicians or investors, The Intelligent Livermore ETF is designed to select portfolio holdings independently of but inspired by investing greats, like Jesse Livermore.
Whether in healthcare or emerging markets, the ETF is designed to comprise holdings that investing titans would select.
So, how does it work?
The firm, with roots in engineering and emerging technologies, will instruct the large language models (LLMs) to emulate the investors’ personalities. The trio of chatbots will spit out 60 to 90 global firms that span a number of sectors, themes and geographies, including health care, renewables and Latin America, to name just a few.
The list of personas targeted by the ETF — besides Buffett, Druckenmiller and Tepper — will include Dan Loeb, Paul Singer and others, though the fund’s holdings may not necessarily reflect the real-life bets by those investors. -Bloomberg”
Will It Work?
Jim Simons once was asked whether markets were efficient and he replied that the markets are largely efficient but it is possible to find persistent edges. For example, a trend in motion often stays in motion. That’s an example of an edge and highlights that the assumption of 50:50 odds up or down don’t necessarily hold true.
He explained that many other edges exist and that’s precisely what this AI solution is designed to exploit. If the thinking of the greatest investors can be analyzed and distilled by AI, can this fund outperform the market similarly?
The real power of AI is in analyzing data rapidly, much more so than any human could do. The question is whether that rapid analysis trumps the minds of the greatest investors, even if it’s attempting to do so.
According to ZeroHedge, “Of the 16 AI-focused ETFs tracked by Bloomberg Intelligence in the U.S., only one, the Franklin Intelligent Machines ETF (IQM), is currently outperforming the S&P 500 in 2024, with a 19% return compared to the stock index’s 18%.”
What’s certain is if the AI offering does work, Minneapolis-based Intelligent Alpha and CEO Doug Clinton will be back with more offerings. For now, the fund appears to have just $3 million under management so perhaps this is a case of wait-and-see how it does and whether the capital flows in.
