Reflection No. 38

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Ah, artificial intelligence. Potentially the best technology since the rise of the internet. It’s everywhere, and with all the buzz, the common narrative is that AI will replace countless jobs.

I’m not entirely sold on that. While I do think AI has the power to make us more efficient, I believe it’s more of a tool than a takeover. That same efficiency can help in investing—from research to data analysis—but it still doesn’t replace the human element that’s needed for making sound, long-term decisions.

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Three Quick Hits:

• Article: Dollar-Cost Averaging

  Dollar-cost averaging—investing the same amount each month—is a smart, steady strategy for most investors. It helps remove emotion from investing and discourages trying to time the market. Now, if you’re sitting on a large pile of cash and have the time and skill to research companies thoroughly, lump-sum investing might give you an edge. But that’s not the case for most of us. Time in the market beats timing the market. 

• Tip: Automate your savings and investments whenever possible. Make things easy on yourself.

• Quote: “Two things seem pretty clear to me: first, no one can consistently buy at the low or sell at the high (except liars, as Bernard Baruch said), and second, lowest average cost wins.” - Bill Miller

Two Questions:

• What does enough look like for you, and how will you know when you’ve reached it?

• Would you rather retire early with a simpler lifestyle or work longer to spend freely now and later? Why?

REFLECTION No. 38: AI and Investing

I - Issue: How can AI help with investing?

R - Rule: AI is a powerful tool for digesting large volumes of financial data, but successful investing still requires human judgment. 

A - Analysis: AI can summarize earnings calls, scan macroeconomic trends, and even pick up on shifts in social media sentiment. Investment firms are already using it to spot tone changes in corporate statements before the market reacts.

But AI has its limits. It can’t always tell when CEOs are bluffing or when consumer behavior in real life doesn’t match online chatter. That’s where human investors come in. Human intelligence brings intuition and cultural awareness that algorithms can’t replicate.

Relying solely on AI can reduce critical thinking and make investors more susceptible to market fluctuations they don’t fully understand.

C - Conclusion: AI can help make you a more efficient and informed investor, but it cannot replace your emotional intelligence.