Hello, my name is Satasha Nabananga Bamblet. I'm a proud
or the Order Kerni Whaltbury and a waddery woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on a wondery country, acknowledging the elders, the ancestors and the next generation coming through as this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow.
Let's get into it.
She's on the Money, She's on the Money.
Hello, and welcome to She's on the Money, the podcast that knows. Investing in innovation sounds hot, but losing all your money on hype is not.
Are you getting fomo? An it was your delivery? Do you like it was? Like you were questioning whether you should say it or not. You're like, it is hot.
It is not true because my whole life I've learned that hype is exciting and fun. But I'm now learning, wow, it's not hot. Are you getting fomo and feeling like you should be investing in AI? Even if you're not one hundred percent short it actually does. Or are you wondering whether this is the next big opportunity or just another tech bubble waiting to burst.
Well, you're in luck because we're diving deep into the world.
Of tech stocks and AI and what's real, what's risky, and what you need to know before you drop your savings into the next shiny thing. I'm excited your co host here to ask, wait, what does that mean? So you don't have to. I'm joined by the woman who actually knows what she's talking about, Victoria Divine. Hi, Victoria, Hello, Beck. I am as always budding into your intros. I do apologize, but I am there very excited to talk about this.
I really wanted to do this episode because I get so many dms from people being like should I be investing in AI? And like, most of the time, I don't mean to be rude. Do you even know what AI is? Like obviously artificial intelligence, but like how does it work? What does that mean? And if you were going to invest into it, do you know what stocks?
Or have you just been watching TikTok's right? Like I swear most of people's I guess investing knowledge comes from TikTok, and that is so fine because same clean like.
TikTok rules my life.
But I think something that social media is really good at is making us feel like we're missing out on something. Yeah, oh yeah, how many times have you seen like one video? You watched it like full, and then you just keep getting served the same stuff, so you keep thinking, oh my god, this is like the next big thing, But it's actually just your algorithm picking up on what you were interested in and serving you more of. It doesn't necessarily mean it is a good thing, right.
Not necessarily No, Yeah, that's see what you're saying.
So let's start at the beginning of what actually makes a company tech share because right now it feels like every company is throwing around the word AI. So I guess if we strip it all the way back, a tech share or a tech company is a share in a company whose core business is technology. So that could be literally so many things. It could be software, it could be hardware, it could be artificial intelligence, it could be.
Cloud computing or robotics.
And you guys probably have heard a lot of the names before, but we've got things like Apple and Microsoft and Navidia and Amazon and Meta that's Facebook, Beck and Alphabet, that's Google, and Tesla. So we already know that these things exist. You've heard of them. And sometimes I've just listed off seven different companies Beck. Sometimes they're actually grouped together.
They specific seven, and they're called the Magnificent Seven because of how much they actually dominate the US market, which is kind of interesting when.
You start to get into it.
They actually make up so these seven shares make up thirty five percent of the entire SMP five hundred. So the SMP five hundred is a list of the top five hundred companies in America, and they make up thirty five percent of that, which I think is absolutely wild. And since the start of twenty twenty three, they've actually driven more than seventy percent of the entire market's returns.
So that's a lot of marketwight sitting on literally seven companies, which is probably why people are genuinely so interested in going should I be investing in this? Because like that seems pretty dramatic, Like if you're telling me these seven companies are driving seventy percent of the index's returns and then also make up thirty five percent of the entire SMP five hundred. Like, okay, right in twenty twenty five, should we be doing that or if things taken a turn?
Let's see, I wonder if there's an ETF that just is comprised of those seven companies. Yes, it's called the SMP five hundred. No, just those seven, just those seven. Yeah, it definitely is there.
Definitely is.
I thought you meant like of all of those and I was like, babe, yes, that's why it's called the SMP five hundred.
It's actually very clear. I didn't steal what you say, but no, I'm just kidding.
So what's actually changed is just like the hype dying down or something more. Okay, So in twenty twenty three and twenty twenty four, I think everyone started getting really excited about AI. It started to become something that you were discussing at home as opposed to just Tesla. Like remember when we were talking I don't know, maybe like between twenty twenty and twenty twenty two about the self
driving car. Yeah, right, So it was all aspirational. It was all stuff that you know, Elon Musk was doing. It wasn't stuff that you could do a homeback like you would just be like, that's so interesting. AI is going to change the world. And then after chat gpt launched, beck you could do it at home, like we've got AI at homeback, And so what that meant was you
could start to see how impactful this was. Whether you were using chat gpt to just answer a few questions about maths or explain the share market to me, or make this letter seem more professional. People started to really believe in what AI could do, and they could literally feel it.
They could see it.
They could see how this change was going to impact the market or impact even their daily jobs.
Like people started.
Being like, oh am I going to be replaced because like, you know, you could say to chat gpt, hey could you write a really nice email, and like it could right. So stocks like Navidia and Meta and Microsoft absolutely surged, not because of their current earnings, but because people started seeing that. People started going, oh AI is pretty cool, and those companies are using AI pretty predominantly, like we've spoken about recently, obviously chat gpt, but like Microsoft now
has co pilot and such. But investors are now asking where's the revenue, where's the return? So all of this urged because we were excited. But that's market sentiment, right, like, oh my god.
I want that.
And if lots of people start buying one particular type of asset, the market goes, oh, let's increase the price because it's quite popular. But there's no increased earnings yet. It's all just like hopes and dreams. I see, and hopes and dreams don't pay the bills back. So people start asking questions when the bills aren't getting paid really quickly and going, hold on, where's the money in all
of this? And so now there was a report that came out recently from the Bank of America and I actually said, we expect AI to be transforming from a tell me to a show me story, with any disconnect between investments and revenue generation to come under intense scrutiny, which I think is definitely happening. So now companies can't just talk about innovation. They actually have to back it up with results. Like Okay, before you could just launch CHATJPT.
You'd be like, Wow, that's really cool. We've seen it.
Now, so if you want to launch something similar, I'm going to need to see some revenue. I'm going to need to see some results Otherwise, that's.
Not that interesting. Like, don't get me wrong, it's very very interesting. I'm not being rude.
I'm just talking from a investment mindset, right, So I think there's just a lot up in the air because people are now like, Okay, cool, so I invested in this thing where am I returns chop shop?
M you mean the same, right? Yeah, totally, totally.
It kind of feels like there are lots of ups and downs in the tech and AI sector. Oh absolutely. I feel like it's like a little roller coaster. And the tech sector obviously is incredibly powerful. We know that that magic seven carry seventy percent of the returns, which.
Is very interesting. But one of the reasons.
Is because tech moves so quickly, and that's what makes it really exciting but also really volatile. And volatility. The word volatility, it literally just means the ups and downs. So anytime someone says volatility, think of a roller coaster, because it just is how much the share price of something increases and then decreases, and then increases and then decreases. And the more exciting that asset, the bigger and the
bougier the roller coaster. Right, So, like if you go to the like to my friends, I've explained it like Disneyland, right, So, like you go to Disneyland and that's the share market and we go to the like kids section and you get on the Teacups. Yes, and like that's kind of fun, very expected, Like is something on the Teacup ride going to happen that you weren't anticipating?
Probably not. It's going to have been around, going to do the job.
Everyone's welcome, you can put your grammar on it, you could put your three year old on it. Everyone's happy, everyone's good. Then we're going to go to the other side and we go into the wild West. Beck Okay, going to the Wild West. Still in Disneyland, still is share but we don't actually know what happens once you get on that roller coaster because it's behind the thing.
You know, when you like see the Wild West ride and all you see is the people coming out of the top of the mountain and straight down into the water.
Yeah yeah, yeah, yeah, but you can't.
See how many ups and downs are before that. But that's way more exciting. Yeah, that's very true. The more exciting an asset, the more excited you are about seeing something or going on the ride, the more ups and downs you've got to anticipate.
The teacup is maybe like cash. Yeah, teacup might be cash.
It might be a little bit of a bond. Like it's keeping as comfy. It's very predictable. I love Disneyland. I love a Wild West ride. You know, I went on the Giant Drop at Movie World when it was a thing.
Is the Giant Drop still a thing? I don't know.
But I hate those ones. But I know exactly what which one you're talking about. But you've got to expect a lot of up and down in a lot of volatility. So when we think volatility, we're thinking roller coasters.
And if you want it to be an exciting.
Roller coaster or an exciting asset class, it has to go up and down and you've got to be prepared for that. Yeah.
Right, so we're getting prepared.
But I actually spoke back to a money direst who worked in tech only God, it was so interesting, literally the amount of money people are making in tech.
Click.
If you've been thinking, maybe I need to change my job, you probably should just go into tech. And while she had a really great salary, like literally Beck, she had like a salary of like three hundred thousand dollars plus she was being issued shares and she was making about half a million.
Dollars is ish a year. Oh my god, that's insane.
Ride. And she literally just worked her way up, like she didn't have some fancy degree, Like she didn't do a degree, but it wasn't the reason for her success anyway. You can go listen to that money diary. Half her team will literally laid off within.
The first few months of her starting. Oh, like that's scary. Yeah.
Like, So not only are the asset classes scary for people purchasing them, but for the people working in them. There's also a lot of volatility, and the same like literally goes for stocks. You can like have a great run and then you can lose a chunk of your value in a couple of weeks. So I think, yeah, let's think about Disneyland and the different types of rides they have, And if you want to be in tech, you've just got to be accepting that the rollercos is.
A little bit more wild. You might have a bit more fun, though that is the risky take. So if we want to.
Talk about I feel like Navidia I did a whole podcast on this. But Navidia is a good example and one that we've spoken about in the past. This company has been I guess, the poster child for the AI boom, Like everyone is talking about it, everyone being me and everyone in the investing space. Maybe you haven't been talking about it at your dinner table, but it was of hot topic I guess in twenty twenty three, twenty twenty four.
And the reason they.
Have been I guess so popular is because they make like little computer chips, and those computer chips are basically the brains of all of the AI models, so like chat GPT needs these chips to function, So obviously, with the rise of people using chat GPT, the video is going to increase in price. And even big tech company is like open Ai and Microsoft and Meta, they were buying Navidia's GPUs by the truckload to essentially power their
data centers. So that tells me that if all of those remember the Big Seven, obviously Navidia is one of them, but if the other companies in the Big seven are purchasing from Navidio, you go, oh, someone's been cooking here, Like what's going on? So naturally, Navidia's share price then started to go through the roof, up over two hundred
percent at one point. Beck based mostly on what people believed AI could become, not proof, just like they started seeing the big dogs getting on the big rides and going, well, if they're comfy, I want to be on the big ride.
But it was all just belief because you were seeing people walk the walk.
But we hadn't heard much about revenue, we hadn't seen a lot of income yet.
It was all just this is the next big thing, Beck.
But someone comes knocking and says, hey, are you paying your bills? And you go, well, I haven't been paid babies as sets yet, so you're going to start asking questions. But obviously I'm on a little bit of a rant, and I do apologize and you can ask the questions in a hot second, but it does get a little bit messy. So this like cossip podcast. Now are you ready?
So there's a Chinese company called deep Seek. You might have heard about it, and it came out of literally nowhere, and it launched a competitive AI model that used way less GPU. So these chips, the power chips, it used a lot less GPU power, meaning they needed less of the chips, so everyone was like, oh, what is deep Seek? How does that work? And that got investors really spooked. So people started being like, oh my god, like I
just invested in this other AI thing. But now Deep Seeks come out, and I feel like we all know that the Chinese people are really, really smart, so when something comes out of China, you go okay, like their
tech sector is really impressive. And suddenly people were asking all these questions like have we just been over investing in something that might actually not be necessary, like because Deep Seeks come out and said, hey, our take use this way less of these cheer and now we're all like, wait, wait, wait, did we jump the.
Gun a little bit?
But now we are seeing the impacts and America has a lot to do with this, but we're now seeing the impacts of Trump's trade war. So he's the drama like he is being drama and I don't appreciate it. I don't think many people appreciate it. But on top of his ridiculous tariffs at the time of recording, America has also put export restrictions on high end chips going to Chinah and then China were like absolutely not and then they fired back by blocking exports of critical minerals
that are needed to make those chips. So like, good luck making the chips if you can't get the minerals to.
Make them grow. Yeah, that's what I mean. Like it's a bit of a gossip podcast, and do you know what that meant?
So the result of that is that analysts believe I do too after reading their work, but like they did it, not me, but analysts believe Navidia is now sitting on five point five get this, five point five billion dollars worth of advanced chips it built for China, but they can't sell without US government approval. Oh so they can't sell GI Yeah, and.
The government's like absolutely not.
That's not leaving because we are the drama and we are starting all of this shit anyway, that's obviously quite stressful. But because this is going around and like Navidia hasn't confirmed to this because it's like, you know, I'm not going to confirm whether you cheated or not, Like it's not going to happen. These are just analysts who are like, okay, like we know what their production looks like, we're going to guess how much they have in their stocks, so
five point five is the guest. But because that's being discussed in the market, their stock has now fallen around eighteen percent, so people are like, oh, that's true, that's stressful. Like if Navidio is holding all of these chips and can't sell them, like, that's not good, which means their income is going to go down, And some of that
hype around how good Navidia is it started fade. People just don't care as much anymore because they're like, h like, Navidio can't even sell their chips, right, Like why would you continue to invest in them? And investors are really starting to ask, well, is this a short term bump or should we be rethinking this whole thing long term?
Like should we be looking for other companies to invest in because we like the idea of AI but like there's a lot of political drama around this particular one, so people are.
Investing less into Navidia. Does that make sense? It does make sense. It's a lot to take in. Yeah, I feel like that's why I'm like, it's a gossip podcast.
You need to understand all of the amsing cuts, and I've got to give you the whole backstory absolutely, So does this mean that Navidia is bad?
Now?
Not necessarily, But it depends on your investment style. And I hate this question when people are like, oh my god, should I buy this? And it's like, well, I can't give you personalized advice. If I could, I would, but I can't, so I won't. It depends on your investment style, the time horizon that you have, so like how long
you're planning on investing for. And your tolerance for risk goes back to Disneyland and like, I can't remember all of the rides that are there, but you get my vibe when I'm like, oh, would you go on the teacup?
Beck?
Right, I would happily go on go on the tea cup? Would you go on the Giant Drop?
I don't think. Yeah.
So that's what risk is, right, So that's your tolerance to risk. But it's in the share market. So you might look at different shares and go, okay, well a blue chip stock, I'm gonna buy that, no worries. But now with all this additional information about Nvidia, would you purchase that? So the question is not whether you should or shouldn't. It's more around your personal situation and whether you would be comfortable with it? Because remember how he
said I love the giant drop. Yeah, So like we're there, the line is short. I go, Beck, do you want to go on it with me? You go, no, absolutely not. I'll wait here, I'll take a picture of you on it, and I go on the ride. So can I tell you whether you should go on the ride or not? Because I like the ride?
You go, but I.
Don't like the ride V So that's what happens when people ask me, Hey, should I invest in this?
How do I answer that?
I don't know?
If you like rides? Do you know what I mean?
Right?
Right?
Right?
You need to work out your own tolerance to risk. And once you do, and you can because I've done episodes on risk tolerance and your investment risk profile, and you can also google free investment risk profile and do one online to work out what you would be able to tolerate. Once you do that, you would get an idea of whether you would want to invest. But I think when it comes to Navidia specifically, they're a massive player.
Like in the AI space, they are going to be a massive player, and they don't think with how much market saturation they have they're going anywhere quickly. Their chips are basically in every single major model out there at the moment. Could that change maybe, but it would take a long time and a lot of different companies making a lot of big changes.
To change that.
They've got scale, they have dominance, and essentially I don't think they're going anywhere anytime. But they are also under so much pressure. Beck Can you imagine all of this gossip coming out about you.
I know, if you're Sam, you would be.
Feeling the pressure, and essentially politically, economically and from competitors.
They are feeling that heat.
So if you are investing for the long term and you believe that you want AI to be in your investing portfolio because you believe in the future of AI infrastructure, then this could definitely be an opportunity for you to purchase some shares because they're down eighteen percent, And when we see the share market down by eighteen percent, sometimes we could be.
Like, oh, it's on sale. Yes, I love a little discount.
Like don't get me wrong, if you're going to go to Disneyland, BIC, are you googling discount code on your tickets? Yeah, exactly, And that's what a drop in the share market means. So it's less I guess about the question of is Navidia a bad guy, and more about whether it fits your goals and your investing aspirations and your timeline, and
then how comfortable you are writing out that volatility. And there are just some people who don't want to go on the giant drop fair enough exactly, even if it's something that could be perceived as like a bad purchase or something.
It's like, there's no way of telling what the future looks like.
So I know it's funny because like, as you know, I get in the comments section on our videos on TikTok and on Instagram, and I'm always replying to people, and someone was like, well, I bought this and my shares are down like ten thousand dollars over the last few months, like essentially saying that it was a bad investment, And I was like, oh, my goodness, Like that is not like, yes, your shares are down over the last few months, but like gazoom oush like you've got blue
chip stocks. The entire market is down at the moment, we should be seeing it as on sale as those too. Oh my investment's down and therefore it must be a bad investment. The market is wild, she's dramatic. We need to understand her to be able to deal with her different moods. Essentially, yeah, absolutely, and just be patient with her. So the video is under pressure right now so much so like where's the opportunity now? Like where are investors starting to look instand?
I feel like.
We're seeing a bit of a shift so like AI. Now I won't say his household. Not everyone understands it fully, but it's not as like ooh ah as it used to be. Sure like now you're like, oh, yeah, I understand the premise of chat GPT, Oh yeah, I understand what deep seek is. But in twenty twenty three and twenty twenty four, the I guess hype was all around AI infrastructure, so like the chips, the servers, like the cloud capacity, basically the building blocks that created AI. We
were like so excited about purchasing. But now the market's really asking, well, who's making money using this technology? Like we've built it that people have come. Who are the people that are using it to make a lot of money? Because we're seeing, you know, this system help us individually, but surely they are really big companies that have found ways to use AI to their advantage and are making a lot of money. I would really like to invest in those companies. Yeah, so that I feel like it
is quite smart. So who's making the money, So there's more focus, I would say on the company's further down the AI value chain side a thing. Let's call it like the chain you've gone further down, like software players or even industries applying AI in real practical ways. So an example of that might be, you know, you might find and this is my easiest example, like I have
a mortgage broking company. At the moment, I'm looking at other mortgage broken companies using AI to help with a lot of the like ADMIN processes, and I'm going, oh, that's smart. Imagine if that was scalable, that could be an investing opportunity here for me, because obviously I'm seeing it individually in my business be really helpful. So let's take a company Palenteer for example. Beck you might not
have heard of Palenteer before. They're not buildings, but they are helping businesses and governments, which is important because governments have lots of money. Taylor AI models using their own data so even in this market downturn, their share price is actually up sixteen or so percent this year, and that's on top of the massive get this, three hundred and forty percent gain they had in twenty twenty.
Four, three hundred and fourty percent gain.
That's a lot of gain. And they're landing some really big deals. So they're landing big defense and government contracts, including get this, the new US immigration deal, which is worth thirty million dollars. So if people are seeing big moves like that being made.
I feel like we get our little ears up and we're like, oh, what's going on over there?
And they are talking about shifting their focus to the commercial sector too, like they're going to look at healthcare and finance, which is where we could see even more upside because those industries obviously need a lot of help but also very lucrative.
Yeah.
So I think that this is a really good thing to look into because they're a company that are I guess using AI and now people are looking at this company going, you're not making AI, but you're using AI and you're making.
A lot of money. I want to be investing in you, I see.
Okay, So instead of just like big flashy AI companies. There's more attention on the ones applying it behind the scene, Yeah, which I think is low key, really smart. But I feel like I have been ranting and I don't even know how we got a Disneyland reference in there. But let's take a really quick break back, and when we come back, I'm going to dive into, after having a little bit of a breather, into a part of the AI world that.
Doesn't seem to always get the spotlight.
We're talking about the quiet achievers, the ones behind the scenes helping power the future of AI.
I would say, there's a spoiler here.
The next big thing might not be a really nice, big, shiny app It could actually be hiding in your electricity bill. Oh bet you didn't see that coming. All right, welcome back everyone. So before the break, Victoria dropped a.
Bit of a juicy gem. I tried, was it Disneyland?
It was?
You know what many juicy gems in that case, and one was Disney Like.
Disneyland just makes it make sense.
Yeah, that makes the fair and art sometimes going to use the most rogue analogies and it really hits.
It works.
So does that mean I can claim my Disneyland trip that I went on a few years ago on tax I think I didn't, but I'm sure we can talk to my accountant.
Yeah, I think so.
I think if you say any name of any product you've bought this year on the podcast you claim it, yeah, iPhone, iPhone, I phone, Google, Pixel nine, Pro Excel, that is a text deductable, I will be talking to my accountant exactly. So we were talking about the shift from hype to application. You mentioned that it's not just the headline names investors are watching. No, it's not, it's the behind the scenes guys,
possibly behind the scenes people. Okay, And we're seeing a bit of a pivot from I guess backing the builders like Navidia and the cloud giants to looking at who's actually using this tech in a meaningful revenue generating way.
So if you're making money, I am interested.
And there's this whole other part of AI I would call AI centrals. So we're talking utility companies, we're talking energy providers and infrastructure players, the ones literally keeping the lights on in the data centers powering all of this tech. Some analysts, and you've probably heard whispers of people being like, oh my God, don't use AI because you know, do you know how many trees it costs?
You've heard this.
So some analysts are essentially saying that electricity demand from data centers, which is where all of the AI is housed, could double by twenty twenty six, which is wild when you think about how many AI models we're running already, Like we're already doing lots. You're saying there's going to be double by twenty twenty six, and like that's next year. Beck, So it's not just about the big, flashy names like Navidia and Microsoft. It's essentially a whole ecosystem that works together.
The company's using AI in super practical ways and the ones enabling it in the background. That's where we're starting to see, I would say a little bit more market attention, right, Okay, so here's the million dollar question. Yes, I feel like this whole episode has just been trying to get you to go against everything you say, which is I can't give personal advice and please tell me you want personal advice now, Okay, we'll sit down and I'll switch the
micro off. Yes, is this the next dot com bubble?
Oh?
Yeah, it could be. It absolutely could be. Do you know what, when you say the dot com bubble, I laughed so hard. Have you seen the interview where Jeff Bezos, who does Amazon, He went to Harvard and like pitched his idea for Amazon to all of these like NBA students doing business at Harvard.
You'd think they'd be really smart.
And one guy said, look, just sell like Amazon worth nothing at that point, because like it's never going to take off, Like you are never going to be bigger than bricks and mortar stores, like the shop down the road already established, already has heaps of customers. You probably should just throw the towel in. And that's coming literally from him pitching to Harvard. How'd Amazon work out?
Beck? Unfortunately it's quite big? Is it? Unfortunate for who?
I mean a lot of people, but unfortunately not for Jeff Bezos, right like he won. Unfortunately. Imagine being that Harvard student. I know that was the one that was like I told Jeff Bezos to drop Amazon anyway, I thought that was funny. But the AI hype, I guess is a lot like or has a lot of similarities to what we actually saw when the Internet started to become big in the late nineties.
I was around in the late nineties.
I was only privy to playing the Muppets video game and the Barbie video game on my computer at a designated time that my parents let me.
So a lot of the stuff that I've learned.
About the dot com bubble is actually through my own research, not experience, and I've done a lot. But when the Internet was the hottest new thing back, investors started essentially throwing money at anything that had a dot com name, right, So like investors were like, oh, you're on the internet, take my money. Literally, companies didn't even need to be profitable or prove themselves, and some of them didn't even have revenue yet, and investors were like, take my money.
It's fine, I believe in this. But because the Internet felt like the future, spoiler actually was people didn't want to miss out. They were like, oh, my god, this is going to be the next big thing, and they weren't wrong. But the problem with that is that those businesses didn't have actual business models. So like people weren't wrong when able to identify that, you know, the Internet.
Was going to be the next big thing. That's pretty sexy, that's pretty.
Exciting, but they did get off track when picking the right companies to invest in. I mean investing in a company with no revenue. It's not for me, sure, but we need to do our research. But most of those businesses didn't actually have business models. They were burning through cash with absolutely no clear plan to turn a profit.
They were just like, let's spend lots of money, we have lots of.
Investors, yay, And that was like their entire strategy. So when reality finally caught up and interest rates then rose, investors started asking questions. They were like, Hi, we invested in your company, where's the revenue And they were like, Lol, there isn't any And that's when it all collapsed. Ah okay, okay. So this is what the dot com bubble was built on,
right belief. It wasn't just built on facts and like looking into okay, well this company sells X and it supplies why and because of this, I think it's a good investment. They were just like, my hopes and dreams are feeling good. I'm going to invest. But when the Nasdaq dropped more than seventy five percent, it took fifteen years to crawl back. Whoa like it did crawl back.
That's really important to point out it did eventually crawl back, and that's why we are long term, long domestics exactly, right, But like that's fifteen years.
That's crazy.
So now fast forward twenty five years, we've got another revolutionary tech which was a mouthful, but that's AI with lots of excitement and some I would say spicy evaluations. So the difference is back that this time it's not really scrappy startups that are just chucking a dot com name and just going, hey, you could invest in.
Us with the future.
It's actually the biggest most profitable companies already existing in the world.
Right.
It's Microsoft, it's Alphabet, it's Navidia, and they're dropping hundreds of billions of dollars into AI research and development and infrastructure, like very serious money. Like they are just you know, floating on hopes and dreams, and I mean that's distelling it down, but you know exactly what I mean when I say that.
So, yeah, we're seeing some type of correlation.
Navidio is down eighteen percent this year, Tesla has been cut in half as what should be. But unlike the dot com days, these companies have real products back, real legitimate products, real customers and real revenue, and you're probably going to go, well, is that really risky? Like still like you're saying that these are real, Like is the risk the same, Well, the risk is not necessarily that it's super risky, but it's that history doesn't repeat itself,
but it can sometimes rhyme. A lot of the optimism around AI is still based on hopes and dreams and what it might do, not what it's doing right now. Okay, so like we're still really optimistic about oh my goodness, it could potentially xyz. So if the money doesn't start flowing soon from what's being invested by these big companies into research and development and all of the infrastructure, I
think that the market could definitely cool off. And maybe I think the biggest takeaway we can get from the dot com bubble as it's called, is that the Internet did change everything, like just not in the timeframe that everybody expected it to do. Like the right idea, I guess at the wrong time can still cost investors.
A lot of money, sure, for sure.
So like remember when we were younger and they were like, the future is going to have flying cars? Like yeah, probably, but like what is required to create those flying cars, you know, right right right, I have to really quickly be honest with about sang. I said dot com bubble before, and I didn't know what it meant, and now keeps and I thought I'll be able to figure it out as you talk, and then I couldn't figure it out, and it's far too.
Late for I love you. You are literally the best.
So the dot com bubble was when the Internet like really started to launch and a whole heap of companies started launching on the Internet, and people got really excited abou about it and started investing a lot of money got into it because they were like, the Internet's the
next big thing. And beck, I think you and I can agree that, yeah, the Internet was the next big thing, like it changed everything, But these companies just existing on the Internet didn't necessarily mean that they were the next
big thing. Yes, Like if you and I'm going to just steal this down really simply, like if you invested in a fashion company online and you're like, oh my god, next big thing is the Internet, and I love fashion, so I'm going to invest in this fashion company, like that doesn't mean it was a good fashion company, right, Like, yeah, they were on the Internet, and if they'd made use of that opportunity and been one of the first to market that fantastic, they would have been really good, like
eBay or Amazon. But lots of companies were jumping up and down about the fact.
That they just existed on the Internet and.
They didn't have real revenue, they didn't have real profits, they didn't have a lot of product, but they had hopes and dreams.
Gotchah okay okay, And that's.
What drove a lot of investment during that period of time. But that investment, again was built on hopes and dreams and wishes, and like, wishes isn't money. So for at some point when people were like, hey, I need to pay the bills, I'm looking for this revenue. Now I invested in this thing, like where's the dollars? People started to see that maybe they couldn't back themselves, and therefore it dropped and it crashed, and reality kind of came to.
The table unfortunately, as it always does.
Literally right, So I reckon, Yes, the Internet did change everything. So I guess when it comes to ai Beck, it's not just all about betting on what we think the next big thing is. I think we can all agree that AI is definitely one of the next big things. It's actually about understanding whether the business model behind the thing you want to invest in behind it is actually going to stack up.
Yeah.
Okay, So how do we even start, like thinking about investing in tech without getting burned? Good question, because I guess tech is very exciting and it moves very quickly. It's literally changing the way that we live and work, and some of the biggest success stories in history have come out of this sector. So I think that's why people still talk about it so much. I think that if I said name a sector in investing, the first thing,
you'd probably say tech sector, like easy, like. I think most people just go to that because that's where most of the returns have come from. But it's also relatively risky. So when we're looking at investing in tech or in AI in particular, I've got a list and I've just written it down. So are you really Yeah. So there's a few things I want you to keep in mind. The first one is hype does not equal profit, So
just because you're excited about it doesn't mean they're making money. Yeah, It's like, do you remember when I was ranting on about after pay shares ages ago, people were like, I invested in after pay and it's just going up and up and up, and I was like, they have no revenue.
This is going to crash. And then it crashed and I was like, what a surprise, that's crazy. Who have seen that going?
But just because a company is trending or dropping buzzwords like quantum ai, cloud infrastructure, that doesn't actually mean it's making money bick. They just have a fancy shiny word. So always check the financials. Is it profitable? Does that have revenue growth? Is it burning cash? Do you know what you can do? You can gain the system.
Okay, you can ask chat GPT.
If a company is profitable, you can ask chat GPT like, can you please look at the financials and let me know if it's got year on year revenue growth. You don't even have to look at the proper financial report. You can give the financial report to chat GPT and she can explain it to you. I've also decided that chat GPT girl, oh yeah for sure. Yeah, definitely giving
female vibes. Yeah, I'm feeling that anyway. The next thing number two on my list follow the value chain that sounds lame, but like hear me out, not every win in AI is going to come from the loudest players. Yes, like Navidia and Microsoft in the spotlight and have lots of money and keep throwing it at that. They're also
really good at a press release. So like, when you're really good at something and you have a lot of money, you're going to have the right amount of money to pay pr so that people are talking about you consistently, really nicely. But I want you to start looking at the software companies applying AI in real ways, even the company is powering the infrastructure like utilities or like the chip manufacturers, Like I think that there's probably some very
real money there to be made. The third thing I've written down, I don't think you're going to be surprised. Diversification is your bestie. That's so true in every Yeah.
Literally, like don't go all in on one stock.
Like how many times do I have to jump up and down about how sexy I think ETFs are?
Why diversification?
How you would never just own one stock in general, So like, if you're going to invest in AI, why are you picking one AI stock if you think it is so important? Let's get a bunch of them. So tech is volatile. We know that it is the biggest
loop de loop bride at Disneyland. So if you want exposure to that sector, maybe consider spreading it a across a few different tech companies, or maybe pick an ETF that has those companies in it, or a mix of hardware and then software and then like infrastructure place.
Sure, so we're mixing it up.
We're making sure that instead of just putting flour in the bowl, we are putting lots of different ingredients like eggs and sugar and a lot of butter because we want to make a cake, baby, Like, I don't want a bowl of flour that's been through the oven. I want a cake.
Absolutely.
The fourth thing and I only have five, so we're coming to the end of my list. But the fourth thing is I want you to know your strategy. Like I asked before if Beck would go on the Giant drop and she said no, I want you to be that clear on what you would and wouldn't invest in. So AI and tech can be classic high risk, right, high risk, high reward to play if you're in it for the long game and you actually believe in where
tech is heading. A little bit of turbulence just comes with the territory, like that's how it works.
But if it's.
Money that you need in I would say the near future. Maybe if you're like, oh what do I do with my house deposit? Or I've got a wedding coming up? Should I be investing this mass amount of money or maybe even your emergency fund? That is not the place for this, like absolutely not. Make sure that your strategy matches your timeline and your goals and.
Your peace of mind. Right.
And then the last thing I've written down here is not every good idea makes a good investment, and I think that is really important to remember. Just because it's a good idea doesn't mean it's going to be profitable. Doesn't mean that you should be investing in it. The dot com bubble or the dot com bust didn't happen because the Internet was a bad idea.
Was the Internet a bad idea back? I don't think so. I think it's pretty slay great idea.
It happened because investors through a lot of money at companies that weren't profitable or proven. AI might absolutely be the future, but it doesn't mean that every single AI stock is a goodbye. Like, just because people are playing in the AI space and they're listed doesn't mean you should be buying them. The lesson here, I think is look for solid business models, not just shiny buzzwords. Okay, okay, they can't just.
Talk the talk.
They also have to be walking a walk. If you're not making money, I'm just not that interested in you. Yeah enough, like low key rude like in the shed market, beck, yeah we're marrying rich.
Oh not just the guy who looks rich?
Yeah yeah right, so right, So if someone's listening and thinking like do I need to jump on the AI train for it leaves the station?
What do you want them to remember?
Literally all of the stuff I just said about Disneyland. But like, you don't need to be in on every single trend to build wealth. Like if you're looking at AI and you're like, oh, this is the future, Like, babe, those shares are still going to increase in the future. If that's the case, yes, you might be getting on at a different station than everybody else.
And yes, some other people might make a little bit more money than you.
That makes sense because they got on the train really early and they get alonger ride, and that's fine. That doesn't mean you're right, is any less valid, You're still going to the same destination. So I think importantly tech
and AI can absolutely be part of your portfolio. It is just so important to make sure it fits your goals and your timeline and what you want to do, and making sure that you're okay with the fact that you're going to have a little bit of that volatility along the way, like it's going to go up and it's going to go down because investing at its crux is a roller coaster and if you don't like roller coasters, don't go to the theme park.
Fair fair call.
So I think that's actually a perfect thought trap this up. So if you've got a mate who's been texting you screenshots of AI stock charts and see I'm also sending my friends screenshots of stock charts, well you're the problem. I am the problem, and they asking, like, you know, should I buy this? Maybe flick them this episode instead? Oh? Should I send this to myself yourself? Don't get me wrong.
As much as I can tell you exactly what you need to be doing, I've been down in the video wormhole, like I go down that rabbit hole on a regular basis and to make ooh what's this?
Oh what's that? I want to look?
And then I send texts to my also investing friends and I'm like, what's this look like? What are your thoughts on? And they think I'm de Lulu and spend too long in financial reports when you could just stay our ski But that's okay, that's a story for another day. So if you're here, still, thank you. We love you, and I adore talking about investing and giving you as much investing knowledge as possible. But a way to get more investing knowledge is for you to hit follow and
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