Good Investing Starts with Good Questions

“If you’re not at least a little unsettled right now, you haven’t been paying attention.” That sums up how I feel about developments in artificial intelligence. And I suspect I’m not alone.

This uncertainty is also reflected in the ups and downs of stock prices. A year ago, ChatGPT was the only name most tech-savvy households knew. It was the brand everyone recognized. These days, however, Claude from Anthropic is on everyone’s lips.

And if you follow the subject, you may share my feeling of constantly being one step behind. Or have you already spent your weekend building your own software or app? After all, that’s what Claude has become famous, or perhaps notorious, for.

An Emotional Roller Coaster

Recent developments have had a massive impact on the share prices of publicly traded software companies. It’s been a real roller coaster of emotions and stock prices. Will we still need professional software solutions if everyone can create their own? Or does it take more expertise than we think? Endless questions, few clear answers.

We have always challenged ourselves to consider which new developments might change the business models of the companies we invest in. What impact will Amazon have? What about China? Today, we debate the implications of AI. Tomorrow, we may already be grappling with the consequences of quantum computing.

Right now, one question in particular is occupying us in the Chief Investment Office: Will the enormous investments in new data centers pay off? More and more debt is being taken on to finance them, raising the stakes and making the answer all the more important.

Keeping an Eye on Risk

Despite this extremely challenging environment, the Gutmann Equity Strategy has performed exceptionally well this year. Does that mean we have taken on more risk than the major stock market indexes? Have we invested even more heavily in the AI stocks that have been driving the market higher?
The answer is no. Just under ten stocks are responsible for the rise in the US stock market, while our portfolio is far more broadly diversified. And while stock market index valuations have climbed, the valuation of the Gutmann equity portfolio has remained remarkably stable. That comes down to our strategy and discipline.

Incidentally, you’ll find some interesting charts illustrating this in our latest Gutmann Chartbook. If you’d like to learn more, please reach out to your Client Advisor.