Artificial Intelligence, Volatility & Uncertainty: How Should Investors Position Today?

0:00 there will be a lot of uh people catching a market wave even though the companies are not fundamentally sound >> just because it's related to AI sometimes the most dangerous res are the ones that we feel safe right um just because they have worked recently and that's what we call survivorship bias in investing >> when we are moving to AI there will be a need for a lot of memory storage >> one of the biggest mistake that investors can make in [music] this current environment is to assume that the world is binary it's either US if not China or is either growth investing even if not must value investing do well but they might not be really mutually exclusive >> looking to make better money decisions. Welcome to money and joy markets today shaped by AI disruption are becoming increasingly complex amid

0:46 geopolitical uncertainties changing interest rate cycles and also evolving investor behavior. So, in this episode, we're going to explore how investors can navigate through the volatile market conditions, and why adaptability, portfolio construction, and long-term thinking matter more than ever. Hi, I'm Hazel from the Joyful Investors, and welcome back to another episode of Money and Joy. And joining me today in this episode, we have Xiaoong. >> Hey, thank you so much, Hazel. I'm Xiaoong and uh I come from Philip Capital. I'm a dealing manager uh handling the US and European side of the market. >> So, markets today seem much more unpredictable than say a few years back. So, what do you think has really fundamentally changed in the investing

1:31 environment? >> The accessibility to the US market has changed drastically. If we look at 2021, there was a lot of um trading and a lot of news on the meme stock, cryptocurrencies and NFT. And then moving forward uh there was uh expectation of inflation where fat reserve actually come uh came in to tighten the the economy >> and there was also the Russia Ukraine war right. >> Yeah. Right. Correct. So so it actually moved the energy market quite a bit causing more volatility >> and then coming into 2023 2024 we have the AI boom. >> We see chat GBT coming. [laughter] >> Yeah. Creating all this AI disruption. And then 2025 we have uh Trump. Trump um big beautiful bill which actually

2:17 resulted to uh global disruption and we see [clears throat] all these um global market getting affected as well. >> So in short I would say it is important um to to know where we are standing and what we are reading in terms of the u uh content >> and accessibility to the market has fundamentally changed the way of how the market works. >> Right? So in other words, put it this way, I think there's always an event, crisis or theme that the markets are focusing on at any point in time, right? And it's really hard for any one of us to be able to predict what's going to be the next one. Um, so why not, you know, that's why I also personally believe that it's more important for us to channel our attention more on how to make sense and interpret those events

3:02 rather than trying to predict what's going to happen next, right? And the thing is that some are they could present structural growth drivers. Some are short leaf fats like me stocks that you mentioned earlier on. So why not let's dive right into one of the hottest topic right now which is on artificial intelligence AI. Okay. So AI creates both the excitement and fear in the markets right so in your view how do you think investors can distinguish between the long-term uh investment opportunities for AI versus hypedriven narratives? If we look at long-term wise and the hype, there is actually something in between both of these and I would say it's actually the fundamentals. >> So if we look at the current trend of AI, there is a lot of hype >> uh alongside this trend and we are

3:48 expecting it to to to last maybe two to two to three years down the road until all these AI uh capex that they cannot support their um expenses. M >> so what you're seeing now if you use chat GBT often is that they are actually moving to the payto use uh >> style um to to actually encourage more people to sign up so that they are they they in terms uh >> to monetize >> correct to to monetize it >> but uh when they first launched it was a very competitive market so they had to push uh if you look at Google as well they let all their users >> um do to use their platforms to to make sure AI is part of their life. >> Yeah. >> And now they monetize it to to make people uh use them and then in terms

4:36 they get subscribers, they get revenue. >> Yes. >> So in the long run we are expecting the trend of u more subscription based uh AI AI models the company eventually those without subscribers will eventually fall. >> Yeah. And this is probably what we're looking at for the long-term wise and for hype. Uh if we're looking at one to two years time, >> there will be a lot of uh people uh catching the market waves putting in even though the companies are not fundamentally you know uh sound people will still invest them to catch the wave the hype. Yeah. >> Just because it's related to AI. >> Correct. [laughter] Correct. So I think in 2023 2024 when there's AI work uh when when there's general meeting and people say word AI we see a boom in the

5:22 stock prices. >> Okay. Yeah. So sometimes the most dangerous res are the ones that we feel safe right. Um just because they have worked recently and that's what we call survivorship buyers in investing also. Yeah. where we only celebrate the winners publicly but very underneath there are also a lot of those who took on same re they lost money but they just disappeared. Yeah. So we have to be very careful between hypdriven narrative and what is really fundamentally sound like you mentioned right. How about share with us you know which are the sectors or business models that you think are most vulnerable to AI disruption. when AI first came about um the content creation side, the art side actually had the biggest impact. >> So you see a lot of artists uh come in

6:07 talking about >> how AI has disrupted their line of work. >> Yeah. >> And uh for us users I think there was even a time where people were using chat GBT to actually create Gibli style content >> and posting on Instagram. But um for the artist itself it's actually uh many years of their hard work and creating the content. So, so we see that in the art industry and slowly it's going to be um translating into the gaming industry as well >> and subsequently uh if we uh look at the financial market nowadays our very first front line will be our chatbots AI agents that's where they actually come in >> but this will probably take a longer period of time uh if we look at it

6:54 >> uh but of course uh these are places that we will uh see disruption especially those areas where it requires more low-level task. It's going to be very easily replaceable by AI. Maybe not immediately tomorrow, but we're going to see it start happening over the next couple of years. Um, and since we're on this point of uh know what could be disrupted, right? Uh why not let's also talk a little bit about software companies since you know it's something that in the last few quarters we have seen a general selloff in the market for software companies. So um any thoughts on on this sell off cuz personally myself I do believe that it is overdone >> selling off in the software company is natural as people move towards I think the current trend which is space uh we we are looking at SpaceX IPO now we are

7:41 actually moving towards semiconductor so all the semicons like uh like Nvidia we are looking at all the chip makers getting their orders actually uh all the way to 2026 2027 and these uh this actually helped them uh be more confident in their reporting in financial wise. But if we look at the memory side of things um it is also getting a huge boom um when we are moving to AI there will be a need for a lot of uh memory uh storage >> which actually led to the rise in uh stock prices for cyber security now. Oh, >> so it's more of a trend moving away from the software side but uh we still see the money flow uh around the uh

8:28 technology industry. I believe a lot of volatilities that will happen and there will always be narratives uh that's there but what's most important is to ask yourself whether you think um generally some of the things that the SAS companies can do will it be replaced by AI right and and actually I do believe AI is a very powerful tool it can help us to really build some of the simple applications and software so if the software company is only providing a very simple and basic solution then they are very highly likely to be replaced by AI. Yeah, correct. But for some of the major giants who do have more complex, they are more deeply embedded within the workflows, right? Then these are the ones um they do have a stronger mode to defend against AI. Um but of course

9:14 things are always changing. Uh but I I do think at least right now I I think that the um selloff is uh is quite overdone. Yeah. because there's a lot of things that uh some of this big giant uh software companies they can do but >> maybe the AI are not able to do like regulatory compliance, cross functional coordination or multi-step approval things like that. Yeah. And there are also industries that are more sensitive, right? Like finance. >> Yes. >> So it's it's not so easy for you to just use a AI tool to be able to replace it. You're right. There will be regulatory compliance issues also. In other words, I think for investors a lot of the things to go and think about and bear in mind before you think about oh should I really sell off or should I buy with so much volatilities in the markets right how how are you personally adapting to

9:59 this market environment so aside from AI we also have geopolitical tensions right at the start of this year so a lot of volatility >> what I usually encourage at least for myself or people around me is to diversify their portfolio >> okay >> and this could be in the different type of asset classes the different type of uh geopolitical uh to to avoid geopolitical risk as well. So expand out your market to to other markets not just the US alone. >> I think in this field of work that I'm working uh I see a lot of people having this concentration risk >> in the US because we are so used to US [laughter] news and even the brokerage is low. >> Okay. >> So a lot of people would want to get into the US market first and their whole portfolio become so US uh concentrated. >> Okay. I I think

10:46 uh we should be looking at a bigger picture to to diversify it even to ETF portion because um a lot of the clients that I see have just single name stock and we have a huge sum of money in there [laughter] and this poses a risk but um of course once again this um it is different for everybody um and and for me myself I would strongly encourage diversifying your portfolio depending on uh your own financial uh status whether you need this money now or you can save them or if you need to use it in a house for maybe next one or two years. Yeah, I think you mentioned some great points like u a lot of people are very concentrated on some like maybe just in the US market or even just single stock

11:33 counters uh because many of them have this mindset that you know I just need to buy one or two multibaggers and then with this big winners I can make a fortune I can stop investing and quit my job and retire right but um in my opinion I don't think this is more of like a gambler mindset it's just like I want to buy a lottery ticket and I can be a millionaire through that one lottery ticket. Yeah. But um things might not happen the way that you want it to. Uh of course if if it does well then yes you'll be able to make a lot of returns but you always have to consider what if it doesn't do well right then the whole portfolio will be wiped out. Yeah. So that is something that I think when it comes to portfolio construction is a very important consideration and you also mentioned about uh diversifying by geographical region right um and and I do agree on that as well because I

12:20 think one of the biggest mistake that investors can make in this current environment is to assume that the world is binary um it's either US if not it's China or it's either growth investing if not must be value investing do well but they might not be really mutually exclusive so So like you mentioned we could always know be investing in the US side but we invest in what they do best uh maybe some of the uh cloud infrastructure or even some of the softwares and we can also at the same time invest in what say China does best uh the energy infrastructure industrial automation or even their consumer ecosystem platforms that that are doing well. So it's it's not about you only have one choice. I do think that's the best of both worlds can exist at the

13:05 same time. Um, and that's the good part of having, you know, autonomy, right? As a self-directed investor. >> Yeah. >> Yeah. Yeah. So, and that is where I think maybe the next important thing we should talk about is flexibility. So, as a self-directed investor today, if you're doing this on your own, um, why do you think flexibility and adaptability matter more than ever in this environment? >> I actually encourage more people to do their own financial investing. >> Okay. uh but I also understand that this uh financial this flexibility do come at a cost where you will need to do your own homework. you have to come back home tired and then you have to plan oh where should I put my funds in is it in the US and is it in China >> and uh each for their own forailer uh of

13:51 course we we see China as well they have their specialization in robotics nowadays >> so this flexibility is important uh at the end of the day it will help uh you find the best investment either in US or in uh China but then again uh like like what I mentioned earlier >> being having this flexibility will come at a cost. Um you will need to spend your own time own this. Yeah. So I I I don't think it's that easy. >> Um especially for some of my friends who have uh difficulty you know even when they come home they are so tired they have a kids. >> Oh yeah. >> So so uh for for myself I would still encourage uh your own self uh portfolio

14:38 management. If not, you can always have the expert do it for you. >> True. Yes. So, while u stock picking might look very fanciful, uh but maybe for some investors, it might not be suitable for them. Maybe to them looking at ETFs will be easier because they don't know how to or don't have the time on picking individual stocks. So, they rely on the funds that available or even if you don't want to pick your own ETFs, there are also um investments uh advisors. Yes. who are able to help you to build out your portfolio. So >> in other words, you can get started investing today but you know which format you have to [clears throat] see what plays out the best for your own circumstances. >> Yes. Correct. >> Yeah. And in fact when you talk about portfolio construction right >> there's always this very conventional mainstream advice that people will say

15:25 uh okay if you want to construct a portfolio then you can do like a 6040 60% in equities uh 40% in bonds. Yeah. So again I think this uh mainstream advice uh whether it works or not or whether it's helpful for you or not you also have to do some uh homework on your own because uh it doesn't work forever just like you know in say 2022 [clears throat] where interest rates were high both the equities and bonds didn't do well. So even if you construct [laughter] a portfolio like this expecting that oh you'll be fine then but it might not happen right. So we we that's why and that's where the flexibility comes in, right? If you have flexibility, you are able to adapt. You can always change your portfolio, make part of the allocation. Maybe you still have equities and bonds, but you you could always, you know, change the allocation or even having some other aside from equities, bonds, some other

16:12 asset classes as part of the portfolio as well in very uncertain markets, right? What does a good portfolio construction looks like to you? >> So a good portfolio construction looks like to me is one that I can sleep at ease at night. Oh >> yeah, I think it's important because um when we stay we we try to stay invested and get high returns um there may be stress in terms of >> how when I need the money hey my portfolio is down 20 30%. >> Can I can I take it out now? So these are some of the stresses and worries uh aside to your normal day-to-day job and I think this may worry some people maybe for others it may be their extra cash that they can >> uh take the vis. So it depends on uh individuals. For myself, I would rather

16:57 have a peace of mind at night. Investors should be looking at the long-term wise. >> So in others, even if you have some speculative positions just to spice up your portfolio, you want to make sure that it's like, you know, a very very small correct >> allocation of your portfolio >> should be a concentration. >> Yeah. Yeah. But the majority of the portfolio is put into assets that they are the ones whereby still within your risk appetite and you can sleep well at night. >> Correct. >> Yeah. Actually adding on to that I think another important consideration for portfolio construction is also uh no matter which asset you buy um the your investment thesis for the asset uh has to be supported by also multiple pillars not just based on like a single narrative uh for example uh you don't invest in AI just because you think it's going to be the future it's not just as

17:43 simple as that but in order for AI to be the future it has to be supported by uh you know capital expenditure it has to be supported by enterp enterprise adoption, the cloud infrastructure, semiconductor, so many different pillars. So I think those will help us to strengthen our investment thesis and therefore also construct a more resilient portfolio over the long term. >> Yes. >> So thankfully over the years you see barriers to investing have actually fallen significantly. So what do you think are some of the biggest changes that make investing more accessible in today's time? So if we look back at the olden days um people were I think I think even for my dad's period investing was >> pretty much very difficult >> um they had to find a broker find a remiser and then they were need to call them up hey I I got this stock I want to

18:29 buy [laughter] and and compared to now now right where we is just a click away from our phone I think in in the past it was >> um there were a lot of news that was lagging so by the time you received the news the stock price jumped And um if we look at uh how they had to place order previously uh in the olden days there were a lot of um phone calls and then the advisers will need to reach SGX to buy the stocks and then call back to client >> but now um it is very very accessible um even to the other markets >> uh around the world in Europe in US and we're just one click away. The thing is there's a lot of different brokers out there that is supporting uh access to to

19:15 the US and for podiums we just launched the US zero commission >> this will eventually help long-term investors short-term investors and uh even people who are investing in the trend >> uh take advantage of this. So for long-term investors, they need not worry. They could just do uh either they can carry out dollar cost averaging or even invest take their time to invest monthly or weekly over the years to build a stronger portfolio >> and bigger. For short-term, we are looking at people who follow the trend. So uh zero brokerage will actually help them in terms of when they want to buy, sell, and this uh brokerage won't will no longer be a barrier. I think if we look at the past it can cost up to 4

20:01 USD, 5 USD and I think if we look back further it's about more than 10 >> and for short-term traders to earn this usually there are some uh we has have to be very large but um nowadays easily you can invest $100 $200 and the best thing is your brokerage is free. So Sasha, I'm going to ask you a difficult question, right? Okay. What do you think is Philip Securities unique selling point given that you know over the years there's been so many new brokers coming into Singapore and Philip Securities is still around. >> I think this honest and important question for us um for POS to stay competitive. We actually just launched a US zero brokerage for everybody and one of the things that uh we we are proud

20:48 for Philip Capital is that we have we support high touch in terms of uh clients if they need to reach out to us anytime >> we will be there and um even for us so I'm from the dealing desk and people will still call in during US market hours and we are ready to support their order flows uh if they have any issue on their platform any issue on their trades they need us to place a trade, we are ready. >> And for ourself, we also have Philip investor centers and people who have difficulty accessing from online, they can always go down to our affiliate investor center to reach out to the >> the the trading reps. >> Ah, okay. So, they can reach you directly at the trading desk. >> Yeah. And and on top of that, we also have our global markets. So, we offer uh

21:34 the different European markets, different Asian markets, and I think Korea will be next. So, so these are some of uh what poems do well and we strive to do do better for our investors. >> Thank you Son for sharing your insights today in this session. As markets continue to evolve, uncertainty will always be part of our investing journey. But for disciplined investors, periods like this could present potential opportunities. So we hope that today's session has given you some fresh perspectives on how to think about risk management and adaptability. and let us know in the comment section below on how you have been investing in this current market environment and we'll see you again in the next episode. If enjoyed this episode, you can follow us on LinkedIn and also like and subscribe to

22:19 the channel. Leave your questions in the comments and let's keep building money and joy together.