Focus on Long-Term AI Megatrend and 'Stay Sane': Carmignac

Bloomberg

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00:00Rotation is sort of that kind of vague term that we use for like something new is leading

00:03the market.

00:04I think it's more the profit taking out of some of the selective winners and they're

00:07quite big stocks and as a result if you take parts of that money out and you put it into

00:11some of these names that are lagged, I think it's interesting and also there is a reasonable

00:16narrative.

00:17I mean central banks are cutting interest rates around the world, there's discussions

00:20about the bank cutting interest rates as well, you mentioned the consumer, that's a sector

00:24that's been very, very, very weak this year.

00:27So there's elements of that potentially if interest rates get cut, then who's going

00:30to benefit?

00:31They're some of the laggard names.

00:32So maybe that's an opportunity.

00:33Yeah, we'll see if interest rates continue to be cut or if that's something we have to

00:36rethink.

00:37But sure, that seems to be an expectation in some places, isn't it, Obi?

00:39Let me ask you about the title of your recent research is Staying Sane in the Narrow Market.

00:44So how do we stay sane?

00:46Look, I think we stay sane by trying to stay long term.

00:49You know, I'm a big fan and we've got a big chunk of the portfolio in some of these AI

00:53themes.

00:54And I think by Staying Sane you have to accept that it is a theme, it's a mega trend and

00:58I think it will play out over the next five to ten years.

01:00There's no doubt about that.

01:01But Staying Sane is not putting all your eggs in that basket and being a bit more balanced

01:05about the risk.

01:06And if we look at the way the market's behaved, especially since Liberation Day, it's not

01:10been what I would call particularly sane.

01:12It's been all the money moved into not just some of the real long term leaders, but into

01:17some of the more speculative parts of the AI trade.

01:18Is it possible to protect yourself from the bursting of an AI bubble if we get one whenever

01:25that is to happen?

01:26Or is this just such an all pervasive theme that it's very difficult to do?

01:30I noticed that you talk about getting into some defensive stocks.

01:32We heard from Michael Burry earlier this week.

01:34I mean, he's outright short Nvidia and Palantir.

01:37I mean, what are you looking at when it comes to protecting your exposure to the AI theme?

01:42Yeah, that's a great point.

01:43I mean, I think protecting, diversification, some of the themes like the consumer staples

01:48have been almost the inverse opposite trade.

01:50We call it low vol or low volatility or less risky in terms of the stock profile.

01:55Those names have been some of the worst performing stocks this year.

01:58And so they're a reasonable natural hedge against some of the speculative behaviour that we may

02:02be seeing in the AI trade.

02:03So I think some of those stocks are a good way of protecting yourself.

02:06You don't want a full portfolio of them, but you certainly want a few names.

02:10And we saw that with the recent pullback, that those were the names that did quite well

02:13in the market.

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