AI Panic and Crazy?

If you have any software stocks in your portfolio, you likely have noticed they may be taking a beating. There is considerable uncertainty about the rapid implementation and growth of AI and its potential threat to conventional software applications.

Stocks are taking a beating, as are some in my Hank High Risk ETF. Coveo and Vital Hub are being pounded, as is a new stock I purchased, Enghouse. Enghouse was the result of my using the new platform feature that lets me hunt for 100 baggers, like what Constellation software looked like in 2011. 

But this isn’t about AI, it’s about typical human psychology.

People are running for the exits. Someone shouted, “AI fire,” and everyone ran.

But sound value investing principles continue to be the guiding light in the dark of this storm.

Like a shoelace, if a company produces a great product or service and uses AI to enhance those offerings, it has a solid foundation. Next, management must be of top-notch quality. Weak, distracted, full of themselves CEO’s or Boards have no place. Owners of small businesses who refuse to even consider the benefits of AI should polish their old resumes. They will be working for someone else shortly.

But this isn’t new. Humans have always felt threatened by change. As the price of groceries rise for example, Canadians are trying to buy different things at the grocery store. But what if you don’t really need to shop there? What if you just need to change your behaviour? Here’s what I did.

Technology and common sense have helped me do the following when buying groceries. Believe it or not, this is cheaper than shopping at a conventional chain. I still go to the grocery store, but buy less.

1. I go down the road and buy apples, cooking apples, squash, pears and cider from the farmer's store. My last trip was $25 for two bags of apples and some pears.

2. I buy pork from the farm store of a pork farmer.

3. I buy beef from a butcher shop on a farm about 40 minutes away. They also now deliver. Their beef is raised in a very close-to-organic way.

4. I buy mushrooms from the forests of BC. Dried, they are shipped to my home.

5. I buy seafood from a start-up in Nova Scotia. It’s shipped to Ontario with next-day delivery, flash-frozen on the boats, and of incredible quality.

6. After I finish writing this, I’m going to drop by the sweet potato farmer who has a small booth inside a building and buy a bag of sweet potatoes that they grew for $5. That’s enough for about a month of soups, baked and air fries. $15 a month would likely feed a family of 5 at least 2-3 meals a week. 

7. I have a battery on my freezer that will keep it running for 12 hours in a power outage. I also have a generator that will kick on, but in case of failure, I’m covered for most outages.

8. In my freezer, I have a year’s supply of raspberries, blueberries and blackberries from the farmer down the road.

Technology, innovation, and even AI are contributing to making these food sources possible and available at much lower costs than my parents paid, relative to inflation-adjusted prices. 

Fear continues to be the driving force behind most investment decisions. That continues to be a problem. My lesson on AI right now is to ensure that, like a shoelace, the software companies I have invested in can be enhanced with AI by skilled owners and managers. The core service they provide is needed for the clients and customers they serve. 

Panic selling is a chance for me to accumulate more of these incredible companies. The psychology of panic and disruption is everywhere. It’s an amazing time to be alive.

 This approach began with a short book titled What Grandpa Learned from His Honeybees: The Little Book to Be Smart with Your Money and Help the Environment. You can find it here.