How the top 1% invests in AI, Digital Assets and Real Estate

[00:00:00] Welcome to Non Consensus Investing. I'm Ram Ahluwalia, your host and CIO at Lumida Wealth, where we specialize in the craft of alternative investments. At Lumida, we help guide clients through the intricacies of managing substantial wealth so they don't have to shoulder the burden alone. Through this podcast, we draw back the curtain to reveal the strategies employed by the best in the business for their high net worth clients so that you too can invest beyond the ordinary.

Thanks so much Ram for joining us for this discussion. Many listeners probably are know your background, but for those who may not, we'll just run through a little bit more. Your research has been featured in CNBC in Bloomberg and the Wall Street Journal. You're the C-E-O-C-I-O and Co-founder of Lumina and you co-wrote a Wall Street Journal op-Ed with former SEC Chair Arthur Levitt.

You also wrote an op-ed in American Banker. And Lumida's investors, former [00:01:00] ICC Chair Arthur Levitt, as well as head of, former head of KKR Reddit, that's the flyover. That's great. I wish my mom was here to hear that. We'll have to send her. We'll have to send it to her afterwards. An image or something, yeah.

Thanks for having me. Awesome. Let's get into it. Let's get into the discussion. We'll set the stage here for some topics we'll discuss across AI, digital assets, and longevity. Clearly, we've seen a rise in some of these topics here. The rise of AI, the rise and fall of digital assets that continue to be in the news.

You talk about us being on the precipice of a changing world and starting to think about non consensus investing across some of these themes. Talk to us a little bit. What would we mean by the precipice of a changing world? It's an incredible time to be alive. We have the convergence of so much transformational change hitting now and in the next few years.

We're seeing the resurgence of digital assets and [00:02:00] better legal frameworks coming. We're seeing the rise of AI. We're seeing shifts from reshoring and we're seeing a nuclear renaissance. We're seeing people live longer and better. The best time to be born, if not today, is tomorrow. It's a great time to be alive.

I agree with you on that. It's absolutely, it's a great time to be alive. Let's start to cycle through some of the topics first, starting with AI. Really, this is what's. Really exciting, it's in the news every day, public companies are investing, startups are incorporating AI, investors are thinking about how it impacts their portfolios, but let's just take a step back, talk about the technology, and what's the right mental model?

So I think the best framework is to look at this as, The rise of the new form factor. So to frame it up, what this slide shows is that roughly every 10 years or so, there's a new form factor. So in the seventies, you had the Unix command [00:03:00] line prompt, you had the rise of Windows operating system in the eighties, in the late nineties, you had the browser, the web 2.

0 apps like Gmail, et cetera. And then mobile was the last form factor in the 2010s. Now, interesting to note, mobile as a form factor is saturated, right? Apple is experiencing year over year declines in revenue. The personal computer already has been in decline. If you look at Microsoft PEC sales, their declines are double digit and the same goes for a MacBook Pro.

So now what AI is introducing is this jump ball in big tech where there's competition to discover and land on the new form factor. No one knows what it is. There's discovery, right? GPT 4. It's not a new form factor. It's a browser. It's a keyboard input, maybe voice input to access this. And there are different bids for the new form factor.

We're seeing Apple roll out a Vision Pro. They've kept [00:04:00] expectations low, calling it a gaming and enterprise device, although you can be sure that they see this as a way to combine AR and AI and potentially compete for that. And you're going to see other offerings from Google and how they reimagine.

Android, the browser, search, with AI leading as enabling this new form factor. It's really exciting. Now when we think about what's happening now in AI, we're already starting, there's a lot of unknowns and we're already starting to see some pushback. When you start to think about when artificial general intelligence comes and people are getting concerned.

I want to bring it back to a theme that you've talked about before. You were very early to say that interest rates were going to stay higher for longer. And now we're starting to see Bill Ackman and Chamath and a number of others start to say that interest rates are going to stay higher for longer.

You're making a call here that AI will be higher for longer. What do you mean by that? [00:05:00] What I mean here is that we'll be in a slow takeoff world. This is not going to be an overnight transformation where you see mass dislocation. That's one of those things where it's hard to measure progress in one year, but we may be underestimating the progress over the span of five to eight to 10 years.

And we're going to see that accelerated change, but it's not going to be immediate. And you can see. Some of the immediate reactions already, right? So JP Morgan has banned chat GPT, Samsung, some other companies have as well, but the promise is there and the early adoption is taking place at startups that are conscious and deliberate about it, as well as creators that are focused on this, where they can get the productivity gains and they don't have to go through a compliance to roll out this technology.

The other is that AI has a learning curve. We're seeing a proliferation of AI apps, the dozens and dozens of new AI apps coming online each week. I know we [00:06:00] experiment with different ones. Most of them aren't that great, but some of them are and they're useful. But the point is that even AI has a learning curve, right?

There was this idea, this meme idea a few months ago that we're going to have the rise of prompt engineers. I don't think that's actually the case. The fact that you need prompt engineering skills is a sign that AI isn't where it needs to be for mass adoption. If you really had to be skillful in that and have to supply the context and supply your preferences and the broader goals you're trying to achieve, then AI isn't ready.

You're already seeing declines in GPT usage over the summer. Some of that's driven by student, but there's a possibility that we have a narrative of AI disillusionment. I would expect that, although the promise is real. So the opportunity is there, but it's going to be a slow takeoff world. Makes sense. So the technology is there, the consumer experience is not quite there yet.

Maybe this is a, an area where big tech step in. How do you see, A [00:07:00] tech getting into AI and maybe impact. So the user experience needs to be improved, the technology also still needs to level up and be improved. So if you take a look at say, Google, and they have a private LLM, it goes by the name of Lambda.

And last summer, there were some transcripts leaked by an internal Google engineer who was then terminated for leaking those transcripts. And it shows a level of intelligence that's beyond what we see with GPT 4. So there are private LLMs. Not available to the public that are very advanced and very skilled.

We're not seeing that yet, but that technology will come and Google has a lot at stake here because if an AI enabled interface is a new form factor, then the ad revenue on search is at stake. So it's no surprise that Google was slow walking the release of this technology. And that Microsoft who of course owns half of open AI is an agent of change here.

I think the other things to [00:08:00] consider here is that you're going to see. The rise of the smaller verticalized LLMs by industry, legal GPT is a very obvious one, but imagine psychotherapy, GPT, that's going to happen. Finance GPT. Bloomberg already has a version of GPT. By the way, my, my wife works at Bloomberg.

I asked the first question, I asked Bloomberg GPT. This is back in February or March, I said, what stock should I buy? And it said NVIDIA. And the funny thing is at the time I dismissed it, I said, okay, AI is looking for its own here. It's pushing NVIDIA. But anyway, the point is that you're going to see verticalized specialty use cases as opposed to the holy grail of broad based artificial general intelligence in the style of the HAL 9000.

That's going to be a few years away, but again, based on what we're seeing from Google and their private R& D, that does seem like it's going to be in the offing. So we've talked a little bit about the consumer. What are some of the more specific? [00:09:00] What happens now is we transform search into getting results.

What do I want? Today, if I'm planning a holiday vacation, I have to search for itineraries, I got to research kid friendly cities, got to figure out how to go from A to B. Tomorrow, or soon, I can specify goals. Help me plan a vacation, I've got three kids and we want to go to a beach, here's a budget and we want to spend 8 10 days, etc.

And I can take those goals, those preferences, those considerations, even my preferences in airlines and all the rest, and not only do the research, but then execute upon it. So it delivers the time. And that means that. We, as a user, get the most value out of these solutions by providing personal preferences.

We reveal private information about ourselves. This is going beyond cookies. This is very, the more value you get from the AI, linearly correlate [00:10:00] with the amount of data you give to the AI. So security matters, privacy matters, and it will create more time for users. And people historically have given up.

Privacy for convenience and value. And I expect that'll happen here, but it'll also trigger new kinds of investments, which I'm sure we'll talk about, but consider, for example, like job, the job search market, like LinkedIn as a primary job board, that can be transformed. You can instead have a consultative conversation.

What is the best career or job for me based on my skills and. You can imagine AI starts doing interviews for candidates on behalf of employers and the different kind of matching process that takes place, or if you're searching for a house as well. So these are high stakes decisions, number one. Number two, those are large markets, the housing market, the career market, forget about restaurant reservations and travel too, [00:11:00] financial decision making.

So AI will transform quite a few industries. So just to summarize that, AI could help us with decision making and also save us time, is that Correct. And we get more value out of AI with the more that we reveal to AI. So the more intimate of a relationship you have with AI, the more value you get. Yeah, makes sense.

Which creates policy questions. There's a number of work there, but maybe, let's maybe talk about some of the other areas that you could see AI impacting across enterprise, across government, just beyond the consumer. So there's a lot of focus on the consumer AI, and again, the holy grail there is this personal assistant AI that is accessing your email.

It's on your WhatsApp, it's on your Telegram, it's on your SMS. And it's intermediating all those communications for you. It's summarizing, it's prioritizing, it's giving you suggestions and recommendations, so you get more time. That's [00:12:00] where the, a key battle across big technology firms is like, how does.

Apple updates Siri. How does Google and how does Amazon update Alexa, et cetera, to go after that market? And we talked about the special use cases. Now, the other key verticals which are not getting enough attention are enterprise AI and government AI. In the enterprise, of course, you have small businesses, you've got large corporates, but in broad brushstrokes, what to expect is AI is tailored to specific roles.

‍