Artificial Intelligence (AI) has been changing the way the world works. Industries like transportation, cybersecurity, entertainment and manufacturing have all seen shifts in efficiency due to AI. It should come as no surprise that the finance industry is no different.
A recent episode of “The Rich Dad Radio Show” delved deep into how AI is changing the way people invest. Robert Kiyosaki, bestselling author of “Rich Dad Poor Dad,” spoke with Dohmen Capital Research’s Bert Dohmen about AI’s implications and potential for investing.
AI Is Going To Be Big
Dohmen starts the episode by saying he expects AI’s value to exceed the dot-com bubble. Because AI takes terabytes of data and can analyze it in a few seconds, it will completely revolutionize industries. For example, he brings up how experts can use AI to read through thousands of studies on cancer in seconds and summarize the findings to treat patients more effectively much faster than they could on their own.
However, for Kiyosaki, this doesn’t mean you should invest directly in AI. He explains that he made a lot of money from investing in oil and real estate because he diligently studied and understood those industries. If you’re unfamiliar with the AI industry and constantly researching how it is evolving, you probably should not be investing in it.
A Common Mistake Investors Make
The question that Dohmen Capital Research receives from most people is: What should I invest in? Dohmen explains that his investment research firm looks into several exchange-traded fund (ETF)-based portfolios for its AI-related research to gain insights on the market.
A common misconception about the value of stocks is that earnings determine their prices. Dohmen says earnings don’t make stocks go up. He claims that stocks with the best earnings can often drop the most, as earnings gains can be illusionary. It’s important not to base your opinion on what everyone else is looking at.
Dohmen provides a personal example of how a stock’s earnings and sales aren’t always as important as many believe. During the dot-com bubble, he purchased a stock without earnings and sales. The stock’s initial public offering (IPO) was around $2.50, but Dohmen watched the value climb to nearly $120 and began to really consider purchasing it.
Though it looked like a great stock, he was concerned that it hadn’t had any sales. He decided to buy it anyway, and its value continued to increase until it reached $950, at which point he sold it.
If your opinion of the financial market is the same as everyone else’s and what they’re saying on the news and other finance channels, you’re not giving yourself a chance to succeed. The way to make money in the stock market is to be in the minority, and using AI-driven research can help individuals and firms make more informed long-term investment decisions than simply following what the media is pushing.
Using AI To Track Money Flow
Both Kiyosaki and Dohmen agree that the most important part of being a successful investor is when you sell your shares. It may come as no surprise, but AI cannot accurately predict the future. However, there are still ways that his firm can use AI to determine when is the best time to sell. Investment firms are using AI to analyze the stock market through pattern recognition.
Dohmen explains that his firm is using AI to help predict the best time to sell through money flow. Money flow is how much money goes into and out of a stock. He says that supply and demand are the only things that actually change an asset’s price. If there’s more supply than demand, the stock price will go down. Likewise, if there is a lot of demand for a stock but a limited amount of shares, the value will rise. This makes money flow a significant variable to keep tabs on.
The money flow analysis Dohmen‘s firm focuses on helps inventors determine when to sell based on AI projections. When the wave of money flow in begins to ebb, then you can determine that the insiders are beginning to sell their shares and it’s time to get out.
Final Take
The traditional way of tracking stocks and investing is quickly becoming extinct. Taking advantage of AI-based research that recognizes cash flow patterns can help investors quickly and easily pinpoint the best times to sell their shares for a profit rather than guessing how the market will react.
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