Thinking beats downloading

A recent column by Guy Spier in Bloomberg caught my attention. Spier, a well-known value investor, argues that the golden age of value investing is over because artificial intelligence has eliminated the information advantage that dedicated investors once had. His complaint is familiar: as he narrates it, obtaining Warren Buffett's annual report in the 1990s required a phone call to Berkshire's headquarters and days of waiting. Today, you simply ask ChatGPT for a summary of everything publicly known about any company.

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I understand his nostalgia because I lived through the same transformation. When I started as a mutual fund analyst in the early 1990s, obtaining even basic information required real effort. Some mutual funds wouldn't publish their NAVs publicly – you had to visit their offices in person. Getting those NAVs by fax, even a few days late, felt like a technological breakthrough. I recall going through the elaborate process of securing permission to access the parliamentary library, as it was the only place where I could reliably find UTI’s annual reports.

However, I believe Spier's conclusion – that this ease of access has eliminated all investing advantages – fundamentally misses the point. The advantage in investing never came from the difficulty of gathering information. It came from what you did with that information once you had it.

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When data was hard-earned and sparse, we spent quality time with it. You would pore over every word of an annual report, every number in a balance sheet, reading and rereading until you truly understood what the company was about. The scarcity of information necessitated a thorough analysis. You couldn't skim through dozens of reports in an afternoon because you didn't have dozens of reports to skim through. You had to extract maximum insight from limited material.

Today's abundance creates the opposite problem. When you can get instant summaries of everything said about a company, the temptation is to consume more and think less. Speed becomes confused with insight. Having ChatGPT summarise a company's business in thirty seconds feels productive, but it's the analytical equivalent of fast food – convenient but ultimately unsatisfying and non-nutritious.

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We've actually been here before. When the internet became widely accessible in the late 1990s, similar concerns emerged. Suddenly, company reports were available online, financial data could be downloaded instantly, and news flowed continuously. Many believed this would eliminate informational advantages entirely. Yet two and a half decades later, the gap between successful and unsuccessful investors remains as wide as ever.

Why? Because the real advantage never lies in having information first or having more of it. The advantage lay in thinking about it better. An LLM can tell you what everyone thinks about a company, but it cannot tell you what to think. It can summarise all public commentary on a business, but it cannot help you understand which commentary matters and which is noise.

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Consider Warren Buffett's investment in Coca-Cola. The information about Coca-Cola's business – its brand strength, distribution network and competitive advantages – was publicly available to everyone. Thousands of professional investors had access to the same data Buffett did. What made Buffett different wasn't that he had secret information. It was that he understood the significance of the information everyone else was overlooking.

This brings me to what I believe is the enduring advantage in investing: patience and perspective. Not the patience to wait for the paper to crawl out of a fax machine--an image that must be mysterious to today’s generation – but the patience to sit with an idea long enough to understand it deeply. Not the perspective that comes from travelling to meet famous investors, but the perspective that comes from thinking independently about what truly matters in a business.

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The irony of the AI revolution is that whilst it has made information gathering effortless, it may actually increase the value of careful thinking. When everyone can get instant answers, the person who takes time to ask better questions gains an edge. When every investor has access to the same LLM-generated summaries, the investor who reads the original source material gains a perspective others lack.

The challenge for today's investor isn't competing with AI – it's resisting the temptation to let AI do the thinking. Utilise these tools to gather information efficiently, whenever possible. But then shut them off and think. Read the source information yourself. Consider what management incentives really are. Think about whether the business model makes sense, not just whether the algorithm says it's undervalued.

The golden age of value investing isn't over. It has simply evolved. The advantage now belongs not to those who can gather information fastest, but to those who can think about it most carefully. No LLM can replicate that. At least for now.

Also read: The thinking investor’s advantage