Merryn Talks Money
The Perpetual Hunt for ‘Alpha’
Feb 7, 2025
Steve Hou, a Bloomberg Indices Quant Researcher specializing in systematic investment strategies, joins the discussion on the relentless search for ‘alpha’ in investments. He highlights the crucial role of consistent R&D spending as a predictor of innovative success. The conversation also covers how AI is transforming traditional industries and the importance of timely investments in turnaround companies. With insights on niche markets like chocolate stocks and the significance of shareholder yield, Hou provides a smart roadmap for savvy investors.
38:23
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Quick takeaways
- Focusing on year-on-year growth in R&D spending identifies innovative companies that are more likely to succeed over time.
- Examining the stability of gross margins reveals a company's pricing power, highlighting hidden investment opportunities in niche markets.
Deep dives
Open Source AI and Innovation
Open source AI models, such as Meta's Llama, are revolutionizing the tech landscape by making advanced technologies accessible to a broader audience. Startups like RightSee leverage these tools to create innovative solutions, exemplified by Job Search Genius, which assists job seekers in crafting resumes, practicing interviews, and negotiating salaries. This democratization of technology allows smaller firms to compete and bring novel ideas to market without the burden of high costs associated with proprietary software. The emphasis on open source AI underscores its potential to stimulate innovation across various sectors, benefiting both developers and users alike.
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