Two traders from «The Big Short» say they’re not diving into AI with the rest of the market.
Instead, they’re betting on opportunities in cheaper foreign stocks.
Emerging markets can win out if Trump’s policies lead to a lower dollar, they said.
The artificial intelligence trade has gotten crowded, two investors famous for betting against the 2008 housing market said they’re looking further afield for sizable returns.
Porter Collins and Vincent Daniel, who were among the traders and investors who bet against the housing market in «The Big Short,» said that they’re eyeing a more under-the-radar corner of the market.
The two co-founders of Seawolf Capital told CNBC that opportunities can be found in emerging markets, an area of the market that helped their firm secure a 66% return in 2024.
«We sit here and we’re scouring the globe, and everyone’s losing brain cells around AI,» Collins said, though he admitted to adding a «little bit» of AI exposure when it fits in with their general goal of finding the world’s cheapest winners.
In particular, the investors said markets in Brazil and China are appealing, noting that Wall Street’s «hate» for Chinese stocks has obscured their money-making potential.
Daniel expects emerging markets to gain popularity if US President Donald Trump succeeds in pushing his agenda of American exceptionalism.
In his view, this only works if the dollar can weaken, a development that would move investors to look to international markets for opportunities.
«If the dollar starts to weaken, a lot of people are going to start looking at emerging market stocks relative to owning the top 15 things,» he said. «This is where we see value.»
So far this year, the iShares MSCI Emerging Markets ETF is up 1.24%. Emerging markets have wavered since Trump’s election, with the threat of US tariffs looming large over many international markets.
«The straw that stirs the drink is President Trump. It’s no longer the Fed,» he said. «Hopefully we can take advantage of where we think he wants to go and what is most probable of what he’s going to get done.»
Read the original article on Business Insider
