2 'Big Short' Traders Bet on Emerging Markets Over AI

In the rapidly evolving world of artificial intelligence (AI), some investors are choosing to look beyond the hype and focus on other promising opportunities. Two prominent traders, known for their roles in "The Big Short," are steering clear of the crowded AI market and instead focusing on cheaper foreign stocks, particularly in emerging markets like Brazil and China. Porter Collins and Vincent Daniel, co-founders of Seawolf Capital, believe these markets offer significant opportunities, especially if U.S. President Donald Trump's policies lead to a weaker dollar, which could drive investors towards international markets.



The AI market has been a hot topic in recent years, with companies like Nvidia and AMD seeing significant growth in their stock prices. However, Collins and Daniel argue that the market is now too crowded, and they are looking for undervalued opportunities elsewhere. They are attracted to emerging markets due to their relatively cheap valuations and high dividend yields, such as the 10% dividend yields in the Brazilian index. They also anticipate that emerging markets will gain traction if Trump's agenda of American exceptionalism results in a weaker dollar, making these markets more attractive to investors.



Collins and Daniel's investment strategy aligns with their previous success in identifying undervalued opportunities, such as in the housing market crash of 2008. By betting against collateralized debt obligations tied to the U.S. housing market, they generated significant returns for their investment firm. Similarly, in their current approach, they are focusing on emerging markets, which are often overlooked by investors due to negative sentiment or geopolitical concerns. By identifying these undervalued opportunities, they aim to generate significant returns for their investment firm.

President Donald Trump's agenda plays a significant role in their investment decisions. They believe that Trump's policies, particularly his focus on "American exceptionalism," will have a substantial impact on the markets they are targeting. By closely monitoring Trump's goals and the likelihood of their success, Collins and Daniel aim to capitalize on opportunities that arise from his policies. Daniel also notes that for their emerging markets bets to succeed, the dollar must weaken, as this would make investments in emerging markets more attractive relative to owning the top 15 names in the market.

In conclusion, Collins and Daniel's decision to focus on emerging markets over the AI market demonstrates their commitment to finding undervalued opportunities and capitalizing on potential shifts in the market. By closely monitoring Trump's policies and the likelihood of their success, they aim to generate significant returns for their investment firm. As the AI market continues to evolve, investors like Collins and Daniel will continue to seek out new opportunities to capitalize on the changing landscape.