Friday Wrap-Up: Milken’s Method and a Tech Day in New York

Nicolai Tangen · Norges Bank Investment Management

Europe was slower to recover from the financial crisis because it took losses longer and never cleaned up its banks.

Tangen contrasts the US and Europe after the financial crisis. The US shrugged off the losses, took them and moved on, while Europe did not, so it was stuck with losses for much longer and did not clean up its financial institutions. He concludes this left Europe much slower to get going again, while the US's agility in changing direction is a real positive.

“We saw it for instance after the financial market, after the financial crisis, they just in a way shrug it off, take the losses, move on. It's something we did not do in Europe. We were stuck with, you know, with losses for much longer. It didn't clean up our financial institutions.”at 5:44

Nicolai Tangen · Norges Bank Investment Management

Surprised how little effort top managements put into AI adoption; a widening gap separates AI-era companies from old industries.

Based on sitting in on company meetings with top managements at both a European and a US company in New York, Tangen finds corporate AI adoption and integration efforts surprisingly weak. He sees a growing gulf between modern, AI-driven companies and old industries that still operate in old-fashioned ways, and says he is surprised there isn't more focus from the top to get AI implementation going.

“I am surprised how little effort they put into AI adoption and AI integration. Increasingly, there is this big gulf opening up between companies in the kind of modern world, in the AI world and old industries”at 6:35

Nicolai Tangen · Norges Bank Investment Management

Old businesses face obsolescence; PE buyers are acquiring them to replace labour with AI, so not adopting AI is risky.

Tangen argues that a large part of the risk in society and the stock market now lies in old businesses that will be replaced or made obsolete. He points to an emerging trend of private equity firms and large players buying old-fashioned companies to replace their labour force with new technology, citing SoftBank moving in on a security guarding company where he expects guards to be replaced with AI solutions. His conclusion is that staying stuck in old technologies is risky, because if a company does not implement AI, someone else will take it over and do it.

“I think probably a lot of the risk now in society and in the stock market is some of these old businesses which are just going to be replaced or totally obsolete.”at 7:16