Two investors known for shorting the real estate market in 2008 stated that investments in the AI sector have become too crowded, and they are looking in more distant areas for substantial returns.

One of the traders and investors who shorted the real estate market in The Big Short, Porter Collins and Vincent Daniel, stated that they are focusing on a more low-key corner of the market.

The two co-founders of Seawolf Capital stated that opportunities can be found in emerging markets, a sector that helped their firm achieve a 66% return in 2024.

Collins stated: "We are sitting here, searching globally, while everyone is losing their mind over artificial intelligence." Although he admitted that they would increase their exposure to AI "a little bit" when it aligns with their overall goal of finding the cheapest global winners.

However, Goldman Sachs said that the dramatic drop in the U.S. stock market on Monday may scare investors this week, but the event is not a precursor to a bear market. Analysts led by Peter Oppenheimer wrote on Wednesday: "We believe this is a correction, not the beginning of a prolonged bear market."

In particular, Collins stated that the markets in Brazil and China are very attractive, noting that Wall Street has underestimated their profit potential.

Daniel expects that if U.S. President Trump successfully pushes his agenda of American exceptionalism, emerging markets will be welcomed. In his view, this only works if the dollar weakens, a development that would prompt investors to turn to international markets for opportunities.

He said: "If the dollar starts to weaken, many will start to look at emerging market stocks instead of holding the top 15 assets. This is where we see value."

Year-to-date, the iShares MSCI Emerging Markets ETF has risen by 1.24%. Emerging markets have been volatile since Trump’s election, with threats of U.S. tariffs looming over many international markets.

He said: "The dominant force in the market is Trump. It's no longer the Federal Reserve. We hope to leverage what we think he wants to do and what he is most likely to accomplish (to profit)."

Article reposted from: Jin Ten Data