199: Can A.I. Improve Investment Results? With Rob Arnott, Founder & Chair of Research Affiliates.

In this episode of the Money Maze Podcast, host Alex Frangos welcomes Rob Arnott, Founder and Chair of Research Affiliates, to explore whether AI can truly improve investment outcomes. Arnott, a pioneer in systematic investing, shares his nuanced view: AI is a powerful tool but not a replacement for human judgment, especially in long-term investing. He emphasizes that while AI excels in data processing, coding, editing, and automation—dramatically boosting productivity—it lacks creativity and long-term foresight. Arnott recounts how his team uses AI for everything from drafting research summaries and generating graphics to writing VBA code, yet explicitly avoids using it for core investment strategy development. He warns against overreliance on AI due to hallucinations and data mining risks, stressing that common sense and scientific method remain essential. The conversation also touches on current market opportunities, with Arnott highlighting undervalued small-cap value stocks in the U.S., global value, and long-duration inflation-linked bonds. He argues that market inefficiencies driven by indexation and emotional reactions to geopolitical shocks create fertile ground for disciplined investors. Finally, Arnott encourages professionals to embrace AI not out of fear, but as a lever for productivity and innovation, especially those with an adventurous, growth-oriented mindset. Key takeaways include: (1) AI is a productivity multiplier but not a substitute for human creativity in long-term investing; (2) Avoid using AI for core investment decisions due to hallucination and data mining risks; (3) Small-cap value and global value remain compelling opportunities due to structural market distortions; (4) Geopolitical shocks create temporary inefficiencies that disciplined investors can exploit; (5) The future belongs to those who can adapt, learn, and leverage tools like AI to work smarter, not harder. Arnott’s message is clear: AI is a tool, not a threat—when used wisely, it amplifies human potential.