For the week ending May 30, 2025
Theme of the Week: When the Machines Took the Wheel
This week’s 🚦Signal & Noise we explore the paradox of progress: how artificial intelligence is revolutionizing investing, while human behavior remains as erratic as ever. From the Golden Gate Bridge's improbable construction during the Great Depression to the modern-day labyrinth of airline fees, we examined the tension between innovation and human nature. In the financial realm, AI is reshaping markets, yet investors still grapple with fear and overconfidence. As we navigate this new landscape, it's clear that while technology evolves, the human psyche remains a constant wildcard.
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ON THIS DAY: The Bridge That Was Never Supposed to Happen
Eighty-eight years ago this week in 1937, San Francisco pulled off the impossible: the Golden Gate Bridge opened to pedestrians. Two hundred thousand people paid a quarter each to walk across what was then the world’s longest suspension span, a feat so audacious that engineers once called it madness.
Built at the height of the Great Depression, when public works projects were mostly fantasy, the Golden Gate Bridge was a moonshot in steel. Construction began in 1933 when unemployment was near 25% and soup lines wrapped around city blocks. Somehow it finished ahead of schedule and $1.3 million under budget. (Please read that last part again and try not to laugh/cry.)
The challenges were absurd: treacherous tides, 372-foot-deep waters, gale-force winds, and 6,700 feet of open straits. The experts said it couldn’t be done. Chief engineer Joseph Strauss disagreed, and then proved it.
Strauss didn’t just build a bridge; he redefined jobsite safety. He installed a revolutionary movable net beneath the bridge, saving 19 lives during construction. Those survivors became the aptly named "Half Way to Hell Club." Eleven others weren’t so lucky, including ten who died in a single tragic accident just months before the bridge opened.
The bridge's iconic International Orange paint? Not the result of a branding brainstorm. It started as a primer coat. Architect Irving Morrow saw it, loved it, and turned it into legend—pleasing the eye while keeping ships from plowing into the towers. The military wanted it painted in black and yellow stripes. Yes, really.
When the gates opened on May 27, 1937, the mood was electric. People danced, roller-skated, and even pogo-sticked across the span. Reporter Wills O’Brien wrote, "A necklace of surpassing beauty was placed about the lovely throat of San Francisco." The next day, FDR pressed a telegraph key from D.C., and the bridge opened to cars as horns, bells, and sirens erupted across the Bay.
It held the record for longest suspension bridge until 1964, but it’s never lost its title as one of the most iconic structures on Earth. More than an engineering marvel, the Golden Gate Bridge stands as proof that during our darkest moments, audacious vision can triumph over doubt, delay, and despair.
In 1933, it was called impossible. In 1937, it was called the noblest structure of steel on the planet. Today, it still is.
Sources: Wikipedia, Darnell Technical, goldengate.org, PBS American Experience
When Markets Panic, Don’t Join Them
Tariffs. Tumbling stocks. CNBC panels breathlessly dissecting the end of capitalism (again). Market volatility isn’t just back. It’s doing cartwheels. The question isn’t what the market’s doing. It’s what you’re about to do in response.
For investors, volatility tests not just portfolios but patience. This is where the real work begins, not with clever trades or market timing, but with steady hands and strong minds.
Two of the most influential voices in investing, William Bernstein and John Bogle, offer wisdom that’s especially relevant right now.
The Market Is Irrational. You Can’t Afford to Be.
William Bernstein who somehow made the jump from neurosurgery to finance without getting insufferable, argues that the secret to investing success isn’t buried in an Excel sheet:
"What I tell all engineers is to forget the math you've learned that's useful, devote all your time to now learning the history and the psychology. And one of the things that any stock analyst, any person who runs an analytic firm will tell you, because they really don't want to hire a finance major, they actually want philosophy and English and history majors working for them."
Why does this matter? Because investing success isn’t just about numbers. It’s about behavior. Tariff talks, interest rate fears, and global uncertainty don’t just move markets, they move us. And often, not in good ways. Those who understand history and psychology are better equipped to interpret what’s happening without overreacting.
Bernstein also reminds us:
"The biggest psychological flaw, the mistake that people make, is being overconfident... One of the mistakes that a lot of investors, and particularly men make, is thinking that they're able to tolerate stock market risk... But when the excrement really hits the ventilating system, they lose their discipline... The analogy that I like to use is a piloting analogy, which is the difference between training for an airplane crash in the simulator and doing it for real."
Many investors think they can handle risk until they actually experience it. And when fear kicks in, even the best-laid investment plans can fall apart.
This is why honest conversations between advisors and clients are so important. If you're an advisor, remind your clients: it’s not about proving how much risk they can “handle” when times are calm, but how they’ll behave when things feel out of control.
Action Is Overrated. Discipline Isn’t.
And then there’s John Bogle, the founder of Vanguard and champion of long-term, low-cost investing. His timeless advice?
“Don’t do something…just stand there!”
In a world that praises action and rewards hustle, this feels counterintuitive. But in investing, inaction is often the most powerful action you can take especially when headlines scream for attention and fear dominates the news cycle.
A Word for Advisors
This is your opportunity to be a behavioral coach, not just a portfolio manager. Reassure clients that market dips, geopolitical headlines, and policy shifts are part of the journey and not a reason to abandon the plan.
Lean on the timeless principles that Bernstein and Bogle preached:
Understand the psychology, not just the math.
Prepare clients for the real emotional impact of volatility.
Stay disciplined.
Don’t overreact.
These aren’t just quotes, they’re seatbelts. Buckle up, stay calm, and keep your eyes on the long road ahead.
In volatile times, the most powerful tool in your arsenal isn’t a new ETF or a hot take. No, it’s restraint. Channel your inner Bogle: Do nothing. And do it well.
“I'm not worried about artificial intelligence giving computers the ability to think like humans. I'm more concerned about humans thinking like computers."
—Sydney J. Harris, American journalist and author
TSA, Take My Wallet: A Modern Aviation Racket
Think your $417 flight deal is a steal? Think again. By the time you're done paying fees for breathing air and not smuggling fruit, you're basically co-financing a runway expansion in Topeka. Let’s break down the Kafkaesque theater of modern airline pricing and why it now feels eerily like booking an Airbnb during peak delusion season.
Booking an international flight in 2025:
Ticket: $417
Taxes and carrier charges: $289
Passenger Civil Aviation Security Service Fee: $5.60
Transportation Tax – Arrival / Departure: $34
Passenger Facility Charge: $4.50
Operator Charges: $41
Departure Charge: $17
Security Tax: $12
Security (again?): $6
APHIS User Fee (so bugs don’t immigrate): $3.96
Immigration User Fee (so you don’t immigrate): $7
Customs User Fee (they’ll still yell at you): $5.50
Breathing While Boarding Surcharge: Coming soon
At this point, I’m not flying internationally. I’m funding the entire Department of Homeland Security, repaving the runway, and personally underwriting a customs officer’s ergonomic chair.
Just tell me the plane ticket costs $900 and throw in a bag of pretzels.
Because that’s what we’re doing here. We’re performing a little theater of fiscal denial. Airlines want to list that impossibly attractive $417 price so they can lure us in like moths to a flame. But by the time you click Continue to Payment, you're basically sponsoring infrastructure upgrades in three nations and an emotional support llama in TSA pre-check.
Let’s not pretend we don’t know what these fees are. Half of them sound made-up. The other half are made up. "Passenger Facility Charge?" Is that for the privilege of sitting in the airport, which looks like a Soviet food hall during rationing? "Operator Charges?" What am I, using a rotary phone?
"Security" appears on the receipt twice because clearly, we need both regular security and bonus security—one to take your water bottle and one to misplace your luggage.
And nothing says modern aviation dystopia like the APHIS User Fee. It’s not enough that you get shaken down for your contraband banana, now you get billed for the privilege. The Immigration User Fee ensures you’re financially penalized before the verbal abuse begins, and Customs adds their own surcharge just in case you had any dignity left.
Honestly, it's all starting to feel very Airbnb-ish. You know the drill: see a place for $82 a night, feel clever for locking it in, and then get whacked with a $45 cleaning fee, a $60 service fee, and a $15 "linen refreshment surcharge" that apparently covers one limp towel and a suspicious stain. Booking a flight now offers the same charming bait-and-switch, only with more TSA pat-downs and less refund policy.
The next frontier? The "Air Molecule Usage Fee" for the oxygen you dared to inhale while taxiing.
So here’s a thought: skip the itemized guilt trip. Just tell me the damage up front and maybe toss in a coupon for a functioning armrest. We’re not buying flights anymore. We’re buying existential crises with a side of SkyMall.
Welcome to the Algorithm Age: Why Your Investment Playbook Just Expired
Forget the AI fatigue. Yes, we’re all tired of hearing about it; the breathless think pieces, the overused buzzwords, the LinkedIn thought leaders pretending they invented machine learning over the weekend. But here’s the thing: beneath all the hype lies a brute economic fact. AI isn’t just another tech trend. It’s bulldozing the foundations of how investment decisions are made, analyzed, and executed. If you're still clinging to your quaint little P/E ratios and five-year growth charts like a security blanket, brace yourself.
The AI revolution is the most seismic shift in markets since electronic trading, and unlike past disruptions, this one doesn’t pause to let the humans catch up. AI is changing not only what gets invested in, but how the game is played and who gets to keep playing at all.
The Quant Apocalypse
Once the crown princes of Wall Street, quants spent decades reigning supreme with statistical wizardry and models that read like math PhDs wrote them in ancient Greek. But today, machine learning makes even elite quant teams look like they're showing up to a Formula 1 race on tricycles. AI doesn’t just parse data, it devours it. Algorithms now detect non-linear relationships and patterns that traditional statistics can’t dream of touching.
Some equities strategies now generate as much as 50% of their alpha from machine learning. That's not a trend. That’s a hostile takeover.
The twist? AI doesn’t replace quants, it weaponizes them. Those who embrace AI get god-tier capabilities. Those who don't? Well, there's always TikTok investing.
Investment Analysis, Mutated
Forget scrolling through balance sheets or parsing Fed minutes over cold brew. AI now scans satellite images for crop yield forecasts, interprets social media for consumer sentiment, monitors shipping traffic for supply chain risk, and ingests real-time credit card data like it's candy. It doesn’t just read the signals, it rewrites them.
Old-school models adjust quarterly. AI-driven strategies adapt live. Reinforcement learning means algorithms are constantly evolving, recalibrating in real-time to market volatility and liquidity shifts. Human oversight? Optional. Accuracy? Terrifying.
Risk management is being rebuilt from scratch. Want to predict a downturn? Forget GDP reports. AI systems already spotted the sentiment crash via tweets, shipping routes, and even the weather in Kansas.
The Price of Ignorance
Here’s the punchline: 72% of companies adopted AI in 2024. That’s up from 55% the year before. Meanwhile, enterprise AI spending is projected to grow 84% annually over the next five years. If you’re investing in companies without understanding their AI game plan, you’re essentially analyzing Ford in 1920 without grasping the significance of the internal combustion engine.
This isn't about investing in AI stocks. It's about recognizing that every stock is now an AI stock (or a value trap).
The Hidden Power Grab: Energy
Data centers don’t run on fairy dust. They consume power like a toddler inhales sugar. Global electricity demand from data centers is expected to double by 2030, reaching levels comparable to Japan's entire power grid. In the U.S., nearly half of electricity demand growth through 2030 will come from data centers alone.
Translation: there’s an unsexy but vital investment thesis forming around infrastructure and energy. Power grids, transmission upgrades, cooling systems, backup generators, battery storage—it’s the backbone of AI. Miss it, and you’re missing one of the century’s biggest investment supercycles.
Utilities, renewables, even good old-fashioned nuclear is suddenly sexy again. If Nvidia is the shiny object, energy is the dark horse.
The Real Correction
AI isn’t just disrupting portfolios. It’s disrupting valuation itself. The Magnificent 7—those glitzy mega-cap tech names—dragged the S&P 500 into correction territory. Was it hype deflation? Or just the market struggling to apply 20th-century math to 21st-century companies?
Traditional metrics can’t capture the velocity of innovation. Companies with solid AI integration aren’t overpriced, they’re under-understood.
What Now?
Here’s your new playbook:
Dump rigid valuation metrics. Embrace models that account for AI-driven competitive moats.
Diversify beyond obvious AI plays. Infrastructure, energy, edge computing since it’s all part of the stack.
Understand risk differently. Today’s risk isn’t just volatility. It’s irrelevance.
Investors stuck in the old paradigm will keep getting blindsided by what’s already obvious to the machines. The real danger isn’t that AI will ruin the markets. It’s that it already has for anyone unwilling to evolve.
Embrace or Expire
The future belongs to investors who can harness AI’s analytical firepower without surrendering their judgment. This isn’t about worshipping the algorithm. It’s about knowing when to trust it, when to interrogate it, and when to use it to destroy your competition.
Now, here's the twist that AI skeptics and disciples alike need to hear: despite all of this disruption, the market still does what it’s always done. The market digest information. It just does it faster, sharper, and with fewer coffee breaks. In many ways, AI is the Efficient Market Hypothesis (EMH) with rocket boosters. The market was already an information processor; AI simply turns it into a nuclear-grade processor with an espresso addiction.
The AI revolution isn’t looming. It’s already reprogramming the market in real-time. Either learn the new code or be rendered obsolete in it.
That’s a Wrap
In a week where AI's influence on investing became undeniable, we were reminded that technology may change the tools we use, but not the emotions that drive us. The Golden Gate Bridge stands as a testament to human ingenuity overcoming adversity, much like investors must now adapt to a market increasingly driven by algorithms. As we face the complexities of modern investing, perhaps the greatest challenge lies not in understanding AI, but in understanding ourselves.
In closing, do something kind for someone this weekend. Altruism is still noble despite Ayn Rand’s objections. And while you’re at it, challenge your brain: read something difficult, thorny, maybe even a little uncomfortable. It’s the antidote to the algorithmic sludge we scroll through daily. I’m diving back into some Graham Greene because nothing says relaxing weekend like moral ambiguity and postwar guilt.
Pax, Lawain
Sources for Welcome to the Algorithm
Barchart. "Beyond Nvidia: 3 AI Stocks Poised To Surge Big Time In 2025." May 28, 2025. https://www.barchart.com/story/news/32607973/beyond-nvidia-3-ai-stocks-poised-to-surge-big-time-in-2025
Lumenalta. "The impact of AI for portfolio management in 2025." January 11, 2025. https://lumenalta.com/insights/the-impact-of-ai-for-portfolio-management-in-2025
Cao, Bokai, et al. "From Deep Learning to LLMs: A survey of AI in Quantitative Investment." arXiv preprint arXiv:2503.21422. March 27, 2025. https://arxiv.org/abs/2503.21422
Menlo Ventures. "2024: The State of Generative AI in the Enterprise." April 2, 2025. https://menlovc.com/2024-the-state-of-generative-ai-in-the-enterprise/
Nature. "Data centres will use twice as much energy by 2030 — driven by AI." April 10, 2025. https://www.nature.com/articles/d41586-025-01113-z
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