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- [00:01]
Maren Somerset Webb
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Maren Somerset Webb
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Maren Somerset Webb
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Nathan Hager / Bloomberg Daybreak Host
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Maren Somerset Webb
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Maren Somerset Webb
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Sarah Catterer
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- [02:02]
Maren Somerset Webb
Welcome to Marin Talks Money, the podcast in which people who know the markets explain the markets. I am Maren Somerset Webb and this week I am speaking with Sarah Catterer. Sarah is the CEO of Causeway Capital Management, a firm that she co founded in 2001. Today we speak about how AI is going to impact and is impacting the fund management industry. We talk about barg bargains in the UK and whether anyone is ever going to pick them up, what's going on in biotech and pharma and why you may need more medical devices than you think. Dera welcome to Maryn Talks Money.
- [02:34]
Sarah Catterer
Thank you for inviting me.
- [02:35]
Maren Somerset Webb
Right now, why don't we start? Can I just ask you to tell me what it is that Causeway actually does? You've been on the podcast before. We've got piles of new listeners since, so it's a little rundown of what does your business actually do.
- [02:47]
Sarah Catterer
Causeway is a fund manager. We manage approximately $80 billion of client assets, and our clients are largely institutional and our business is global equity. So we have both fundamental research and quantitative research. And we have strategies that deploy primarily fundamental with quantitative risk control and then primarily quantitative with fundamental risk control. So that's what distinguishes us. It's the convergence of both fundamental and quant.
- [03:19]
Maren Somerset Webb
Yeah, the combination of the two, which is not something you find that often. Okay, so following directly on from that, I wanted to ask you about AI, because I know you've been thinking about a lot, I know you've been talking about it, but the key question is, how are you using it in your own business? You know, we're hearing a lot about the businesses that are being disrupted by AI and how they're being disrupted. And I'm beginning to hear a lot from people saying, well, what do we need fund managers for? Because AI can do this.
- [03:43]
Sarah Catterer
Yes, if only I know. Well, I believe that the initial applications of AI for us at Causeway, we've had a similar experience to other enterprises in that we got tremendous efficiency gains from coding so that our software engineers could do so much more in the same amount of time. And I've noticed this based on our head of investment technology has been able to do much more for our quant effort and the people who work for him. So the quant software infrastructure has become much more developed more quickly. That means that our quant researchers can test more ideas more and do so not just more quickly, with more accuracy. The head of our digital services, just our whole IT effort, he's been able to help us produce Tax Optimizer. He did in about two weeks. It normally would have taken months. This was all, I guess in part, vibe coded using AI models to accelerate the software development. But the output has been really good. And the interaction with our team to make sure that it does what it's supposed to do for our mutual funds has been great. But I'm going to just step back and say that from a coding perspective, fantastic. From an investment perspective, the answer is mixed. And it's that AI has been made. Made us, each of us as research analysts, able to read everything. We have an assistant now, our AI agents who read everything. Every company earning transcript, every government agency filing, every trade journal, every bit of news.
- [05:40]
Maren Somerset Webb
Actually, the annual report. Someone's reading the annual report finally, it reads them all.
- [05:45]
Sarah Catterer
It can do all of that, but what it can't do is make decisions with the information. I don't know how AI will replicate the fundamental Portfolio manager who relies on his or her experience has a level of intuition that's probably 30 to 40% of the investment decision comes from something that you can't even quantify. It's this instinct honed after decades of doing this. And from a quant perspective with AI, the ability to find signals that aren't actually explainable to clients is quite a temptation. We have to be really careful not to go and use the tool, I'd say ineffectively. So in short, AI is an accelerant to productivity improvement, but it hasn't yet developed to where it can replace that human judgment. And I think that's true across many of the companies that we research. They have some of the similar experiences. So it isn't confined to fundamentals.
- [06:50]
Maren Somerset Webb
It's interesting there, isn't it, when we're talking about it, reading everything, every research report, every company announcement, everything and that all being done and summarized and presumably produced for an atlas. That's. I mean if you're looking at thousands of companies, which I know you are, that's a massive time saving. But back to the intuition bit. It is the reading of those reports, the reading of the company announcements, followed by the reading of the transcripts of earning calls, et cetera, et cetera, where a good analyst might pick up the bits and bobs and make the connections that create the intuition that we talked about. So without the, without the hard graft bed. Yes.
- [07:25]
Sarah Catterer
Can you have the intuition bit? Well, AI can make some connections. It can find in the footnotes where there might be counting anomalies. What it can't do is what we're doing. It can't have a meeting with management and observe the body language. It can't say, you know, this doesn't feel right. I don't even know how to put it into words. But I think they're becoming. They, the management are a little more cautious and I'm going to take that back and assimilate that information. We don't record meetings. I think management would find that a little off putting and probably we wouldn't get any meetings. But we're taking notes. But it's what we're hearing and the way we're observing how the message is being delivered, that's so incredibly important. And this is not someday when robots are doing the job and it's all visual, I think the other side of the table will be a robot too. It's going to be a pretty grim world.
- [08:22]
Maren Somerset Webb
How do you and I don't normally get into young people early on. We normally Save that for the end. But the way you're talking about the fund management business now, the fundamental part of it, what does a young person who wants to be in fund management these days do? Because all that grunt work, that was the training ground. Yeah.
- [08:37]
Sarah Catterer
Yes, the grunt work initially is probably a good idea. We encourage our analysts to do everything from scratch to understand what the meaning is of all these documents, where to go when you. In a prompt, one has to ask the AI to search certain areas. Or we have agent builders that link into systems, it links into databases and you have to know which databases to plumb. But once an analyst has done this a few times, they don't necessarily want to do the grunt work because it displaces in a zero sum day something more higher level, thinking oriented. So I'm okay with the AI doing the grunt work. It's just that if people stop thinking, that's when we're in trouble. It's using that time freed up where you're not entering the quarter's earnings into your spreadsheet, but the AI is doing it. Your Claude add in or whatever the tool is, how else is the analyst using that freed up time? Is he or she thinking more about the assumptions, really testing the model, going back to the notes and thinking again about where they might have been wrong. Taking a step back and thinking more about structural change and how this company, what could come out of left field, being one's own devil's advocate. And the AI can help with that too, interestingly. But that's the higher level thinking that we want and we are promoting.
- [10:11]
Maren Somerset Webb
Okay, I'm convinced we still need you. Thanks. So when you look at how it's working in your own company and then you look at the businesses in which you invest, what are you looking for in the companies you're investing in?
- [10:25]
Sarah Catterer
Well, I'm glad you asked because we, for every sector globally have done a deep dive into how we believe they will be impacted by AI. This is quite an endeavor. We did this fundamentally and our quant colleagues observed the process and the output. But what we found is for many there are some structural changes that are going to be quite significant and then others, there's a lot of upside. Let's go to healthcare to start. We have a number of pharmaceutical companies in the portfolio and now we're adding more medical technology because they've been left out in the cold in this huge AI driven rally. But their ability to innovate, their ability to, in the case of pharmaceuticals, discover new molecules, advance them through the clinical Trial process more quickly. Efficiency, lower cost is that could be given that patent lives remain the same, that means more years out in the marketplace and less in development. That's a profit booster. We're hard pressed to see how there'll be some sort of mysterious AI entity that will develop drugs. Pharmaceutical business is very laborious and involves a lot of interaction with the health authorities. And clinical trials are carefully scripted and then being able to target patients with AI in advance of doing trials, so so they are the right individuals for that particular drug. That's another way to accelerate the process and get output that can be get that drug into the market more quickly. So for healthcare, we think this is gonna be fantastic. Healthcare companies, they gather lots and lots of data and their ability to use it in ways they never could before with AI is not that dissimilar from other industries. It's just they have so much intellectual property and their ability to innovate now is improved. And innovation equals pricing power. And pricing power is margin and margin is profitability. And profitability leads to cash flow and cash flow gets returned to shareholders.
- [12:32]
Maren Somerset Webb
Okay, that makes sense. How does that then interact? I mean one of the one things about health sector is how regulated it is hugely regulated across the board, regulated in different ways in every country. But the layers of regulation are massive. Is that a barrier?
- [12:47]
Sarah Catterer
It's part of the moat. And regulation and compliance and the need for audible outcomes are one of the reasons why some industries, they just won't have the sort of AI competition the market might be inferring they're going to incur. So a moat is a plus and a minus. A moat can protect the business from competition, but it can also mean that there will be, it can hibit growth.
- [13:15]
Maren Somerset Webb
Yeah, you need competition. Yes, yes you do.
- [13:19]
Sarah Catterer
But the working their way for the regulatory maze is what healthcare companies do very well. And the large ones have whole teams for this and the teams may be able to harness AI to be more efficient doing that, which could be also a cost savings as well as a time savings.
- [13:38]
Maren Somerset Webb
Interesting. And we've often talked on this podcast about how big companies love regulation because nothing holds computation back more than a good bit of regulation. And one of the thoughts about AI was it might be one way for new entrants to circumvent or find easier ways to deal with large piles of regulation. But it sounds like your case is that that is not going to happen.
- [14:01]
Sarah Catterer
It depends. In something that gets put into the human body, the regulation's there for a reason. Yeah, it's a little different, say financial services.
- [14:10]
Maren Somerset Webb
Okay.
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Sarah Catterer
They aren't necessarily going to create a health outcome.
- [14:14]
Maren Somerset Webb
Okay, so what other sectors will have a regulatory moat that will limit the use of AI elsewhere?
- [14:21]
Sarah Catterer
Well, I've been talking about software as a service. This sounds a little silly but it's Tangential where the SaaS companies have all sold off this idea that you're a software business. You had a 70 plus percent gross margin or higher, now your business is losing its moat and software will be vibe coded. Anybody can now code, but code isn't the moat. And these software companies that provide like SAP or Oracle, very comprehensive for Fortune 500 global companies and SAP in particular, this mission critical software where they're dealing with systems of ledger. In businesses that are heavily regulated that means the data is crucial, there can't be errors in the outcome. So software needs to be deterministic, yet generative. AI is non deterministic. It can be a useful tool for users in the enterprise to get access to their data and see it in different ways. But it can't run the business, it can't run hr, it can't run account, it can't run supply chain, can't run client relations.
- [15:33]
Maren Somerset Webb
Yes.
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Sarah Catterer
So I think about as the market has just decided, these companies are all going to be incurring great competition and we would disagree. It's regulation and the need for the businesses, everything they do to be fully audible and transparent, auditable, that will make it quite hard for native AI startups to undermine them.
- [16:02]
Maren Somerset Webb
Okay, so you quite heavily invested in the likes of SAP now?
- [16:06]
Sarah Catterer
We are, yeah. We are fundamentally the good management, incredibly sticky business and all that migration to cloud that's coming up, that's one of the absolutes. So what we know, there's a lot we don't know. But what we do know is that for enterprises to take advantage of AI, they need to move their data to the cloud, they need to have it accessible for the AI and they need to be able to access that tremendous compute on an as needed basis.
- [16:35]
Maren Somerset Webb
And are you on the other side of this? Are you in any of the hyperscalers or they don't fit into your fundamental matrix?
- [16:42]
Sarah Catterer
Some of them do, Some of them do. For example, the two great digital advertising leviathans, Meta and Alphabet, generate enough free cash flow to where they can fund their foundational model ambitions and so they can fund their own capex which is very different from some of these massive new AI companies where it's all about finding more investors who believe in the
- [17:12]
Maren Somerset Webb
dream not going to be buying into the OpenAI IPO. Are you?
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Sarah Catterer
Yeah, I cannot say.
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Maren Somerset Webb
I'm kind of guessing. Where else are you finding value in the market?
- [17:23]
Sarah Catterer
Well, I did mention in passing medical technology. I just think it's fascinating that you could find companies like Boston Scientific and heart valves and very complex, important cardiovascular devices that you cannot get anywhere else that used to trade at 25 or 30 times earnings and now their multiples are half that. Companies like Stryker or Zimmer Biomed, they're fantastic medical devices. As long as human bodies break down are going to be needed and it's a very research intensive business and to the degree they keep innovating and they're not in commodity products, they should do quite well. Part of what's weighed on them has been concerns about the GLP1 trends and consumer and individuals will no longer need new body parts and we think that's unlikely. In fact, the longer they live, the more part replacements they'll need.
- [18:29]
Maren Somerset Webb
Okay, so people will get thin, they'll still need the replacement parts, they just won't need them until later. Yes.
- [18:35]
Sarah Catterer
And they won't all get thin, sadly, wouldn't they? No. Some people will neither want an injection nor will they want it. They will take a pill. They won't do it. And compliance will. As always with drugs, people aren't necessarily willing to comply.
- [18:54]
Maren Somerset Webb
Sure. It has been fascinating seeing the obesity rate in the US drop. It has for the first time. Yes, it has.
- [19:01]
Sarah Catterer
Extraordinary change and that should lead to better healthcare outcomes and lower cost healthcare.
- [19:09]
Maren Somerset Webb
Two new hips each when everyone's 90. Yes, exactly. Not one at 65.
- [19:13]
Sarah Catterer
I'll take two please. Exactly.
- [19:15]
Maren Somerset Webb
And a couple of knees while I'm at it. Yeah.
- [19:29]
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Sarah Catterer
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Maren Somerset Webb
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- [21:50]
Maren Somerset Webb
When I look at your main vehicles are global, global, international, two different words for it. But you also have some emerging markets exposure. The global fund can have 20% in emerging markets and there's also one emerging markets fund. Right. What's interesting there, and we've talked about this quite a lot recently, about how the difficulty of emerging markets being now so defined by Korea and Taiwan and that market concentration, making a nonsense of the idea that you can get diversified exposure within inde has been one of the things we've been, I'm afraid, going on about for rather too long. But then the question is, if you're not going to have index style exposure to those two countries and of course to China, what are you going to have?
- [22:30]
Sarah Catterer
Well, I would argue vociferously against indexing emerging markets and I'll just give recent examples. Maybe 2022 isn't that recent, but Russia, like why would you even wanted an index weight in that market? We were underweight and very underweight and that was extremely helpful. Sometimes emerging markets go to zero and that one did. That's why they're emerging. They have much higher levels of risk because they're growth markets and interestingly they're not all demographically in that growth phase. China, it's been the largest of the emerging markets and now it's number three behind South Korea and Taiwan, which is also fascinating. But it's within China that three of
- [23:17]
Maren Somerset Webb
them have shrinking populations.
- [23:19]
Sarah Catterer
They do, but at least South Korea and Taiwan have semiconductor giants in memory and Taiwan has TSMC in chip production. And there are no substitutes at present. There won't be for a couple of years. No matter how many fabs are built or semiconductor facilities, it's going to take some time for supply to catch up with the demand. Demand may sag and there may be technologies reasons why memory isn't quite as hotly in demand as it is now. But that's very clear and I can see those markets are highly, highly concentrated and the stocks are, those big three stocks are very large in the benchmark. It's beginning to look a little bit more like the US oddly than anywhere else. What's interesting in emerging markets, I think in China there are all kinds of companies that have been left behind. We were talking about US hyperscalers. You could have the Chinese version effectively the operating system of China through WeChat or Weixin, which is Tencent. They're the largest publisher of music video or not music, of video games globally. And they have a music business, they have a messaging business, they have the most amazing flywheels. So they're massively cash generative like US hyperscalers and they're developing through H Y3 their own foundational models. They were a little behind in AI, but it's when you have that kind of, that sort of financial resource, their net cash, it's not too hard to catch up. And they'll find a way to get AI infused throughout their consumer products, all the social media they do and they'll keep their customers and the, what is it, 1.3 billion monthly average users like they're just. This stock just keeps falling and we just look at it and we wonder why. What an amazing company. It shouldn't trade at mid teens multiples of earnings. It should be much. And part of this is just China. No one's interested right now. There's this love hate relationship with China. Only three or four years ago it was uninvestable. That's probably the time we all should have bought a lot of it. But now all eyes are on one area and not there. And especially for these Chinese companies that aren't necessarily considered at the absolute forefront of AI, they've been discarded. And this is where taking a two year view is really useful as opposed to just thinking out the next three to six months because it gives us a chance to accumulate what may be one Of I think my colleagues would agree with me. Probably one of the best companies in China overall for a very attractive valuation. Yeah.
- [26:21]
Maren Somerset Webb
And the lack of interest in it is just fashioned, just people coming slowly back to being interested in the Chinese market. Again, the fact that it's impossible to draw your eyes away from the stars in the tech sector in the US and as I say, in these few emerging market caps.
- [26:35]
Sarah Catterer
Yes, I think so. I think so. There's a certain amount of short termism baked into that. It may very well. I mean we could be, we. Cause we could be wrong. And Tencent doesn't develop out their AI features fast enough and part of their business gets competed away. But it's very unlikely that's going to happen given their track record, given what they've already built and given the marketplaces where they dominate. They've got infrastructure as a service, their platform as a service and software as a service and they have this cloud business and that gives them a lot of compute and a lot of flexibility. And again that balance sheet, it's like they have all the raw materials and they have the history of doing it and that usually convinces us as fundamental investors. And given how low the valuation is, this is the risk is very modest versus, I mean, you mentioned semiconductors. We started. Given where they trade, they're very risky right now.
- [27:40]
Maren Somerset Webb
Well, because they're cyclical businesses. Right. This is exactly the wrong point in the cycle. Historically, if, if you were looking at this as a normal cycle, this would be exactly the wrong cycle.
- [27:49]
Sarah Catterer
Exactly. You don't believe in a cycle if you think that the, the demand goes on perpetually like this and supply will be, will not meet demand indefinitely. But that's, I think, physically impossible.
- [28:02]
Maren Somerset Webb
Yeah. Normally at this point you would start to see a sharp rise in supply and a fall off in demand at the same time.
- [28:07]
Sarah Catterer
Or all the market needs to perceive is that their supply is plant. That's all, that's all it'll take to tip them back the other direction.
- [28:17]
Maren Somerset Webb
Well, they always used to say, I remember someone telling me when I was a very, very junior broker that the chip makers, you sold them when they were very cheap and you bought them when they were very expensive. Because that's how the cycle works. Yes, exactly.
- [28:31]
Sarah Catterer
The multiples tend to be low. This is where people often get confused. They think very low multiple stocks are value stocks or they're cheap, but it could be, you have to look carefully. If they're in cyclical industries, their earnings are at a peak and conversely when their earnings are in a Trough their
- [28:49]
Maren Somerset Webb
multiples look high, look very expensive, but that's exactly the time as their earnings start to go up again.
- [28:54]
Sarah Catterer
And it's really helpful from an investor perspective to be in a cyclical business because at least you have history as a guide. If you're in a business that has no history or everything has changed, you can't use the past as a predictor of the future. And in my view it makes cyclical investing, assuming there isn't some massive change in the business, lower risk than appears at first glance.
- [29:22]
Maren Somerset Webb
Let's go back to the US we talked briefly about the intense concentration in the US indices and we've talked a little bit about biotech and pharma. Are there other sectors in the US that you are finding very interesting at the moment? That outside these hugely expensive tech companies
- [29:37]
Sarah Catterer
and outside what we've already discussed because tech is so massive. Technology, communication services. And another stock that's come out of our research is in the IT services area and this is a major contractor of the US government. Booz Allen and again in the category of we didn't used to be able to buy these stocks because the growth rates were high and the multiples were even higher. The concern about reduced U.S. government spending, especially in civilization. But 73 to 75% of Booms Island's revenues come from military defense. So the US government needs to modernize its systems and it needs better, much better cybersecurity. This is all common sense. Like nobody's ever said to me, oh, that's not true.
- [30:31]
Maren Somerset Webb
Yes, they don't need cybersecurity. They'll be fine without it. Exactly.
- [30:34]
Sarah Catterer
So this is an 85 year old company and, and 90% of their revenues come from US agencies. They've had somewhat of a partially rocky relationship and yet nobody else can do what they do. They're partly, they collaborate as well as compete with Palantir. Palantir can't take all the business. There's military cryptography needed. There's just so many different areas where Boost has that dominant expertise. And it's just this $8 billion market cap now and it trades at high single digit earnings. Then market has said it's going out of business or it's slowly. Surely it'll melt like an ice cube in the sun. And we disagree.
- [31:23]
Maren Somerset Webb
And valuations.
- [31:24]
Sarah Catterer
Yeah, well valuation, they're very attractive. Probably should be at least 15 times next year's earnings. And then you get a 3.6% dividend yield which is something a lot of these tech stocks don't give you much in dividend, they may do share repurchases. SAP does big buybacks. I think they've announced something like 10 billion euros over the next couple of years.
- [31:46]
Maren Somerset Webb
It's extraordinary, isn't it? We've talked about this quite a few times recently as well. The way that over the last decade or so the stock market has become sort of an extraction machine for investors, where you take out your dividends, you take out your special dividends, you get your money back and buybacks, et cetera. Whereas originally the whole idea idea was that individuals gave money to companies rather than the other way around.
- [32:06]
Sarah Catterer
Well, there's still plenty of that happening too.
- [32:07]
Maren Somerset Webb
Well, there is now, but you have
- [32:09]
Sarah Catterer
to think about how in the idea of gaining a return if you are expecting, let's just say, 10% annually from your global equities, which I think is a very punchy number, but let's just throw that out there so we can all smile and love the fact that our money's doubling every seven years. If you can get a third or 40% of that in dividends, that's phenomenal, then you don't have to rely so much on capital gains. This is sort of dividend 101. But the dividends are a signal. Management saying, we're so confident in our business, we're sending money back to you shareholders and that's great. We want them to be confident if they. Once dividends are paused or eliminated, that's a time to be a little nervous.
- [33:00]
Maren Somerset Webb
It sounds like an ad for the UK market. Well, the UK market, given that we've had such great dividends, hit lots of
- [33:06]
Sarah Catterer
bargains in the UK market, there's no doubt about it. And it's just a question of when the global spotlight turns to it. I heard somebody say this week they thought that private equity was galloping over here to take a good look.
- [33:20]
Maren Somerset Webb
They are, they are. And then we find ourselves in this ridiculous situation where UK investors won't buy UK UK companies, private equity arrives here, buys them up, and then we buy the private equity companies or the private equity funds and just have the same stuff in them and pay five times the fee.
- [33:37]
Sarah Catterer
Yes, yes.
- [33:38]
Maren Somerset Webb
Not ideal.
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Sarah Catterer
Not ideal. There's so many things in the world that aren't ideal.
- [33:42]
Maren Somerset Webb
What might make Global Spotlight move here in a good way? Because it quite often moves here in a bad way these days.
- [33:48]
Sarah Catterer
Stable government.
- [33:49]
Maren Somerset Webb
Stable government. Good luck.
- [33:51]
Sarah Catterer
Larger bond yields remaining stable, if not dropping slightly, which would mean getting inflation under control and having a fiscal stability. Yes. Well, I didn't say it was going to be easy. I just said that would be.
- [34:07]
Maren Somerset Webb
I was just for those of you who are listening, not watching, I'm just looking at Sarah going, well, I mean, I don't even know what to say to that because these things sound quite unlikely for poor old UK at the moment.
- [34:17]
Sarah Catterer
Globally competitive companies. I think about AstraZeneca and pharmaceuticals. What a, what an incredible innovator. They're based here, but they don't, I mean, I don't know what percentage of revenue, my guess is less than 10 in this country. But to have a company like that listed here is tremendous. Or in life insurance, a Prudential plc, they're an Asian life insurance giant.
- [34:43]
Maren Somerset Webb
Well, I mean we always say that a very small percentage of FTSE 100 revenues actually come from the UK. Well under 40%. Yes.
- [34:50]
Sarah Catterer
Yeah, but that's okay. The fact they've chosen to domicile here and use UK jurisdiction is an endorsement of the UK legal system. And they like the weather.
- [35:02]
Maren Somerset Webb
They like the weather. When you look at your portfolio, Sarah, all the many portfolios across the board, you look at them and is there anything that you, that you worry about when you look at them and you think, oh God, if this thing happens, we're in a whole pile of trouble. And one of the things that one of our most recent guests was talking about was if AI works as suggested and perhaps in the way that you've suggested taking away a lot of the grunt work and we see a lot of highly paid jobs disappear. And this guest was saying, well, maybe 15% of high income jobs will disappear, white collar, high income jobs, then that has an immediate knock on effect into the flows into 401s which again has knock on effect into the flows into passive funds. And then we might see a massive market collapse of GFC style collapse. That was his worry.
- [35:51]
Sarah Catterer
I don't share that. I'm more in the Marc Andreessen camp that I think there are some industries or even sectors that we're going to struggle a little bit, are going to have to find new ways of proving their value to consumers. But as for employment, I would have more software engineers because they're doing so much. It's revolutionary. And as for analysts, our analysts will be even more productive. We'll be able to cover more stocks. There's 7,000 stocks and we only can cover about 10 to 12 per person pretty well. And in quant we can cover quite a lot. But it's a breadth strategy so we don't have any depth there. And we'd like to have More depth. I mean, why not? It would make our models even more informed. So I would happily take on more analysts if the AI tools make them them even more productive because then they sort of pay for themselves. So I think it really depends on the industry you're talking about. First I thought it would put lawyers out of business and of course I should never have thought that because nothing
- [36:54]
Maren Somerset Webb
ever puts lawyers out of business.
- [36:56]
Sarah Catterer
Of course not, but whatever it is.
- [36:58]
Maren Somerset Webb
But there is worry they don't train enough people at the bottom end and then there aren't enough experienced people in the middle to check the mistakes of the LLMs.
- [37:05]
Sarah Catterer
Yes, so that look, the LLMs, the. But right now the AI coding agents do the coding and then check the coding. But somebody has to be there, across the table from the client, somebody has to supervise it all and then the amount of legal work could just burgeon. Look at radiologists, we thought maybe they would go out a bit with all the scans in the AI. And when you get a scan, it's compared to thousands, maybe hundreds of thousands, thousands of different. And you get the benefit of all these different radiologists opinions. But you still want the radiologist. In fact, now you want one to talk to. Well, not just that, but if it brings down the cost of the radiology process, then more people who heretofore wouldn't have been scanned because it was too expensive can afford it. Like the marketplace, the tam, the total addressable market gets bigger. So you need more radiologists like a hypochondriac stream? Well, yes, one, one can find things if one goes to look. It's so true. But every once in a while it saves somebody's life, so why not?
- [38:13]
Maren Somerset Webb
Yeah, absolutely. All right, last question, last question. You said that people come to London for the weather, when at the moment we are talking, it is very, very hot in London. Well, hot for us anyway. Hot for us. Over 30 degrees. So a lot of people are heading to the beach. When you go, what are you going to take to read? What are you reading at the moment?
- [38:36]
Sarah Catterer
I really like sci fi, so I will read as much science fiction as I can get my hands on. I don't know what it is. I've never really been that interested in history. I've forced myself to, but thank God my husband is a great historian so he helps fill in the gifts for me.
- [38:59]
Maren Somerset Webb
I have one of those husbands too. It's great, isn't it?
- [39:01]
Sarah Catterer
Thinking about the future is fascinating. Going back and reading some of the great sci fi of the past and anything that's been written the last 10 years. But when an author who has a great mind divines the future and it turns out that's sort of where we're heading today, and they wrote it 40 or 50 years ago or more, I just find that thrilling.
- [39:23]
Maren Somerset Webb
Yeah. And I think I might even have mentioned this on another podcast. My son was reading something called Invasion of the Aliens Wells, and that's fascinating because a lot of it is like, how did you think of that back when in horse and carriage days? How did you think of this? Yes, exactly. Extraordinary. Do you prefer a utopia or a dystopia in your science fiction where you're
- [39:43]
Sarah Catterer
not quite sure where it ends, where it could go either way, because dystopian is depressing.
- [39:50]
Maren Somerset Webb
Yeah, yeah, there's a lot of that about a lot of depressing.
- [39:52]
Sarah Catterer
If you want to be an investor, you have to ultimately be an optimist. Otherwise you're not going to hold anything.
- [39:57]
Maren Somerset Webb
Oh, well, we'll leave it there. Sarah, thank you so much for joining us today. Thank you, Maren. Thanks for listening to this week's Marian Talks Money. If you like our show, rate, review and subscribe wherever you listen to your podcasts and keep sending questions or comments to marianmoneyloomburg.net you can also follow me and John on Twitter or x. I'm Mariansw and John is John. Underscore Stepek. This episode was hosted by me, Marian Somerset Webb. It was produced by some Asadi Moses Andam and Jennifer Seeley. Sound designed by Blake Maples and Aaron Caspers. And special thanks, of course, to Sarah Catter.
- [40:49]
Sarah Catterer
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Sarah Catterer
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Sarah Catterer
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