Investing on Tap Insights: The Future of Investing in an AI Driven World
At Hills Bank’s recent Investing on Tap event, customers gathered to explore how artificial intelligence is reshaping the economy – and what that means for long‑term investing. Anna Nerys, Product Strategist with BlackRock iShares, joined Hills Bank’s own Aaron Schaefer, Senior Vice President and Investment Committee Chair, for a wide‑ranging discussion that focused less on predicting winners and more on understanding structural change, risk, and opportunity.
Below are the key insights from the conversation.
AI Is a Powerful Force – but It’s Not Just One Story
While artificial intelligence often dominates headlines, the conversation emphasized that AI is only one part of a much broader set of long‑term structural changes reshaping the global economy. These include demographic shifts, geopolitical competition, energy transitions, and changes in how finance itself operates.
AI intersects with all of these forces, amplifying productivity and enabling new possibilities – but it does not operate in isolation. Understanding AI as part of a system, rather than a standalone trend, helps investors maintain perspective.
Technological Revolutions Take Time – and Come With Volatility
AI may feel sudden, but it has a long history. From early automation in the 1950's to chess‑playing computers in the 1990s and voice assistants in the 2010s, today’s generative AI tools represent another step – not an overnight transformation.
Both speakers emphasized that major technologies rarely deliver clean or immediate investment results. Instead, periods of innovation often bring volatility, trial and error, and shifting expectations. For investors, volatility isn’t a sign something is broken – it’s often part of the transition itself.
AI’s Growth Happens in Phases
The discussion outlined three broad phases of AI development:
- Infrastructure: Heavy investment in data centers, energy, semiconductors, and computing power
- Adoption: Businesses and consumers learning how, when, and where to use AI effectively
- Transformation: New business models, jobs, and industries emerging over time
We are still early in the infrastructure and adoption phases. While this spending is significant, it also means many potential outcomes remain uncertain – reinforcing the value of diversification.
How Hills Bank Thinks About AI and Investing
Hills Bank’s approach is intentionally disciplined:
- AI is an input, not a portfolio theme. Rather than chasing narrow AI bets, portfolios are designed to capture broad economic progress – including AI’s impact – through diversified exposure across sectors, market caps, and geographies.
- Diversification matters more than prediction. AI leadership today is concentrated in a handful of companies, but long‑term outcomes are rarely confined to early leaders. Diversified portfolios help manage single‑company risk while still participating in innovation.
- Costs, taxes, and risk management drive returns. Active decisions are focused where they consistently add value – asset allocation, rebalancing during market extremes, and tax efficiency – rather than speculative stock selection.
Fixed Income Still Plays a Critical Role
As AI‑driven growth may increase equity volatility, fixed income remains an important stabilizer within portfolios. Bonds provide income, flexibility, and risk management – especially during periods of market stress or shifting interest‑rate environments.
This balance allows investors to stay invested through uncertainty without being forced into reactive decisions.
What AI Means for Jobs, Markets, and Daily Life
One recurring theme was balance. AI is neither an immediate threat nor a guaranteed cure‑all. Like past technological advances, it will change how work is done – often by making tasks easier, faster, or more efficient – while also creating new roles that don’t yet exist.
History shows that the biggest risk for investors isn’t missing a single innovation – it’s reacting emotionally to short‑term fear and abandoning long‑term plans at the wrong time.
The Bottom Line
AI will reshape the economy over decades, not months. Markets will fluctuate along the way, and no one can reliably predict which companies will lead each phase. For investors, the disciplined response isn’t to chase headlines – it’s to stay invested with a well‑designed plan that manages risk, controls costs, and focuses on long‑term goals.
At Hills Bank, that philosophy remains unchanged. If you’d like to discuss your investment strategy, give us a call at 319‑338‑1522 or email wealthmanagement@hillsbank.com. We look forward to hearing from you.
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