Your S&P 500 index fund looks diversified — but Alec Litowitz says its concentration in AI stocks makes it one giant bet in disguise.

Alec Litowitz joined a hedge fund with $100 million in assets and six employees. He had never made a trade in his life.

That fund was Citadel, in its earliest days, and Alec became one of its founding partners alongside Ken Griffin — eventually running its global equities business. He later left to start his own firm, Magnetar Capital, now one of the largest alternative asset managers in the world.

Somewhere across those three decades, Alec noticed something uncomfortable: the smartest, most experienced people in the room are often the last ones to realize the world has changed. Not because they’re not smart. Because they’re the most attached to having already been right.

His new book, The Adaptability Quotient, argues that raw intelligence and experience — IQ and EQ — aren’t enough anymore. What matters now is a third thing: how fast you notice your mental model is wrong, and how willing you are to let it go.

We get into why Blockbuster’s downfall wasn’t really about one bad decision, how to tell whether a shift in your industry is temporary or permanent, why AI might make judgment scarcer even as it makes knowledge abundant, and why Alec says a “diversified” portfolio can secretly be one big bet in disguise.

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The Adaptability Quotient by Alec Litowitz Alec’s new book, discussed throughout this episode. Get the book