Episode summary
ALTSLA 2026: Sandip Bhagat of Whittier Trust Company Spoke to Courtney McQuade
Summary
The conversation centered on two early-2026 shocks that Sandip Bhagat said are already shaping portfolios: renewed geopolitical risk in the Middle East and a more sinister AI shock. He argued that this conflict is not just another market headline, because the target set now includes physical assets such as energy infrastructure and power grids, creating risks that extend beyond inflation, rates, and the usual stock-and-bond reaction.
Bhagat also said the AI debate has moved from productivity gains to the possibility of machine intelligence displacing human labor. He warned that software is one of the industries most exposed to obsolescence, which matters for private credit because many loans were made to companies in that segment. His practical answer was diversification, not concentration in a single narrow sector.
Even with the risks, Bhagat said AI still creates opportunity if investors balance upside and downside carefully. He framed the challenge as protecting portfolios from a scenario in which U.S. unemployment could reach 10% within a few years, while still participating in areas with strong productivity growth and better risk-adjusted returns.
Key takeaways
- Sandip Bhagat said the Middle East conflict is different because it threatens physical assets like energy infrastructure and power grids, not just markets.
- Bhagat warned that AI could create a “sinister” labor shock, with U.S. unemployment potentially reaching 10% in a few years.
- The panel flagged software as an industry at risk of obsolescence, which creates knock-on risk for private credit lenders.
- Bhagat’s main portfolio response was diversification away from narrow sector concentration.
- Bhagat said investors should still pursue AI-related upside, but with allocations designed to avoid bearing the full downside.
- He expects the rest of the conference to move from high-level themes to more granular, practical insights.
Notable quotes
“this shock to the system will leave us with a financial crisis that just goes beyond inflation, interest rates, and the bond and the stock market”
“physical assets are being attacked, energy, infrastructure, power grids, and the world doesn't have a whole lot of experience with physical risk”
“one of the industries at risk of almost obsolescence from the replacement of humans by machines is in the software industry”
“their counter to this risk is to just diversify. Do not focus or concentrate only in one narrow sector like software industries”
“the unemployment being contemplated in the US is as is as large as 10% in a few years”
How the episode opens
Hi, I'm Courtney McUade with Markets Group here at our Alts LA. With me is Sandeep Vagot, chief investment officer at Whittier Trust. Sandep, it's great to see you. — It is so nice to be here almost year in and year out. I think I've been doing this for six or seven years now.
You are a repeat visitor and we're so glad you're here. Delighted to be here and it's actually a very timely occasion because look 2026 has just started. We're barely 2 months into the year and yet we have had two significant jarring events.
So let me headline them. Of course we have geopolitical risk and then there are a whole bunch of question marks on artificial intelligence. So, first things first, normally geopolitical events make for great drama and theater, but rarely have a big impact on the markets and the economy.
But this one is different. It is centered in the Middle East. War has broken out.
So, with that comes the sad collateral damage of human tragedy. And for the first time, this shock to the system will leave us with a financial crisis that just goes beyond inflation, interest rates, and the bond and the stock market. Now, physical assets are being attacked, energy, infrastructure, power grids, and the world doesn't have a whole lot of experience with physical risk and how to deal with it.
And on the topic of AI, and I'll jam this through very quickly. One of the newer concerns that has come about is pretty sinister. It's almost of the existential variety.
But people are saying that AI already is so good that machine intelligence is ready to displace human intelligence. And with that could come mass unemployment and the previous rewards that new technology created where capital would get an extra return through higher profit margins but labor would also benefit through higher wages.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- geopolitical risk
- ai downside scenarios
- unemployment risk
- portfolio resilience
- physical asset risk
Companies and tickers mentioned
- Whittier Trust Company
Watch the episode
Watch “ALTSLA 2026: Sandip Bhagat of Whittier Trust Company Spoke to Courtney McQuade” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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