Main Steet HALO Businesses

Why many main street businesses already have the secret sauce to thrive in the AI era.

My guy Josh Brown over at Ritholtz Wealth Management has been on CNBC since February banging the desk about something he calls the HALO trade.

If you haven’t heard the term yet, it stands for Heavy Assets, Low Obsolescence. For the last fifteen years on Wall Street, “Asset Light” was the only strategy that mattered. If you owned a factory, a fleet of trucks, or a warehouse full of inventory, the Ivy League analysts looked at you like you were wearing a powdered wig. The goal was to own nothing but code. Software was the king because it was infinitely scalable and cost nothing to distribute.

But then the AI surge hit.

Suddenly, the market is realizing that software is actually quite fragile. Bits are easy to copy; atoms are not. If your entire business is built on code, AI can probably be taught to rewrite that code by next Tuesday. If you provide a non-tangible service—legal research, basic accounting, data entry—AI is coming for your lunch.

The “Software Slaughterhouse” is real. But for those of us living in the physical world? It turns out the “HALO” might be shining brightest on Main Street.

The Final Mile of Reality

Wall Street is currently scrambling to find HALO stocks. They’re buying power grids, data centers, and pipelines. They want “Atoms” because they’re realizing that in an AI world, the only thing that isn’t a commodity is something you can actually touch.

But while the big firms are fighting over utility stocks, here on mainstreet we are living deep in the HALO world.

Specifically, small businesses that deal directly with the customer in the physical world.

Is there a time, way in the future, when your 3:00 AM plumbing emergency will be answered by an autonomous robot showing up in a self-driving van? Maybe. But we’ve been hearing about self-driving cars for thirty years, and we don’t seem much closer to that reality today than we were five years ago. Reports still abound of Waymos and Teslas doing all kinds of stupid things because that final mile is so impossible to program.

The “final mile” of physical service is incredibly hard to automate. Taking a wrench to a leaky pipe in a cramped basement or troubleshooting a customized HVAC system requires a level of physical dexterity and human problem-solving that a server farm can’t replace.

The Human Pushback

We’ve talked about this before: the more the world goes digital, the more people crave the analog.

There is a growing pushback against the “Data Center-ification” of our lives. People are getting tired of not being able to talk to a human. They’re tired of “Support Bots” that don’t understand their problem.

Small business stands on the front line of that pushback. We don’t have the option of being an “unreachable” tech giant. We have to look the customer in the eye. That face-to-face interaction isn’t a bug; in an AI world, it’s the ultimate feature.

Brewers Don’t Panic

AI is not going to make your local craft beer pint.

Sure, we’re going to use AI on the office side. We already are. It handles the boring stuff—accounting, social media copy, bookkeeping—and it allows us to stick around longer by increasing our efficiency. Like any other industry, the businesses that don’t adapt and use these tools will disappear.

But the physical part of brewing? The smells, the temperature control, the actual manual labor of moving grain and cleaning tanks? That’s here to stay.

I’ve seen plenty of reels on Instagram of brewers making the joke: “When is AI going to take my job?” Usually, they’re asking with a smile while they’re elbow-deep in a mash tun. They aren’t panicking.

Compare that to your average SaaS (Software as a Service) company. Those guys are sweating. Wall Street seems to agree, thinking many of these software businesses are totally cooked because their barrier to entry just dropped to near zero.

But I don’t talk to any small business owners who are losing sleep over Gemini. Maybe some of that is naivete, but most of it is a realistic understanding of what we do. Interacting with customers and providing a physical good is not something an LLM can do, or at least not in the way that we do it.

The Margin Expander

Here is the secret: AI is actually a gift for the “Atoms” business.

In the software world, AI is a disruptor. It lowers the barrier of entry, meaning any kid with a laptop can now compete with a firm that has 500 engineers.

In the Small/Mid-sized Business (SMB) world, AI is a margin expander.

It handles the “boring crap” we don’t want to deal with anyway. It makes our processes smoother, our marketing more professional, and our scheduling more efficient. It does all of that without threatening our core service.

We keep the physical moat, but we get the “Asset Light” efficiency on the backend. That is a recipe for profit growth.

The Last Man Standing

The Lindy Effect: The longer something has existed, the longer it is likely to exist.

Plumbing has been around forever. Heating and cooling have been around for a century. Drinking alcohol with your friends? That’s been around since we crawled out of the caves.

I know, the brewing industry has its headwinds right now (believe me, I know), and maybe I should take the “permanence” of the bar business with a grain of salt. But people are going to keep drinking, just like they’re going to keep needing their toilets fixed.

These things are not going to be disrupted by AI. While Wall Street is freaking out about which software company is going to be “Amazoned” by OpenAI, Main Street is quietly focusing on its HALO.

A local HVAC company has a much clearer line of sight for what 2035 looks like than some “revolutionary” AI startup has for 2027. That clarity is an advantage that is finally being priced into the public markets for companies that have it and do not. On the small business side, it’s not an advantage that is talked about often, but it definitely exists.

The Bottom Line

The HALO trade isn’t just for Mega-cap stocks or utility conglomerates. It belongs to the entrepreneurs who own the physical infrastructure we live in every day.

It belongs to the people who provide the face-to-face services we need to exist as a society.

Don’t chase the bits; own the atoms. Looking around the brewery right now, I see a hell of a lot of atoms.

I think we’re going to be all right.