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This futuristic Research Report from June 2028 got Wall Street scared a few days ago. It predicts that AI will cause massive disruption and displacement in the economy which will lead to a terrible market decline.
It’s very scary reading not for the faint of heart.
Personally, with national debt at $38 trillion, I worry more about a looming debt crisis than AI.
What is your take on either of these topics? What are you worried about? A debt crisis or disruption to the economy by AI?
AI is disruptive so it will influence companies. We see that today as there is a shift in interest underway from the hardware suppliers to the software companies that are involved in the AI industry.
The market has been overpriced. It doesn’t take a genius to say that there will be a correction. In the present circumstances, when a market correction does occur, it can be large. But not always.
As for AI, it is likely that certain jobs will be eliminated while others are modified. A few will be transformed. As for “massive” disruptions, who knows? Which jobs, how soon, etc. This cannot be predicted with any real accuracy. However, if one is inclined to hype the stocks, then by all means, use words such as “massive” when describing the changes.
As usual, a well-diversified portfolio is probably the investor’s best defense. Currently, foreign stocks (Ex-U.S.) are once again in vogue as some investors chase better returns. There is also a renewed interest away from large caps. As for AI, some companies will get rich off of this, while others are absorbed or go out of business entirely. Mr. Grossman’s article “Managing Investment Risk” points to the folly of investing in things we don’t understand. I’d add that chasing results isn’t a good strategy, either.
I don’t put much stock into the gurus who think they can predict the fallout of this. At one end we have the utopia believers who say we’ll work far fewer hours per week (and perhaps earn far less per year). At the other end of the spectrum are the doom sayers.
I’m reminded of all of the changes anyone born in 1900 experienced before their retirement at age 65 including: WWI, the flu epidemic, the great recession and depression, WWII, the polio epidemic, the recessions after WWII, the Korean war, possible nuclear Armageddon, multiple stock declines and several “lost decades”, etc.
Ross Perot comes to mind a lot these days.
Debt crisis, it won’t go away by its self.
I’ve read several articles that AI isn’t as smart as people think it is. You also can’t trust it to tell the truth. As long as AI contains self modifying code you can’t make it follow any rules. However it can be useful as long as you’re careful.
I recently used AI to find a US customs code for something I was buying from Israel. I had done some research before I asked my question so I had a general idea what it might be. The first answer was almost right on, but when I asked it the same question again a few times, to see if I would get the same result, it started drifting further and further off track.
On the other hand I had a subscription to satellite radio that expired. I was able to bargain the chat AI down to $6 a month for a year. The next day I received their final renewal offer in the mail for $8 per month. My brother did even better at $4.
I’ll take the debt crisis, please.