Seldom do I write in between my typical quarterly cycle of economic commentaries, but I feel compelled to do so today. Do you know what an economic “Supercycle” is? Depending on how old you are, you have witnessed at least one or two in your lifetime, and some of you have witnessed more. An economic Supercycle is a sustained period of expansion usually driven by robust growth in demand for products and services. (I pulled that definition from a Google search, which now seems so antiquated considering what lies ahead.)
Examples of macroeconomic Supercycles include the industrial revolution in the late 1800’s and the information technology revolution of the last 25 years, just to name a couple you are familiar with. For investors, Supercycles are economic tsunamis of innovation that create significant wealth opportunities for those who can both see it coming (but may not be able to define or describe it) and who are willing to risk their investment dollars to benefit from it.
The earlier we are in the Supercycle, the more challenging it is to see what the coming transformation looks like. There is a level of “faith vs. hype” contemplation that we must navigate through. Consider the transformative power of Apple’s iPhone in 2005. Until it was adopted en masse, it was difficult to comprehend just how transformative this product would become. Put yourself back to the year 2005. Did you ever believe you would carry a wireless phone that fit comfortably in your pocket? Did you ever believe you could carry around a full music library of your favorite songs on that same phone? Did you ever believe you could connect that phone using this crazy technology called bluetooth to wireless speakers known as buds that sit comfortably in your ears? I could pose a thousand “Did you ever…” questions, and your answer would have been “no” to every one of them. We are human, and unless we were working on this technology inside of Apple’s labs, we just do not have the bandwidth to understand the capacity of technology. Apple’s closing stock price on February 1, 2005 – adjusted for stock splits – was $1.36 per share. You can do the math on what that would equate to today. That is the life-changing opportunity that a Supercycle can create.
I have gone on record to state that Artificial Intelligence offers the greatest potential for creating the next Supercycle. If you are sick of hearing the term “A.I.”, you are not alone. For all its monotony in its current limited scope, there is a faith in its promising advancement that cannot be under expressed. The shared characteristic among all Supercycles is that they were all unfathomable prior to fruition. Thank God for the innovators that live among us, who dedicate their lives to advancement and who envision the things that most of us cannot yet see. Furthermore, Thank God we are fortunate as Americans to be allowed to participate in the fearless pursuits of these innovators through public stock ownership.
The best definition for artificial intelligence I have heard is “machines reading data to deliver the best outcome to customers and constituents, a task that was prior relegated to just humans”. Is there fear in “machine learning”? You bet there is, and it is a more valid concern than in any other innovation in history. For instance, some machine learning languages have shown susceptibility to subjective data inputs, in which the outcomes do not represent the beliefs and ideals of 100% of the population. Machines also cannot emulate or evaluate emotional intelligence, the impact of human instincts, or usefulness of human non-verbal language. One more, and probably the most concerning one, is that A.I. is certainly also a job displacer. Of course, the hope is that A.I. will create new job sectors and skill sets in its evolution.
Despite its inevitable shortcomings, the Artificial Intelligence train is pulling away from the station, and it will also offer a ton of positive societal benefits and operational efficiencies. It is easy for us to display skepticism, but as A.I. starts to permeate multiple industries and create more efficiencies and life enhancements that we can personally quantify and feel, it may just blow our minds for how much good it can do for us. Not to mention, it could also provide early adopter investors a “wealth window” that does not open frequently.
At Future Bright, we are acutely aware of the household names leading the charge in A.I., and we have positioned client dollars, commensurate with individual risk, to participate in several of those companies. As an investment advisor, I realized the importance of diving deeper into the A.I. initiatives of multiple publicly traded companies, and I am excited to be in the business of bringing those opportunities to you.
