April 2024 Market Update
- Federico Donadio
- Apr 4, 2024
- 4 min read
Beyond A.I. Chips & Technology
Looking Through The Jungle To Find Treasure
As you read this monthly note, you can have the computer read it to you while you do something else that requires your eyes to focus. Maybe you are having your car drive you to work while you read this if you are a Tesla owner and are taking advantage of their free one-month trial of full self-driving. Your groceries may be waiting for you at the store to be picked up or delivered to your front door. Your refrigerator and pantry may have ordered those groceries for you, all while your robotic lawnmower mowed your lawn and your vacuum robot cleaned your floors. These are just a few things that exist now that are being utilized by more than just the “early adopters.” Often, they started out as inventions for high-income earners’ and are now accessible to the middle and lower-income earners of society.
Some, at first, allowed for greater productivity in business. Now that same innovation has filtered down to the lower income levels, think about cell phones and food being delivered without extra cost to your door. We are already seeing that much like the cell phone and the internet have progressed to being used by some of the poorest on the planet, artificial intelligence, robotics, etc., have also progressed to be used by those less fortunate to improve their lives. This last part, where new tech is not just widening the wealth gap, has happened much more quickly than it did for cell phones and the internet.
The question we discuss this month is, as always, how do you position yourself to profit?
Digging A Little Deeper:
Most of those reading this note have noticed that the chip developers, manufacturers, suppliers, and installers have been in the news, and the price of those companies’ stock has risen. Software developers are not far behind.
While I get flashbacks to the “.com” euphoria of the 90s and the resultant crash, I believe the market and business, in general, learned much from that era about testing a market’s viability, utility, and profitability before getting overly excited. Not that the market won’t have some pullbacks. We expect those, and part of positioning yourself to profit involves knowing when and how to take profits and potentially allocate those profits to the next phase of growth. Where is the next growth phase likely to come from? Possibly the more mundane, less exciting but valuable and necessary sectors and companies.
Things that seemed incomprehensible five years ago are not only reality but they are being utilized by mainstream consumers today. According to several studies, the costs of training artificial intelligence have been reduced by more than 90 percent since 2017.
While it may be hard to imagine, amidst all the hype, not every application needs a $40,000 chip from Nvidia, or the advanced AI required for Tesla’s self-driving or Chat GPT’s advanced algorithms. As is often the case, there is room for growth at the bottom of the pyramid.
Five Potential Other Areas of Outsized Profit
Electricity production and transformer equipment, as Elon Musk predicted years ago.
Oddly enough, this may also drive traditional oil and gas companies higher.
Farming equipment, food production, and food security
Health Care and senior care
Three-D printing and engineering
New improvements in manufacturing could push the industrial sector higher.
The bad news may be that high inflation may persist, which could mean higher interest rates for longer and continuing volatility in the fixed-income sector. Further, as new technologies create ever higher demand for commodities, our recycling efforts have lagged far behind the market for new materials; hence, very boring companies like waste management may continue to be a highly profitable sector that many have ignored.
As you can likely tell, we remain diligent in risk management. Still, we are optimistic about opportunities to continue to profit from long-term investing for the remainder of the year.
If you would like to learn more about how to create your personal paycheck protection program in retirement without relying on traditional fixed income so you are not worrying about running out of money or not being able to live your best life, reach out to us at the “Contact Us” section of Guardianrockwealth.com or by texting the word LIFE to 321-421-5213
This note is not investment guidance for you; it is information and opinion only.
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Please remember that this note is our opinion from a broad perspective based on over three decades of money management experience and is not personal investment advice.
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John Browning, MBA, and CSA®
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