You’re obviously aware of all the AI talk and its potential impact on our future.
Me: I believe it will dramatically change many things.
That said, however, it’s impossible to sit here and predict exactly what it will actually change.
“It’s tough to make predictions, especially about the future.” –Yogi Berra
AIs already drastically disrupted/disrupting the software industry. Well-known software giants like Salesforce and Adobe have seen precipitous drops in their market value.
There are different theories as to why and the answer largely lies in the belief that the future is more uncertain today than it was a year ago.
However, one example of a company benefitting from AI is agricultural equipment manufacturers that have integrated artificial intelligence into its precision agriculture technologies such as autonomous spraying and crop-monitoring systems. These systems use machine vision and machine learning to optimize spraying, reduce chemical use, and improve crop health.
Myself and the rest of the Know My Plan team, we aim to avoid being in a position of trying to identify singular companies or sectors that will be the winners or the losers.
We believe in a more prudent approach, which is to continue to invest in a low-cost broadly diversified portfolio owning large, medium, and small cap stocks.
By default, we will own the winners (and the losers).
Capitalism does a great job of sorting outcomes. That is why we favor diversified portfolios, as the risk of concentrated bets is simply too high when stewarding our clients’ hard-earned life savings.
Closing thoughts: I am excited about the future of being a long-term investor as I believe that AI will make companies more efficient and profitable.
While there is very little correlation in the short term (month-to-month or year-to-year), the stock market is highly correlated to earnings growth over longer periods (10-year rolling periods).
This is great news for the investors!
–Nic
Any opinions are those of Nic Nielsen and not necessarily those of Raymond James. Expressions of opinion are of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.
