With markets in the position they are in (grossly overpriced) I question the validity of it in the future for a number of reasons. I wonder what the world markets will look like.
1) Best case scenario for AI. Everything is automated. Costs are reduced and inventories shoot up. Then products go to market to the buyers who are now unemployed and can’t afford to buy things. I’ve heard universal income thrown around but that seems completely counter to the capitalism structure we have now. (Exaggeration possibly but if it goes on a macro scale it’s not an impossible thought)
2) It’s not as hyped as it’s made out to be. Similarly to the dot com bubble. Companies just start throwing the word out (some of this is already happening) and just as before high valuation without the income to back it up. People realize this and… Crash. After this maybe it’s used or maybe something else takes over. My understanding of machine learning and artificial intelligence hinges towards it being profitable and useful, but when and how that shows up in financials I’m less certain of. I think this is the most likely scenario.
3) We kind of just keep going at the pace we are going and market gradually corrects to something. Maybe analysts are estimating correctly, maybe under estimating, maybe over estimating. Maybe I’ll be pleasantly surprised and AI ends up exploding the market… but in my eyes it feels harder to make a valuation on an intangible like AI.
I think about it because I’m an accounting student about to enter the workforce. Labor markets are tight and I’ve heard entry white collar jobs are at a large risk. Am I right to be concerned? I’ve been reading more and more into AI and machine learning but I worry I’m studying for a job that won’t exist. The strategy I’m taking is to work with AI. If it’s the future I can’t stop it. Best I can do is adapt.
Additionally I’m an investor. I’ve noticed Buffet is taking a cash heavy position which tells me… he’s holding for a correction.
Just my opinions and observations. What are your thoughts?