So… I still feel pretty optimistic about the future of AI revenue. However: Public companies are not cheap right now. ..For example, SpaceX has shown us that a company will have a lot to prove in terms of revenue and profits and still trade at a very high valuation.
That said, there are still several major risks to technology stocks.
Potential risks
1. Government dysfunction: Government has increasingly become a “clown show” of what seems like endless incompetence and corruption.
\*\*\*\* along with politics, the midterms could very well trigger some fear in the stock market because of the current cozy relationship between government and corporations that could shift a bit. Also, there could be a big battle between Maga/anti-maga which could create uncertainty in the stock market
2. Economic weakness: The economy and the stock market are not the same thing, but they are usually positively correlated. If the economy takes a significant hit, the stock market often declines as well.
3. Growing tribalism: Rising wealth inequality appears to be increasing tribalism; whether ethnic, economic, religious, or political. Tribalism can be as harmless as cheering for a local football team or as destructive as bombs or biological warfare. Because I strongly lean towards evolutionary psychology, I think much of human behavior comes from our underlying biological programming interacting with the environment. Assuming a person did not experience extreme abuse or neglect; in the absence of an extreme environment, I suspect a large portion(80%+) of who we become is influenced by our genetics. Hopefully, the country can work through these tribal divisions.
\*\* to be fair, research says 50% genetics 50% environment but based on Twins( separated at Birth) research I got a call BS on 50/50. Again, assuming that the environment or the genetics is not drastically different from the average human
4. Speculation and insider advantages: There is also a great deal of gambling-like behavior and growing insider-trading advantages in the market, which can amplify fear and greed in already tribalistic humans. \*\*We don't want people to lose hope in the market as a safe place to invest money.
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Despite all of that, humans are reasonably, within limits, adaptable to a changing environment. Ai and Robotics is probably going to exponentially change our environment. \*\*If\*\* we can avoid the worst forms of tribal conflict; including something catastrophic like nuclear war; I think we can continue to adjust to rapid technological change.
\*\*I try to stay optimistic, which is why I still believe humanity can eventually find better ways to manage its hardwired tribal instincts in a changing environment where we don't have to battle over resources like food and shelter and potential life partners, as we've been programmed to do for millions of years.
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I also understand that most people do not have endless time to research all these risks... That is one reason broad ETFs are such a good option for many investors, with not a lot of time, especially when combined with solid money management and perhaps a small allocation to precious metals as insurance against extreme scenarios.
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My main thesis is that demand for AI will continue to increase, especially among the wealthiest individuals and corporations. I have watched enough science-fiction movies to think that AI, robotics, and autonomous systems are very likely part of our future. Films such as "Her;" when someone can have deep conversations with a favorite philosopher/historical figure; even fall in love with an AI. Or, Interstellar with the robotic genius "TARS." Or, personal security, for the elite, in the form of personal "Terminators."
Speaking of Interstellar, I think Christopher Nolan is a genius. Movies such as Interstellar and Oppenheimer can teach us something about the future of humanity and our relationship with technology by forcing us to reflect on the past; some of these movies can definitely help us figure out where technology might be going in the future.
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Ultimately, I want to identify a few large-cap or mega-cap "cutting-edge" technology companies with "top-tier" management teams and focus on those few companies. My goal is to ride through the inevitable highs and lows in the stock price as long as my core thesis about the company remains intact. Technology companies require a lot more research than a well-established company like Walmart or Exxon; which is why I can only focus on a small number of companies at a time because of the constantly changing technology landscape.
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Comments/criticisms are welcome