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Weekend reading: Should we invest in the robots, or in the toys they’ll use to keep us happy?

What caught my eye this week.

Josh Brown at The Reformed Broker [1] wrote this week about the rise of the robots – and of artificial intelligence (AI) – from an investing perspective.

The perceived danger of advances in AI [2] is a common theme these days. (I just saw Blade Runner 2049, and very good it is, too.)

But Josh struck a novel note when he suggested fears about AI and automation mean some investors are no longer putting money to work to replace their income when they retire in their 60s – but rather to have a life-raft if AI kills their job long before then:

There is a sense of desperation underlying the way in which we’re investing. […]

A 45 year old married father of two with a mortgage and a pair of college educations to fund. The remote yet persistent threat of a nuclear war is not what keeps him up at night.

In fact, he might almost see it as a relief should it come. He is a bundle of raw nerves, and each day brings even more dread and foreboding than the day before.

What’s frying his nerves and impinging on his amygdala all day long is something far scarier, after all. He, like everyone else, is afraid that he doesn’t have a future.

He is petrified by the idea that the skills he’s managed to build throughout the course of his life are already obsolete.

“Just own the damn robots!” concludes Josh, and I agree you should have a few horses in the race.

Hopefully there aren’t many Monevator readers who only own the UK stock market or companies listed on it. But if you’re one of them, know that you are getting very short-changed in the robot department. When chip designer ARM was acquired by SoftBank we lost our last great listed tech titan. You have to look overseas.

Personally I own technology investment trusts and individual tech shares. If you are a passive investor with solid exposure to the US market (perhaps through a global tracker [3]) you’ll be getting a lot of technology through that, too.

Fun and games

I wrote an unfinished post (actually a chapter of a very unfinished investing book) along the same lines as Josh a few years ago. I agree it’s worth some thought.

But actually, I am not at all sure that all the riches will go to the robot owners.

For starters, it’s very unclear whether robots and AI really will take all our jobs. I’ll grant you things do feel different right now, but historically technology creates far more work than it destroys. Also, my friends working in the field say progress is very over-hyped.

But even if robots do take all today’s jobs, that doesn’t mean they’ll necessarily take all the wealth.

When industrialization replaced 98% of the jobs in farming, farmers didn’t become rich, nor did the manufacturers of farm equipment inherit the world. You’d have done better to invest in companies benefiting from the resultant urbanization boom, and the changes to leisure and consumption.

What will we do if robots do all the work but fail to get all the pay?

Perhaps we’ll play more computer games. Maybe instead of shares in robot makers – or even companies that make use of robots – we should own game creators like Electronic Arts.

Think that’s a depressing future for humanity? Then alternatively you could buy shares in Diageo, the UK whiskey behemoth. Perhaps we’ll all drink ourselves into oblivion…

From Monevator

Book Review: Living Off Your Money by Michael McClung – Monevator [4]

Brexit logic in 140 characters – Monevator on Twitter [5]

From the archive: Rebalance your portfolio with new contributions – Monevator [6]


Note: Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber.1 [7]

Reverse Brexit to avert economic disaster for UK, says OECD – Evening Standard [8]

Sterling’s long-term decline [Search result]FT [9]

Half of UK adults are financially vulnerable, City watchdog finds – Guardian [10]

Are you ready for an interest rate rise? [Search result]FT [11]

Property market divide and pensions mean 45% of UK wealth is held by top 10% – ThisIsMoney [12]

Robert Shiller: A stock market panic like 1987 could happen again – New York Times [13]

UK inflation at five-year high of 3%; real wages squeezed – Reuters via Twitter [14]

Products and services

Leeds launches new best easy access Isa and Virgin Money pays 2.4% – ThisIsMoney [15]

Millennial railcard to launch next year offering a third off fares – Guardian [16]

As annuity rates rise, does it still make sense to stay invested? – Telegraph [17]

Government’s pension dashboard set to go ahead – Money Observer [18]

TSB’s new 28-month balance transfer card is fee-free for 30 days – ThisIsMoney [19]

Yorkshire Building Society closes thousands of accounts paying 3.55% – Telegraph [20]

Property raffle website offers chance to win London flat for ‘price of a coffee’ – Telegraph [21]

Comment and opinion

Return data on example portfolios from a British perspective – Portfolio Charts [22]

If Bitcoin isn’t a bubble it’s a spookily good impression – The Value Perspective [23]

Alternatives to screening for stock pickers – Gannon on Investing [24]

Simon Lambert: A rate rise is about credibility not inflation – ThisIsMoney [25]

Advise for aspiring share traders [Careful!]The Irrelevant Investor [26]

“I make £10,000 a year from my cards business – and still have my day job” – Telegraph [27]

Deconstructing Amazon Prime: Loss leader or value creator? – Musings on Markets [28]

The Fearful Fifties – SexHealthMoneyDeath [29]

The theory of maybes – Morgan Housel [30]

So what does all this Brexit baloney really mean then? – Simple Living in Somerset [31]

The economics of having twins – A Wealth of Common Sense [32]

What have these financial bloggers changed their minds about? – Abnormal Returns [33]

Off our beat

Grand Theft Life: Interview with Wait But Why’s Tim Urban [Podcast]ILTB [34]

The weird strategy Dr Seuss used to create his greatest work of art – James Clear [35]

The War to sell you a mattress is an Internet nightmare – Fast Company [36]

“Neutron stars are some of the smallest, densest stars we know. They do not have much more mass than our sun, but all of it is compressed into a ball no bigger than the width of a mid-sized city (about 15 km, or 9 miles). That’s a lot of compression. A teaspoon of neutron star would weigh 10 billion kg (or 22 billion lbs) – about the same as 1 million very large elephants.” – Quartz [37]

And finally…

“Today’s most dangerous crises, the ones that threaten the very survival of the financial system, are not modern dress reenactments of the ‘tulip mania’ bubble of old Amsterdam. They are warp-speed flashbacks to Black Monday.”
– Diana Henriques, A First-Class Catastrophe: The Road to Black Monday [38]

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  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [ [41]]