Fear Not the Robot

  • Will artificial intelligence put 40% of Americans in the poorhouse?
  • No way, says Altucher… and you want to position your portfolio now
  • The scary speech just delivered by China’s president
  • More “pot-com” parallels: Super Bowl cannabis ad rejected
  • AOC, the millennial generation and the world improvers

It’s hard to escape the doomy headlines…

  • “AI Expert Says Automation Could Replace 40% of Jobs in 15 Years” (Fortune)
  • “Will You Lose Your Job to Artificial Intelligence?” (TechSpective)
  • “Artificial Intelligence Could Impact Half of Jobs in New York State” (Albany Times Union).

It’s such a big deal that the jet-setters meeting this week at the World Economic Forum in Davos, Switzerland, are talking about “universal basic income” — in which governments cut a check of an identical amount for every citizen.

Think tanks are getting on board and generating publicity from the likes of CNBC…


Even many of Silicon Valley’s biggest movers and shakers, like Elon Musk, say their own innovations will make it inevitable.

After all, if hordes of people will be thrown out of work by robots, those people will have to be bought off lest they rise up. Right?

Poppycock, says our James Altucher — who knows a thing or two about advanced technology with his extensive background in venture capital.

History is chockablock with dire forecasts of how new technology would put the masses out of work. It goes back at least to the days of Ned Ludd smashing the newfangled knitting frames of late 18th-century England.

(Actually, there’s no documented proof that ever happened — or that a Ned Ludd existed — which only goes to show the power of the narrative, huh?)

It’s more than James can stand. “When the world went from horse-driven buggies to cars, no jobs were lost,” he says. “How come?

“Because every horse driver became a cab driver. Every person who cared for horses became a car engineer. And so on.”

Not literally, of course. (Please spare us the angry-typing emails.) The point is that the “lost” jobs were replaced by higher-value jobs delivering more productivity and thus more pay. A man with a backhoe is worth a lot more to his employer than a man with a shovel.

“The auto industry created millions of jobs and the economy kept growing,” is James’ bottom line. And that’s hardly the only example.

“Typewriters were replaced by computers. Obviously this was huge for jobs and the economy.

“The same thing happened with ATMs. Everyone was worried that all bank tellers would be fired. But the reverse happened. Profits increased so much at banks that they opened up more bank branches and hired more bank tellers.

“Every company used to have employees titled ‘network engineers.’ Now they aren’t needed because everyone uses the same internet. Are these software guys on the unemployment lines? No. There is more need than ever for programmers.”

Were lives disrupted as a consequence of these changes? No doubt. Was the transition painful for some people? Absolutely.

And so it will go for AI, James acknowledges: “If AI performs surgery on you, we don’t need a surgeon. If AI creates a contract for you, we don’t need a lawyer. If AI fills out your taxes, we don’t need accountants.”

But to suggest that AI is somehow “different” from everything that’s come before and 40% of the people will soon be begging on the streets absent a newfangled government handout? No.

“Of course, we don’t know yet what new jobs will be created thanks to AI and new tech,” says James. “But nobody was ever able to predict what new jobs would replace the old anyway.”

More important for our purposes today: “There will be lots of money made, lots of profits, and an AI class of billionaires will be created.”

How can you play it? James is just the guy to ask. When he recommends companies to his premium subscribers, he uses the same approach he did when he ran a hedge fund. He calls on the same network of contacts he did then. He zeroes in on opportunities you’ll never hear about from the mainstream.

And so it goes with AI. You have to move beyond the scary headlines like the ones up top today.

“You need to know when trends are gaining momentum beforehand,” he says, “so that you can get in on the ground floor, because that’s where the life-changing gains are made.

“So when you’re looking for the biggest trends of tomorrow, you have to ask questions like:

  1. What are the biggest problems in society? What are the tidal wave-like trends taking shape around the world that I can surf on top of?
  2. What are the opportunities and companies in each trend that we focus on?”

That’s the approach he’s taking to AI — and blockchain and autonomous vehicles and every other tech breakthrough in the works this year.

As we’ve been saying for a few days now, James believes we’re on the cusp of a “superconvergence” event — something last seen in the early ’80s. Depending on your age, that means you’re looking at the opportunity of a lifetime — never to be seen again.

How confident is James in this outlook? “I’ll guarantee that anyone who listens to my predictions and follows my recommendations will see a chance to turn every $1,000 into $10,000 and every $10,000 into $100,000.

“I feel confident making this guarantee because I’m using the same strategy I used to pick 13 stocks that went up over 1,000% and 77 others that went up between 100% and 999% over the last decade.”

James shows you the way during a special event tomorrow at 1:00 p.m. EST. At that time he’ll reveal how superconvergence could make you 10 times your money this year alone. He’ll also reveal how superconvergence plays that took decades to play out in the past… could deliver a generation of profits in just the next 12 months.

Time is running out, and the available slots could be gone at any moment. Click here for what might be your last chance to seize the moment.

The major U.S. stock indexes are clawing and scraping to recover yesterday’s losses.

At last check the Dow was up more than half a percent. That’s because three of the 30 Dow stocks delivered pleasing earnings reports this morning — United Technologies, Procter & Gamble and IBM. By comparison, the S&P 500 and the Nasdaq are struggling a bit more… but they’re still in the green.

Gold continues to languish in the low $1,280s. Crude is up a touch at $53.17.

And now the most alarming news from China we’ve seen in — well, we can’t remember.

From Bloomberg: “President Xi Jinping stressed the need to maintain political stability in an unusual meeting of China’s top leaders — a fresh sign the ruling party is growing concerned about the social implications of the slowing economy.

“Xi told a ‘seminar’ of top provincial leaders and ministers in Beijing on Monday that the Communist Party needed greater efforts ‘to prevent and resolve major risks,’” the official Xinhua News Agency said. “He said areas of concern facing the leadership ranged from politics and ideology to the economy, environment and external situation.”

In other words, Xi isn’t concerned about the news we mentioned in passing yesterday — China’s economy growing last year at the slowest pace since 1990. He’s concerned about preserving social order.

When thinking about China, we usually come back to a passage from Currency Wars — the first book by our Jim Rickards. (The fourth and final volume of his tetralogy is due this spring.)

“No one knows better than the Chinese Communist Party leadership what would happen if… jobs were not available,” Jim wrote.

“The study of Chinese history is the study of periodic collapse. In particular, the 140-year period from 1839–1979 was one of almost constant turmoil.”

1839 marked the start of the Opium Wars. 1979 marked the end of the Cultural Revolution. In between came the Boxer Rebellion, the Japanese invasion, the Great Leap Forward…

That doesn’t even include “lesser” incidents that usually get passed over in high school world history, like the Taiping Rebellion. It began, Jim wrote, “with a single disappointed student and soon embroiled the southern half of the empire in a civil war, resulting in 20 million deaths.”

So when Xi Jinping puts lines in his speech about the party’s risk of “a slackness in spirit, lack of ability, distance from the people and being passive and corrupt”… that’s a warning more profound than Bloomberg’s story lets on.

And of course, in today’s globalized economy, what happens in China doesn’t stay in China…

For today’s entry in the annals of financial quirk, we have the sinsemilla Super Bowl commercial that wasn’t.

The cannabis company Acreage Holdings (ACRGF) — that’s the one with former House Speaker John Boehner on its board — wanted to buy commercial time during the Super Bowl coming up in less than two weeks.

But CBS said no. “We’re disappointed… but somewhat unsurprised,” said company president George Allen.

On the one hand, the whole thing might have been a publicity stunt. “The company said it plans to publish a 60-second version of the spot on its website so people can see what the fuss was all about,” reports CNN. Even in states where cannabis is legal, federally regulated TV and radio stations are reluctant to accept ads from cannabusinesses. An ad that would air nationwide? Forget it.

On the other hand, the fact Acreage says it was willing to stump up $5 million for Super Bowl access reminds us of Ray Blanco’s warning here three weeks ago: The pot sector is due for a shakeout, not unlike what happened nearly 20 years ago with dot-com stocks. Remember those Super Bowl ads in 2000? (Historical aside: Pets.com paid only $2 million for its infamous Super Bowl spot with that goofy sock puppet in 2000.)

Ray has studiously avoided Acreage Holdings since it went public in November; it’s up an OK-but-hardly-spectacular 10%. For access to his watchlist of companies best positioned to survive the coming shakeout, look here.

“At the risk of ‘piling on,’ I think all the wonder at Alexandria Ocasio-Cortez’s media popularity misses the root cause,” a reader writes on the AOC phenomenon.

“The reason so many Americans are sympathetic to socialism is that since World War II, each generation has had more and more given to it as it matured. Children receive everything from their parents, their schools and social organizations with no demand for performance or contribution of any kind. The ubiquitous participation trophy stands as a symbol of our mistaken notions of equality.

“The majority of teachers, academics and those whose incomes depend on taxation are likely to side with her, and they are the ones who influence our children most. By the time our generations graduate from high school they firmly believe that everything ought to be free (because up to that point it has been), and now everyone must go to college — not because college gives them anything of value, but to postpone personal responsibility another four–seven years.

“Their college indoctrination adds to this naivety about the real world, and when the newly graduated are confronted with a giant education debt and the need to take responsibility for their own lives, they quite naturally view this as unfair as well. All through their education experience it has all been ‘free,’ including lunches, extracurricular activities, etc.

“For a long time I sympathized with millennials because the compensation paid for work has not kept pace with the CPI for 40 years and is not sufficient for them to set off on their own. But lately, I’ve come to realize that their generation does not make themselves valuable enough to invite any greater compensation for their lack of contribution. Labor is a market, and demand determines the price.

“Socialism itself does not accept such a poor contribution from its participants. There has to be a net surplus of value created by every member of an economic system in order for it to provide a common benefit to all, and it can’t be strictly voluntary. Socialist countries only work when everyone contributes sufficient to more than offset their consumption. That’s true for every economic system, but capitalism offers the opportunity to actually obtain more than one puts in, because there are more ways for collective wealth to be created from nothing except the voice of the market.

“The misfortune is that too many obtain excessive shares without having put anything at all in. It is interesting that AOC, like most leftists, see Gates and Buffett as morally better than other billionaires and that so many media members believe the folks at Davos are going to ‘fix the world,’ as a recent Guardian article suggested.”

The 5: Yeah. Don’t forget the Davos slogan…

world econ forum

What a contrast with the original saying of the French physiocrats, “Laissez faire, laissez passer, le monde va de lui-même.”

It translates roughly to… “Let do and let pass, the world goes on by itself.”

Can’t let the world do that now, can we?

Best regards,

David Gonigam

Dave Gonigam

The 5 Min. Forecast

P.S. This is your last reminder: James Altucher’s “superconvergence” event is tomorrow at 1:00 p.m. EST.

There you can learn about James’ outlook for the advent of world-changing technology during 2019… converging with a huge financial catalyst in the form of the Trump administration’s tax cuts and deregulation.

Nothing like it has happened since the early Reagan years… and James believes the profit opportunities will be even more lucrative. He’s talking 10 times your money this year alone.

Signup is free, but the available slots could be filled any moment now. Follow this link and secure your spot right here.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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