The Sunday Drive - 02/18/2024 Edition [#98]
Musings and Meanderings of a Financial Provocateur
👋🏼 Hello friends,
Let's enjoy a leisurely Sunday Drive around the internet.
🎶 Vibin'
Readers of the Sunday Drive know that in addition to discussing investing and economic topics, I also write about and include articles about, among other things, demographics, longevity, and artificial intelligence. I believe that over time, these will all be increasingly related in important ways.
So in keeping with our hopeful theme of productivity led economic growth as our society ages, this week, I’m vibin’ to Walk of Life from the 1985 Dire Straits album, Brothers in Arms. It’s a fun song, with the video of sports bloopers being an added bonus. Enjoy.
💭 Quote of the Week
“There's a lot of blood, sweat and guts between dreams and success.”
– Paul “Bear” Bryant
📈 Charts of the Week
After falling briefly post the pandemic years, late 2023 brought a significant increase in retirees, topping their late 2021 high. There a likely a number of causes for this, but I suspect it is largely driven by the wealth effect enabled by stronger financial markets in 2023.
Even in light of an increase in retirees, or perhaps because of them, labor productivity has begun to turn up again, exceeding their pre-pandemic levels. This is likely one of the primary reasons the economic hasn’t fallen into (the long predicted) recession.
I believe that much of the recent uptick in productivity has been the early adoption of artificial intelligence (AI). As AI drives deeper and deeper into all manner of professions, and creates new ones, there will certainly be winners and losers.
However, if the history of the human spirit and our collective ingenuity is any guide, there will be more winners than losers as our economy and society reorganizes itself in the age of AI.
So to the modern day Luddites out there, I say, “Take heart!” Hope and optimism always win in the end, even if the ride is bumpy along the way.
🚙 Interesting Drive-By's
This week we have articles on investor sentiment, information overload, aging usefully, and (of course) AI :
🤔 AI is Already Making Us More Productive - from Ed D'Agostino
We all know everyone’s talking about AI. Companies mentioned it on earnings calls over 30,000 times last year. And PwC reports that 73% of businesses are already using AI. But “using AI” could mean something as benign as managers favoring ChatGPT over Wikipedia when they need marginally reliable background information. That isn’t enough to drive up productivity.
Instead, the productivity winners will be the companies that deeply integrate customized AI into their enterprise software and business systems, pairing it with automation whenever possible. Despite all the chatter, Nitin Mittal and Thomas H. Davenport note in their book All in on AI that only a handful of major companies have already done this.
Over the next few years, the companies that quickly and aggressively take a comprehensive and customized approach to AI will radically outperform the ones that don’t. This will push many of the AI/automation naysayers and slow adopters out of business. The early adopters that have completely overhauled their business systems will be left standing. [link]
📈 What’s Right With the World - from Capital Group
A daily diet of negative news can lead even the most experienced investors to lose conviction in their long-term investment plans.
Bad news often overshadows more favorable events. Even after the U.S. avoided a recession and the inflation picture brightened in 2023, many Americans remain downbeat about the economy and markets.
With wars in Ukraine and the Mideast, simmering U.S.-China tensions and a contentious U.S. presidential campaign underway, it is understandable that investors may be anxious. Yet positive trends across technology, health care and other areas are transforming lives and driving opportunity for companies and patient investors. [link]
💡 Attention Ecology - from Levi Ouwendijk
We are faced with a problem we haven’t ever so much before: to filter out information that has become excessive in supply. People used to have to exert more efforts in order to obtain information, because the way of making information travel was much less efficient. This inefficiency may have had plenty of disadvantages, but it did exert a selective pressure on the contents that were shared. A letter in 1940 could easily summarize the scope of a couple of months, devote itself to notable events, and significant residual sentiments. The messages needed to be confined, therefore considered, and the information condensed. Prioritization and filtration happened before the act of communication.
Now we can share much greater volumes of messages than that letter, instantly, and across the globe. And we don’t need to select chiefly the most significant information over a period of months: we can share whatever happens right now. The technology of our time has made the travel of information a background matter, a self-evident process. Because, in the act of communication, we encounter no more friction. It is now inexpensive, convenient, and efficient to share information. Although this may have many advantages, our solution has led us to a new problem. It has greatly removed the selective pressures that were once inherent in the act of communicating across distances—those conferred by the limitations, capacities, and constraints of the medium.
As a consequence, we have become indiscriminate. We share everything. We have a direct line into the pool of information that reaches everywhere simultaneously. We are incessantly documenting, sharing, listening, interpreting—producing and consuming. Everything far away has become within reach, everything close-by now stretches everywhere. We have turned information from a necessity into a triviality. We are indiscriminate about our production and consumption of information, because we can have so much of it! [link]
💰 What Will This Generation of Elders Mean for Humanity? - from John Izzo
More people turn sixty-five each day now in America than are born and, by 2030, the number of people over sixty will outnumber those under eighteen. We are entering a unique moment. This generation of “elders” in the developed world will be the longest lived, wealthiest, most highly educated, and largest percentage of elder population in human history. It begs the question, “What will be the impact on society of this elder abundance?”
It's happening at a unique moment for humanity as well. Almost every ecosystem is at or near collapse: the climate is warming rapidly, the gap between the wealthy and everyone else is growing, there are wars in Europe and the Middle East, and the generation younger than the new cohort of emerging elders is filled with anxiety about the future. What this generation of elders does with their time, talent, wealth, and political muscle will have a big impact on how the world weathers these multiple challenges.Recent surveys show that all generations agree that younger people are most responsible to solve the confluence of environmental and societal unrest. As an elder myself, it disturbs me that this is the case. Throughout most of history, elders in society were the ones most responsible to think about the future to ensure they become good ancestors for next generations.
The youngest among us now have a phrase that has come to embody how they see us-the phrase is OK Boomer. It grew out of a feeling among them that the current crop of Elders has failed to constructively engage to ensure a better future. But there is good news - I believe many of today’s Modern Elders are stepping up and I hope you will join them. [link]
😊 How to Become a Chief of AI - from Taylor Malmsheimer
AI is going to affect every department at your company. Here’s a short list of what it will impact over the next 3 years:
You’ll need to build more software, faster, to keep up with your competition
Your business model will need to evolve to incorporate AI
Every workflow will need to be re-assessed to incorporate AI
Some work will have to be outsourced entirely to AI companies or agents
Your younger workforce will become AI-native (quickly) and the rest will need to develop their comfort fast
You’ll need to rebuild company culture (including incentive alignment and performance reviews) around AI usage
The bottom line: Your company needs someone who can look at your business holistically, identify the opportunities for AI, manage each department through the piloting process, and report back on progress. This person should own the mandate to take your business from status quo to full adoption within three years and work cross-functionally to make it happen. [link]
👋🏼 Parting Thought
If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.
Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed.
I hope you have a relaxing weekend and a great week ahead. See you next Sunday...
Your faithful financial provocateur,
-Mike
If you enjoy the Sunday Drive, I'd be honored if you'd share it with others.
If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.