Questions From The Flight Deck:
• What the heck is ChatGPT, and what jobs will most be impacted?
• What is it…? https://en.wikipedia.org/wiki/ChatGPT
• What jobs are at risk…? https://www.visualcapitalist.com/cp/which-jobs-artificial-intelligence-gptimpact/
• What about ChatGPT from an investing perspective? ETFs: AIQ, BOTZ, ROBT, AIEQ – see Kwanti.
• https://www.visualcapitalist.com/how-smart-is-chatgpt/
AI in the Cockpit? https://theaircurrent.com/technology/natural-language-processing-aviation-atccockpit/
Optimism – It’s NOT cool!
Have we always been pessimistic? Or is it a new phenomenon?
“The preacher man says it’s the end of time and the Mississippi river, she’s goin dry…the interest is up and the stock market’s down and you only get mugged if you go downtown…”
Great survival story…Hank Williams Jr.
If Everything is Getting Better, Why Are People So Pessimistic?
“…Those are three emotional biases toward pessimism. We also have cognitive biases that incline us that way, foremost among them being the “availability heuristic.” This is a feature of the psychology of probability also documented by Tversky, in collaboration with the Nobel Prize–winning economist Daniel Kahneman. Forty years ago, Kahnemanm and Tversky argued that one of the ways the human brain estimates probability is by using a simple rule of thumb: the more easily you can recall an example of something, the more likely you estimate it to be. The result is that anything that makes an incident more memorable will also make it seem more probable. The quirks of the brain’s ability to retain information will bleed into our estimates of a risk’s likelihood.”
“…The bad‐ dominates‐ good phenomenon is multiplied by a second source of bias, sometimes called the illusion of the good old days.
People always pine for a golden age. They’re nostalgic about an era in which life was simpler and more predictable. The psychologist Roger Eibach has argued that this is because people confuse changes in themselves with changes in the times. As we get older, certain things inevitably happen to us. We take on more responsibilities, so we have a greater cognitive burden. We become more vigilant about threats, especially as we become parents.
…At the same time, we see our own capacities decline. As we get older, we become stupider in terms of the sheer ability to process and retain information.
There’s a strong tendency to misattribute these changes in ourselves to changes in the world. A number of experimental manipulations bear this out. If you have people try to make some change in their lives — say, to eat less fat — often they become convinced that there are more and more advertisements for fatty foods.”
Ten Reasons Clients Should Be Optimistic About The Future:
1. The US is a net oil exporter.
2. Higher short-term interest rates.
3. Inflation is moderating
4. Companies are great at passing along costs.
5. Now is the time to seek out lower cost providers/products.
6. The Federal Reserve is not a bunch of dummies.
7. Companies know how to cut expenses to boost profits.
8. The stock market has been the best way to make money consistently for decades.
9. The US dollar is the world’s reserve currency.
10. Riding High…
Some Alternatives:
• Inflation cooling – 4.9% in April – announced today – 10 May 2023
• The Fed doesn’t have as much control as you think. And no more, QE!
• https://awealthofcommonsense.com/2023/05/some-things-the-fed-doesnt-control/
• US households are in excellent shape, the ratio of liabilities to net wealth has declined 50% since the 2008 financial crisis, and household leverage is currently at levels last seen in the early 1980s; see chart below. If the unemployment rate rises, consumer spending will slow down, but the starting point for US households is very strong.
• Balance Sheets Are Barriers Against Contagion…Household, corporate and bank balance sheets are more resilient today than during past crises.
Factfullness: Ten Reasons We’re Wrong About the World—And Why Things Are Better Than You Think
Author Hans Rosling
Quotes
The first is from philosopher, historian, psychologist, William James: “Pessimism leads to weakness, optimism to power.”
The second from the late former Chairman of the Joint Chiefs of Staff, Army General Colin Powell: “Perpetual optimism is a force multiplier.”
Resources
• https://www.morningstar.com/articles/1103776/why-optimism-is-a-secret-weapon-ininvesting
• https://www.forbes.com/advisor/investing/is-inflation-good-or-bad/
• https://www.reference.com/world-view/inflation-good-bad-5bcd09b085e0a85d