Market dips slightly. This report is a week later than my usually third week time. Overall, I tread water for the month, which is slightly better than most indices.
Here are some ETFs 2023 year-to-date:
QQQ
Nasdaq 100 36.7%
SPY SP500 15.1%
IWM
Russell 2000 5.5%
GLD gold 4.7%
EEM
emerging mkt 2.7%
TLT
US20 yr -4.6%
SLV
silver 0.9%
My account +16.7%, so back ahead of SPY buy and hold. Probably near dead even after dividends. This is a good result, because I feel like I have less downside risk than buy and hold.
I was wrong about a few things. I try a debit call spread on AMZN post earnings, and it is near a total loss. Overall, this minor market dip felt worse than the numbers indicate.
I have been telling people that I believe AI is a big deal. That it probably leads to three more big inventions. The analogy is the steam engine, which tangentially led to railroads, steel, oil, electricity. These big inventions change everything. There will be winners and losers. I tend to think that companies with a significant AI department will be able to out compete those that don’t have that. AI has the potential to improve many processes. The hype says 5 to 10 times more efficient. I doubt that in the short term, but in the long term, those kind of gains may be possible.
Unlike the 1800s and 1900s where physical plants and rail lines had to be built by hand and later machine, the modern revolution is mostly about ideas. AI can help develop new ideas, even though its current state is mostly about taking what is already known.
What does an investor do? My idea is to add to QQQ on every dip. We are a long, long way from bubble stage. That said, the price action of a leader like NVDA after good earnings is a cautionary tale. A lot of people have already leveraged long for the short term. Those may not have the staying power to handle any dips. So keep plenty in reserve, but lean to the long side.
The AI train has a long run ahead. It is near impossible to predict long term winners and losers, thus the thinking to buy QQQ. There are likely new companies or tiny companies that will become big because of the wheels set in motion by AI. Think about going back in time to the invention of the steam engine, and predicting that railroads, steel, oil would become huge industries. A regular worker back in the day would not even begin to imagine what you were predicting, because those industries did not even exist.
If AI is the big deal that I tend to believe it is, we are on the start of a long journey. Social disruptions may be the biggest risk. Industrialization changed how people lived. AI and what follows is likely to marginalize many jobs. That doesn’t mean a bleak future, but it may lead to political and social upheaval.
Industrialization was a factor in the rise of Communism and modern Socialism. AI may be the catalyst for similar changes. Enough soap box talk, again the idea is to add to QQQ on dips, while keeping plenty in reserve. The AI train has a long run ahead, despite some bumps along the tracks.
