AI, AI and AI – That is What is Driving This Stock Market

There is a saying in property that three things determine value - location, location and location. I think the US stock market may be heading in a similar direction but substitute artificial intelligence for location.

Technology has been a thing for 50 years now with mainframe computers. mini-computers, desk tops, hardware and software, cellular phones, smart phones, the cloud and now the dawn of the age of artificial intelligence, a world of smart robots, smart everything which is as yet barely understood but full of potential and even a little scary.

I was born at the beginning of all this just after Alan Turing had created the computer which broke the Enigma code. It is quite apparent to me that technology is changing at a dramatically accelerating rate. As a friend said to me the other day new technologies can be created and become obsolete within a lifetime. Think stone age man with his flints, which probably seemed a big deal to him and it is beyond incredible what is happening.

My guess is that one consequence of this is that global stock markets are increasingly going to focus on AI. There will be the stocks making the revolution happen, the stocks, often the same ones, using the technology to make manifold wonders possible and there will be all those which are left behind and need not concern us.

Just as an aside, we also have macro factors to consider. Rising bond yields are kryptonite for stock markets and recent years have seen the sharpest ever rise in bond yields from near invisible levels to levels where they need to be seriously considered in taking investment decisions.

This is the cost of dealing with a spike in inflation but I suppose we should be glad that our leaders are on the case and rooting out the evil before it rages out on control.