Littlejohn Financial

AI vs. 90’s Tech Bubble: Lessons for Smart Investing

Financial Podcast by Financial Advisors

Dive into the parallels between today’s AI hype and the late 90’s tech bubble. Discover similarities, differences, and valuable lessons for smart investing. Explore how historical trends can guide us in making smarter investment decisions amidst the current AI craze.

Episode Highlights:

  • AI’s transformative potential, economic disruptions, and cybersecurity risks, balancing its benefits with potential drawbacks.
  • The true cost of technology, particularly AI and its impact on the job market, including potential job losses.
  • Energy usage and carbon footprint of AI platforms like ChatGPT, alongside the resource requirements of electric vehicles and AI technology.
  • The adverse impacts of technology on social behavior, productivity, and the risk of dependency, prompting the necessity for a ‘tech detox.’
  • The speed of market transactions, the shift to decimal stock prices, blockchain technology, and the environmental impact of AI and digital technology.

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TRANSCRIPT

00:00:00 What’s the diminishing return, right? AI can do everything in 0.001 seconds, but we need to get it down to 0.0001 seconds. And you’re like, what’s the differentiator? Right now, if it has to fight another AI for something and it needs that speed, maybe, you know, military, something like that. This is for most of us. It’s like, I can wait the one 100th of a second and I don’t have to spend twice as much.

 

00:00:32 All right, that’s the new music. It tells us we’re going again. Welcome to the True Wealth radio show. I’m your host Dave Littlejohn. Matt’s in the studio with me today. And we’re currently setting up cameras and making sure that they are live because we are chatty and sometimes, we’re a little slow on the uptake here, but we’ve got a very interesting show for you. And again, this is the greatest Tuesday you’ve had all week. 

 

00:01:01 First, I’m just going to say this out loud. I think we’re going to have to try to get different music, right? This is not a news program. This is like a financial entertainment program. Right? So we got to talk about money and we got to talk about it. Make it fun. Right. So we, this, that news thing, it just makes me all stressed out. 

 

00:01:22 Well, it’s not my favorite. Yeah. 

 

00:01:25 All right. So Dale, we’ve officially put our vote in Kyle. We were officially voting. We’re going to change the music for our program. You know why? 

 

00:01:33 What’s like if your life was a theme song, what would it be? 

 

00:01:36 Oh, probably something goofy. It’s not like–

 

00:01:39 I had a tiger or something super cool. 

 

00:01:41 No, no, that’s cool. That I’m like, I’m not the cool guy. I’m firmly in dadland now. And so my life is a stream together of dad jokes and finance. Yeah. 

 

00:01:57 In that order?

 

00:01:57 Yeah. Do you need me to, are you going to fight the microphone? 

 

00:02:00 I am. 

 

00:02:01 That’s like literally just, you guys are going to have to watch the video of it later because it’s going to look ridiculous. Like, what are you, are you arm wrestling the microphone?

 

00:02:10 I’m just going to give up for the segment and say, you know what? We’ll fix it at the break. 

 

00:21:16 Yeah. So anyway, we got to thinking today, what would be the most valuable thing that we can talk about? And I will tell you, I feel like I was chasing a curveball today. 

 

00:02:28 Yeah, but. 

 

00:02:29 Well, why? You know, cause yesterday was tax day, right? So tax freedom day, which I haven’t checked the actual date. You know, there’s a thing by the way, you know, there’s a thing called tax freedom days.

 

00:02:37 You have to work in order to like start to break even. And it’s like, you work for the first, what, three or four months.

 

00:02:43 It’s usually really close. It’s somewhere in early February. It’s usually the crossover point where great, you’re done paying your taxes, the rest of what you earn can be yours, at least at the federal level. So, and then there’s different tax freedom day for different states, right? Oregon’s historically been on the higher side of things, so, you know, who knows? But anyway, so if you didn’t get your IRAs funded. 

 

00:03:07 Well, too bad. 

 

00:03:08 Now you have to do it for this year, right? Yeah, but 2023 is officially in the books. 

 

00:03:12 Does it feel good to have another one like crossed off the list. Is it starting to go too by? Is it going by too fast? Or, I mean, you’ve been in business for a lot of years now. How many years have you been in this industry? 

 

00:03:23 So, Little John Financial’s been around since 2010 now. 

 

00:03:27 Right, but you were in it even before 2010. 

 

00:03:29 I started, I had my licenses formally in 2000. So, I started going. 

 

00:03:34 24 years. 

 

00:03:35 Yeah, I’m in my 24th year, because I would say it’s kind of easing into the industry in ’99. I mean, I remember watching Y2K and wondering what was gonna happen. And I was in the business when that was happening. So I started in 99% insurance. 

 

00:03:48 Oh, so you started right at the tech bubble. 

 

00:03:52 Yeah. 

 

00:03:54 So that must’ve been kind of an interesting time to watch. 

 

00:03:57 It was fascinating to watch the NASDAQ just fall and fall and fall. 

 

00:04:03 And then here I start during kind of the COVID pandemic where markets are getting rattled around and…

 

00:04:09 Yeah, COVID was its own weird animal, right? 

 

00:04:12 And you’ve seen a lot of these, you know, kind of big moves in the market. You were there for the dot com bubble. You were there for oh eight and the housing issue. You were there for COVID. I mean, you’ve been through a lot of these market cycles. What have you learned? Let’s let’s go there. Like what has Dave learned over the last 20 something years of being in this industry? 

 

00:04:33 Okay, this is one of the things that I’ve learned is that the technology may keep changing, but the principles really don’t. Like every time somebody says this time it’s different, it’s hardly ever different. 

 

00:04:43 Right, so right now, I mean, the headline articles are, oh my gosh, look at AI and how this is gonna reshape the entire stock market. Does it feel a little bit kinda like what the dot com bubble was, where everyone’s like, forget earnings and forget everything, let’s just buy the thing that’s the internet? 

 

00:05:00 Well, I think you know my answer, cause you just totally, you know, aked it into the question a little bit. 

 

00:05:04 I did, but that’s- 

 

00:05:06 Because what have I been saying? 

 

00:05:07 Well, kind of that, but I want you to expand upon it for the listeners so that they get a feeling of how you’re kind of connecting the dots here. 

 

00:05:15 Right. So I remember in ’98 and ’99 when people started to say that Warren Buffett was washed up. Right? He’d just been underperforming and the Oracle of Omaha was old news and he was missing out because everybody was jumping in tech funds and they were making huge returns You know, you were seeing 40 50 60 percent returns in 99 some cases higher than that it was just money getting printed and The logic at the time was that well the internet had really exploded now The internet wasn’t new at that point, but the dot-com phenomenon was really exploding It was personal computers. You were starting to see a lot more web browser search engines

 

00:05:57 Yahoo was really big news. There were companies like Alta Vista and Lycos and Netscape and Prodigy and AOL was big back then. Right. And so you had this this massive push to get people accessing the internet. And you know, to this day, you can go find Gen Xers and play the sound to a modem connecting and on dial up and everybody will kind of giggle about what that meant because we all knew. Right.

 

00:06:26 But there were things like, this is the new economy, right? You don’t have to make money in stocks. The company doesn’t have to make money as long as it’s growing rapidly, right? Investors put money into these things and as long as they were acquiring customers rapidly, that was all it took to be relevant. Just find eyeballs, eyeballs, eyeballs. And then there was a big spend that aligned with that, right? The big spend was the scare around Y2K.

 

00:06:56 The idea that the computers, because before we had memory coming out of our ears, before memory was everywhere in computers, it was sort of a premium. I can remember actual, now I don’t remember punch cards, but I remember the five and a quarter actual floppy disks that had very limited storage. And then the three and a half inch sort of hard disk that had very limited storage. And then it was a very big deal when DVDs started to show up on scene and you had as much as 4.7 games. 

 

00:07:31 Knowing your love for technology, I bet you, you bought hundreds of DVDs and you still have them. Am I correct? 

 

00:07:37 I still have some DVDs, yes. 

 

00:07:39 Oh man. I love them. I do. I like having a physical copy of stuff. Like gaming, I still have, you know, the original Xbox, the 360, I have the new one. And I’ll tell you, I play the 360 more than I do the new one because I like putting the disc in there and playing the game. I hate having to download the game. Oh, I’m out of storage. Delete that one. Redownload that one. 

 

00:08:05 Right. Well, the storage thing was the gotcha, right? Storage was expensive. And so everybody had to be careful with it back then. And so when they design computers, even the code was about keeping the date had to be short to save on memory. 

 

00:08:24 I think it’s interesting that, you know, it’s evolved so much since then, and we’re in a really different landscape where a floppy disk back then, it’s like, you can’t even take a thousand floppy disks and equal a cell phone. 

 

00:08:39 Yeah, the memory has gone just exponential, but here’s what happened. Everybody started upgrading their computers in ’98, ’99. Like crazy, because they were worried that the infrastructure was going to fail if the computers reset back to zero zero instead of 99. And what would happen? Like the dates all messed up. Is it going to break everything? Is it going to just dock to normal? 

 

00:08:59 So you see this huge investment? 

 

00:09:01 Huge investments spent to update computers. And then this was in a cycle where like you needed a new computer about every two years because of the way technology was advancing. And they all did that in ’99 and then in 2000, nothing happened. 

 

00:09:18 It’s interesting to me. You look at a company like Intel, right? And you read the news articles and, well, Intel’s price is down and the underlying theme is, well, people aren’t buying computers the way that they used to. And so if computer sales are down, Intel is struggling. And I look at this and I’m like, well, we are on this verge of a new wave of technology where computing has really taken that next leap or will be shortly in the future. We talk about quantum computing and all sorts of different topics. 

 

00:09:54 And I look at this and I’m like, are we gonna do the same thing that we did back in that timeframe where everyone was buy up the new computer, the new next best thing that’s gonna change the world? And I’m like, how far are we away from that. Are we further than we think or is it right here right now? Like some people are trying to indicate. 

 

00:10:15 So, you know, I don’t know the answer to that. What I can tell you is, you know, I’ll finish the story and then compare it like you asked me. Right. So first, once the dot com didn’t materialize, we had two years where nobody had to buy computers and markets collapsed. Right. And we also determined that, oh, yeah, the internet’s here, but you still need companies to make money because who’s paying the bills. Right. And so that became a separate issue. And I just know that the hype around it drove prices really high. Today, the hype is driving AI really high. Everybody’s convinced it’s gonna change everything. And… 

 

00:10:53 But largely, you know, Nvidia has been one of the big players. And we have seen the sales drive it. 

 

00:11:00 Well, so talk about that a little bit, because our listeners, they’re like, what the heck, you just dropped a name. What do you mean? 

 

00:11:05 Nvidia is a company that makes a lot of the parts for some of the AI that’s being developed. Right? 

 

00:11:11 NVIDIA is a hardware company primarily, and what they started around, they were most famous originally for graphic processors. 

 

00:11:17 Yeah. 

 

00:11:17 Right? But they are processors, okay? And so, and graphics processors for a while, they were useful in mining cryptocurrency too. So NVIDIA rode the crypto wave higher, and then NVIDIA started developing processors that are good at running artificial intelligence programs. Okay? And so Nvidia has been developing new hardware and their sales have exploded. They’re like 1100% increase in sales and so forth. And so their revenue’s gone bananas. The challenge is, can they sustain that? Right? And…

 

00:11:53 Other companies getting swept up in that craze? Because you look at a company like Broadcom, right? Not that long ago, they’re trading at $600 a share. Today it’s $1300 in just a matter of a short few months. So it’s not just Nvidia. There are other companies that are caught up in this. And so is it sustainable? 

 

00:12:13 People are paying, is it a frenzy? Can you justify these prices? Because if a company grows by 1100%, what do they have to do? So this is a company that by market cap is now like over a trillion dollars. 

 

00:12:26 Right, one of the, probably the top five largest companies. 

 

00:12:29 Number three, I believe. I think that Microsoft and Google are the only ones bigger right now, I think.

 

00:12:35 It’s Apple and Microsoft. 

 

00:12:36 Yeah, Apple and Microsoft, everybody else. Apple and Microsoft and then Nvidia, and then I think you’ve got Google and Amazon and Facebook kind of in that group all by. But it’s so big by market cap now that what does it take to double that again? 

 

00:12:51 A lot more. 

 

00:12:53 That’s the thing. And so at what point does AI say, well, it’s just like memory, right? Memory used to be such a premium. Now it’s pretty cheap. So how much horsepower do you need for AI? And at what point do you have adequate or excessive horsepower? 

 

00:13:10 Or at what point does another company come in and say, yeah, we see the technology that you’ve built and we’re gonna replicate it? 

 

00:13:16 Well, certainly that will start to occur. 

 

00:13:19 There’s gotta be at some point some competitors in that space, you would think. 

 

00:13:23 So what does all of this mean? Well, first of all, it means we’re running long. So we’re gonna grab a break here. So we’ll do that. We’ll come back and let’s talk a little bit more about what exactly does the AI, like how does this resemble 1999 or not? How it’s different and what we think maybe investors ought to be looking at. So stick around, we’ll be right back. 

 

00:13:43 All right, we’re back just so we get their music off as quick as possible. Welcome back to the True Wealth Radio Show. I’m your host, Dave Littlejohn with me. And remember podcast if you want to get caught up. Today, Matt asks the very interesting question of does AI change the world?

 

00:13:59 That’s a great question. 

 

00:14:01 Right. And I think the answer is yes. And then we said, how do you feel about it? So I think it kind of smells like 1999, but, or, you know, rhymes with it. How long is it going to be the same? 

 

00:14:11 It might be a little bit different. 

 

00:14:13 Well, yeah, I don’t think we have the same buildup in computer inventories. I don’t think we have the same conditions that were present where there was this massive spin and we were, I do think AI stocks, basically, if you’re kind of associated with AI, you had a pretty good run. Right? 

 

00:14:28 Right. 

 

00:14:28 And I do think there’s going to be a get real moment where we say, you know, unless AI goes full Terminator on us, it’s likely to become a tool that we use. Like the internet is a tool we use. At first it was going to be everything is going to be different because of the internet. Yes. And we still take vacations and we still build stuff and we still drive places. And we there’s still like human activity, even with the internet. Okay. So, so I think AI is going to change the way we interact with.

 

information. I think it’s going to kind of work like a second brain for us because it’s going to be able to access things really quickly. There’s pros and cons to that, right? That we’re going to memorize less, but we’re going to have access to more. 

 

00:15:11 Google has already seen fit for that, right? But my question in the business cycle is how much horsepower does it take? Right? Just like how much bandwidth does it take? I’ll tell everybody a dirty little secret. I haven’t replace my laptop at work in eight years. 

 

00:15:28 That is a dirty secret. I can’t believe this came out on air. Right. 

 

00:15:32 But the thing is, it’s 16 gig of RAM and an i7 processor and we run lightweight stuff. I don’t tax it that hard. Right? And so, and because we’re not doing a lot of graphic processing and heavy duty stuff that requires a lot of horsepower, it’s still functioning okay. Right? I mean, financial software is calculators. Number algorithms are easy for computers, right? They’re really easy. The graphic processing, virtual reality, augmented reality, and really high bandwidth stuff, that pushing lots of data to different areas on the planet, that takes a lot of internet pipe to get it moved from one spot to another. It takes a lot of horsepower to manipulate things like heavy duty graphics, but it doesn’t take a lot. You can put a calculator on a watch. And so it still works. And the question is, what level do we need to get to where, God, we got tons of horsepower and it’s enough for what AI needs to get done. 

 

00:16:37 That is a really good question because how many businesses and how many different companies out there really need the type of horsepower that’s required or that, you know, would be justifying you the spin on new platforms. And that’s it. 

 

00:16:56 Or what’s the diminishing return, right? AI can do everything in 0.001 seconds, but we need to get it down to 0.001 seconds. And you’re like, what’s the differentiator, right? Now, if it has to fight another AI for something and it needs that speed, maybe, you know, military, something like that. This is where- 

 

00:17:15 But for most of us.

 

00:17:16 It’s like, I can wait the 1 one hundredth of a second and I don’t have to spend twice as much.

 

00:17:21 Well, like the Apple, what’s it called? The Apple Vision Pro, the headset.

 

00:17:25 Yeah, that I was telling you about. 

 

00:17:27 Yeah, I look at that. That’s another thing where I’m like, will it sell at the price point that it’s at? Because all of these chips and all of this artificial intelligence that we keep kind of piling into things, at what point does the consumer say, I don’t really need that much? Or I can’t justify the spend. We’re seeing it in automobiles. Right? 

 

00:17:47 At what point do people say, I don’t want to be that immersed. Like we keep making these more and more immersive. That vision pro, I did a demo. It’s unbelievable. Right. It’s amazing. I think the device is heavy. So Apple, if you’re listening, make it lighter. Right. But how do you, how do you make software for it? And do you really want to disappear into another world? What’s the danger of disappearing into a world that doesn’t really exist? Great question. 

 

00:18:16 But yeah, I think the bigger question is, is at what point has technology gone too far into integrating into our lives? Like you have refrigerators now where there’s cameras and wifi built in and you go to the store and you’re like, ah, I forget if I have milk. And you can look inside your fridge with a video camera. Right, like we keep integrating technology to a certain point. I’m like, is there a breaking point where we’re like, that’s too much? 

 

00:18:43 Well, I think there’s a danger point where if somebody wanted to exploit it. You know, it gets the more digital footprint, right? Then there’s the point at which how do we start managing security? Because that’s the next thing that one has to think about is if AI, AI is getting powerful enough that it can fake people. And so what happens like, you know, we’re starting to examine in our business. How do we have things that are kind of like security protocols that aren’t digital.

 

00:19:16 Isn’t that a weird thing to think about? Because everything is digital. 

 

00:19:19 It’s a thing that you don’t, it’s much harder to hack because there may be a series of things that are out of wallet, right? The docusign concept, but they’re unique identifiers that were developed face to face specifically to protect your identity. 

 

00:19:34 Well, and here’s a conspiracy theory idea for you. This is like kind of getting into the weeds, but I look at, I mean, some people have all of the locks on their home, for example, that are digital. You type in a code. And the lights in their house, there’s a code for it. You can control it from your phone. I’d start thinking about like, you know, what about like an EMP or something where there’s a blast that wipes out a lot of the technology inside of these components. And I’m like, I still want to be able to turn my lights on. So I stick with a switch, like a manual switch. I still want to be able to open my door with a lock. I don’t know, I get paranoid with this type of stuff. And I’m like, I like technology, but I also like things where it’s like, I know when I put the key in the door, it’s gonna unlock. 

 

00:20:22 Yeah, and the funny thing is you say that I like redundancies, but I have a lot of those things, right? I have a lot of electronic things and yes, the right conditions could fry them. And part of what I do is things like mechanical redundancy. So, oh yes, you have a door lock that’s digital, but there is a physical key so that if you needed it, it was there. There you go. So that’s a physical redundancy that you’ve got. The challenge is that that’s simultaneously an exploitation point in security. Of course, when it comes to door locks in my house, the window is a bigger exploitation point than the lock. So it’s like, well, I’m gonna lock the door, but if somebody really wants in, they’re getting in. 

 

00:21:09 Because they can just break out a window. 

 

00:21:10 They can break a lot of things to get into the house.

 

00:21:11 I got to give technology a little tip of the hat. I was driving this weekend and my wife has a vehicle that has like a bunch of super fancy electronics that I don’t really know how to work. And someone started to go through a light and I followed them and they stopped all of a sudden in the middle of a red light. And I wasn’t paying attention because I turned to look at my wife for a second. The vehicle stopped itself and prevented a collision. And I’m like hey, that’s pretty cool. Like I definitely would have hit this person had I not had this technology. I didn’t even know that it did that. And so when it did the braking and slammed on the brakes and stopped the vehicle. 

 

00:21:49 That saves your bacon for you. 

 

00:21:50 Yeah, I didn’t even know it had that feature. So I’m like, thank you, technology. You have a point, one point technology. 

 

00:21:57 Yeah, now I’m a big fan of technology, but I also am very aware that you still need good security hygiene. A lot of the things that I have at my home, for example, are not cloud-based. Right? So they are–

 

00:22:11 Your information–

 

00:21:13 They are locally domiciled so that you have to be able to access it through specific protocols and nothing’s foolproof or failproof, right? But it’s much more secure as a result. And that’s just cause I’m the nerdy guy that went down the pathway to figure it out, right? But come on, what would you guys expect? I mean like, Elisa Carallo. That Dave, nerd guy? Oh, I’m totally shocked.

 

00:22:37 Okay, so we were talking originally about how technology has kind of integrated itself in. We were looking at the dot com bubble, where we’re at today, kind of the compare and contrast. Do you want to kind of talk about what other stuff you’re seeing in the marketplace? Or I mean, did we really draw, did we get to that conclusion yet of like how this is maybe different than the dot com bubble?

 

00:23:00 Well, you know, at a high level, the the overspend in the markets doesn’t seem to be there. Right. We do seem to be in an area where rates have been rising, where I guess there was some of that that was similar as well. It’s there are a couple of things that are really different now than what was going on back then. One of them is the speed of the market is very different, right? The democracy–

 

00:23:27 What do you mean the speed of the market, 

 

00:23:28 The information moves so fast now. You know, my, I’ve said this before, but my primary theory is that what has driven the changes in tactics in the investment markets over the last couple of decades is how fast information can move. Case in point, for years we had trade settlements actually took three days, right? So you make a trade and it took three days for that money to actually settle before it was technically available. Yeah, there may have been other accommodations that meant you could use the money within an investment account, buy something else with it and so forth, but the money didn’t technically arrive in your account for three days. It was a credit that your broker was applying that was sort of making sure they were aware the money was coming, but it hadn’t formally settled. 

 

00:24:13 Those trades are now going from three-day settlement to one-day settlement. And that’s happening, I think, here at the end of May, May 28th or something. We’re seeing that shift. That is a direct response to improvement in speed of information and data processing. 

 

00:24:27 What’s wild is that could eventually be almost instantaneous. 

 

00:24:31 It could. I think there will probably always be a gap of time because if you’ve got large trades and a mistake occurs, there’s an opportunity to correct that mistake as opposed to having it be instantaneous. Now, correcting a mistake is not without cost, but nevertheless, you can correct a mistake when you’ve got a little bit of that administrative lag time. So there may be some intention to that. But there were other things that were happening. About the time I went in, we went to the decimalization of the markets. We used to trade stocks in eighths.

 

00:25:02 Wouldn’t it be wild if somehow the blockchain technology integrated itself in the stock market where the exchange pings around? I know that’s kind of a wild concept, but another way to maybe even validate and secure information even faster. 

 

00:25:19 Potentially, yes. 

 

00:25:20 It’s interesting to see what the future brings. 

 

00:25:23 The applications are fascinating and how we manage security protocols are fascinating. But one of the big differences though, I think speed is a big difference, right? Access to information is very different, right? We can get everybody has way more access than 20 years ago, 25 years ago.

 

00:25:41 You know that access comes with a little bit of a cost though. I was looking at an article just today.

 

00:25:47 I’m going to totally make you pause on this. This is so important. You’re right. You just said access to information comes at a cost. 

 

00:25:54 It does. It’s expensive. 

 

00:25:57 And so here’s the thing. I’m going to give us a cliffhanger. We’re going to take a break on this one. I want everybody listening to understand. Information moves really freely. Now this is where you get to cue the music, Dale. Information. It like it moves super fast, super available, but what is the dark side? Stick around. We’re going to talk about that when we come back. 

 

00:26:20 All right, welcome back to the True Wealth show. I have got a polling question for the audience before we get back on this map. 

 

00:26:25 Yep.

 

00:26:25 The question would be how many of you would like to see the show like live streamed in video? 

 

00:26:33 Can they just for convenience purposes text us and let us know? 

 

00:26:37 Yeah, so either way. So the main line to the office 541-375-0898 and you can text that number if you want to or send us an email at info at littlejohnfs.com and the question is just do you want this… do you want a live stream where like if you’re at your computer and you could pull up video and you can see our mugs and be like, all right, that’s what’s going on. Because, you know, we could look into doing that. And occasionally we have graphics and stuff that we actually could use on which don’t on the radio because, you know, radio. 

 

00:27:07 Yeah, please text. We want to see Dave’s face to 541-375. 

 

00:27:311 No, we’re just saying no, we’d rather just just math. We can have that argument later. He’s the younger, taller, better looking one, just so we’re clear. All right, Matt. 

 

00:27:24 Yes. 

 

00:27:25 What is the dark side of so much information available anymore? 

 

00:27:30 Well, it’s coming at a cost. 

 

00:27:33 Okay, Go on. 

 

00:27:35 Yeah. So we think that AI is awesome. And maybe it is, but it takes so much electricity to run the platform like the language models that are generating the responses. I think in a day, like just now, and ChatGPT is still kind of in its trial run. That’s just one language platform. I believe it was consuming the same amount of like energy that it takes to move like 8,000 planes over the course of, yeah, it’s a ton, like the carbon footprint of–

 

00:28:13 OF AI.

 

00:28:13 Of AI is huge. Very, very big. And so they were saying, hey, the next time you want to ask ChapGPT to come up with a recipe for dinner, know that you just got in your car and basically drove to the store and back to get that recipe, right? So it is not going without a cost. They’re building facilities that take an enormous amount from the grid and it’s very expensive to run. So there is a big cost associated. Remember, nothing is free. Like we talk about this, nothing’s free. 

 

00:28:46 If you’re not paying for the product, you are the product. 

 

00:28:49 Right, and so you’re paying for it in a way, because it’s not free. And the carbon footprint is huge and it’s taking a ton of resources from the grid. And this is coming at the same time that everyone wants an electric vehicle. So I’m like, you’re doubling down on the EVs, you’re doubling down on your ChatGPT usage. You are just consuming so much. 

 

00:29:13 You’re making that my case from the investment community this morning for me. You realize that, right?

 

00:29:17 No. 

 

00:29:18 Okay. So I’m gonna share like a little piece. By the way, just I’m looking straight at the camera and I says, this is not an investment recommendation. This is a research topic that we’re exploring, okay? 

 

00:29:30 I like it. 

 

00:29:31 So the use case for purchasing uranium. Oh. Okay. Reason being that it’s very difficult to imagine a way to conjure the amount of electricity needed without in a way that is distributable because you could say, well, let’s just, you know, put a few hundred square miles of solar cells somewhere. Okay. But we have to be able to get that energy distributed to the various locations. And so there’s the question is, what about modern nuclear? Okay, which can be done on a smaller scale, with a lot better controls, a lot, remember a lot of the failures that we’ve had, we’re talking about 60 plus year old technology for the plants that had issues. So we’ve had 60 years of improvement. Okay, remember 60 years ago, we didn’t have computers in households. Okay, we didn’t have cell phones. We didn’t even have a calculator. 

 

00:30:31 Right, because you look at like Chernobyl, that was what, in the 80s? 

 

00:30:34 Yeah, and so we’re talking about, we don’t have nuclear reactors in the United States like nuclear power generation that wasn’t designed on… That wasn’t using a slide rule to design it. That’s how old it is. Not that that’s saying there’s something wrong with the slide rule I’m just saying give yourself some time periods here So modern-day safety and the idea that one of the ways that you can generate quite clean power is nuclear.

 

00:31:06 The other one: geothermal. We don’t really touch that. I don’t think a ton. 

 

00:31:11 We don’t. Geothermal is an interesting one conceptually. It can work. It’s not super easy to my knowledge because it involves, generally you gotta like get probes deep in the earth in order to tap into consistent temperature. And there’s still the byproduct of either heat or cold that needs to be directed somewhere. Okay. So where the byproduct of nuclear, pretty much steam. Right now, once you have depleted uranium, you have to deal with it or even getting better at recycling uranium so that it can be reused. 

 

00:31:42 So it does make an interesting long term case for when you look at the escalation of the proliferation of nuclear and around the world where things are coming back online or being slated for production. Because even if the United States isn’t going to do it, other places will. Like tell me that China is not interested in nuclear when they’re burning a bunch of coal right now. Right. They have smog problems. That’s a real life issue. 

 

00:32:07 And they know it. 

 

00:32:08 And then they’re going to have medical issues as a result of what they’re polluting the atmosphere with it’s and that’s local to them. They don’t care about the rest of the world per se, but they will have an effect. So they’re going to have to make a transition at some point for their own viability and this is a really obvious answer for them. So if you were to look at that, I said, then there’s, there’s the case of, well, here’s the goal and it’s funny you say that that’s the cost of energy. There are the cost of information information. And that is a really high.

 

00:32:39 The information isn’t slowing down like that cost is going to be there whether we like it or not. 

 

00:32:45 It seems to be foundationally what we’re building on right absolutely and and unless we have a real cultural revolution that pushes back against technology and says sort of the revenge of analog we need to get back to some other ways. 

 

00:33:01 We actually might see that

 

00:33:02 I think we are seeing some. 

 

00:33:05 Yeah. 

 

00:33:05 I mean, you know, schools are starting to say the cell phone goes in the locked drawer while you’re in school. You know, you don’t have it until you leave and we’re seeing that there’s improvement in test scores. And I mean, I can’t–

 

00:33:16 Even Gen Z kind of get away from the social media platforms. I had one person in that generation tell me, yeah, technology ruined me. And I’m like, well, that’s powerful. You like you’re able to recognize it. Yeah. I just it sucked all my motivation. And I’ve had to detox for years to be able to get to a point to where I can really function. And I’m like, so if we start to label it as toxic.

 

00:33:41 See there, there’s the other cost, right? The dark side, the productivity cost. Well, I think that we don’t have a full understanding of how it alters brain chemistry. So these, you know, you remember the kids used to get Saturday morning cartoons and you could be a zombie for a few hours, but then the cartoons went away and they’re so did their attention. Heck, even commercials. We don’t have commercials to break it up anymore. Right? 

 

00:34:06 That’s true, yeah. Because everyone’s paying for their streaming service without commercials. 

 

00:34:10  Right, so you think about what does that mean and what’s it gonna do for social development, brain development, and so forth. I don’t know. 

 

00:34:21 You’ll be proud of me. I canceled all of them.

 

00:34:24 I don’t know why I’m proud of you for it, but okay. 

 

00:34:27 I’m more productive. 

 

00:34:29 Yes. Yeah.

 

00:34:30 Yeah, more time reading about–

 

00:34:32 This is the boss going like, you know, what’s awesome. That’s productivity. 

 

00:34:38 Yeah. He’s reading about stocks. I like it. 

 

00:34:41 So, I will say, there are a lot of upsides to product for technology and information from a productivity perspective. That to me is probably one of the key things that happened in ’90, like after ’99 that we started to see really proliferate was the internet changed productivity. Email changed productivity. We could distribute a memo instantly to lots of people. And then the internet gave us the ability to almost confuse ourselves, right? Because now we have social circles that extend well beyond a community. They’re like all over the globe now, right? And then you get influencers, millions of their closest friends that they don’t even know. 

 

00:35:26 I hate it. It makes me want to fall in.

 

00:35:29 Well, it’s a product, right? 

 

00:35:31 It is. 

 

00:35:33 In the end, if you’re an influencer, you are a product. I mean, let’s be honest, some of what we are doing right now, right? What are we doing right now? We are communicating information and personality, and then we’re offering a solve to people. Saying, look, you may operate in an ecosystem where you go, you know what? I like doing the finance stuff on my own. Or you may find yourself saying, even if I did, I don’t have the time or the bandwidth. Or maybe you just don’t like it. In which case you go, well, I got to figure out somebody. Well, it turns out David, Matt, if the rest of the firms kind of like them and they’re kind of cool, well, maybe we use somebody like that. At least we kind of get a flavor for who they are and what they’re about. 

 

00:36:13 True. 

 

00:36:14 Right. So there is that element of influence. We’re really like transparent about, we’re going to do it by giving away information, right? You go find this out anywhere you want. So you find it through us. There you go. It’s also why I keep telling people ask specific questions. We will answer them. 

 

00:36:33 It’s fun when people ask questions.

 

00:36:35 Yeah. So there’s the magic word that I would use is productivity. Okay. Artificial intelligence for certain industries may radically improve productivity. 

 

00:36:52 Okay. Do you think it’ll cause as much job loss as people like Elon Musk have conjured right like he’s talking about like man at a certain point if this continues. we’re all just gonna get a handout from the government We don’t even have to go to work because everything’s solved for us. Do you buy into that? 

 

00:37:11 I think it can, sort of right. 

 

00:37:15 I want to know what you mean by that.

 

00:37:16 Sort of okay. So, well, let’s answer that let’s do this. Let’s take our last break. When we come back, we’ll talk about does AI like put everybody on universal basic income where we’re all just sitting on our hands wondering what to do with ourselves, or is there an alternative? 

 

00:37:32 Are we gonna turn into France? 

 

00:37:36 Apparently, we are told we have lots of listeners in France, so maybe we owe them an apology. 

 

00:37:40 No, I don’t apologize for anything. 

 

00:37:43 Welcome back to the home stretch of the True Wealth Show. Dave Littlejohn. 

 

00:37:47 And Matt Dickson.

 

00:37:47 And we are talking about kind of the show turned into AI and what does that really mean. And it’s kind of loose for investors. We know that there’s some costs and pros and cons, but the last one is sick, does it really, um, get it to where a bunch of people aren’t working anymore? 

 

00:38:06 We touch. Yeah. We touched on universal basic income. 

 

00:38:08 Yeah. And if you’re unfamiliar, universal basic income is the idea that the government basically gives everybody a certain amount of money and it’s like your allowance, right? And you try to live on the allowance and there’s just not enough jobs to go around. So the universal basic income is to give everybody a minimum standard of living.

 

00:38:24 I mean, not that I support it, but jeez, it kind of feels like we’ve already hit this point. When I was growing up as a kid, sure, there was homeless problems, people were displaced, but you go for a bike ride and maybe you pass one. And I went for a ride the other day and just hundreds, it seemed camped out on the river and displaced and people living in their vehicles. And I’m like, have we already of started to trickle into this. I mean, is this the starting point where there aren’t enough jobs because–

 

00:38:58 My personal take on this is it’s not about it’s a lot of things, right? 

 

00:39:02 It is. 

 

00:39:03 It’s the jobs and the it’s whether or not you’ll work. Right. And then what kind of financial decisions are being made? And then what kind of decisions are being made in the like, I think, I’ll call it leadership. Well, it’s I’m not just going to say, well, people make terrible financial systems. They do. Like that happens all the time, right? And some people are unwilling to work or fit in the system. That’s part of it. But then we have other structural problems that I think are sort of bred into the system by government. Sometimes well intended, but it just, it just gets too radical. 

 

00:39:36 Right, you’re saying that almost too many social programs and too many endowments. 

 

00:39:39 Well, too many things layered on top of each other, right? The complexity of the system compounds costs and slows things down. Like think about how expensive it is to buy a home. And we say, well, the whole needs to be environmentally friendly. It needs to handle, you know, all the code and safety and everything else. But by the time you layer in the inspections and the this and the that, and all of the other programs involved in whether or not union labor’s involved–

 

00:40:04 The cost out–

 

00:40:05 Exactly. The costs are so astronomical that the jobs don’t really. They can’t pay enough to make it work. And especially because labor gets sent all over the planet. It’d be one thing if we had to manufacture everything within our borders and we all had to sort of escalate those costs and share them. But when you ship labor overseas and bring a product back for cheap, the labor goes somewhere. It relocates to different cost centers. And a lot of it just comes down to it’s just really expensive. The cost of putting infrastructure in is so expensive that there’s no such thing as affordable housing in Oregon right now. Because you just can’t do it. And the only stuff that is affordable is because it’s predates code. 

 

00:40:51 You know, so you have issues like that, that just make it structurally hard to survive it. So now put that into your question of does AI, you know, make us all jobless? And probably not unless we can start developing machines that can self heal. Right? When machines can do the infrastructure and everything else with it.

 

00:41:14 When there’s no one needed to fix the thing that breaks itself. 

 

00:41:17 Correct.

 

00:41:18 Right. 

 

00:41:18 And right now, you still, there’s a tremendous need for trade, right? And that would bring the cost down too. If we had like 300% increase in the number of trades people out there, then the cost of trades would come down because there’d be way less of a supply and demand imbalance. Okay. But we told everybody to go to college and go into debt to do it, and then come out and find a white collar job where nobody wanted to go get their hands dirty and we have an imbalance. Okay. So there’s structural elements of play here. 

 

00:41:51 Right. 

 

00:41:53 And then there just are. Well, what AI is likely to do is say that people in white collar jobs will need fewer of them. 

 

00:41:59 True. 

 

00:42:01 And so, right. And if people are unwilling to go do the blue collar jobs, then universal basic income may be the way that we manage social programs. Because the problem is it gives people choice. And yes, that really is the problem because when you give people a choice, you can give them the wrong choice. What does wrong mean? Well, to them, it was the right choice. That’s why they made it. But wrong would be they do something that harms them. And there’s still a problem in our social safety net because we don’t allow people to fail or not. We don’t, we try not to allow them to fail. Right? So, oh, you made a decision that you know, you wanted to overdose on drugs. We’ll save you and let you try again.

 

00:42:41 Right. Instead of letting natural consequences play out. I’m not saying that’s like, we should let everybody die. I’m saying you can’t fix the problem by giving people the choice and not forcing them out of that scenario, right? We saw it here when we tried to legalize drugs, right? It got worse. It got worse. And now we’re dealing with the consequences and we’re trying to self correct that. That like, I believe in choice. Like, let me be a hundred percent clear. I want choices. But with choice comes responsibility.

 

00:43:13 And if people aren’t capable of making good enough decisions on their own. 

 

00:43:18 Well, at some point, if somebody’s willing to say, I will trade in my choices to have this level of security or whatever, okay. But I don’t think we should take the choice from somebody. I think they have to like rescind it. Right. You’re born with the right. You don’t have to earn it. That’s the issue here. Boy, we’re way off in the weeds on this one. I’ll just tell you, I believe in the concepts of freedom. And I’m not about to say that we should take that away. But if somebody’s willing to voluntarily give their freedom up for security, I’m like, hey, well, you didn’t make the trade. You just can’t make everybody else make the trade, right? That’s the idea, like, you can go be a socialist right now if you can get your friends to do it with you. You just don’t put a gun to everybody else’s head and say they have to come with you. 

 

00:44:02 Right, I like that. Let’s clip that and make it short.

 

00:44:06 Fair enough. Okay. So anyway, as we run to the tail end of the show, do I think AI is going to ruin everything? Actually don’t. I think people are going to get pretty clever with it and they’re going to leverage it. And keep in mind, AI is still making mistakes at this point. It’s only as good as how well it’s trained. Right. 

 

00:44:21 And studies have shown that it’s actually gotten less intuitive and less intelligent. 

 

00:44:26 Evidently, it’s being fed by people that don’t know the right answer sometimes. Right. 

 

00:44:31 Yeah. You learn from humans and you’re going to learn a lot of things wrong. 

 

00:44:35 Yeah. So look, we’re not AI. We use it when we can and when it works, but that’s not what we do. Are we real people? We’re real people trying to be actual intelligence. So, if you need any kind of help or resources when it comes to your investments, estate planning, insurance or risk management, how do they reach us? 

 

00:44:55 541-375-0898 or go to the website, littlejohnfs.com as in financial services

 

00:45:02 Alright, well we’re out of time, so thanks for tuning in this week as always. Until next time, I’m Dave Littlejohn. 

 

00:45:08 And Matt Dickson. 

 

00:45:09 And you’ve been listening to True Wealth on News Radio 93.9 FM at 1240 KQEN.

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