Investing in Future-Proof Industries Amidst the Rise of Artificial Intelligence
In the ever-changing landscape of investment trends, it is crucial for savvy investors to identify opportunities that go beyond the fear of missing out (FOMO) and embrace the joy of missing out (JOMO). While artificial intelligence (AI) continues to dominate the investment scene, a unique strategy emerges – investing in industries and assets that AI could never replace.
The potential of AI is undeniable, and investing directly in technologies that facilitate or benefit from AI can yield significant gains. However, the risks associated with the unknown future capabilities of AI cannot be ignored. As AI evolves and matures, it will create and destroy tech-centric businesses, making it essential to adopt a two-pronged approach to AI investing.
The first prong involves investing directly in technologies or industries that are likely to thrive in an AI-centric world. Pharmaceutical and biotech companies, for instance, fall into this category. The promise of capturing future 10-baggers and staying ahead of the creative-distraction curve makes this approach enticing, albeit with inherent risks.
The second prong focuses on investing in industries or assets that AI will never replace. These industries are essential in an AI-centric world, regardless of its intelligence level. Examples include shipping, cosmetics, lumber, energy generation and storage, travel, sporting goods, rail transit, and agriculture. While not entirely future-proof, these industries offer a level of protection from AI’s destructive side and can potentially benefit from its creative side.
AI may revolutionize transportation by creating autonomous freighters or transforming drivetrains and fuel sources, but it will not eliminate the need for ships, trains, or planes. Similarly, AI cannot replace the demand for essential commodities like lumber, wheat, or pineapples. The human desire to travel will persist, and AI-enabled enhancements can improve the overall travel experience and boost profitability for travel and tourism companies.
Investing in future-proof industries may not deliver spectacular gains in the short term compared to AI-focused tech stocks. However, as we progress towards Artificial General Intelligence (AGI), the world’s wealthiest investors are already shifting their money out of the tech sector in what is being called “The Great Cash-Out.” Preparing for this exodus is crucial, especially for those with investments in the markets, particularly tech stocks.
In conclusion, while AI continues to shape the investment landscape, a balanced approach is necessary. Investing directly in AI technologies and industries that benefit from AI can yield substantial gains, but the risks associated with the unknown future of AI must be considered. Simultaneously, investing in industries or assets that AI cannot replace provides a level of stability and potential for reliable gains. As the road to AGI unfolds, staying informed and adapting investment strategies accordingly will be key to long-term success.