Automation may not replace jobs as quickly as predicted

Automation is touted to be ready to take over many jobs, including truckers. Here’s a rebuttal, specifically related to truck drivers, from a comment at Marginal Revolution. A few highlights:

One of the big failings of high-level analyses of future trends is that in general they either ignore or seriously underestimate the complexity of the job at a detailed level. Lots of jobs look simple or rote from a think tank or government office, but turn out to be quite complex when you dive into the details.

I’ve been working in automation for 20 years. When you see how hard it is to simply digitize a paper process inside a single plant (often a multi-year project), you start to roll your eyes at ivory tower claims of entire industries being totally transformed by automation in a few years.

A lot of pundits have a sense that automation is accelerating in replacing jobs. In fact, I predict it will slow down, because we have been picking the low hanging fruit first. That has given us an unrealistic idea of how hard it is to fully automate a job.

Based on my own experience with setting up routine tasks for online-oriented jobs, the role of a human to adapt to changes is very underestimated.  It seems more likely that automation will be used as a tool by humans. It requires a different set of skills, but it’s far from robots working without human interaction.

Some of these tech giants will fail

With so many companies routinely setting all-time highs, it’s good to remember it won’t always be like this. As Howard Lindzon said a few weeks ago, in a post recalling Yahoo’s dominance (all subsequent fall):

There are so many giant technology companies crushing it right now that it is easy to forget how hard it is to stay relevant.

The average lifespan of a company in the S&P has plummeted over the last fifty years.

I’m not predicting any particular tech-giant will go the way of Yahoo. It has happened many times before and it’s hard to believe it will be any different now.

The futility of timing buys and sells

A good reminder of the futility of trying to time markets from a Howard Lindzon post a few weeks ago:

Eddy also has a great reminder on why timing the markets when it comes to owning the best companies is rather silly.

Etch this Amazon chart and their numbers into your head: If you bought Amazon at its exact high 18 years ago, and held on, you’re beating the S&P 500 1,284% to 180%.

via Blockchain Lindzon and Competition for Stocks at Howard Lindzon

What might the next bear market look like for investors?

Great piece from Ben Carlson where he poses & answer 6 questions about the next bear market. He begins by putting things in perspective, then looks at how various areas may react in the next bear market.

 

How bad will things get?

In fact, the median drop was 26 percent. A crash is always possible, but your baseline for a bear market shouldn’t be a huge meltdown

Will emerging markets outperform the U.S.?

Grantham’s view is that the relatively undervalued emerging markets should hold up better in a downturn than the relatively overvalued U.S. shares. This is a development most investors likely aren’t positioned for if they’re basing allocations on historical risk-reward characteristics.

Will managed futures provide positive performance in a down market again? …Managed futures were one of the few strategies that held up well in 2008 when everything else got hammered by providing positive returns during a market crisis. According to the BarclayHedge CTA Index, these funds were up more than 14 percent even as stocks around the globe fell 40 percent or worse for the year.

Will commodities provide diversification benefits?
Like most risk assets, commodities fell off a cliff during the financial crisis. But unlike these other assets, commodities are still languishing far below their highs from the previous peak.

How will cryptocurrencies react? ..The rise in cryptocurrencies has corresponded with a bull market in stocks. And while cryptocurrencies have experienced a number of bear markets and crashes over the past few years on their way to remarkable gains, we have yet to see how they will handle a bear market in stocks.

 

ETH & QTUM to rise in 2018?

Earlier this year, Store of Value published a few predictions on the cryptocurrencies to rise in 2018. They start off with a bold one:

Ethereum will overtake Bitcoin by the end of 2018 and QTUM will be a top 5 cryptocurrency. There are some incredible things brewing for both and I don’t believe the market has fully realized nor appreciated what’s going on. Ethereum has the largest user and developer base in the West. QTUM has gained a strong foothold in the East.

These predictions aren’t made off the cuff; each is backed by an reasonable argument. For example, QTUM can benefit from both BTH and ETH “winning”:

Ethereum ecosystem wins = QTUM ecosystem wins
Because QTUM uses the EVM, any projects building on Ethereum can be easily ported to QTUM. A corollary to this is that any successful dApp or protocol on Ethereum can easily become a successful dApp or protocol on QTUM. QTUM doesn’t need to compete with Ethereum for its developer ecosystem, it shares Etheruem’s developer ecosystem. There are many amazing up-and-coming projects for Ethereum such as 0x and Augur and I can envision a world where QTUM has its own 0x’s and Augurs.

Bitcoin ecosystem wins = QTUM ecosystem wins
Because QTUM uses a Bitcoin-based UTXO blockchain as its settlement layer, QTUM can take advantage of any upgrades to Bitcoin. Here’s a few examples: QTUM is already using SegWit and is primed to deploy its own version of Lightning. Once deployed, QTUM is essentially Ethereum with Lightning. How cool is that? It’d be even better for QTUM if Lightning turns out to be a massive success.

Read the full post at Why 2018 Will Be The Year Of Ethereum And QTUM at Store of Value.

 

Is the artisan trend a precursor to a Big Tech backlash?

In the Economist’s 1843 magazine, Ryan Avent writes about the resurgence of the “artisan” culture in Crafting a life:

Before the Industrial Revolution, the craft economy was simply the economy. Clothing, processed food, furniture, wood and iron tools were all made by hand, using simple equipment, one unique batch at a time. Artisans learned their trade through years of observing experts, within the family or in a structured apprenticeship. The quality of both the instruction and the finished products was highly variable. There was virtually no opportunity for mass education in trades, nor a chance for better producers to capture increased market share by scaling up production.

The Atlantic ran a similar piece recently Craft Beer Is the Strangest, Happiest Economic Story in America.

At the same time, the number of public companies has decreased and the “Big 4” tech companies make up 24% of the market cap of $SPY. Some amazing numbers, per Scott Galloway in Esquire:

Over the past decade, Amazon, Apple, Facebook, and Google—or, as I call them, “the Four”—have aggregated more economic value and influence than nearly any other commercial entity in history. Together, they have a market capitalization of $2.8 trillion (the GDP of France), a staggering 24 percent share of the S&P 500 Top 50, close to the value of every stock traded on the Nasdaq in 2001.

How big are they? Consider that Amazon, with a market cap of $591 billion, is worth more to the stock market than Walmart, Costco, T. J. Maxx, Target, Ross, Best Buy, Ulta, Kohl’s, Nordstrom, Macy’s, Bed Bath & Beyond, Saks/Lord & Taylor, Dillard’s, JCPenney, and Sears combined.

Meanwhile, Facebook and Google (now known as Alphabet) are together worth $1.3 trillion. You could merge the world’s top five advertising agencies (WPP, Omnicom, Publicis, IPG, and Dentsu) with five major media companies (Disney, Time Warner, 21st Century Fox, CBS, and Viacom) and still need to add five major communications companies (AT&T, Verizon, Comcast, Charter, and Dish) to get only 90 percent of what Google and Facebook are worth together.

And what of Apple? With a market cap of nearly $900 billion, Apple is the most valuable public company. Even more remarkable is that the company registers profit margins of 32 percent, closer to luxury brands Hermès (35 percent) and Ferrari (29 percent) than peers in electronics. In 2016, Apple brought in $46 billion in profits, a haul larger than that of any other American company, including JPMorgan Chase, Johnson & Johnson, and Wells Fargo. What’s more, Apple’s profits were greater than the revenues of either Coca- Cola or Facebook. This quarter, it will clock nearly twice the profits that Amazon has produced in its history.

Will the trend of the big getting bigger continue? Or is there enough of a Big Tech backlash to make things start regressing to more normalized levels?

We’re certainly not making a call and will continue to look for further evidence.

 

Look longterm for crypto investments

There’s a possibility that some big winners come out of the crypto projects. Sure, most are junk but like the tech boom, a few big winners may emerge. There’s a lot debate about how to value crypto assets. Most of that pertains to assets that are being used as intended now.

With many projects either not yet active, or still in the very early stages, any valuation based on data or metrics seems unlikely to be accurate. Investments need to be longterm, as Jeremy Epstein writes in How do you value crypto-assets? at Never Stop Marketing

if you are serious about profiting from this long term trend towards blockchain-based ownership of assets that will have value within decentralized networks, then the smart move is to ignore the short-term crypto mania and use this time to go as deep as you can on the fundamentals.

Do what you can to understand HOW a crypto-network is put together and how it will work. If you are about to make an investment, find someone who has really done his or her homework.

As an example of someone that’s done their homework, he cites the Store of Value blog.

Why do cities make deals to host Super Bowl & Olympics despite negative economic returns?

Why do cities agree to deals to host events like the Super Bowl and Olympics and build stadiums, despite proven negative negative economic results?

Seth Godin on the practical, human reasons this happens:

 

  1. The project is now. It’s imminent. It’s yes or no. You can’t study it for a year or a decade and come back to it. The team creates a forcing function, one that turns apathy into support or opposition.
  2. The project is specific. Are there other ways that Minneapolis could have effectively invested five hundred million dollars? Could they have created access, improved education, invested in technology, primed the job market? Without a doubt. But there’s an infinite number of alternatives vs. just one specific. 
  3. The end is in sight. When you build a stadium, you get a stadium. When you host a game, you get a game. That’s rarely true for the more important (but less visually urgent) alternatives.
  4. People in power and people with power will benefit. High profile projects attract vendors, businesses and politicians that seek high profile outcomes. And these folks often have experience doing this, which means that they’re better at pulling levers that lead to forward motion.
  5. There’s a tribal patriotism at work. “What do you mean you don’t support our city?

This seems applicable with a project of any size.

via The Super Bowl is for losers at Seth’s Blog

Split the deal to reach for bigger upside

Advice on investing and splitting the deal in order to share risk and reach for rewards that may otherwise be unattainable from Fred Wilson in Splitting The Deal at A VC.  His experience comes from venture capital, but these seems applicable in any type of private investing.

I am a firm believer in splitting the deal, even when the economics (another word for ownership) suggest that there is no room for others.

My personal track record tells me that splitting the deal works. It helps you step up to something that has a lot of risk but also a lot of upside and it brings other people who can add value into the situation early on.

At a time when we are seeing venture funds get bigger and bigger, I am convinced that the hallmarks of old school early stage investing; small fund sizes, small rounds, and syndicates remain best practices

NVT Signal, a new indicator, shows Bitcoin has bottomed

From well-known crypto investor Woobull, a post on a trading signal for Bitcoin, as first derived by  Dmitry Kalichki.

What is NVT Signal?

Standard NVT Ratio is simply the Network Valuation divided by the Transaction Value flowing through the blockchain and then smoothed using a moving average. What Dimitry did was to apply the moving average just to the volatile Transactions component only without smoothing the already stable Network Valuation component.

This produces a much more responsive chart. Responsive enough to use as a trading indicator.

This is probably the first trading indicator to use blockchain data instead of the basic price and volume data coming in from exchanges.

The NVT Signal is picking we’ve bottomed.

This is available on Woobull Charts for now, though a new project named Fomonomics is mentioned.

via NVT Signal, a new trading indicator to pick tops and bottoms at Woobull