Forum Topics Two Macro Trends Coming Our Way
PortfolioPlus
Added 2 months ago

I’ve now lived past the three score and 10 years, and despite some very tumultuous events in that time, I do believe the events to come are more worrisome. I refer to the full social impacts of artificial intelligence and the apparent carve-up of the world into three sectors.

Let me start with the latter and an admission up front, I am no Donald Trump supporter, but despite the USA having some 330+ million citizens, there doesn’t appear to be a ‘knight on a white charger’, even a Winston Churchill, anywhere in sight.  

So, with the growing trend of authoritarianism seemingly swamping democracy, our planet Earth seems destined to be split into three spheres – the USA owning and running the Americas, Russia dominating Europe, and China controlling Asia, the Pacific, and Australia/NZ.

I truly hope I don’t see it in my lifetime, but I have promised the bride of 52 years that she and I will dance the rumba at my 85th birthday. I am betting my wicked, wicked ways of the past will grant me that one last favour. You are invited, as many of my friends won't make it; I’ve seen their disgraceful lifestyle choices firsthand, and I am disgusted, but it was fun at the time!  

Anyhow, my scenario above suggests defense-related shares will be front and centre. Certainly, my investments in Bisalloy (BIS), Austral (ASB), and Civmec (CVL) have played out brilliantly over the past two years, and I expect them to really hit their straps as the Federal Government is forced by the macro scenarios above to really ramp up defense spending. Any companies tied up with the activity around Henderson in WA will do well.

The second worrying trend is the likely social disruption caused by artificial intelligence assuming many menial jobs. The government has neither planned for it nor implemented any retraining programs, so, as I see it, our unemployment rate will start to skyrocket over the next decade. Maybe the 2032 Olympics might soften the initial blow.  

By way of specific example: Driverless vehicles – what will happen to the estimated 150,000 Taxi and Uber drivers or the 120,000 ‘truckies’ when progressively, from around 2029 to 2035, it will be ‘hasta la vista baby’. My tip is that there won’t be many alternative jobs for these folk, and that’s just one small sector.

Next point: Call me skeptical, but my firm belief is that people are only as honest as they can afford to be. When these displaced people, used to a comfortable wage, start to battle on the meagre social security benefits, and the kids are starving, or the bailiff talks about eviction, what are they going to do?

Yep, definitely violate the 10th commandment and covet their neighbors' everything, before doing a number 7 on them (stealing), maybe, as a deliberate or accidental consequence, violate the fifth (killing). Into the bargain, they might well breach commandments 1,2 3,4,6, 8, and 9 for the clean sweep!  

Without a doubt, the citizens will be forced to take significantly stronger measures to defend their castle, creating investment opportunities.

I’ve long been a fan of the potential of Intelligent Monitoring Group (IMB), and they are ideally placed to leverage smart technology to protect homes and commercial properties/businesses across Australia and NZ.

Maybe Droneshield (DRO) and Electro Optics (EOS) can straddle both of these trends, but I know little of them atm.

Anyhow, by all means, thrash my thesis with wet lettuce if warranted, and I'd be interested to hear the views of others.


  



 


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Chagsy
Added 2 months ago

Congratulations on reaching that milestone @PortfolioPlus !

Predicting the future is said to be a mug's game. Predicting Macro economic trends is equally challenging. Predicting Macro trends and also picking the companies that can successfully navigate those trends might be even harder.

Whenever I am tempted to identify some grand theme, I try to take Matt Joass' sage advice: pick the companies that tick the boxes you have for a successful investment thesis and leave the big picture to evolve as it will. He is also an inveterate optimist about the power of human development being able to surmount the challenges of the future. I tend more to pessimism about the future: but he is without doubt one of the smartest investors I've come across and so I attempt to maintain an optimistic approach to picking assets.

That said, identifying tailwinds is part of that process, and you may be right in what you outline. My only comment on the big picture is that democracies, if they remain true democracies, have negotiated huge challenges in the past. When societies become too polarised between the haves and the have nots, there is often a change to correct this. Usually a peaceful transition or realignment, but not infrequently a violent one. This possibility does concern me, on many levels. From the purely financial perspective, gold would be the obvious destination, but other options include land and other hard assets including commodities and collectables. I currently don't hold any of these (aside from one piece of art), but if the rise of populism and the resultant poor economic policies likely to ensue from entrenched authoritarian populist governments continues, I would likely start to consider it more seriously.

Let's hope happier times are ahead, and Greenland remains a non-USA autonomous territory....

C

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reddogaustin
Added 2 months ago

@PortfolioPlus Firstly, I love a good grand stratedgy. I think you need to take a view at the world level for a baseline of assumptions that lead into investment choices.

I offer the following considerations to your thesis;

1. Spheres of influence will come to pass, agreed. But there will be more than 3. Don't forget India. Its the most populous nation, has aircraft carriers (project force), and has 'the bomb' (nukes), and has backbone. Remember, the Indian ocean has its name for a reason. Also, don't count on China's sphere extending to the whole of asia and pacific. There is only one military who can reliably project and sustain force (ie the basic kind of influence) at scale, and thats ol' Uncle Sam. China's economic policies will only extend so far as a form of influence, as countries pivot away, remembering many SEA nations are middle powers in their own right. Australia could even have its own sphere in the pacific! We're not beat yet!

All that is to say I agree with your theme and I go hard on ARMR.asx IRL.

2. AI. That fear of it taking over, in the opposite is the saviour of India and China. Two most populous nations. One who has an aging population (china) and one that has the foresight to plan for theirs (india), and the plan is essentially robots and ai to care for millions of old people. Theres no other practical or ethical option for them (no star trek scenario, the episode where theres a planet where every person at age 70 commits ritual suicide for the greater good of resource managment).

Thats all to say, AI will arrive everywhere. How to invest for it? My guesses are no better than anyone elses.

Just my 10c. I hope you enjoy the thinking or the rageing. Hahaha.

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