29 ms·

Just own the damn robots

474 points by npalli 9y ago

mooreds 9y ago
Whoa. No solutions, at the end, but what a story. As someone in a situation similar to the 45 year old he mentions, I worry about being displaced. Not every day, but every month or so I wonder. What a fascinating thesis. I wonder what happens when the 'replacement fear' buy collides with the 'boomer retirement' sell?
- pdog 9y ago
  Pretty sure the proposed solution is to buy stocks of the U.S. technology giants: Amazon, Apple, Facebook, Microsoft, and Alphabet, the parent company of Google.
  - adventured 9y ago
    The largest market cap companies in a given decade, overwhelmingly tend to be under-performers in the following decade. It's a trend that has repeated decade after decade. Many of these types of companies - AMZN, NFLX, GOOGL, FB - have pulled a massive share of their future returns forward (which is what happened to Microsoft, stagnating its stock for ~15 years). In 2007 the largest companies were: Exxon, GE, Microsoft, PetroChina, Royal Dutch Shell, Citigroup, AT&T, Gazprom, BP, Toyota, Bank of America, China Mobile, HSBC, ICBC, Walmart. All have performed at a mediocre level at best over that time. See: https://www.bloomberg.com/news/articles/2017-09-11/apple-vaults-to-no-1-from-no-70-after-a-decade-of-iphone-sales https://www.bloomberg.com/news/articles/2017-09-11/apple-vau... Is Amazon going to grow into a $2 trillion market cap over the next ten years? No, there is zero possibility of that happening. It'll be very lucky to grow into its existing market cap today, over that ten years. Keep in mind, they have $100 billion in retail sales, generating Walmart style margins on that business; Walmart has ~$450 billion in retail sales, generating ~$15 billion in net income. For that, Walmart gets to trade at half the market cap of Amazon. That's Amazon's future value compression. That multiple erosion won't occur until the market starts to realize the AWS growth machine isn't going to last forever (AWS representing a very large portion of the Amazon stock appreciation the last three years), as that growth curve slows in the next few years, the market will push down on Amazon's present extreme premium. Netflix has a ~200 PE ratio, there is no means for it to ever justify its existing valuation (400 million global subscribers? no chance), much less a far higher one. Their present business model has never proven the ability to produce good margins, content has perpetually sapped their earnings potential and is likely to continue to do so. Facebook and Google will stagnate and grow into their valuations. Google particularly is trading far beyond where it should versus its now modest growth rate. ~37 times earnings, $700 billion market cap, for 10%-15% annual growth over the next five years? No thanks. In the not very distant future, Google will pull a Microsoft and begin paying out a dividend, after this latest stock market bubble ends and their stock returns drift to mediocrity.
    - pdog 9y ago
      Investors are willing to accept much lower long-term returns for safe haven assets. If you're going to "just own the damn robots" at any price, you're essentially paying for this sort of insurance.
      - adventured 9y ago
        I agree investors will continue to own these companies in a very big way. They won't continue to maintain much less inflate the premium that presently exists. Microsoft for example has barely grown its income in a decade. On what planet should they have a 28 pe ratio? The stock has tripled (!) in five years on the back of zero income growth. It's massive value destruction just waiting to happen. Shareholders will not just sit, hold and tolerate the inevitable value destruction that is looming, it doesn't work as insurance at all in such a context.
        frandroid 9y ago
        You forget that Microsoft's stock stagnated for 10 years before that. A 28 PE ratio is the new normal for tech companies. With Ballmer out of the picture, investors are speculating on a brighter future for MS. It's not here yet but they're making lots of smart moves.
        adventured 9y ago
        > A 28 PE ratio is the new normal for tech companies. It's not the new normal. That's what people say to justify extreme premiums during times in which investors have overly inflated valuations. This is the third bubbly tech era in the last 20 years. That new normal premise has been used frequently in each. I understand why Microsoft has inflated. It doesn't jive with actual results in the post Ballmer era. There isn't even a hint of the kind of growth that could justify such an elevated PE ratio (elevated for a company with no growth for years). Their fast growth areas are struggling to off-set what they're losing in eroding, old business franchises. Net result, they're standing still.
        9y ago
  - s73ver_ 9y ago
    But with what money? Most of the people at high risk for displacement aren't exactly rolling in the cash.
  - beams_of_light 9y ago
    An index fund is really the best option.
deleted 9y ago
[deleted]
emiliobumachar 9y ago
HN hug of death strikes again. Website does not reply.
- drzaiusapelord 9y ago
  http://webcache.googleusercontent.com/search?q=cache:http://thereformedbroker.com/2017/10/16/just-own-the-damn-robots/ http://webcache.googleusercontent.com/search?q=cache:http://...
pdog 9y ago
Interesting investment thesis, but isn't there a better way to hedge yourself than buying tech stocks? That's just a huge bet on a tiny number of cyclical revenue sources: online shopping, online advertising, cloud services, iPhones, Microsoft Office, and Windows.
- bykovich2 9y ago
  I didn't read this as an investment thesis. I don't think he's trying to prescribe an investment strategy.
- empath75 9y ago
  I bought nvidia rather than FAANG stocks. I did pretty well ($30 -> $190)
- leggomylibro 9y ago
  What will that tech need to survive? Lithium, for batteries. Heavy metals, for processing. Energy, most of all. I wonder how long it'll be until we replace fiat currencies with a balance of kilowatt-hours.
  - hodder 9y ago
    The problem with those is they are capital intensive industries with commodity products. Not exactly the kind of thing that compounds capital at fast rates.
  - Apocryphon 9y ago
    Energy is the currency of the future. - CEO Nwabudike Morgan, "The Centauri Monopoly"
    - endgame 9y ago
      That game was incredibly prescient. I was going to link to its page on Paean to SMAC but it turns out that quote is from "Global Energy Theory", a tech that didn't make it into the final game (but had data set up for it). So there's no write-up about it. Instead, I'll link to the Paean's "First Time Here?" page: https://paeantosmac.wordpress.com/first-time-here/ https://paeantosmac.wordpress.com/first-time-here/
jboggan 9y ago
"We’re in an age where we’re being told AI is about to start writing its own software." The most pregnant sentence in the entire piece.
- EliRivers 9y ago
  All the problems in every serious piece of software I've ever worked on stem from the customer (be it external or in-house) not knowing what they want, the person in charge of capturing that doing a pretty bad job of it anyway, and the chain from there to the person writing the software taking that failure and making it worse. AI writing software will just get me another flavour of the wrong software. AI working out what people want the software to do would be useful.
  - colemannugent 9y ago
    My thoughts exactly. Until the AI can hold useless meetings and design things by bureaucracy it will never be a serious threat to big businesses/government.
  - kmicklas 9y ago
    You don't think good old fashioned bugs are a problem?
    - deleted 9y ago
      [deleted]
  - letlambda 9y ago
    >AI writing software will just get me another flavour of the wrong software. AI working out what people want the software to do would be useful. Maybe we can deliver that wrong software in 100ms instead of 100 days.
- sp332 9y ago
  https://research.googleblog.com/2017/05/using-machine-learning-to-explore.html https://research.googleblog.com/2017/05/using-machine-learni... Right now they're pitching it as a way for non-experts to make better neural network architectures.
arichard123 9y ago
I just don't buy it. I understand I'm in a minority, so let me indulge myself and explain, for a moment, why I think AI / Robots are nothing to worry about. My claim is: Robots will not replace humans in all jobs. Further, it's more than because of Human preference, I think that Robots will lack cognitive abilities that we have. My expectation is that in each area where they are deficient then they may well become a tool for a Human overseer, and that might replace some workers. I don't believe AI will effectively deal with: 1) Cultural concerns. e.g. Appropriate imagery in advertising. 2) Major strategic considerations when faced with an uncertain future. (Physical war, trade war, geopolitical events, natural disasters). 3) Legal frameworks, as they are not well defined. 4) Human relationships. e.g. Don't make Alice and Bob work together. 5) Intuitive leaps. e.g. Rubics cube. 6) Empathy. The reason I believe this is not because I believe in a soul, or anything mystical, but because I believe that the nature of our brains, our senses, our learning experiences, and the evolutionary processes that got us here can not be matched by our technology. I think this means Robots / AI will not independently create new businesses, new products, build factories, kit out factories, buy other robots, produce marketing, deal with customer services, returns, courts, investors, regulators, suppliers and so on. I can imagine products that will exist forever, like, rope, or cutlery, or plates, and someone automating a factory to produce these commodities. But they will still use humans to manage product development, supplier and customer relations, advertising and security, and, probably, looking after the robots. I think that Robots / AI will at best become a tool for people to use, but the power will remain with Human employees.
- taberiand 9y ago
  Humans aren't so complicated that an AI won't be able to model those things you've listed.
  - notahacker 9y ago
    Alternate view: humans are so fucking simple they'll pay extra for a machine-made coffee if it comes with a human attendant. Humans might be so bad at figuring out whether Alice can work with Bob or whether we should bomb Iran that a magic 8 ball could do a better job, never mind the anthropomorphised superintelligent computers which exist only in the imaginations of futurists past and present. But humanity is going to continue to insist on getting people to sort that sort of thing out.
anigbrowl 9y ago
Why not just seize the means of production? Private (real) property is ultimately rooted in the theft of the commons. This has historically been justified using two assertions: that people don't value what they don't own, and that nobody does anything except for profit. Both are highly questionable, yet when counterexamples are offered they are generally dismissed as 'the exception that proves the rule' or some equally irrational rhetoric. Our existing economic paradigms are demonstrably flawed. Just as feudalism tried to restrain the creative forces of capitalism but eventually collapsed, capitalism is arguably restraining the creative forces of (socialism, participativism, something we haven't got a good name for yet). We are familiar with many of the potential pitfalls - excessive bureaucracy and various flavors of authoritarianism - but have yet to fully systematize the desirable alternatives of open source culture. Perhaps what is needed is a general theory of economic networking that incorporates lateral as well as hierarchical structures.
- colemannugent 9y ago
  In the capitalist interpretation, "seize the means of production" translates to "start your own business and out-compete your competitors". Or put another way: just own the damn robots. "Private (real) property is ultimately rooted in the theft of the commons" If only somehow I could capitalize on everyone who believed this nonsense. I would sell them shirts, but for them to receive them would be ownership of private property and therefore a "theft of the commons". Can I ask what piece of technology you stole from "the commons" to write that comment? What was the brand?
  - kmicklas 9y ago
    Private property and personal property are not the same thing.
  - anigbrowl 9y ago
    I'm referring to a specific legal practice when I mention the Commons, sorry for not making that clearer. A similar method is proposed today to manage fisheries, with established actors being granted fungible fishing rights; well-intentioned as this proposal may be, it's philosophically problematic. https://en.wikipedia.org/wiki/Enclosure https://en.wikipedia.org/wiki/Enclosure
Apocryphon 9y ago
"Player Piano" should be required reading for all. It doesn't have to be the future, but it's a future worth examining.
- sf_rob 9y ago
  "Manna"[1] as well. While I don't like the writing style, I love the story. Especially since it shows AI gutting middle management in an interesting way before robotics is mature enough to do all the dextrous tasks. 1 http://marshallbrain.com/manna1.htm http://marshallbrain.com/manna1.htm
  - pm 9y ago
    Agreed. While I'm not a fan of the writing style either, the premise was enough to keep me interested until the end. It wouldn't surprise me if it wasn't too far off the mark for the next 50 or so years.
  - eadmund 9y ago
    I read Manna, but honestly I thought it was silly. > Terrafoam is, by contrast, 'Worse and worse.' No, it's not. Manna is better and better: it yields continually better results. > With all that happening, it is very hard to get people together to work on big projects. Wouldn't it be cool if there were something to get people to work together on big projects? Something like an economic force causing them to give a little to get a little? Frankly, I think the Australia Project would stagnate after a generation or two, while Manna would continually improve. After a few generations, it'd be much like to Communist states vs. the West: yes, the Communists did often improve on their initial conditions by quite a bit — but the free economies improved even more. I recall a story about someone (in China, perhaps?) bragging about how the government dumped a pallet of free cabbage on each city block every time period. Free cabbage sounds wonderful to someone who was a subsistence farmer — but Asian-American fusion cuisine on every city block sounds even better. And that's just within the construct of the story. A real-world example would have competing Manna-like systems. Also, in the Manna world the problem is that in the U.S. most people don't have the ability to contribute, and so they languish in Terrafoam. It provides no reason for why they are suddenly more talented in the Australia Project. That just doesn't make sense. Anyway, I hope that mankind's actual future is not to choose between two different totalitarian systems.
paulpauper 9y ago
In Kurt Vonnegut’s 1952 novel, Player Piano, we are introduced to a future in which only engineers and managers have gainful employment and meaningful lives. If you’re not one of the engineers and managers, then you’re in the army of nameless people fixing roads and bridges. You live in Homestead, far from the machines that do everything, and are treated throughout your life like a helpless baby. The world no longer has a use for you. Anything you can do a machine can do better, and you are reminded of this all day, every day by society and the single omnipotent industrial corporation that oversees it all. He wrote this 65 years ago. It couldn’t have been more apropos to what we’re witnessing now than if had he written it this morning, right down to the nostalgia-selling demagogue who seizes the opportunity to foment rebellion amongst the displaced and disgruntled. When millions of people start seeing their purpose begin to erode and their dignity being stolen from them, the idea that there’s nothing left to lose starts to creep in. The fact he wrote this 65 years ago yet the labor force and population have grown in lockstep, augers against this. https://staticseekingalpha.a.ssl.fastly.net/uploads/2011/12/2/saupload_growth-of-us-labor-force.jpg https://staticseekingalpha.a.ssl.fastly.net/uploads/2011/12/... Why would companies, especially in an economic environment that is so competitive, keep employees that serve no purpose. Buying and holding shares of Facebook, Google, Amazon, and Microsoft ,which are are not only leading this techno revolution but profiting immensely from it, is one the best ways to capitalize on this trend, which is what I have been doing for the past few years (along with owning Bitcoin). I don't however agree that automation will mean the 'end of jobs'. It's not that robots will take all the jobs, but rather the labor market will become increasingly bifurcated, with a 'creative class' at the top and the low-income service sector jobs at the bottom, without much in between. There is significant demand for service sectors jobs, of all skill levels, including skilled technical jobs such as coding, teaching, consulting, and engineering. But also huge demand for hospitality jobs; however, many of these jobs may not pay as much as the jobs they replaced, or bring much personal fulfillment.
- candiodari 9y ago
  > The fact he wrote this 65 years ago yet the labor force and population have grown in lockstep Only the reporting has grown in lockstep. The metrics have changed to make this happen. Some of the real story can be seen in these graphs: https://data.bls.gov/timeseries/LNS11300000 https://data.bls.gov/timeseries/LNS11300000 https://data.bls.gov/timeseries/LNS12026620 https://data.bls.gov/timeseries/LNS12026620 (you'll have to change the dates to get the full picture. Works with a POST so I can't link to it. Note that unemployment essentially is labour force - jobs. Hence, the weakest members of the jobs force are counted double. Also, discouraged workers are discounted (and the rules for discouraged workers means they are essentially anyone unemployed for more than some months). The real unemployment rate, discounting double jobs and including discouraged workers is somewhere between 9 and 16%) The short of it is that the job market froze, with a few bubbles in between, at around 1984-1987 or so, at an unemployment rate of around 8% or so and has been slowly but very steadily increasing since. Even the rate at which this is happening is increasing. The government, of course, has changed definitions again and again to show better numbers, but so far they don't go all out China on us (ie. the real data still appears to be published by the government, unlike in China where we know 15 million people were fired last year in several provinces due to protests and violence resulting from it, but this is not reported anywhere in government data) Granted, that's still not quite the story of Kurt Vonnegut, but keep in mind that we're about 30 years into a phase in history where jobs grow slightly slower than population growth. This could be accelerating, or it could simply be that under Obama there was no real jobs recovery despite "extraordinary measures" by the Fed.
btilly 9y ago
A correction to the history of retirement schemes. Retirement schemes go back a lot farther than acknowledged in that article. The most popular to have lots of children in the hopes that one would take care of parents in their old age. But then you having things like the https://en.wikipedia.org/wiki/Tontine https://en.wikipedia.org/wiki/Tontine.
- pgeorgi 9y ago
  Sure, but Tontines didn't originate in the US (or at least the UK) and therefore there's no need for the author to consider them part of world history.
  - btilly 9y ago
    They didn't originate in the US, but they were popular in the US long before the invention of pension funds.
dogruck 9y ago
Nice rant, but I think it would be stronger if it did more to consider the counter arguments. I see it as: * perhaps AI will someday rule the world -- in which case there's nothing more to discuss * if humans do still have a role, then they will work with the machines to figure out a solution * most moaning about so called under privileged people, such as Uber drivers, ignores that their standard of living is far superior to people of the past (e.g. 1800s farmer) and the millions living in deep poverty or slavery today. To be clear, I think there are many social problems that need to be addressed.
a_brawling_boo 9y ago
I came to see if people were talking about the robotics and automation ETF cited in the article and if it would be a good idea to buy at this point, but seems that everyone is having philosophical conversation instead of a investing conversation :-p
- sf_rob 9y ago
  The "problem" with that ETF is that there are few "pure play" intelligent robotic/automation companies in the world. There are manufacturing/farming equipment suppliers, consumer good robots doing fairly mundane tasks, chip makers who happen to make hardware that is good for AI.
- disease 9y ago
  From a clueless investor here, it seems like NVidia would be a good play if you anticipate widespread growth in machine learning.
  - FLUX-YOU 9y ago
    GPUs are more useful than CPUs for ML, but eventually someone's going to want to cut nVidia out of that process: https://cloud.google.com/blog/big-data/2017/05/an-in-depth-look-at-googles-first-tensor-processing-unit-tpu https://cloud.google.com/blog/big-data/2017/05/an-in-depth-l... nVidia is still a solid choice as VR has raised the visual fidelity demands for games and experiences, and even a 1080Ti can't render VR games at 90+FPS at max graphics. That's still a lot of demand nVidia has to meet.
  - partiallypro 9y ago
    Not sure if I'd want to chase Nvidia here, granted you could have said that 30% ago. I just don't see it as a sustained thing, because I believe FPGAs will eventually become the ML solution for giant corporations like Microsoft, Google, Amazon, IBM etc. Couple that with Tesla ditching Nvidia on the self driving things...I think Nvidia's run is in its late stages. It's still a great company, with a great product, but I think more than ML right now, it is riding a bitcoin train. It's like a pair trade.
Density 9y ago
In sci-fi the singularity is the moment when human consciousness merges with machine. In the real world the singularity is when people get so worked up about automation they invest infinity money in tech companies. e: I spent a solid chunk of my income on tech company stocks.
matthewbauer 9y ago
Interesting article but I think the premise that workers are buying tech stocks because they fear automation is incorrect. Gallup found 13% of Americans thought that their jobs would soon be replaced by automation[1]. In fact you usually find more people worried about immigration than automation[2]. Maybe people /should/ be more concerned about automation but they just aren’t right now. [1]: http://news.gallup.com/poll/216116/few-workers-worry-tech-making-job-obsolete.aspx http://news.gallup.com/poll/216116/few-workers-worry-tech-ma... [2]: http://news.gallup.com/poll/1660/immigration.aspx http://news.gallup.com/poll/1660/immigration.aspx
- Chathamization 9y ago
  > Maybe people /should/ be more concerned about automation but they just aren’t right now. Or maybe people should be less concerned about it. The rate of automation/productivity growth has actually been pretty low over the last decade[1], some of the slowest in the past 70 years. [1] https://www.bls.gov/lpc/prodybar.htm https://www.bls.gov/lpc/prodybar.htm
  - adrianN 9y ago
    That doesn't mean that the technology hasn't progressed. Cheap labor from countries like China has made it less profitable to invest in automation.
    - rtpg 9y ago
      it's also possible that we no longer have a lot of general technology imporvements that can be cost effective relative to just paying someone. We could probably build excellent robots to bring food from the kitchen to tables of a restaurant, but the capital costs are just not worth it relative to hiring wait staff (conveyor belt sushi nonwithstanding). Would it ever be worth it to Chili's to outfit a 40-table restaurant with automated delivery systems, replace 3 wait staff with a technician, and deal with the edge cases (how do tables get cleared??)? Probably not. Likely most tech ends up actually make existing staff more efficient, to be simply overworked instead of insanely overworked. Tablet digital ordering systems, fast dishwashers, kitchen-side logistics improvements....
javajosh 9y ago
A certain amount of compute capacity should be given with citizenship to each individual. It is fixed. You get to use that capacity however you want: some on your phone, some on your laptop. If you want to run an internet business that uses a lot of compute capacity, then you'll need to rent it from other individuals and consolidate it under your control.
- explainplease 9y ago
  It sounds really silly, but that might actually be the only way to prevent a few bad actors from taking over the world with killer robots. Of course, enforcement would be a problem.
- doctorstupid 9y ago
  You mean a brain?
primeblue 9y ago
This is the future and a good reminder to all the Millenials who will be replaced by the GenZ soon enough.
Waterluvian 9y ago
Reads like this are slowly convincing me not to buy into the world of mortgages and debt and to just live the rest of my life paying for everything in cash. I tried to buy a house last year with my wife but the market exploded where I live and suddenly houses were 40% more expensive from last year. So we still rent, which makes me feel incomplete. Like I'm kind of failing my duty of bringing the Canadian Dream to my family. But I gotta tell you, seeing 45% of my before tax income going into savings feels amazingly liberating. I stopped calling my savings a "down payment". It's now, "two college funds and 3 years of unemployment." I feel in total control of my future this way, but I also feel like I'm feeding into the apocalypse paranoia. I won't actually need this unemployment cash will I?
- bufordsharkley 9y ago
  It's no surprise that we're seeing more and more anxiety coalesce around land: this is the classical economic expectation of what would happen as automated output starts to outperform labor, and capital can be automatically produced. When this happens, scarce natural resources (such as location) increase in value. Henry George saw this nearly 140 years ago, with his "Fool's Paradise" thought experiment.[0] As efficiency rises and rises, can the cost of living ever approach zero, or will the landlords (in their many forms) be able to extract what they will? This is a very important question we need to answer. [0] http://www.econlib.org/library/YPDBooks/George/grgPP15.html#III.V.13 http://www.econlib.org/library/YPDBooks/George/grgPP15.html#...
  - graeme 9y ago
    Please don’t encourage the Toronto housing bubble. (Or Vancouver, OP is surely in one of the two) I’m sure Georgianism has its merits, but housing generally hasn’t been a great investment in most of north america, especially once maintenance costs are factored in. Meanwhile, Toronto and Vancouver are in the midst of a speculative housing mania. House prices have far outpaced rents. OP is correct not to buy. (Especially now, the bank regulator has just announced restrictions on mortgage lending. These are likely to reduce home prizes as average mortgage eligibility will shrink) Long run, you may be right, but re: the canadian markets OP is referring to you’re commenting on a situation of short term mania. Note: I’m referring chiefly to your “it’s no surprise” line. I’d say the cause of the immediate anxiety is the housing mania I described, rather than a longer run trend.
aorloff 9y ago
15 years ago all the software jobs I worked at were retiring clerical workers with software (oh you have 15 people doing spreadsheets ? We can automate that and you won't need them for the same report generation). So this has been going on a lot longer than the article supposes. Yes its true that the sophistication of the automation, and the breadth of its reach (with robots / gig economy) is higher than before, so it will affect more jobs, but it will also create new jobs managing the automation (the same way people found jobs using Excel to manage those spreadsheets from previously more manual ways to do reporting). In other words, this is the normal destructive (and positive) cycle of capitalism. It is always painful for people who adapt slowly, and provides opportunities for those willing and able to jump into the development and use of new automation tools.
- ThomPete 9y ago
  The point isn't that it's been going on for a long time but the speed with which it is happening today. Furthermore, I don't think most people understand how little the tech sector is. Even in the Bay Area, it's only around 15-20% who actually work in tech. Most people aren't able to just relearn and adopt.
  - ian0 9y ago
    I think this is where social safety nets (or the lack of them) come into play. The market can be short sighted when it comes to training and typically focus on younger generations where they do (large orgs sponsoring university courses etc). A good adult education scheme in conjunction with social welfare to allow people to make use of it makes a world of difference when it comes to re-tooling older people once jobs are automated. Not to find jobs at google but at the legion of smaller traditional enterprises that now have technology components due to automation.
    - ThomPete 9y ago
      I don't disagree but how are you going to pay for social welfare if no one is making money? So what do you tax? do you do something else? These are the questions that are really relevant to figure out IMO.
Terr_ 9y ago
> In this context, the FANG stocks are not a gimmick or a fad, they’re a f---ing life raft. Note that if you are employed in one of those companies, you should think twice how you'd want to invest in them, because you're actually putting a bunch of your eggs in one basket. I keep remembering those poor Enron employees whose retirement funds were mainly in stock of Enron itself, so that they were both unemployed and financially ruined when the scam fell apart.
- suls 9y ago
  This. Just a bit of portfolio theory would make it very clear this isn’t a good idea .. .. yet I have to defend myself every odd month as to why I am not participating in the employee stock ownership program.
  - lostboys67 9y ago
    Depends on program in the uk share save schemes are an obvious no brainer investment you literally cant lose more than the difference between inflation and the guaranteed return if the stocks are under water at exercise time
    - alien_at_work 9y ago
      There is more to consider than that. How much money is being tied up for participation, what is your average expected return for that amount, how does that compare to just picking an index, etc.
gfodor 9y ago
It's conditions where most market participants believe future returns are inevitable that often lead to the biggest corrections. Eternal growth of software companies is definitely a great example of "this time it's different", surely one day it will be but the question for the investor today is how confidently they can answer this question.
no_wizard 9y ago
Like all things this well written on this topic I feel like it hits the nail on the head and misses a few things because it’s an article by necessity must paint in broad strucks so let me say this: It’s completely right that automation/ robotics will accelerate the displacement of workers and cause upheaval. Certainly owning the productive fruits of this will make one very rich. What won’t happen is that these will displace those who service unmapped or poorly systemic mapped things. For instance: in the last 15 years there have been techniques to attempt to automatically curate wine. Most either fail or pivot. Why? Because chemical composition is only ine facet in the high end. Remarkably software still does not do a great job here as tastes are subtle and hard to train in a model or algorithm. It so far can only get n times better than average but never tops an expert human curator in the high end. Will it some day? Maybe. On an infinite time scale yes it will but I wouldn’t quite go dumping my high end wine skills quite yet. Which brings me to my point: automation is great for irredeemable or trainable repetitive processes but still an infant at more complex things like the example given. In turn, if you can carve out a niche that is unusually hard to model and train you may be okay. Unfortunately that’s not 90 percent of jobs I reckon. The other sure fire bet us to only deal in Veblen goods. The value there being exclusivity, which I reckon will never stop being a thing
- intended 9y ago
  There an article somewhere which breaks down the types of automation, into a useable manner. Theres automation of tasks which free up labor to do MORE work - so if you were a bricklayer, and were bottlenecked by number of hands, the wheelbarrow would be a force multiplier. Theres removal of jobs with less useful jobs, so the chef got replaced by the burger flipper (not really, but I can't think of a good example at the moment). And finally removal of jobs entirely, with no need of replacement.
  - Qwertious 9y ago
    >And finally removal of jobs entirely, with no need of replacement. For example, computers - who were replaced by computers. https://en.wikipedia.org/wiki/Human_computer https://en.wikipedia.org/wiki/Human_computer
arca_vorago 9y ago
Have fun trying to own the robots after we've allowed proprietary licenses and leasing to takeover anything with a CPU attached. Ownership is important, which is why copyleft is important, and its time to recognize how integral the four freedoms are to the future I think most of us want.
- Digit-Al 9y ago
  He wasn't talking about actually, physically, owning the robots. He was talking about owning stocks in the companies that make the robots. So that as they get wealthier, so do you.
  - pygy_ 9y ago
    Until the robots decide to stop feeding their "owners". Money is a social construct. Power comes from controlling energetic resources, and automation is gradually stripping that control away from humans.
  - alien_at_work 9y ago
    Depending on who you believe, the first people to get replaced by robots are the least likely to be able to afford investing in robots companies.
Zanni 9y ago
What I never see mentioned in these types of articles is the rise of the service economy. There are some jobs that will never be automated because we prefer to deal with humans. Take food service for instance. No one wants to go to a high end steak house and have their wine poured and meal served by robots. Human interaction is part of the experience and part of the value. (At McDonald's, by contrast, the humans don't add value and could easily be replaced.) The "human touch" is going to become more important, not less, as automation increases.
- BoiledCabbage 9y ago
  > What I never see mentioned in these types of articles is the rise of the service economy. There are some jobs that will never be automated because we prefer to deal with humans Mainly because percentage-wise there are so few of them, and they don't make up a significant enough portion of the economy to keep it afloat.
  - CryptoPunk 9y ago
    Customer-facing service jobs employ a huge number of people. In any case, there once was a time when white collar jobs were a tiny occupation category. There was even a time when manufacturing jobs were rare. The economy and composition of jobs changes with the abundance of resources.
    - BoiledCabbage 9y ago
      > Customer-facing service jobs employ a huge number of people But irreplaceable ones aren't. Bank tellers, cashiers, bus drivers, firemen, card dealers, bar tenders... all can and will be replaced by automation and consumers won't care.
      - CryptoPunk 9y ago
        Bartenders are totally irreplaceable. The non-social aspect of the job is easily automatable and has been for a long time, and the social aspect is contingent on human interaction.
sulam 9y ago
This “theory” for equities growth is a joke. There is a very simple reason for it and plenty of non-tech baskets show the same 2 yr (or longer) pattern. Simply put, cash and cash equivalents are generating historically low returns. So you put your money in equity. (And if you are a retiree you put it in stocks with dividends. Look at the growth in dividend-generating stocks like energy, mining and metals and it makes FANG look shitty. This is fixed income portfolios trying to achieve their needed goals.) Ironically, it’s GDP growth that will stop the music, because enough of that will generate inflation and make it rational to hold something besides US treasuries. In fact it’s already starting to happen for non-US markets (although slower than all the hedge fund smarties thought, therefore the complete bath they’ve taken the last year). The length of our equities boom is inversely correlated with GDP growth. This cycle is (much) longer than the historical average simply because real growth has been so low. Normalize against aggregate growth over a cycle and we have a year or two left in the current one (assuming job, GDP, wages etc continue to be anemic - if they pick up rapidly things will rapidly shift).
- roymurdock 9y ago
  > we have a year or two left in the current [cycle] Are you saying that we have a year or two until we see a pick up in productivity (driving real growth and GDP), which will shift investment out of equities and into? Cash and cash equivalents? Or are you saying that we have a year or two until we see a recession (decline in GNP), triggered by a flight from the equity markets?
  - TheAdamAndChe 9y ago
    Inferring from "Ironically, it’s GDP growth that will stop the music," it seems to me like they're saying that a lack of increased productivity combined with a tightening labor market will increase wages and thus inflation while not affecting equity returns, shifting growth from equital holdings to cash holdings. I'm not so sure it'll happen personally. The Fed seems to be raising interest rates before inflation has a chance to increase, but we'll see.
  - sulam 9y ago
    I'm making a (perhaps reflexive) statement about economic cycles, that they are effectively defined as a period of growth followed by a shock. Without growth, there is no shock. Our current cycle has been characterized by very low growth. It is also much longer than typical, but I think this simply follows from the fact that we haven't had a lot of growth. Growth seems to be picking up, though, and I think over the entire period of the cycle will soon be "enough" to trigger the next cycle.
nocoder 9y ago
This is going to be a rant, so apologies. This is a pretty crappy read. Lacks real data and also unwillingness to look outside of the tech bubble, seriously what serious AI work is apple or Netflix doing? Its as if the author started with the conclusion and wrote up whole thing to justify it. For large parts most of the tech people at Google/FB are involved in getting more people click and buys ads. And Amazon are involved in getting people to buy more stuff and reduce the costs of handling and shipping them. So, if the logical conclusion that many visionaries in these thread are saying is true that 90% will be useless then these companies will have nobody to serve and will collapse before we reach that point anyways. Secondly, let's believe this is true then if an economic system which does not benefit majority deserves to be overthrown by any means even violent and rise of trump is a step in right direction. Third, if the tech companies are so smart then how were they caught with their pants down when a foreign power used their own infrastructure and technology to help elect a leader that they ostensibly opposed. Finally, the fundamental reason for the current stock boom is simply liquidity and lack of asset classes outside of stocks which give meaningful growth. This is not just limited to fang or usa but seen in many stock markets. I actively invest and trade in India where the markets are hitting new highs and the only reason right now for this is that in most places it is very hard to get a good return plus there is excess institutional & industrial capital since they are not optimistic of the growth and thus not investing in augmenting capacities or production. So investing in stock market seems the only alternative. One of the reasons for this liquidity is central banks around the world have been pumping money. This will end when the excess liquidity is pulled out from the global financial system.
- shadofx 9y ago
  So Trump is a harbinger of technocommunism?
MattyRad 9y ago
Definitely an interesting read, if a bit pessimistic, nihilistic, and a bit Marxist (seize the means of production!). But ultimately the article offers no solutions and the author comes off to me as a doomsayer and luddite (https://en.wikipedia.org/wiki/Luddite https://en.wikipedia.org/wiki/Luddite). If the author really fears the current system as described, maybe he should return to the old system: become a subsistence farmer and work till you die.

474 points by npalli 9y ago

Whoa. No solutions, at the end, but what a story. As someone in a situation similar to the 45 year old he mentions, I worry about being displaced. Not every day, but every month or so I wonder. What a fascinating thesis. I wonder what happens when the 'replacement fear' buy collides with the 'boomer retirement' sell?

pdog 9y ago
Pretty sure the proposed solution is to buy stocks of the U.S. technology giants: Amazon, Apple, Facebook, Microsoft, and Alphabet, the parent company of Google.
- adventured 9y ago
  The largest market cap companies in a given decade, overwhelmingly tend to be under-performers in the following decade. It's a trend that has repeated decade after decade. Many of these types of companies - AMZN, NFLX, GOOGL, FB - have pulled a massive share of their future returns forward (which is what happened to Microsoft, stagnating its stock for ~15 years). In 2007 the largest companies were: Exxon, GE, Microsoft, PetroChina, Royal Dutch Shell, Citigroup, AT&T, Gazprom, BP, Toyota, Bank of America, China Mobile, HSBC, ICBC, Walmart. All have performed at a mediocre level at best over that time. See: https://www.bloomberg.com/news/articles/2017-09-11/apple-vaults-to-no-1-from-no-70-after-a-decade-of-iphone-sales https://www.bloomberg.com/news/articles/2017-09-11/apple-vau... Is Amazon going to grow into a $2 trillion market cap over the next ten years? No, there is zero possibility of that happening. It'll be very lucky to grow into its existing market cap today, over that ten years. Keep in mind, they have $100 billion in retail sales, generating Walmart style margins on that business; Walmart has ~$450 billion in retail sales, generating ~$15 billion in net income. For that, Walmart gets to trade at half the market cap of Amazon. That's Amazon's future value compression. That multiple erosion won't occur until the market starts to realize the AWS growth machine isn't going to last forever (AWS representing a very large portion of the Amazon stock appreciation the last three years), as that growth curve slows in the next few years, the market will push down on Amazon's present extreme premium. Netflix has a ~200 PE ratio, there is no means for it to ever justify its existing valuation (400 million global subscribers? no chance), much less a far higher one. Their present business model has never proven the ability to produce good margins, content has perpetually sapped their earnings potential and is likely to continue to do so. Facebook and Google will stagnate and grow into their valuations. Google particularly is trading far beyond where it should versus its now modest growth rate. ~37 times earnings, $700 billion market cap, for 10%-15% annual growth over the next five years? No thanks. In the not very distant future, Google will pull a Microsoft and begin paying out a dividend, after this latest stock market bubble ends and their stock returns drift to mediocrity.
  - pdog 9y ago
    Investors are willing to accept much lower long-term returns for safe haven assets. If you're going to "just own the damn robots" at any price, you're essentially paying for this sort of insurance.
    - adventured 9y ago
      I agree investors will continue to own these companies in a very big way. They won't continue to maintain much less inflate the premium that presently exists. Microsoft for example has barely grown its income in a decade. On what planet should they have a 28 pe ratio? The stock has tripled (!) in five years on the back of zero income growth. It's massive value destruction just waiting to happen. Shareholders will not just sit, hold and tolerate the inevitable value destruction that is looming, it doesn't work as insurance at all in such a context.
      - frandroid 9y ago
        You forget that Microsoft's stock stagnated for 10 years before that. A 28 PE ratio is the new normal for tech companies. With Ballmer out of the picture, investors are speculating on a brighter future for MS. It's not here yet but they're making lots of smart moves.
        adventured 9y ago
        > A 28 PE ratio is the new normal for tech companies. It's not the new normal. That's what people say to justify extreme premiums during times in which investors have overly inflated valuations. This is the third bubbly tech era in the last 20 years. That new normal premise has been used frequently in each. I understand why Microsoft has inflated. It doesn't jive with actual results in the post Ballmer era. There isn't even a hint of the kind of growth that could justify such an elevated PE ratio (elevated for a company with no growth for years). Their fast growth areas are struggling to off-set what they're losing in eroding, old business franchises. Net result, they're standing still.
      - 9y ago
- s73ver_ 9y ago
  But with what money? Most of the people at high risk for displacement aren't exactly rolling in the cash.
- beams_of_light 9y ago
  An index fund is really the best option.

deleted 9y ago

[deleted]

emiliobumachar 9y ago

HN hug of death strikes again. Website does not reply.

drzaiusapelord 9y ago
http://webcache.googleusercontent.com/search?q=cache:http://thereformedbroker.com/2017/10/16/just-own-the-damn-robots/ http://webcache.googleusercontent.com/search?q=cache:http://...

pdog 9y ago

Interesting investment thesis, but isn't there a better way to hedge yourself than buying tech stocks? That's just a huge bet on a tiny number of cyclical revenue sources: online shopping, online advertising, cloud services, iPhones, Microsoft Office, and Windows.

bykovich2 9y ago
I didn't read this as an investment thesis. I don't think he's trying to prescribe an investment strategy.
empath75 9y ago
I bought nvidia rather than FAANG stocks. I did pretty well ($30 -> $190)
leggomylibro 9y ago
What will that tech need to survive? Lithium, for batteries. Heavy metals, for processing. Energy, most of all. I wonder how long it'll be until we replace fiat currencies with a balance of kilowatt-hours.
- hodder 9y ago
  The problem with those is they are capital intensive industries with commodity products. Not exactly the kind of thing that compounds capital at fast rates.
- Apocryphon 9y ago
  Energy is the currency of the future. - CEO Nwabudike Morgan, "The Centauri Monopoly"
  - endgame 9y ago
    That game was incredibly prescient. I was going to link to its page on Paean to SMAC but it turns out that quote is from "Global Energy Theory", a tech that didn't make it into the final game (but had data set up for it). So there's no write-up about it. Instead, I'll link to the Paean's "First Time Here?" page: https://paeantosmac.wordpress.com/first-time-here/ https://paeantosmac.wordpress.com/first-time-here/

jboggan 9y ago

"We’re in an age where we’re being told AI is about to start writing its own software." The most pregnant sentence in the entire piece.

EliRivers 9y ago
All the problems in every serious piece of software I've ever worked on stem from the customer (be it external or in-house) not knowing what they want, the person in charge of capturing that doing a pretty bad job of it anyway, and the chain from there to the person writing the software taking that failure and making it worse. AI writing software will just get me another flavour of the wrong software. AI working out what people want the software to do would be useful.
- colemannugent 9y ago
  My thoughts exactly. Until the AI can hold useless meetings and design things by bureaucracy it will never be a serious threat to big businesses/government.
- kmicklas 9y ago
  You don't think good old fashioned bugs are a problem?
  - deleted 9y ago
    [deleted]
- letlambda 9y ago
  >AI writing software will just get me another flavour of the wrong software. AI working out what people want the software to do would be useful. Maybe we can deliver that wrong software in 100ms instead of 100 days.
sp332 9y ago
https://research.googleblog.com/2017/05/using-machine-learning-to-explore.html https://research.googleblog.com/2017/05/using-machine-learni... Right now they're pitching it as a way for non-experts to make better neural network architectures.

arichard123 9y ago

I just don't buy it. I understand I'm in a minority, so let me indulge myself and explain, for a moment, why I think AI / Robots are nothing to worry about. My claim is: Robots will not replace humans in all jobs. Further, it's more than because of Human preference, I think that Robots will lack cognitive abilities that we have. My expectation is that in each area where they are deficient then they may well become a tool for a Human overseer, and that might replace some workers. I don't believe AI will effectively deal with: 1) Cultural concerns. e.g. Appropriate imagery in advertising. 2) Major strategic considerations when faced with an uncertain future. (Physical war, trade war, geopolitical events, natural disasters). 3) Legal frameworks, as they are not well defined. 4) Human relationships. e.g. Don't make Alice and Bob work together. 5) Intuitive leaps. e.g. Rubics cube. 6) Empathy. The reason I believe this is not because I believe in a soul, or anything mystical, but because I believe that the nature of our brains, our senses, our learning experiences, and the evolutionary processes that got us here can not be matched by our technology. I think this means Robots / AI will not independently create new businesses, new products, build factories, kit out factories, buy other robots, produce marketing, deal with customer services, returns, courts, investors, regulators, suppliers and so on. I can imagine products that will exist forever, like, rope, or cutlery, or plates, and someone automating a factory to produce these commodities. But they will still use humans to manage product development, supplier and customer relations, advertising and security, and, probably, looking after the robots. I think that Robots / AI will at best become a tool for people to use, but the power will remain with Human employees.

taberiand 9y ago
Humans aren't so complicated that an AI won't be able to model those things you've listed.
- notahacker 9y ago
  Alternate view: humans are so fucking simple they'll pay extra for a machine-made coffee if it comes with a human attendant. Humans might be so bad at figuring out whether Alice can work with Bob or whether we should bomb Iran that a magic 8 ball could do a better job, never mind the anthropomorphised superintelligent computers which exist only in the imaginations of futurists past and present. But humanity is going to continue to insist on getting people to sort that sort of thing out.

anigbrowl 9y ago

Why not just seize the means of production? Private (real) property is ultimately rooted in the theft of the commons. This has historically been justified using two assertions: that people don't value what they don't own, and that nobody does anything except for profit. Both are highly questionable, yet when counterexamples are offered they are generally dismissed as 'the exception that proves the rule' or some equally irrational rhetoric. Our existing economic paradigms are demonstrably flawed. Just as feudalism tried to restrain the creative forces of capitalism but eventually collapsed, capitalism is arguably restraining the creative forces of (socialism, participativism, something we haven't got a good name for yet). We are familiar with many of the potential pitfalls - excessive bureaucracy and various flavors of authoritarianism - but have yet to fully systematize the desirable alternatives of open source culture. Perhaps what is needed is a general theory of economic networking that incorporates lateral as well as hierarchical structures.

colemannugent 9y ago
In the capitalist interpretation, "seize the means of production" translates to "start your own business and out-compete your competitors". Or put another way: just own the damn robots. "Private (real) property is ultimately rooted in the theft of the commons" If only somehow I could capitalize on everyone who believed this nonsense. I would sell them shirts, but for them to receive them would be ownership of private property and therefore a "theft of the commons". Can I ask what piece of technology you stole from "the commons" to write that comment? What was the brand?
- kmicklas 9y ago
  Private property and personal property are not the same thing.
- anigbrowl 9y ago
  I'm referring to a specific legal practice when I mention the Commons, sorry for not making that clearer. A similar method is proposed today to manage fisheries, with established actors being granted fungible fishing rights; well-intentioned as this proposal may be, it's philosophically problematic. https://en.wikipedia.org/wiki/Enclosure https://en.wikipedia.org/wiki/Enclosure

Apocryphon 9y ago

"Player Piano" should be required reading for all. It doesn't have to be the future, but it's a future worth examining.

sf_rob 9y ago
"Manna"[1] as well. While I don't like the writing style, I love the story. Especially since it shows AI gutting middle management in an interesting way before robotics is mature enough to do all the dextrous tasks. 1 http://marshallbrain.com/manna1.htm http://marshallbrain.com/manna1.htm
- pm 9y ago
  Agreed. While I'm not a fan of the writing style either, the premise was enough to keep me interested until the end. It wouldn't surprise me if it wasn't too far off the mark for the next 50 or so years.
- eadmund 9y ago
  I read Manna, but honestly I thought it was silly. > Terrafoam is, by contrast, 'Worse and worse.' No, it's not. Manna is better and better: it yields continually better results. > With all that happening, it is very hard to get people together to work on big projects. Wouldn't it be cool if there were something to get people to work together on big projects? Something like an economic force causing them to give a little to get a little? Frankly, I think the Australia Project would stagnate after a generation or two, while Manna would continually improve. After a few generations, it'd be much like to Communist states vs. the West: yes, the Communists did often improve on their initial conditions by quite a bit — but the free economies improved even more. I recall a story about someone (in China, perhaps?) bragging about how the government dumped a pallet of free cabbage on each city block every time period. Free cabbage sounds wonderful to someone who was a subsistence farmer — but Asian-American fusion cuisine on every city block sounds even better. And that's just within the construct of the story. A real-world example would have competing Manna-like systems. Also, in the Manna world the problem is that in the U.S. most people don't have the ability to contribute, and so they languish in Terrafoam. It provides no reason for why they are suddenly more talented in the Australia Project. That just doesn't make sense. Anyway, I hope that mankind's actual future is not to choose between two different totalitarian systems.

paulpauper 9y ago

In Kurt Vonnegut’s 1952 novel, Player Piano, we are introduced to a future in which only engineers and managers have gainful employment and meaningful lives. If you’re not one of the engineers and managers, then you’re in the army of nameless people fixing roads and bridges. You live in Homestead, far from the machines that do everything, and are treated throughout your life like a helpless baby. The world no longer has a use for you. Anything you can do a machine can do better, and you are reminded of this all day, every day by society and the single omnipotent industrial corporation that oversees it all. He wrote this 65 years ago. It couldn’t have been more apropos to what we’re witnessing now than if had he written it this morning, right down to the nostalgia-selling demagogue who seizes the opportunity to foment rebellion amongst the displaced and disgruntled. When millions of people start seeing their purpose begin to erode and their dignity being stolen from them, the idea that there’s nothing left to lose starts to creep in. The fact he wrote this 65 years ago yet the labor force and population have grown in lockstep, augers against this. https://staticseekingalpha.a.ssl.fastly.net/uploads/2011/12/2/saupload_growth-of-us-labor-force.jpg https://staticseekingalpha.a.ssl.fastly.net/uploads/2011/12/... Why would companies, especially in an economic environment that is so competitive, keep employees that serve no purpose. Buying and holding shares of Facebook, Google, Amazon, and Microsoft ,which are are not only leading this techno revolution but profiting immensely from it, is one the best ways to capitalize on this trend, which is what I have been doing for the past few years (along with owning Bitcoin). I don't however agree that automation will mean the 'end of jobs'. It's not that robots will take all the jobs, but rather the labor market will become increasingly bifurcated, with a 'creative class' at the top and the low-income service sector jobs at the bottom, without much in between. There is significant demand for service sectors jobs, of all skill levels, including skilled technical jobs such as coding, teaching, consulting, and engineering. But also huge demand for hospitality jobs; however, many of these jobs may not pay as much as the jobs they replaced, or bring much personal fulfillment.

candiodari 9y ago
> The fact he wrote this 65 years ago yet the labor force and population have grown in lockstep Only the reporting has grown in lockstep. The metrics have changed to make this happen. Some of the real story can be seen in these graphs: https://data.bls.gov/timeseries/LNS11300000 https://data.bls.gov/timeseries/LNS11300000 https://data.bls.gov/timeseries/LNS12026620 https://data.bls.gov/timeseries/LNS12026620 (you'll have to change the dates to get the full picture. Works with a POST so I can't link to it. Note that unemployment essentially is labour force - jobs. Hence, the weakest members of the jobs force are counted double. Also, discouraged workers are discounted (and the rules for discouraged workers means they are essentially anyone unemployed for more than some months). The real unemployment rate, discounting double jobs and including discouraged workers is somewhere between 9 and 16%) The short of it is that the job market froze, with a few bubbles in between, at around 1984-1987 or so, at an unemployment rate of around 8% or so and has been slowly but very steadily increasing since. Even the rate at which this is happening is increasing. The government, of course, has changed definitions again and again to show better numbers, but so far they don't go all out China on us (ie. the real data still appears to be published by the government, unlike in China where we know 15 million people were fired last year in several provinces due to protests and violence resulting from it, but this is not reported anywhere in government data) Granted, that's still not quite the story of Kurt Vonnegut, but keep in mind that we're about 30 years into a phase in history where jobs grow slightly slower than population growth. This could be accelerating, or it could simply be that under Obama there was no real jobs recovery despite "extraordinary measures" by the Fed.

btilly 9y ago

A correction to the history of retirement schemes. Retirement schemes go back a lot farther than acknowledged in that article. The most popular to have lots of children in the hopes that one would take care of parents in their old age. But then you having things like the https://en.wikipedia.org/wiki/Tontine https://en.wikipedia.org/wiki/Tontine.

pgeorgi 9y ago
Sure, but Tontines didn't originate in the US (or at least the UK) and therefore there's no need for the author to consider them part of world history.
- btilly 9y ago
  They didn't originate in the US, but they were popular in the US long before the invention of pension funds.

dogruck 9y ago

Nice rant, but I think it would be stronger if it did more to consider the counter arguments. I see it as: * perhaps AI will someday rule the world -- in which case there's nothing more to discuss * if humans do still have a role, then they will work with the machines to figure out a solution * most moaning about so called under privileged people, such as Uber drivers, ignores that their standard of living is far superior to people of the past (e.g. 1800s farmer) and the millions living in deep poverty or slavery today. To be clear, I think there are many social problems that need to be addressed.

a_brawling_boo 9y ago

I came to see if people were talking about the robotics and automation ETF cited in the article and if it would be a good idea to buy at this point, but seems that everyone is having philosophical conversation instead of a investing conversation :-p

sf_rob 9y ago
The "problem" with that ETF is that there are few "pure play" intelligent robotic/automation companies in the world. There are manufacturing/farming equipment suppliers, consumer good robots doing fairly mundane tasks, chip makers who happen to make hardware that is good for AI.
disease 9y ago
From a clueless investor here, it seems like NVidia would be a good play if you anticipate widespread growth in machine learning.
- FLUX-YOU 9y ago
  GPUs are more useful than CPUs for ML, but eventually someone's going to want to cut nVidia out of that process: https://cloud.google.com/blog/big-data/2017/05/an-in-depth-look-at-googles-first-tensor-processing-unit-tpu https://cloud.google.com/blog/big-data/2017/05/an-in-depth-l... nVidia is still a solid choice as VR has raised the visual fidelity demands for games and experiences, and even a 1080Ti can't render VR games at 90+FPS at max graphics. That's still a lot of demand nVidia has to meet.
- partiallypro 9y ago
  Not sure if I'd want to chase Nvidia here, granted you could have said that 30% ago. I just don't see it as a sustained thing, because I believe FPGAs will eventually become the ML solution for giant corporations like Microsoft, Google, Amazon, IBM etc. Couple that with Tesla ditching Nvidia on the self driving things...I think Nvidia's run is in its late stages. It's still a great company, with a great product, but I think more than ML right now, it is riding a bitcoin train. It's like a pair trade.

Density 9y ago

In sci-fi the singularity is the moment when human consciousness merges with machine. In the real world the singularity is when people get so worked up about automation they invest infinity money in tech companies. e: I spent a solid chunk of my income on tech company stocks.

matthewbauer 9y ago

Interesting article but I think the premise that workers are buying tech stocks because they fear automation is incorrect. Gallup found 13% of Americans thought that their jobs would soon be replaced by automation[1]. In fact you usually find more people worried about immigration than automation[2]. Maybe people /should/ be more concerned about automation but they just aren’t right now. [1]: http://news.gallup.com/poll/216116/few-workers-worry-tech-making-job-obsolete.aspx http://news.gallup.com/poll/216116/few-workers-worry-tech-ma... [2]: http://news.gallup.com/poll/1660/immigration.aspx http://news.gallup.com/poll/1660/immigration.aspx

Chathamization 9y ago
> Maybe people /should/ be more concerned about automation but they just aren’t right now. Or maybe people should be less concerned about it. The rate of automation/productivity growth has actually been pretty low over the last decade[1], some of the slowest in the past 70 years. [1] https://www.bls.gov/lpc/prodybar.htm https://www.bls.gov/lpc/prodybar.htm
- adrianN 9y ago
  That doesn't mean that the technology hasn't progressed. Cheap labor from countries like China has made it less profitable to invest in automation.
  - rtpg 9y ago
    it's also possible that we no longer have a lot of general technology imporvements that can be cost effective relative to just paying someone. We could probably build excellent robots to bring food from the kitchen to tables of a restaurant, but the capital costs are just not worth it relative to hiring wait staff (conveyor belt sushi nonwithstanding). Would it ever be worth it to Chili's to outfit a 40-table restaurant with automated delivery systems, replace 3 wait staff with a technician, and deal with the edge cases (how do tables get cleared??)? Probably not. Likely most tech ends up actually make existing staff more efficient, to be simply overworked instead of insanely overworked. Tablet digital ordering systems, fast dishwashers, kitchen-side logistics improvements....

javajosh 9y ago

A certain amount of compute capacity should be given with citizenship to each individual. It is fixed. You get to use that capacity however you want: some on your phone, some on your laptop. If you want to run an internet business that uses a lot of compute capacity, then you'll need to rent it from other individuals and consolidate it under your control.

explainplease 9y ago
It sounds really silly, but that might actually be the only way to prevent a few bad actors from taking over the world with killer robots. Of course, enforcement would be a problem.
doctorstupid 9y ago
You mean a brain?

primeblue 9y ago

This is the future and a good reminder to all the Millenials who will be replaced by the GenZ soon enough.

Waterluvian 9y ago

Reads like this are slowly convincing me not to buy into the world of mortgages and debt and to just live the rest of my life paying for everything in cash. I tried to buy a house last year with my wife but the market exploded where I live and suddenly houses were 40% more expensive from last year. So we still rent, which makes me feel incomplete. Like I'm kind of failing my duty of bringing the Canadian Dream to my family. But I gotta tell you, seeing 45% of my before tax income going into savings feels amazingly liberating. I stopped calling my savings a "down payment". It's now, "two college funds and 3 years of unemployment." I feel in total control of my future this way, but I also feel like I'm feeding into the apocalypse paranoia. I won't actually need this unemployment cash will I?

bufordsharkley 9y ago
It's no surprise that we're seeing more and more anxiety coalesce around land: this is the classical economic expectation of what would happen as automated output starts to outperform labor, and capital can be automatically produced. When this happens, scarce natural resources (such as location) increase in value. Henry George saw this nearly 140 years ago, with his "Fool's Paradise" thought experiment.[0] As efficiency rises and rises, can the cost of living ever approach zero, or will the landlords (in their many forms) be able to extract what they will? This is a very important question we need to answer. [0] http://www.econlib.org/library/YPDBooks/George/grgPP15.html#III.V.13 http://www.econlib.org/library/YPDBooks/George/grgPP15.html#...
- graeme 9y ago
  Please don’t encourage the Toronto housing bubble. (Or Vancouver, OP is surely in one of the two) I’m sure Georgianism has its merits, but housing generally hasn’t been a great investment in most of north america, especially once maintenance costs are factored in. Meanwhile, Toronto and Vancouver are in the midst of a speculative housing mania. House prices have far outpaced rents. OP is correct not to buy. (Especially now, the bank regulator has just announced restrictions on mortgage lending. These are likely to reduce home prizes as average mortgage eligibility will shrink) Long run, you may be right, but re: the canadian markets OP is referring to you’re commenting on a situation of short term mania. Note: I’m referring chiefly to your “it’s no surprise” line. I’d say the cause of the immediate anxiety is the housing mania I described, rather than a longer run trend.

aorloff 9y ago

15 years ago all the software jobs I worked at were retiring clerical workers with software (oh you have 15 people doing spreadsheets ? We can automate that and you won't need them for the same report generation). So this has been going on a lot longer than the article supposes. Yes its true that the sophistication of the automation, and the breadth of its reach (with robots / gig economy) is higher than before, so it will affect more jobs, but it will also create new jobs managing the automation (the same way people found jobs using Excel to manage those spreadsheets from previously more manual ways to do reporting). In other words, this is the normal destructive (and positive) cycle of capitalism. It is always painful for people who adapt slowly, and provides opportunities for those willing and able to jump into the development and use of new automation tools.

ThomPete 9y ago
The point isn't that it's been going on for a long time but the speed with which it is happening today. Furthermore, I don't think most people understand how little the tech sector is. Even in the Bay Area, it's only around 15-20% who actually work in tech. Most people aren't able to just relearn and adopt.
- ian0 9y ago
  I think this is where social safety nets (or the lack of them) come into play. The market can be short sighted when it comes to training and typically focus on younger generations where they do (large orgs sponsoring university courses etc). A good adult education scheme in conjunction with social welfare to allow people to make use of it makes a world of difference when it comes to re-tooling older people once jobs are automated. Not to find jobs at google but at the legion of smaller traditional enterprises that now have technology components due to automation.
  - ThomPete 9y ago
    I don't disagree but how are you going to pay for social welfare if no one is making money? So what do you tax? do you do something else? These are the questions that are really relevant to figure out IMO.

Terr_ 9y ago

> In this context, the FANG stocks are not a gimmick or a fad, they’re a f---ing life raft. Note that if you are employed in one of those companies, you should think twice how you'd want to invest in them, because you're actually putting a bunch of your eggs in one basket. I keep remembering those poor Enron employees whose retirement funds were mainly in stock of Enron itself, so that they were both unemployed and financially ruined when the scam fell apart.

suls 9y ago
This. Just a bit of portfolio theory would make it very clear this isn’t a good idea .. .. yet I have to defend myself every odd month as to why I am not participating in the employee stock ownership program.
- lostboys67 9y ago
  Depends on program in the uk share save schemes are an obvious no brainer investment you literally cant lose more than the difference between inflation and the guaranteed return if the stocks are under water at exercise time
  - alien_at_work 9y ago
    There is more to consider than that. How much money is being tied up for participation, what is your average expected return for that amount, how does that compare to just picking an index, etc.

gfodor 9y ago

It's conditions where most market participants believe future returns are inevitable that often lead to the biggest corrections. Eternal growth of software companies is definitely a great example of "this time it's different", surely one day it will be but the question for the investor today is how confidently they can answer this question.

no_wizard 9y ago

Like all things this well written on this topic I feel like it hits the nail on the head and misses a few things because it’s an article by necessity must paint in broad strucks so let me say this: It’s completely right that automation/ robotics will accelerate the displacement of workers and cause upheaval. Certainly owning the productive fruits of this will make one very rich. What won’t happen is that these will displace those who service unmapped or poorly systemic mapped things. For instance: in the last 15 years there have been techniques to attempt to automatically curate wine. Most either fail or pivot. Why? Because chemical composition is only ine facet in the high end. Remarkably software still does not do a great job here as tastes are subtle and hard to train in a model or algorithm. It so far can only get n times better than average but never tops an expert human curator in the high end. Will it some day? Maybe. On an infinite time scale yes it will but I wouldn’t quite go dumping my high end wine skills quite yet. Which brings me to my point: automation is great for irredeemable or trainable repetitive processes but still an infant at more complex things like the example given. In turn, if you can carve out a niche that is unusually hard to model and train you may be okay. Unfortunately that’s not 90 percent of jobs I reckon. The other sure fire bet us to only deal in Veblen goods. The value there being exclusivity, which I reckon will never stop being a thing

intended 9y ago
There an article somewhere which breaks down the types of automation, into a useable manner. Theres automation of tasks which free up labor to do MORE work - so if you were a bricklayer, and were bottlenecked by number of hands, the wheelbarrow would be a force multiplier. Theres removal of jobs with less useful jobs, so the chef got replaced by the burger flipper (not really, but I can't think of a good example at the moment). And finally removal of jobs entirely, with no need of replacement.
- Qwertious 9y ago
  >And finally removal of jobs entirely, with no need of replacement. For example, computers - who were replaced by computers. https://en.wikipedia.org/wiki/Human_computer https://en.wikipedia.org/wiki/Human_computer

arca_vorago 9y ago

Have fun trying to own the robots after we've allowed proprietary licenses and leasing to takeover anything with a CPU attached. Ownership is important, which is why copyleft is important, and its time to recognize how integral the four freedoms are to the future I think most of us want.

Digit-Al 9y ago
He wasn't talking about actually, physically, owning the robots. He was talking about owning stocks in the companies that make the robots. So that as they get wealthier, so do you.
- pygy_ 9y ago
  Until the robots decide to stop feeding their "owners". Money is a social construct. Power comes from controlling energetic resources, and automation is gradually stripping that control away from humans.
- alien_at_work 9y ago
  Depending on who you believe, the first people to get replaced by robots are the least likely to be able to afford investing in robots companies.

Zanni 9y ago

What I never see mentioned in these types of articles is the rise of the service economy. There are some jobs that will never be automated because we prefer to deal with humans. Take food service for instance. No one wants to go to a high end steak house and have their wine poured and meal served by robots. Human interaction is part of the experience and part of the value. (At McDonald's, by contrast, the humans don't add value and could easily be replaced.) The "human touch" is going to become more important, not less, as automation increases.

BoiledCabbage 9y ago
> What I never see mentioned in these types of articles is the rise of the service economy. There are some jobs that will never be automated because we prefer to deal with humans Mainly because percentage-wise there are so few of them, and they don't make up a significant enough portion of the economy to keep it afloat.
- CryptoPunk 9y ago
  Customer-facing service jobs employ a huge number of people. In any case, there once was a time when white collar jobs were a tiny occupation category. There was even a time when manufacturing jobs were rare. The economy and composition of jobs changes with the abundance of resources.
  - BoiledCabbage 9y ago
    > Customer-facing service jobs employ a huge number of people But irreplaceable ones aren't. Bank tellers, cashiers, bus drivers, firemen, card dealers, bar tenders... all can and will be replaced by automation and consumers won't care.
    - CryptoPunk 9y ago
      Bartenders are totally irreplaceable. The non-social aspect of the job is easily automatable and has been for a long time, and the social aspect is contingent on human interaction.

sulam 9y ago

This “theory” for equities growth is a joke. There is a very simple reason for it and plenty of non-tech baskets show the same 2 yr (or longer) pattern. Simply put, cash and cash equivalents are generating historically low returns. So you put your money in equity. (And if you are a retiree you put it in stocks with dividends. Look at the growth in dividend-generating stocks like energy, mining and metals and it makes FANG look shitty. This is fixed income portfolios trying to achieve their needed goals.) Ironically, it’s GDP growth that will stop the music, because enough of that will generate inflation and make it rational to hold something besides US treasuries. In fact it’s already starting to happen for non-US markets (although slower than all the hedge fund smarties thought, therefore the complete bath they’ve taken the last year). The length of our equities boom is inversely correlated with GDP growth. This cycle is (much) longer than the historical average simply because real growth has been so low. Normalize against aggregate growth over a cycle and we have a year or two left in the current one (assuming job, GDP, wages etc continue to be anemic - if they pick up rapidly things will rapidly shift).

roymurdock 9y ago
> we have a year or two left in the current [cycle] Are you saying that we have a year or two until we see a pick up in productivity (driving real growth and GDP), which will shift investment out of equities and into? Cash and cash equivalents? Or are you saying that we have a year or two until we see a recession (decline in GNP), triggered by a flight from the equity markets?
- TheAdamAndChe 9y ago
  Inferring from "Ironically, it’s GDP growth that will stop the music," it seems to me like they're saying that a lack of increased productivity combined with a tightening labor market will increase wages and thus inflation while not affecting equity returns, shifting growth from equital holdings to cash holdings. I'm not so sure it'll happen personally. The Fed seems to be raising interest rates before inflation has a chance to increase, but we'll see.
- sulam 9y ago
  I'm making a (perhaps reflexive) statement about economic cycles, that they are effectively defined as a period of growth followed by a shock. Without growth, there is no shock. Our current cycle has been characterized by very low growth. It is also much longer than typical, but I think this simply follows from the fact that we haven't had a lot of growth. Growth seems to be picking up, though, and I think over the entire period of the cycle will soon be "enough" to trigger the next cycle.

nocoder 9y ago

This is going to be a rant, so apologies. This is a pretty crappy read. Lacks real data and also unwillingness to look outside of the tech bubble, seriously what serious AI work is apple or Netflix doing? Its as if the author started with the conclusion and wrote up whole thing to justify it. For large parts most of the tech people at Google/FB are involved in getting more people click and buys ads. And Amazon are involved in getting people to buy more stuff and reduce the costs of handling and shipping them. So, if the logical conclusion that many visionaries in these thread are saying is true that 90% will be useless then these companies will have nobody to serve and will collapse before we reach that point anyways. Secondly, let's believe this is true then if an economic system which does not benefit majority deserves to be overthrown by any means even violent and rise of trump is a step in right direction. Third, if the tech companies are so smart then how were they caught with their pants down when a foreign power used their own infrastructure and technology to help elect a leader that they ostensibly opposed. Finally, the fundamental reason for the current stock boom is simply liquidity and lack of asset classes outside of stocks which give meaningful growth. This is not just limited to fang or usa but seen in many stock markets. I actively invest and trade in India where the markets are hitting new highs and the only reason right now for this is that in most places it is very hard to get a good return plus there is excess institutional & industrial capital since they are not optimistic of the growth and thus not investing in augmenting capacities or production. So investing in stock market seems the only alternative. One of the reasons for this liquidity is central banks around the world have been pumping money. This will end when the excess liquidity is pulled out from the global financial system.

shadofx 9y ago
So Trump is a harbinger of technocommunism?

MattyRad 9y ago

Definitely an interesting read, if a bit pessimistic, nihilistic, and a bit Marxist (seize the means of production!). But ultimately the article offers no solutions and the author comes off to me as a doomsayer and luddite (https://en.wikipedia.org/wiki/Luddite https://en.wikipedia.org/wiki/Luddite). If the author really fears the current system as described, maybe he should return to the old system: become a subsistence farmer and work till you die.