Own the Businesses — My Money Blog

We are surrounded by predictions about the imminent effect of AI. The CEO of Anthropic says that AI could wipe out half of all entry-level white-collar jobs, a “white collar bloodbath“. Vanguard (which has really started to like throwing predictions around ), says the AI megatrend is “likely to augment most jobs, not replace them” with this fancy graphic on their estimates for time savings due to AI for over 800 occupations:

In the end, I only see one real “megatrend”. Ask yourself, will this make the lives of workers better, or business owners?

Will the time saved by AI augmentation or automation really makes your life as an employee better? Will we all get 4-day workweeks? Or will your time just be filled by higher expectations of productivity? I’m sorry but I can’t see workers winning.

I’ve always been a bit negative in this viewpoint, but that’s also why I worked so hard to try to achieve financial independence by owning businesses instead of relying on working 40 years x 40 hours a week as an employee.

What would Bogle say? Here’s part of the transcript from an interview with Joe Davis, Vanguard Global Chief Economist:

Rebecca: Principle, Investment Strategy Group
In light of all of this, how should investors be thinking about positioning their equity portfolios?

Joe: Global Chief Economist
I think it’s really important to break it down into two phases, because this could be a decade in the making.

One is, if Jack Bogle were here, I know what he would say.

He’d be like, “Joe, own the haystack,” which is all the equity market because you have technology exposure.

Then secondly, if you’re going to concentrate in areas of the market themselves and not simply own the entire equity market, history shows two things very clearly.

One is technology stocks, whatever that technology is, really outperform fora solid period but also get somewhat overvalued.

And then if you focus there, the timing stuff to get and then you can miss opportunities if the technology broadens the other parts of the economy, because if it hasn’t done that, then the technology’s overrated and technology stocks will really underperform.

So I think it’s important just eyes wide open in terms of how you think about that transition — you’re exposed to technology companies already, and if you’re going to overweight it, you may eventually miss opportunities of less valued companies that start to harness the very technology itself.

As the kids say, VTI and chill. Owning the haystack is owning businesses. If anything, the “optimal equity portfolio position” is to make sure you own as many chunks of businesses as you can.