“Don’t Stop Believing” in Technological Advancement… Even in the Face of Destruction

Hello, reader.

This weekend I asked my wife, a physical therapist, what she thought triggered the sharp pain I was experiencing in my right shoulder and neck.

She promptly replied, “Too many birthdays.”

This response reminded me of the suffering that many public companies suffer. Even iconic, industry-leading companies sometimes struggle to maintain their leadership for more than a few decades.

That’s because the history of capitalism is a history of creative destruction. The creators of a certain era often become the “destroyers” of a later era. Because of this phenomenon, a set-it-and-forget-it investment portfolio rarely prospers over the long term.

Exceptions to the rule are folkloric, like the “friend of a friend” who forgot his 10,000 shares Apple Inc. (AAPL) his mother gave it to him in 1989. In the years that followed, Apple soared more than 67,000%—boosting the $4,000 value of those 10,000 ancient shares to more than $2.7 million.

More commonly, a “friend of a friend” opens an old desk drawer to find a long-forgotten stock certificate for Bethlehem Steel, Eastman Kodak, Blockbuster, or some other company long gone bankrupt.

The history of the Dow Jones Industrial Average underscores capitalism’s tendency to destroy as it creates. The original 12 members of the blue-chip index in 1896 featured names such as American Cotton Oil Co., Distilling & Cattle Feeding Co., National Lead Co., US Leather and US Rubber.

US Leather declared bankruptcy 15 years later. Most of the other original Dow members have long since disappeared into larger enterprises.

Due to non-stop technological progress, the composition of the Dow and S&P 500 has continuously evolved. They changed their membership lists like a catwalk model changes her outfits.

Inadvertently, rock group Journey depicted the ongoing effects of creative destruction in their legendary party/karaoke anthem “Don’t Stop Believin'”…

Some will win, some will lose
Some are born to play the blues
Wow, the movie never ends
It goes on and on and on

Even if creative destruction “goes on and on”, it does not do so at a constant rate. Technology is accelerating it.

As the pace of technological progress accelerates exponentially, so does the pace of creative destruction. This dynamic helps explain why members of the major stock indexes tend to get off the ground faster than before.

The nearby graph illustrates this phenomenon. In the 1970s, stocks that belonged to the S&P 500 would spend about 32 years as members of the index. Today, however, the average S&P 500 stock spends only about 16 years—or half that time—as a member of the index.

This trend was well established even before artificial intelligence came on the scene. But with the advent of AI, both the wealth creation and wealth destruction processes should accelerate dramatically.

Therefore, we investors must remain alert to emerging investment opportunities. But at the same time, we need to be careful about the companies and industries that AI is likely to “disrupt”.

To make sure you don’t invite victims of AI creative destruction into your portfolio, join my elite trading service today speculator. As a member, you will get access speculator Model portfolioas well as my latest trade alerts.

You will also get access to all my special reports including 5 Victims of the race to AGI. In this report, we’ve identified five specific companies that appear particularly vulnerable to the growing presence of AI in the global economy, especially as it becomes AGI, or artificial general intelligence.

Now, let’s take a look back at what we covered here Smart money last week…

Smart money Elevate

The latest inflation reports are in… Is the wild over?

In light of the recent CPI and PPI reports – and with the crucial Federal Reserve meeting around the corner – I invited Louis Navellier to destroy the current economic landscape. In this Smart money In the special edition, he provides insight into inflation trends and potential Fed actions, and a warning about a future AI-driven “financial tsunami.” Click here to read more.

If you haven’t hit oil, do so

While there is no perfect investment method, there is a way to allocate your assets intelligently. This will then help set you up for the best chance of success. Now, there are many facets to this strategy, but the one I want to focus on is the stocks to buy and hold forever. So here are three stocks that I consider some of the best “Forever Stocks” out there. Read more here.

Equity investors cannot ignore this “alert” from the bond markets

Two weeks ago, the 10-year Treasury yield rose above the 2-year yield for the first time in over two years. This “disinversion” (or inversion) of the spread is an extremely bullish sign as it reverses the yield inversion we have seen since June 2022 – a typical warning of a coming recession. This “disinvestment” means the recession alarm has now been raised. So we remain extremely bullish on commodity-based bets and game-changers in tech and healthcare. Click here to read more.

The one thing that could trigger the stock market rally in just a few days

my colleague Luke Lango identified a rare economic event that historically triggers a massive stock market boom. According to oddsmakers, there is a 100% chance that this event will take place this week. Despite September’s slow start, he believes this event will trigger numerous stock breakouts and has selected three trades poised for significant growth. In this special guest issue, find out why he believes these circumstances will work out again.

I can’t wait

More than at any other time in history, emotions and impatience drive the stock market. Do you remember what happened at the beginning of August?

On July 31, weak news about the strength of the US economy began to emerge and rekindled recession fears. Investors also began to worry that the Fed waited too long to start cutting interest rates. And over the next three trading days, the S&P 500 lost more than 6% of its value, and the Nasdaq Composite lost nearly 8% over the same period.

However, about 10 days later, the markets recovered their losses and started moving towards new highs. However, many investors had panicked and sold their shares for a loss instead of holding on.

So, to understand how to set yourself up for success, especially in today’s market, you need to know one very important thing: deciding when to sell.

Nothing is harder. In fact, it’s often called “the hardest thing to do in investing.” However, deciding when to sell is one of the most important decisions you can make when it comes to managing your portfolio over time.

That’s why, together with a special guest, I will soon reveal a discovery that can help you keep your confidence in the markets, making as much profit as possible…

It also alerts you before the next big sale.

I will provide more details over the next week. So be sure to keep an eye on your inbox.

Sincerely,

Eric Fry