loading . . . Stan Yan (@zombicatures) I wanted to get something off of my chest that isn’t going into my newsletter, but it takes too long to make a video about it, so I thought maybe this was a better place for it.
As things get bad in this world, as prices rise, gas gets expensive, food gets expensive, the economy gets pretty bad for all of us…well almost all of us. I noticed that the stock market, which is typically sold to us as an indication of economic health is STILL going up! How can that be? This administration has done more to destroy our faith in institutions of law and business that tend to be what gives us confidence to invest in stocks and bonds. The DJIA, which is made up of 30 industrial companies did show a bit of weakness before rallying up to a previous high, but it’s tempered enthusiasm at a time of really awful confidence. But, the chart that REALLY baffles me is the tech-heavy Nasdaq 100. There was no real sell-off and it’s hitting new all-time highs really aggressively.
I think the key is TECH-HEAVY Nasdaq 100. The components that seem to be driving this growth are companies involved in AI, which is odd, since AI is not currently close to profitable at ALL. But, stocks tend to go up and down based on future expectations, so let’s take a closer look at what AI is and the goals of it.
AI is a technology that is meant to displace human jobs. Corporations have only one obligation, and that is to their shareholders. One of the largest expenses of corporations is human labor, so these companies will be the customers paying the AI companies for their technology to replace this human labor.
My problem in seeing profits with this scenario is it will leave many of the people in our economy incomeless, which in my experience isn’t a great thing for the economy, since the incomeless can’t buy things to drive the economy, which gets me back to my original conundrum, why isn’t the stock market selling off as it looks toward a future of a jobless, incomeless populace that can’t buy anything from these corporations, the basis of revenues that turn to profits.
So, I’m left to conclude that the stock prices for AI companies are going up because they are really the only ones that are going to benefit from the short-sightedness of corporate America that only seems to look forward to the next quarterly earnings statement.
If these AI companies eventually turn a profit, they won’t be profitable forever because the companies subscribing to their services won’t eventually have any employees and very few customers as a result, so what’s the end game?
It seems the end game is the same as it is for being a publicly-traded company in the first place: to cash out while you can, which is the grift that is as old as the stock market is.
Let me explain: when you start a company with your own capital, your decisions you make for your company directly impacts your investment. If you make a good decision, you make more money, and your investment appreciates. If you make a bad decision, you could potentially lose all of your investment or more! So, a solution to this so you can make more aggressive and risky business decisions to raise more capital and goose your growth is either to 1) Get a loan (which you would have to pay back or go bankrupt) or 2) Sell shares of equity or stock in your company. If you do the latter, you are essentially SHIFTING the burden of the risks of your decisions to your shareholders.
The cool thing about this for the company executives is you can do things like give yourself stock options and golden parachute payouts if you ever end up leaving the company of your own accord or not. If the shareholders vote you out, it’s cool: you probably leave with millions in your pocket CONTRACTUALLY. Oh, yeah. You probably had a hand in writing that contract for yourself when you set up this stock offering.
So, now back to these AI companies and their mysteriously rising stock prices. Remember what I said about these stock options? That’s helping these AI executives stock options (which they pay no taxes on, but can BORROW against as collateral).
So at the same time most of us who are at risk of having our jobs replaced by AI are losing our jobs? These guys are making bank on a business that is NOT PROFITABLE, and in the future shouldn’t be either. So it stands to reason, their stock prices will eventually drop.
These guys are the same guys that have marketing departments running commercials that normalize AI as a benefit to humanity to the point that they don’t even explain why AI is beneficial, they just say, “Widgets. Now with AI” And the benefit is implied, and that normalizes it.
Now we’re hearing from people like Reese Witherspoon and Ben Affleck that you don’t want to get left behind, and now people are feeling pressured by their companies, school boards, and social media that you should just accept it. It’s happening, so you either use it or don’t use it and get left behind.
The thing is every time you use it you are helping someone lose their job, and providing activity on the AI company’s product they can point to to justify the high stock prices. You are helping an AI executive to build his golden parachute and cash out, eventually leaving the rest of the shareholders penniless in this ponzi scheme.
If everything works out they way it should in this AI revolution. Companies will just be executives that own everything and have no employees. All of those people will be homeless, penniless, begging Elon Musk, Larry Ellison, and Rupert Murdock for a penny in your tin can.
This is what your harmless AI-generated caricature is investing in. This is what your harmless AI-generated picture book is investing in. This is what your Chat GPT “web search” is investing in. It doesn’t have to be inevitable. AI wisely, my friend. https://substack.com/@zombicatures/note/c-261694782?r=2m0065
