Bear or Bull
There are many people out there who make a lot of money telling people the world is going to end. Unfortunately, we’re wired to heed these warnings, and there’s not much we can do to change that. The results tell a different story. In the face of even the worst circumstances, bull market growth outpaces bear market losses by a vast margin. The first six months of 2022 gave us the S&P 500 down -20%, Nasdaq down -30%, and many high-quality growth assets down -50% to -80%. Oil and Gas was the only equity market with a positive return globally. Even the global bond market dropped -10% to -20%, depending on the asset.
Most professional investors seem to be waiting for a final leg down before we can start the next bull market. There are many bearish upcoming catalysts. Earnings numbers could disappoint. More companies could follow Apple, Amazon, and Google in slowing their hiring. Inflation could persist higher for longer, pushing the Fed to continue to raise rates. Energy prices could go even higher. Covid is still not over. Despite this, equity prices and valuations eventually get low enough that investors can’t or won’t ignore them. It’s a big market, and quality has never been evenly distributed. When it comes to being bullish or bearish, bullish has a much better track record.
The first AI-generated art sold at Christie’s in 2018, Portrait of Edmond Belamy, for $432,500. In 2018, few had the technical skills to create AI-generated images. With the rollout of Dall-E 2, MidJourney, Google’s Imagen, Meta’s Make-A-Scene, and Craiyon this year, anyone can use text prompts to create wildly detailed, imaginative and expressive images.
There was a backlash in the art community when cameras first arrived. The criticism was that anyone without painting skills could now push a button on a camera to create a realistic depiction of a scene. Now with a series of text prompts and another simple click of a button, anyone can create AI-generated images (art). In the end, the art is made by the person, not the brush, camera, or algorithm. AI artists now must consider the datasets used to train the models as well as maintain an evolving series of prompts to tweak the outputs to the desired result.
Given the speed of AI development and the flexibility of these tools to jump between different mediums, text and images, it’s not inconceivable that AI will be used to generate other forms of art and entertainment in the near future. This decade, we could see AI-generated music appear on the billboard 100 or an AI-generated book make it onto the NYTimes Best Sellers list.
This post on Industrial Literacy caught my attention for its message on education. We should teach people and students industrial literacy so they can understand how we introduce technology to solve our problems within the given constraints. It also provides helpful context on how much the world changes over extended periods and how quickly we get used to new standards.
- Housework included hauling water, sewing clothing, and cooking all meals from scratch. Now we have washing machines, plumbing, and dishwashers automating our work.
- Antibiotics were discovered in the early 1900s; Penicillin in 1928, less than 100 years ago. The last 100 years of public health innovation have been full of industrial miracles.
- The oil and gas industry introduced synthetic fertilizers, a wide variety of plastics, and the many types of fuel used in airplanes, cargo ships, cars, and power plants.
The oil and gas industry is one area where I’d like to see greater all-around industrial literacy. Today’s ongoing (and necessary) feud over energy production and consumption and the impact on the environment is often missing critical context. Some energy changes have a current solution, like switching to electric vehicles. There are some changes we can’t make until we discover a new technology altogether, like our reliance on jet fuel or diesel for cargo ships. Industrial solutions always include a unique set of tradeoffs, drawbacks, costs, and benefits. On balance, we’re better off today than at any point in history. Don’t let the doomsday types tell you otherwise.