Literacy and Education, Bitcoin, AI

Demographics & Literacy

We’ve written recently about the importance of demographics in investing over long periods. This week I wanted to highlight the role that education plays. As a refresher, population growth is a significant tailwind for a country’s GDP growth and vice versa. The United States has an immigration advantage that other developed nations have opted not to use.

China and India each have populations of around 1.4 billion, but India’s average weighted age is almost a decade younger than China’s. Chinese and US populations average around 40 years old, while India’s is 31. 1/3rd of India’s population is under 20 years old, or 480m people. For context, the US population is around 330m.

The Economist had an important article over the weekend about India’s education issues. Can India educate its vast workforce? “Before the pandemic less than half of India’s ten-year-olds could read a simple story, even though most of them had spent years sitting obediently behind school desks (the share in America was 96%). School closures that lasted more than two years have since made this worse.” While China has demographic issues, they are much further ahead of India regarding literacy rates. If you read a pro-investment article about broad long term investments in China or India, consider the role of education and whether or not that opportunity is being adequately developed. In other words, the demographics are not the whole story.

In the US, Ken Griffin of Citadel, one of the most powerful financial figures in the world, has been vocal about how our current K-12 system is failing too many students and actively contributing to wealth inequality issues. Education is a force multiplier. It’s an investment in a country’s human capital.

Bitcoin is finance’s least favorite subject

A new blockchain unicorn was minted a few weeks ago, the first since the start of the crypto meltdown. MadHive is an advertising tech software company with a pro-crypto CEO and a handful of underlying blockchain projects. The crypto world did not broadly promote it as a win for the industry, which I thought was interesting. It’s notable because most people are once again wondering if crypto is dead after the many embarrassments, frauds and failures over the past 18 months.

At a basic level, investing in out-of-favor markets tilts the odds in your favor. Institutions are climbing over each other in a frenzy to get the first Bitcoin ETF listing. Fidelity has already rolled out Bitcoin retail investment accounts and will be rolling out institutional accounts soon as well. When you can hold Bitcoin directly at an institution like Fidelity, or others like it, you don’t need an ETF. The institutional interest at this point is a calculated bet to keep their foot in the door in the off chance that the industry survives and thrives again someday in the future.

Even More AI

AI continues to be my favorite subject but to save you from the repetition, I’ll reduce my comments this week to two brief bullets:

• Eric Schmidt’s AI article in MIT Tech Review covers the role of AI in scientific discovery. This is something I’ve been thinking about recently. Biotech is not a competitively strong subject for me. Still, I have the sense that biotech and health tech, in general, will experience a massive wave of productivity and efficiency thanks to evolving AI tools. The scientific method is supercharged by AI, which allows us to brute-force answers to broad and challenging questions. AlphaFold is an early example of this.
• Personal AI. I’ve started using ChatGPT to prepare comprehensive and coordinated meal plans, grocery shopping lists and exercise routines. The nuance and detail are just incredible, down to the correct temperature and time. If you haven’t tried it, I can’t recommend it enough. It’s important to note that the quality of the results depends on the quality of the questions you ask. Thoughtful prompts produce better results. True outside AI as well.