It seems every week we hear more about layoffs caused by firms replacing humans work with artificial intelligence.
Here was this week’s headline that caught my eye.
In April, Swiss staffing company Adecco published the results of a survey of executives at more than 2,000 companies worldwide. The survey showed that many companies plan to hire fewer people in the next five years because of AI.
In this environment, everything is changing, and investors need to be prepared to change with it.
Today, we’re going to examine how.
AI in Surprising Places
We’re all getting used to the idea that AI will replace some human work. But the type of work AI can do can still surprise us.
Charles Sizemore, Chief Investing Strategist at our corporate partner, The Freeport Society recently expressed it this way in an issue of The Freeport Investor.
There is no way artificial intelligence can replace human decision making… or artistic expression… or connoisseurship…
A machine will never be able to tell you what art is… or what tastes good or smells appealing…
Right?
If only that were true!
Charles goes on to tell the story of the perfume company Givaudan. Here’s Charles again:
You’ve probably never heard of Givaudan, but I can guarantee with 100% certainty that you or someone in your family has used their products. You or they may be wearing one right now.
Givaudan is the world’s largest maker of flavors and fragrances and the creator of some of the world’s most iconic perfumes, including Opium by Yves Saint Laurent, Angel by Mugler, 1 Million by Paco Rabanne, Le Male by Jean-Paul Gaultier, Armani Code, Gucci Guilty, Versace Eros, Carolina Herrera Good Girl, and Prada Infusion d’Iris, among many, many others.
To develop their products, Givaudan employees undergo rigorous training. After all, it’s not just a fashion brand. It’s a laboratory.
Givaudan hires scientists with at least a bachelor’s or master’s degree and puts them through more than two years of study in a specialized perfumery school.
Then, a junior perfumer might work under a more experienced master perfumer for years before they’re really able to make a name for themselves.
And, of course, all of this requires an advanced and highly cultivated sense of smell and the creativity of an artist… neither of which can be entirely taught.
Perfumery is both science and art.
Professional perfumers are some of the most highly trained and experienced specialists in the world.
Can AI do this job?
Yes, it can.
From a recent press release from the company.
“Carto” enables perfumers to perform at the peak of their creativity, delivering on an idea almost as soon as they dream it. This intuitive and interactive system functions a bit like a game, making centuries’ worth of research available in a flash.
Firstly, the perfumer uses a wide touchscreen to select which raw materials they wish to mix. A special robot then produces an instant sample, using real ingredients and the best possible formula, at a speed that would be impossible using traditional methods.
Perfumers will always play a vital role in fragrance creation, and this pioneering new tool makes the process more efficient and enjoyable.
Charles gets right to the point:
If AI can disrupt even the ancient craft of perfumery, then there is literally no job in any industry anywhere in the world that is safe.
How we can prepare today
The truth is we’re going to need AI to do a lot of the work in the future. The United States’ population simply isn’t growing fast enough to support our economy.
Charles shared the chart below to help make the point that our working-age population essentially flatlined in 2016 and is projected to start shrinking in about 20 years.
Charles goes on to describe how technological progress has always caused economic upheaval. We sit here now on the other side of all that, but we shouldn’t forget that many people lost jobs during the industrial revolution, through automation, robotics, and the evolution of the Internet.
So, what’s the big picture answer? Here’s Charles:
Above all, the best advice I can give you is to AI-proof your investment portfolio.
That way, should you find your career on the wrong side of AI disruption, you’ll still have the means to provide for your family and you won’t be trapped in what may end up being a permanent underclass of Americans.
There are two elements to AI-proofing a portfolio. There’s defense – protecting against the worst effects of AI disruption… and then there’s offense – proactively profiting from it.
Charles then goes on to describe how to incorporate both strategies.
To play defense, he recommends seeking scarcity, buying physical assets, and buying quality companies with irreplaceable branding and trademarks.
For offense, Charles recommends investing directly in companies developing AI programs (think Microsoft and Apple), buying “picks and shovels” companies developing the materials that will be needed (like Nvidia), and investing in the energy infrastructure that will be needed as AI becomes ubiquitous.
The heart of The Freeport Society is “life, liberty and the pursuit of wealth.” Here is how Charles phrases it.
Far too many Americans have lost the fiber that made this country the greatest place on Earth: good old-fashioned grit… the willingness to work hard and do the right thing.
Here at The Freeport Society, we say, “No thanks!”
We advocate free minds, free speech, and free markets. And the best way to secure your freedom is with smart investments. That’s what you’ll get with The Freeport Investor.
Charles has recommendations that capitalize on exponential progress, rebuilding the American empire, rejecting the ESG crowd and hedging against inflation risk.
Click here to learn more about Charles and The Freeport Investor.
Enjoy your weekend,
Luis Hernandez
Editor in Chief, InvestorPlace
