Artificial Intelligence (AI) is already reshaping the economy and the stock market, but its full impact is only beginning to unfold.
Current Impact
One of the most visible effects of AI today is the massive investment in data centers required to power AI applications. The biggest players—Microsoft, Meta, Amazon, and NVIDIA—are collectively spending $100 to $200 billion per year on infrastructure. That level of capital deployment is so large that it is meaningfully boosting GDP growth.
Naturally, the stock prices of these tech giants have surged. But the key question remains: will these investments pay off?
So far, revenue models are still developing. Billion-dollar AI service deals are being signed, but revenues haven’t yet caught up with the spending. Investors are increasingly uneasy, comparing today’s AI buildout to the broadband overexpansion of the late 1990s dot-com bubble. Any sign of weak returns could trigger a sharp decline in stock prices.
Future Impact
Over the long term, the real force behind AI’s influence on markets will be productivity gains across the entire economy.
We’re already seeing this: software developers using AI coding tools are many times more productive. Soon, nearly every profession will benefit from custom AI applications, dramatically boosting efficiency.
Here’s a conservative scenario for the S&P 500:
20% increase in labor productivity
10% reduction in supplier costs, as AI makes upstream industries more efficient
Stable revenue, as lower prices are offset by increased demand
These assumptions alone could double corporate profits, leading to a corresponding doubling of stock prices. Even with today’s somewhat stretched valuations, AI-driven productivity easily justifies the current market.
And this may be only the beginning. If productivity were to double—a plausible outcome—profits could skyrocket far beyond current projections.
Societal Impact
But the benefits won’t come without serious challenges. While higher profits and stock prices are great for shareholders, AI’s effect on employment could be devastating.
In my conservative 20% productivity increase scenario, unemployment could climb to 15–20%—triple today’s acceptable level.
In a more aggressive AI-and-robotics future, unemployment could approach 50%.
Without sweeping changes to our economic system, such levels of job loss could collapse both the economy and democracy. Businesses may remain efficient, but too few people will have money to buy their products.
Unfortunately, our political system is poorly equipped for the challenge. If we struggle to deal with the impact of 3% inflation, how will we handle rapidly rising unemployment? Worse, the gradual pace of disruption will allow misinformation and partisan infighting to block real solutions until it’s too late.
The Hard Truth
There’s no way around it: addressing mass unemployment will require higher corporate taxes to fund support for displaced workers.
Yet with corporate lobbyists wielding enormous power in Washington, passing such reforms will be nearly impossible. By the time public pressure forces change, the damage could be severe. If corporations resist contributing, demand for their products will collapse anyway. And if the government turns to printing money instead, we’ll face runaway deficits, inflation, and currency devaluation.
The painful lesson of globalization—where jobs were shipped overseas while leaders failed to act—will look minor compared to the disruption AI brings. The scale and speed of this transformation will dwarf past economic shifts.
Conclusion
I wish I could be more optimistic, but history shows us that societies rarely act proactively—we tend to wait until crises force change. Sadly, the coming AI upheaval may be no different.
These AI concerns are another reason why I honestly believe that my investing system is the best way to manage your retirement money. The primary objective of my system is to shift your money out of the stock market before big losses are realized. It works best in any financial meltdown, but it will be the only way to protect you when the AI crisis materializes.
If you want to learn how my investing system can improve your results and protect your life savings, click here to schedule a call.
I am actually a long-term optimist. Humans eventually do the right thing, I believe. We will eventually make the necessary changes and put ourselves on a better path. It will just take some time.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
The investment services industry spends about $20 billion every year on advertising.
You see the commercials and the ads everywhere.
“We do better when our clients do better”.
“We make money the old fashioned way, we earn it”
“We are fiduciaries so we are obligated to act in your best interests”
It sounds good, doesn’t it? The people in the ads look so happy. Their offerings and their strategies must be terrific.
Why then do roughly one third of their clients switch advisors every year?
Why do they say that you should only expect measly annual investment returns of 7% per year?
Why do their clients have to simply “ride it out” when the market tanks and see their accounts lose 30% or 40% overnight when their carefully constructed portfolios were supposed to protect their savings?
The truth is that the financial services industry has NO solutions that address your biggest investing challenges. All retirement investors need strong growth in their assets AND protection against catastrophic losses during market meltdowns.
The investment professionals say that you can’t have both. You can only achieve strong returns if you take on more risk of losses.
The truth is that the go-to solution of the investment industry and most advisors (asset allocation) delivers neither. They offer mediocre investment returns and minimal protection against losses.
The truth is that their Asset Allocation strategy does not work. If their core strategy worked, they wouldn’t need to keep telling you to “ride it out” in tough times or to keep emphasizing the benefits of their standard “Buy & Hold” mantra. I like to call it Buy & Hold & Suffer.
The investment services industry is a trillion-dollar industry with lousy solutions for retirement investors. And to make matters worse, they charge exorbitant fees for this pathetic advice.
Fortunately for you, there is a much better investment option for people over 60 that can
provide the growth you need AND protect your life savings against big losses in bear
markets.
I am an investment strategist and former hedge fund manager who is on a mission to help people achieve the retirement of their dreams. I am leveling the playing field by giving ordinary investors access to the investment solutions that were previously only available to the big financial institutions and wealthy investors.
You have worked hard and saved a lot of money over the last several decades. You deserve to enjoy the fruits of your labor. I have helped hundreds of people to finally solve their investing challenges.
Most people can and should be generating twice as much income in retirement.
And this additional income can be generated without taking on additional risk. In fact, you can double your retirement income with less risk than you are exposed to right now.
I have created an investing system that provides what you can’t get elsewhere - Growth AND Safety.
If you don’t improve your investing, you will limit your income in retirement.
You owe it to yourself and your family to learn about a Smarter Way to Invest.
Today, I am providing an investment research report that outlines the investment strategy options available to individual investors along with the pros and cons of each approach.
Click here to access your free pdf download that will be an important part of your investing education.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
The stock market has continued its steady climb since the lows reached on April 8th at the depths of the tariff concerns. The S&P 500 has risen 30% since the low point in April and has climbed about 3% over the last month. Both the S&P 500 and the Nasdaq are now up about 10% year-to-date.
In the chart below you can see the extreme price volatility in April and the steady move higher over the last three months.
Economic news has been mixed over the last month. Corporate earnings have mostly exceeded expectations for the most recent quarter. Inflation ticked up slightly in July due to the tariffs. Jobs numbers have been weak lately. But the Fed has indicated that it will begin lowering interest rates in September.
It was a wild ride to nowhere in March, April and May. Discipline and patience paid off over the last six months. Following a disciplined system in times of volatility always produces better results than letting emotions drive your investing decisions.
The biggest cloud that I see hanging over the stock market currently is valuation levels. My valuation gauge indicates that the stock market (S&P 500) is now 21% above its fair market value in late August. This is higher than we were in January 2022. The last time the market was overvalued by this much was in 2000 during the dot-com bubble.
I do not trade based on market valuation levels and you should not either. It is just a reminder that you need a strategy in place to protect your savings in case we experience a bear market. Older investors in particular need loss protection.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
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