In the past month, we bought a house in Charlotte, sold a house in Atlanta, moved everything in between them, watched our daughter receive her doctorate degree from Rice University, and still found time to schedule hip replacement surgery for me. To say we have been busy is an understatement, and all of these activities have brought us a certain amount of joy or stress. But it’s the last of these, the idea of having an artificial hip, that has me a little concerned.
Artificial hip surgery was first attempted in 1891. Since then, there have been countless inventions of other artificial replacement body parts. Today, we are confronted with the idea that we have surpassed even that, with artificial intelligence. Personally, I find it insulting to think that the thing that makes us uniquely human—our experiences and intelligence—can be artificially replicated by computer code. Perhaps an actual thinking computer is still a long way off. But still, I prefer real things; I want real intelligence just like I want a real hip—nothing artificial for me, thank you.
The fervor around artificial intelligence, and the companies that are developing the hardware, software, and programming to make it possible, have helped to fuel some nice gains in the stock market. Maybe artificial intelligence will change our lives the way the PC did in the 80s, the Internet did in the 90s, and the smartphone did in the 2000s. But we still must remain cautious. We always have to be mindful of the quality of the businesses that we own. We have to maintain balance in our portfolios so that we don’t have too much or too little exposure to the different industries and sectors and businesses that make America great.
Certainly, owning tech companies is a big part of investing. Tech represents about 30% of the US economy, in stock market terms. But tech isn’t the only part, and it’s important to have great companies in other industries too, and many of these are the name brand companies with products and services you use every day. We can’t know if Pepsi or Coke, Home Depot or Lowe’s, Costco or Walmart, will deliver better results over any given period. But these companies all have qualities that make them great businesses, and it’s these qualities we gravitate toward for our investments.
~ Steve Davenport, CFA
P.S. The image above may look like a photo, but it’s not. It was generated by artificial intelligence in about 15 seconds. Not bad for a computer pretending to be human.