Robots and stocks. That was the conclusion a local wealth manager and I had as we drove to San Francisco to listen to Ben Bernanke speak some years ago. Recently, as in a few weeks ago, my son spoke of applying to UPS and FedEx for work as a baggage handler. At that time I thought “I sure hope he does well in his computer science major because the baggage handler jobs he applied to will eventually be replaced by robots.” Will, it appears that pace is quickening.

Another person in town suggested that if my son applies to work at UPS and FedEx, he should apply to the driver position citing better benefits and union representation. Again I thought “I sure hope he does well in his computer science major because the driver job will eventually be replaced by robots.” Guess what? This morning I also read an article about Google gaining Federal Aviation Administration (FAA) clearance for drone deliveries: https://www.bloomberg.com/news/articles/2019-04-23/alphabet-s-drone-delivery-business-cleared-for-takeoff-by-faa
This is in addition to the prospect of driverless cars.

Robots and automation are coming. One might as well know how to design, use, and repair them as well as own stock in companies that do. But then again, one needs a job to earn enough money to purchase stock after paying for food, clothing, and shelter. Which job is the question – which job isn’t soon-to-be eliminated by robots? See this McKinsey article for some perspectives on that question: http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/where-machines-could-replace-humans-and-where-they-cant-yet

Hope you find these reads informative.

-Dr. Moore

UPS’s $20 Billion Tech Bet Was Scorned by Wall Street. Now It’s Paying Off
https://www.bloomberg.com/news/articles/2019-04-23/ups-sees-payoff-from-20-billion-tech-bet-scorned-by-wall-street

A question came up during the Student Investment Fund meeting this week: are we going to take some defensive position given the upcoming recession? At the meeting I showed how we are in a little better shape relative to our benchmark, the S&P 500, in terms of PE ratio, dividend yield, debt ratios, etc. However, the recession warning signs are increasing in number and magnitude. Perhaps we need to take other action such as protective puts. Another idea would be to “stay the course” but perhaps focus even more on value firms with a history of growing dividends. Or purchase high quality bonds in lieu of stocks this semester.

Hopefully the market holds up while we contemplate our strategy -or- our past picks prove resilient.

-Dr. Moore

Guggenheim Says Chance of Recession in 24 Months Has Doubled
https://www.bloomberg.com/news/articles/2019-04-09/guggenheim-says-chance-of-recession-in-24-months-has-doubled