Mankind has been truly blessed with knowledge. Our creator has blessed us with the ability to adapt to our environment using our brains rather than our brawn, unlike other animals.
It’s allowed us to move from caves to skyscrapers. And from moving along on two legs to landing on the moon.
We’ve learned how to vastly increase nature’s bounty. And we’re always finding new ways to use the existing resources all around us.
But with all this knowledge—do we have wisdom?
The Boeing 737 Max story tells us… maybe not. It’s a complex piece of machinery, and it practically flies itself (most airplanes have an autopilot feature). But as we learn that the crew had to frantically go through the manual to try and manually correct a steep dive—unsuccessfully—we may have become too reliant on technology, at least relative to things like common sense.
These troublesome planes are part of a larger problem. Technology is a tool. It can be used for good, or it can be used for evil, like how China is pushing social media on its populace to keep it in line.
In many cases, it’s just a shiny distraction. If you’ve ever stopped to check your texts or email on your phone at a stop sign or red light and inconvenient someone, you’ve experienced this phenomenon as well.
In any event, it seems as though we don’t always have the wisdom to use what we have. Given how fast we’re making newer and better technology, there may come a day out of a science fiction story where a dumbed down society is being kept alive by old, but now-dying technology. There may be no time travelers from the past, a la H.G. Welles, to save us though.
So civilization descends into a technological 1984 Big Brother state, a Fahrenheit 451 distracted nightmare, or A Time Machine. Or we get artificial intelligence setting off the world’s supply of nuclear warheads and we’re in A Canticle For Leibowitz. There’s truly a science fiction story for every scenario!
There is some hope, and I side with the optimists. Capitalists usually use the technology they develop for good. Whatever their personal flaws, the idea of Bill Gates, Jeff Bezos, Warren Buffett, or the late Steve Jobs working against mankind’s best interests is the kind of thing you get out of a poorly-written Hollywood screenplay.
These people have created billions, if not trillions, in new wealth for others, yet only personally recaptured a part of that wealth. And they’re addressing the income inequality their societal improvements have made by largely giving it away as well.
Perhaps there’s some wisdom after all. Mankind’s upward surge in knowledge and technology is growing at leaps and bounds. We may yet end up in more of a Star Trek scenario, a bright future where energy and matter are interchangeable, and energy is only limited by plot considerations. Under that scenario, it’s hard to see anyone keep their material wants, when they can be so easily fulfilled.
But we’re not there yet. For as quickly as our technology is developing, our minds simply can’t evolve that fast.
That’s where the issue lies. We can create advanced computer algorithms to help us invest in the stock market, and we can largely automate things like that. But if we’re programming in our caveman-era fight-or-flight response, a small market dip may become a large correction as automated programs fuel a selling frenzy. That was the partial explanation behind the one-day, 22 percent drop in stocks in 1987, as “portfolio insurance” programs simply kept selling. Ditto the flash crash in stocks in 2010.
If we keep improving our technology, but keep putting our biases into them, we need to simply recognize this fact and plan accordingly. We can’t just update our mental software like we can a computer. But we can, as individuals, look for what’s going wrong at the group level.
This is why only a minority of investors can be contrarian—you have to have a majority to go against. That’s also why it’s so profitable from time to time, and getting a contrarian investment at the right time can be so incredibly profitable.
One example: we haven’t licked the scarcity problem yet. Our ability to create material goods is incredible as a society, but it can’t fulfill everyone’s wants. That scarcity will likely be exacerbated in coming years for many base commodities like iron and copper. At current prices, demand is being met with supply, but future supplies won’t be as plentiful if prices stay the same. As the cure for low supply in any market is a higher price, it’s likely that prices of these commodities will rise sufficiently to cure the low supply in the coming years. Invest accordingly!
And, like it or not, we still live in a world that’s heavily dependent on fossil fuels. I don’t see oil going away anytime soon. But natural gas is starting to look more interesting given its massive underperformance in recent years and how it’s managed to sink another 25 percent in the decade since the markets bottomed from the Great Recession.
But, siding with the optimists, I’m also on the lookout for new technologies. While some see robots as humanity’s end, there’s a growing need for simple, repetitive physical tasks that humans are too easily distracted to perform for long. There’s a lot of opportunity there, although there will be setbacks along the way.
Perhaps our reliance on technology will destroy civilization. Or, maybe we’ll end up seeing slower technological growth in the future—a sort of post-modern Dark Age. Whatever happens, it’s better to be optimistic, and bet heavily against the crowd during those periods of pessimism.
Andrew Packer is a Senior Financial Editor with Newsmax Media. He currently writes the Insider Hotline investment advisory, serves as investment director for the Financial Braintrust, and writes the monthly newsletter Crisis Point Investor.
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