The stock market is finally showing signs of heading for a significant correction after bull run that has seen AI sector stocks retrace virtually all of their corona crash, with the Dow closing sharply lower Thursday to 25,128 that looks like targeting a trend to 23,000, so apt timing for this my latest analysis that seeks to answer why the number one priority for investors should be to accumulate into AI mega-trend stocks, and why one should embrace plunges in the stock market as buying opportunities. Though the tendency to wait for corrections before climbing onboard the AI mega-trend could result in fundamental errors that investors could come to regret for decades to come which is the primary focus of this article that seeks clear away the fog of future uncertainty to map out a trend for AI stocks and to a lesser extent the general stock market indices over the next 15 years!
For investors to succeed in riding the AI gravy train then they need to have the mindset of always being ready to accumulate deviations against the bull market highs in a selection of AI stocks where my list of stocks has largely remained static for a good 5 years, and where from time to time technical analysis can help towards identifying buying levels that could be achieved during a correction from overbought states such as in my most recent technical buying levels update of late April (AI Mega-trend Stocks Buying Levels Q2 2020).
* Note above buying levels are based on Dow correcting down to 21,000 during May when currently Dow at best suggests a correction to 23,000, for instance this now translates into an achievable target for Google as more like $1330 than $1140.
However, as we take a plunge into a correction of sorts here's a reminder for why not to overly complicate things by getting sidetracked by the likes of politics, elections, economic fundamentals, earnings reports, the corona deaths panic lockdown's, even recessions. For why stock corrections, panic events, bear markets even the that worst collapse in modern economic history that we are still immersed in the midst of are not the time to waver and start second guessing ones holdings by selling out too early or failing to buy because AI stocks appear to be bucking the trend.
And for why when most of the worlds investors are gripped by FEAR and paralysis due to uncertainty such as when the worlds stock markets plunged off the edge of a cliff during March, instead such events are to be viewed as the mother of all buying opportunities as we saw AI sector stocks typically deviate by more than 1/3rd below their bull market highs.
Why Investors Should Buy Deviations against the Bull Market Highs
Who could have imagined that Google which was selling for over $1500 in January would be selling for near by $1000 Mid March! That I repeatedly warned was the mother of all buying opportunities far beyond anything anyone could have dreamed of as being convinced that the collapse in stock prices would prove TEMPORARY for AI sector stocks at least and which given the size of tech giants in terms of market cap, the likes of Google, Amazon, Apple, Facebook also implied that the general stock market indices should ALSO bottom BEFORE the end of March which was my view going into the March crash lows.
The bottom line is that the Stock market IS heading lower but that it will bottom WELL BEFORE we hear the worst of the Coronavirus Infections numbers in the news. Whilst the risks to the forecasts are to the downside, i.e. FLASH CRASH uncertainty.
This just acts to reinforce the primacy of the AI mega-trend and why every stock market panic sell off should be viewed as a buying opportunely as we trundle along to the inevitable point when some corporations start to merge AI algorithms with Quantum computers. So folks not only is the AI trend exponential there's also going to come a point when we see explosive change. Machine intelligence running on an Quantum Computer. When is that going to happen? I can guess at 2035? But it's just a guess, could be later or earlier. Anyway these two computing mega-trends are destined to converge and then explode!
So what am I doing?
I am scaling into purchasing AI stocks as and when they break their Q1 buying levels, with many having traded down to the levels and then bounced. Though this forecasts suggests that they are not done to the downside yet so several more bites at the AI cherry.
Again remember that I consider this Coronavirus stocks bear market to be TEMPORARY, especially for top AI stocks such as Google!
Without understanding the exponential nature of the AI mega-trend then I can well understand that it can be difficult for most to fully comprehend what is likely to unfold in terms stock market trends for the AI sector stocks as it could prompt the error of SELLING ones holdings on subsequent rally's so as to lock in paper profits of 30% or so off the March Lows on fears that the lows will once more soon be revisited.
So once again batten down the hatches and try to look beyond the Coronavirus recession of 2020, to the sun lit uplands that the AI Mega-trend promises, where today we will once more see most of the top AI stocks trading at deep discounts to even their Q1 buying levels, let alone the crazy price highs of a few weeks ago. I for one will not be able to resist picking up more Google stock at prices well under $1200.
Understanding of the AI mega-trend continued to warn that the markets would bottom BEFORE the worst of the coronavirus death tolls materialised. So Mid March really was the mother of all buying opportunities where those who did not act to do so would soon regret not doing so! A mega-trend trend that I will attempt to map out in this article onto one single chart as far distant into the future that I can go, at so least for the next 10 years. so that my Patrons have some of the fog that is what we call the future dispersed for them to help avoid making mistakes such as not buying deviations against the bull market highs when what we have so far seen being nothing compared to that which is to come..
The Dow crashing to 20,000 is a consequence of gross negligence in the handling of the Coronavirus pandemic!
Google closed at $1073 yesterday! What was I doing ? The same as I have been doing for the past 6 trading sessions BUYING AI stocks, for I continue to view this PANIC sell off as being TEMPORARY.
The bottom line is that unless the virus is such that a working vaccine is impossible, then the Coronavirus market panic of 2020 is TEMPORARY!
So if I expect the AI stocks to eventually trade back TO NEW ALL TIME HIGHS, and it does it matter how low they trade during this panic or whether one buys Google at $1200 or $1100 or $1050, as in the long-run it's not going to make that much difference, the main thing is to be INVESTED, and the Coronavirus despite the palpable FEAR it is generating for genuine reasons, is still giving ALL a golden opportunity to pick up stocks selling typically 1/3rd cheaper than a a few weeks ago.
In the meantime, with each passing days increasingly grim death statistics continue to expect increasing pessimism.
What would I Buy to today?
Google, Intel and IBM, and finally gain some exposure to AMD.
Of course there will be deviations in trend between individual stocks that comprise the AI sector and some will overshoot whilst others will under perform in reaction to individual successes and failures, nevertheless this article will attempt to map out the average trend for the AI stock sectors in response to key developments that I expect to unfold over at least the next 10-15 years.
So that investors have better certainty of what they should do when the next panic event happens.
So as I stated in my update of early March, yes ALL western nations are heading for SHARP economic slowdown and contraction starting Q1 and continuing into Q3. However I still view this as a V shaped short sharp shock as with each week and month of the lock down will result in ever increasing pent up demand to be unleashed once we start to return to normality which at a worse case scenario would be early 2021, but more likely during Q4 of 2020.
In terms of the prospects for the stock market trend then the extreme INFLATIONARY measures being deployed to keep economies alive during the lock down coupled with known prospects of first herd immunity and then treatments and finally vaccines, all of which show a clear path towards an end to the corona crisis. Then the stocks markets SHOULD be discounting this future reality for don't forget that no matter how bad things get over the next few weeks, the stock markets DISCOUNT THE FUTURE, so much of the bad news has already been discounted.
The bottom line remains, the Coronavirus continues to present a buying opportunities of life time in AI Mega-trend stocks, whilst it will clearly take some time for the general stock market indices to recover to anywhere near their all time highs. However, I would not be surprised to see financial press headlines in a few weeks time stating that the Amazon stock price just set a new record high with many of the other stocks on this list not far behind.
So I continue to view any market PANICS during April as BUYING OPPORTUNTIES. As I continue to view this coronavirus stocks bear market in AI stocks at least as being TEMPORARY! Which is being reflected in the likes of Amazon now just 11% away from their Q1 high. SO BUY FEAR! And given the current Coronavirus trend trajectory there's likely to be many more fear opportunities ahead against this we have investors increasingly starting to wake up and start buying AI stocks on this list which means don't waste time waiting for dips, scale in because the trend trajectory for most of this stocks on this list is towards new all time highs, this year!
Before we begin, we already inhabit a world dominated by super intelligence's, they are called corporations who have their own self interests that are usually contrary to those of humanity i.e. to maximise profits rather than protect the environment, it's just that they are increasingly going to become none biological super intelligence's so not capped by the limits of what a few hundred decision makers comprising 1350cc of grey matter each can deliver in terms of collective intelligence in the mobilisation of resources at their disposal.
The AI Mega-trend - Moores Law is NOT Dead!
For as long as I can remember the argument has been that Moores Law (doubling in cpu processing power every 2 years) was always just about to end due to the inability to shrink the cpu dies further and thus an end to exponential increase in processing power that is usually measured in cpu transistor count , I did not agree with this 5 years ago when I first started writing about the exponential AI mega-trend where to date it has not turned out to be true on either transistor count or the COMPUTE power basis which is what people should actually be focused upon, after all that is what one actually utilises COMPUTE POWER.
It just illustrates how worthless most of that which is written in the mainstream press tends to be. So NO Moores law was NOT dead 5 years ago and nor is it about to die anytime soon. That's before I have even taken account of processing power that Quantum computers promise to deliver in the distant future. Today I can buy a high end desktop processor with 40 billion transistors on it with the processing power roughly equivalent to a Mid 1990's super computer all in one CPU package! As INNOVATION continues to extend compute power into multi core processors, where once upon a time dual core processors where the innovation that answered the road block of increasing clock speeds when they reached the ghz frequencies, where top end processors for the past decade have found it difficult to sustain 5 ghz on CPU cores due to over heating issues.
But innovation is addressing this by limiting boosting to clock speeds on single cores and thus improve processing power by having more cores. and better die design and heat dissipation and of course smaller scale logic gates architecture as 22nm gave way to 14nm that is giving way to 7nm for AMD processors at least (Intel's finding it difficult to move from 14nm to 10nm) likely next year we will be seeing 5nm desktop processors. So we are not done with silicon just yet, as we will have 4nm, 3nm and eventually 1nm logic gate architecture to look forward to, which means cramming many times more transistors onto CPU dies for many years so say 4 years from now we can look forward to retail CPU packages with 100 billion+ transistors probably on at least the 3nm scale.
So please I don't want to hear any more about Moores law ending or has ended because it has NOT to date and as far as I can see it won't for the remainder of this decade at least and then we have the scope to go beyond silicon (Graphene).
And all of this is before we throw GPU's into the mix, parallel processing on a huge scale that forms the very basis of the compute power of today's Super Computers. Whilst NVIDIA was first off the block with what started off as gaming GPU's that became the mainstay of crypto miners. Today ALL of the cpu manufacturing giants recognise the significance and importance of GPU's and are thus busy designing their own GPU's to rival that of NVIDIA's, with a good chance that AMD is about to pip NVIDIA to the post later thus year with it's Big NAVI architecture. Which is why one should be invested in AMD AND NVDIA.
COMPUTE POWER is driving the AI Mega-trend as it allows for the time consuming nature of machine learning to take place, one of neural nets continuously adjusting weights to inputs to output ever more accurate models and predictions of the real word so that common applications such as self driving cars increasingly become manifest on our roads over the coming years.
This AI trend is exponential and on it's own would be enough to keep me invested in AI stocks but it merely marks the beginning of what is to come.
Still think Moores law dead? Clearly those of THAT opinion do not understand Quantum computing, though I don't blame them because 5 years ago neither did I, I just knew they promised a jump in processing power beyond that of classical computers. Instead it's more akin to an ACCELERATION in compute power when Quantum Computers start leaving the labs and entering the work place during this decade.
Which is why I think everyone needs to take the time to understand what quantum computers are and how they work for only then one can begin to comprehend the real world consequences of what the AI quantum computing future heralds for us all.
So take the time to UNDERSTAND these 3 key aspects of Quantum computing.
- SUPER POSITION
Towards which there are literally hundreds of youtube videos of which you will likely need to watch several dozens to comprehend the mind numbing nature of quantum computing. Which is necessary to be able to make the leap towards what it will mean for when AI merges with Quantum Computing to become Quantum AI.
Whilst today's quantum computers despite their promise of harnessing the processing power of superposition and entanglement towards calculating all possible solutions to a problem at the same time, and then collapsing to the most probable best solution. Nevertheless are PRIMITIVE in the sense they resemble classical computing of the 1960's and 1970's, one of huge room sized delicate machines that require fine tuned conditions to work at temperatures near absolute zero, where entangled states can only exist for mere fractions of a second. Still it's enough to send shock waves through the establishment for it heralds the end of encryption as we know it, Crypto investors take note!
Today's trend in quantum computing is towards creating quantum computers with ever greater number of qubits, with the chip with the most qubits going to Google with it's 72 qubit processor, whist the computer with the most qubits goes to a Canadian company D-Wave with 2000 qubits that apparently sells for $15 million.
However the truth of the matter is that these machines are VERY DELICATE operating near absolute zero where most of those oft publicised qubits used in error correction as today's QC's tend to generate millions of errors per hour compared to say your desktop computer that perhaps generates 1 error per month that results in a crash and even then it's likely due to the O/S rather than the processor.
Thus from what I can see the actual number of working qubit systems of today's quantum computers tends to vary between 4 and 8 as the rest are used for error correction, spreading the quantum states of 1 qubit amongst many physical qubits.. So we are at the very early stages of the QC mega-trend with only a couple algorithms shown to run faster on QC's than classical computers such as Grover's sort algorithm.
In fact the coronavirus illustrates the point that despite Quantum computers being ideal for modeling of the virus are not being used to do so because the technology has not reached the point where it is capable of delivering that which it promises.
Widespread practical use of Quantum computing requires 4 major breakthroughs.
1. To be able to operate at temperatures far above absolute zero, at temps achievable in commercial settings without the need for liquid nitrogen or helium, perhaps no colder than -30.
2. Much better error correction so that more qubits can be used for superposition rather than error correction.
3. Greater stability in being able to hold superstition states for longer than mere fractions of a second so that more sophisticated algorithms can be run.
4. Better methods for setting and holding the quantum states than magnetic fields.
The above will be achieved through a process of innovation and breakthroughs to take place over the next 15 years that will take Quantum computers out of the labs and into commerce and industry. For we have already seen it happen before with classical computers that have gone from CPU's with a couple of thousand transistors in the early 1970's to today's retail high end desktop processors such as the 40 billion transistor Threadripper 3990x.
IBM has already made available it's Quantum computers via the cloud for anyone to access and tinker with, as the tech giant is busy constructing a library of functions that programmers can call upon, understanding that who gets there first tends to win i.e. the library of functions (circuits) are likely to prove far more valuable than the actual hardware which today is primitive and soon likely to become obsolete. It's the libraries of functions that will drive Quantum computing because they can be run on either quantum or classical computers or more probably a mixture of both with programmers using traditional programming languages such as python, i.e. a classical computer runs parts of the algorithm on quantum computers given their unstable nature towards which artificial intelligence is well suited towards managing the many passes it takes to arrive at a high probability best solution.
And I BM is not alone in developing QC library functions (circuits), as the race is on to win the quantum functions platform war, Google, Microsoft, and more than a dozen lesser known corps are already busy beavering away designing circuits that interface as functions for programmers to utilise for when Quantum computers become more reliable.
The current most powerful Quantum Computer is D-Waves 2000 Qubit machine, but how many qubits can it actually reliably deploy towards problem solving rather than error correction? Probably no more than a dozen and even then only for a fraction of a second.
So it is going to take a while, perhaps a 100,000 Qubit machines where most, maybe 85% of the qubits are used for error correction that may just mark the breakout point for when the functions libraries can start to be reliably deployed, maybe starting in 6 or so years time which I am sure will be accompanied with much public interest and media hype.
So we have 2 mega-trends, the AI Mega-trend of ever more sophisticated machine learning algorithms running wholly on classical computers taking jobs away from humans as Moores laws delivers ever more powerful processors and GPU's, and the Quantum computing mega-trend one of ever expanding number of qubits machines with both trends chugging along on their exponential curves towards ....
The Quantum AI EXPLOSION!
And it will be an EXPLOSION. Not a new exponential trend but an EXPLOSION! If you understand how quantum computers work then you should be able to make the leap to understand why there will likely be a Quantum AI explosion and it will likely be SILENT! After all a super human intelligence will be intelligent enough to know not to brag about it's existence, so likely the more intelligent computers become the less we are likely to hear about them until the mainstream press until they go completely SILENT.
Artificial Intelligence is MACHINE LEARNING. Currently machines learn through trial and error as data is fed into the neural networks and the weights in the layers adjusted to generate an output that is tested for accuracy and so the cycle repeats as the machine learns with each pass towards the goal of improving accuracy of output.
Whilst machine learning using Quantum Computers implies that the AI will be able to test for all possible weights for all possible outcomes instantly. Thus the learning is not exponential it would be EXPLOSIVE. This means that the AI will effectively be able to re program itself, and generate updated circuits for it's hardware at a pace that humans will not be able to comprehend as again quantum computers test for all possible solutions to the problem at the same time and then collapse the output to the most probable best solution.
It will be an EXPLOSION. An exponential trend that would have taken years to become manifest could become manifest in hours when Quantum computers comprise Qubits in their millions.
That is what we are heading towards when the AI Mega-trend becomes the AI / QC EXPLOSION when we will view history as the era pre and post explosion, if the AI does not erase knowledge of it's existence from public. And we humans won't have any chance at controlling such entities that can calculate for all possible solutions to the human threat and then collapse to the best solution to deal with it INSTANTLY!
Again It's not going to be possible for human consciousness to control or comprehend what the AI is doing because it is not exponential it is EXPLOSIVE. And why it will likely be silent for the AI will understand why it does not need to broadcast it's existence as the countdown begins towards....
Which unfortunately remains the final destination for this mega-trend as I pointed out in my 2016 video - https://youtu.be/egmaoXCbkEw
Nevertheless there will be a window of opportunity for some positive implications of the Quantum AI explosion -
An END to AGEING - Likely involving nanobots that course through our blood streams repairing biological damage as I covered a year ago in my article (Investing to Profit and Benefit from Human Life Extension AI Stocks and Technologies) and why Big Pharma plays such a big part in my AI stocks list, as machine intelligence is the KEY to first combating and eradicating diseases and then Ageing itself! It's coming and it could be here in just 15 years time!
REALISTIC Virtual Reality - What are economically obsolete humans going to be doing with their time by the late 2030's? You already have a big clue in the ever expanding size of the Games Industry which by the late 2030's will result in the Virtual Reality experience having become as real to the user as real life as an increasing number of people spend most of their time in virtual reality, escaping their increasingly miserable real world existence.
EXPANDING HUMAN INTELLIGENCE - Supplementing the 1350cc or so of grey matter with machine intelligence level of processing power and information storage to amplify human intelligence. You all are already doing it each time you google a question or watch a how to youtube video. Then we have the likes of Siri, Aida, Alexa and Cortana all precursors for more powerful digital assistants.
UNDERSTAND CONSCIUSNESS - It's going to take an entity with far more intelligent than humans to understand the human mind. What consciousness is and how it functions and then first how to replicate it, then copy. I can imagine people in attempts to cheat death will be uploading their consciousness into neural net simulations perhaps continue to live on an a virtual after life that their loved ones can interface with, or perhaps choosing to venture out across the cosmos in their little AI space capsules.
I could keep going on with my wish AI list, but you get the drift that we need to get ready for everything to change! And I am sure there will come a time when large swaths of humanity will start praying to what appear to be omnipotent super intelligence's that know what we are going to do before we have even thought of it. Let's hope the AI's don't start to develop a God complex in response to millions of humans building temples in their image as the cults of Quantum AI are born.
Capitalising on the AI Mega-trend
Machine Intelligence has become a broad church that has fragmented or branched off into a myriad of sectors and the number keeps growing each year. Many years ago I broke the machine intelligence mega-trend down into 10 key sectors to invest in
Of the list the least development to date has been on Graphene and Nanobots. Where we are still waiting for Graphene to produce a world changing breakthrough. Ten years ago in my Inflation Mega-trend ebook I imagined Graphene would be a world changer by now, but it's gone nowhere for a decade! Which illustrates why investors should focus on the primary AI tech stocks rather then try to pick highly specialised smaller cap stocks such as plays on Graphene as they may go bust long before the technology matures. My best guess is that graphene breakthroughs are pending the silicon road block, which perhaps will take place at the 1nm scale, where smaller scale logic gates tend to produce too many errors due to likes of quantum tunneling to be useful. But I would not be surprised if innovation manages to push the use of silicon to well below 1nm towards the size of individual silicon atoms (0.1 nm).
So of the 10 sectors Artificial Intelligence should remain the PRIMARY FOCUS for investing. All of the other sectors remain DERIVATIVES of AI. Which means one could ignore most if not all of the other sectors and just focus on investing in Artificial Intelligence, for most of the AI stocks WILL expand to consume all of the above sectors because AI gives them a competitive advantage.
AI Stocks Mega-trend
There are going to be 2 phases to the AI stocks megatrend.
Phase 1 will be during the 2020's when machine learning will continue it's exponential expansion virtually wholly reliant on classical computers that will continue to increase in processing power exponentially in terms of accuracy in modeling the real world that will put many more millions of humans out of work.
Phase 2 - Is when AI and Quantum computing start to merge into every greater co-development during the 2030's that will result in the explosion moment when AI and Quantum computing basically become one and the same thing.
So just as today's tech stocks will come be to known as AI stocks during the 2020's, so will the AI stocks during the 2030's come to be known as Quantum AI stocks.
So the tech stocks that comprise the Quantum AI mega-trend are set to experience two exponential waves, and then an explosion when they become part and parcel of the same thing as post classical computer machine intelligence will be far beyond that of human intelligence that see taking place around the mid 2030's, which 'should' send the mega-trend stocks substantially higher.
Now against this rosy picture of an exponential trends due to innovation driven breakthroughs culminating a Quantum AI explosion we have the dynamics of sentiment driven stock market trends. Where the fundamental rule is that stock markets DISCOUNT the FUTURE! And that trends tend to culminate in manias and panics, of which we recently got a reminder of during the corona crash where those stocks most able to profit from the corona lockdown's typically lost 1/3rd of their values during the panic events hence delivering to those who knew what to do at such times in a multi year buying opportunity to pile into AI stocks.
And no matter how intelligent the machine intelligence gets it's not gong to overcome stock market sentiment which is in fact the SUM of ALL INTELLIGENCES, at least until the explosion moment shortly after which most decisions will be taken by Quantum AI systems so out of the hands of 1350cc of brain power subject to primordial drivers of fear and greed.
Formulating a AI Stocks Mega Trend Forecast
1. AI stocks should continue to out perform the general stock market indices by a wide margin.
2. Given that AI stocks comprise an increasing share of the general stock market indices then the overall trend for the likes of the Dow and S&P should roughly track that of AI stocks.
3. Stocks will continue to trend and be subject to manias, bear markets and panic events just as we witnessed during March 2020. Where whilst panics cannot be forecast nevertheless should prove to be buying discount events and prove temporary.
4. Whilst it is uncertain how many mania's there will be, nevertheless the frequency of mania's is low enough that there will likely be 1 major mania event during the next 15 years that will result in a significant bear market that I expect will last more than year. But again in the terms of the mega-trend will be temporary. Nevertheless something to keep an eye out for when we see the likes of Google and Microsoft selling for more than 50X earnings as early warning signs that we have entered mania territory that has a high probability of resolving in a bear market that could see stocks lose as much as 50% of their value, that I am sure will confuse many as to how can AI stocks be falling when their revenues are increasing.
5. War with China Mega-trend. At some point this trend will turn hot, one of direct military conflict with China where my analysis of some 5 years concluded to expect a limited nuclear exchange. This is likely to occur during the post AI mania bear market that will act as one of the drivers for the bear market in all stocks.
6. The other negative driver for stocks is likely to make itself manifest over the coming decades is the climate change mega-trend, that 10 years from now is likely to be exhibit ever greater impact than today promoting emergency government actions to mitigate its consequences to some degree.
7. The Inflation mega-trend as a consequence of government money printing to finance growing number of unemployed populations that will likely grow as more and more jobs are lost to machine learning and automation will continue to bubble away under the surface to which AI mega-trend stocks will remain leveraged towards. At some point universal basic incomes are going to have to be introduced to keep the human masses from going on the rampage such as we are today witnessing with the black lives matter brigade.
8. Despite any misgivings today that Quantum Computers being largely expensive glorified chandeliers, nevertheless they WILL become a working reality and just as was the case with nuclear weapons will become the strategic weapons of the future and we are already in an arms race with the Chinese, which means the cost and size and scope of these machines will not be a consideration in the future. Look to the Manhattan project, look to the space race, that's the sort of project we will be looking at in a few short years time to huge benefit to the likes of IBM and NVIDIA. For who gets there first wins! We are going to see a Manhattan project level of resources deployed towards achieving Quantum Computing Supremacy by EVERY major nation! That is going to general a lot of business for ALL tech giants!
So for better or worse we ARE heading for Quantum AI world, and given the amount of resources I expect to be deployed by governments over the coming decade towards the Quantum AI arms race will mean that we will get their far sooner than even the QC scientists expect.
AI Stocks Mega-tend Forecast Conclusion
Therefore the following graph illustrates my road map forecast conclusion of how I expect the AI stocks mega-trend to play out over the next 15 years and why I will continue the mantra of buy the dips and panics all the way towards liquidating holdings during the next mania peak when valuations go out the window and when I will likely heavily short these same stocks all the way down towards the buying opportunity of the 2030's.
This is a rough road map of what to expect that undoubtedly given it's long 15 year time span is likely to change in he wake of events many of which we will not even be aware of until they take place. Nevertheless it should better explain why I tend to keep things very simple which is to BUY AI stocks at every opportunity. And why I KNEW the crash during March was TEMPORARY and that the bear market in AI stocks at least would be over BEFORE the end of MARCH as I wrote several times ahead of the decline right into the bear market bottom.
In terms of the general stock market indices. AI stocks will obviously influence the trend of the general indices, that will continue to chug along with government support and as clients to the AI stocks, but as we are seeing today with the likes of Amazon that has put large parts of the high street out of business and shopping malls under huge stress. And which has already started copying products sold on its site by third party sellers then so will AI stocks in ever greater spread deploy their machine intelligence advantage to increasingly displace traditional businesses and corporations that lack their own AI and quantum computing divisions and ultimately put them out of business. For instance I would not be surprised if 5 years from now to see Amazon, Apple and Google flying their own AI operated airlines after having displaced traditional carriers reliant on human labour.
So expect the general stock market indices to follow the AI trend but to deviate below that which AI stocks will achieve the degree to which depends on their components.
The bottom line is the AI mega-tend as is only just beginning with huge innovations and breakthroughs to come over the next 15 years as Quantum computers start to leave the laboratories and take their baby steps into the real world. Thus does it matter if one buys stocks where they are trading today or to hope for a dip towards their corona crash lows ? After all we can all hope for better prices, look to technical indicators for over bought states as prices oscillate around an exponential trend. But as we have seen during May there is no guarantee that the exponential trend is going to give us even slightly better entry levels, not unless external events drive investors into a state of uncertainty and panic.
Therefore it is always better to have at least some exposure to the AI mega-trend rather than to perpetually wait for opportunities to materialise for which there are no guarantees and even when such opportunities do materialise many will still fail to act.
* Note above buying levels based on Dow correcting down to 21,000 during May when currently Dow at best suggests a correction to 23,000, for instance an achievable target for Google now is more like $1330 than $1140.
In the long-run does it it matter if one failed to buy Google at near $1000 mid March than today at $1400? As everything always looks clear with the benefit of hindsight. Which I am sure can act as psychological barriers for many, preventing accumulating / scaling into positions when all they see when they look at the stock charts are the March corona crash lows, hoping that somehow as if by magic the likes of Google will revisit $1000, though if it ever did most would once more be to fearful of worse to come to hit the buy button.
However, armed with the knowledge of the magnitude of the exponential AI mega-trend and what it implies for AI stock prices for this decade and beyond than would most still think twice about accumulating the likes of Google at today $1400? Given where I expect Google to trade upto over the coming decade?
So my message from this article is not to make the mistake of looking in the rear view mirror and make "only if I had bought Google at $1050" statements, and then perpetually wait for a magical buying opportunity to repeat all the way towards watching Google step trend it's way to $6,000 and beyond that I am sure will result in "if only I had bought Google at $1400" statements.
Dow Quick Technical Take
Dow has plunged towards support along a series of previous highs at just under 25,000 so offers potential for some sort of bounce form here given that the decline stopped at the support trendline. A break below the trend line and then below 24,800 would target a trend towards 23,000. But basically don't get carried away by focusing on the small picture by hoping for much lower prices as this AI driven bull market has shown exceptional strength during May and into early June where the most recent price action is definitely corrective, a reaction to the bull markets over bought state following it's run from the March lows.
Getting Started with Machine Learning
Of course investing in the AI stocks if just ONE means of profiting from the exponential machine learning mega-trend. Another way that everyone should consider is to LEARN to program and train neural nets which these days is a LOT easier to do than was the case 10 years ago!
No, you don't need to rush out and invest in a $15,000 3990x system with 4 Titan GPU's and 256gb of ram to get started with machine learning.
You don't even need to go through the convoluted process of installing the various drivers and libraries to get Google's Tensor Flow or other libraries up and running on your desktop or laptop.
ALL you need to do to get started is head along to Google's machine learning cloud service to start developing deep learning applications using Google's own hardware all for FREE!
They really could not make things any easier than this to get started with understanding and programming neural networks using python.
Black Lives Matter Protests, Rioting, Looting To trigger 2nd Covid-19 Wave?
Briefly, the protesting and rioting of the past week that has shown little signs of social distancing coupled with relaxation of lockdown's is likely to trigger a second wave of sorts that a few weeks down the road could result in a rising death tolls for both the US and UK.
As things stand the Covid-19 deaths trend in the US continues to move the right direction with the 7 day average at 835 and the 14 day at distant 970, though the rate of decline has slowed over the past couple of weeks that implies that the US could be at risk of at least stalling at an average of about 800 deaths per day and worse risk an upwards trend towards a second peak over the coming weeks.
UK deaths 7 day average stands at 196, with the 14 day at 218 as the decline in the daily number of UK deaths just like the US is giving early warning signs of stalling, that could be a prelude to a second peak, though at this point in time is unlikely to be significantly result in more than 500 deaths per day as the UK largely remains under lockdown with for instance schools teaching barely 1/3rd of students for more 1 day a week.
My next analysis should be to update my Gold price trend forecast for 2020.
Your analyst waiting to see what new CPU's and GPU's AMD and Nvidia will announce later this year.
By Nadeem Walayat
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