Reflecting on my previous post, it is essential to understand that the market and history generally are not cyclical but act more like a spiral. Therefore, it means that we should adhere to the events that have happened in the past to conduct an educated assessment and analysis of the present and future trends. Although the housing market seems stable when I am writing this, there are still plenty of inflated assets and investments that are pretty vulnerable to market shifts. One example of this could be AI and the product that it provides. To my degree of expertise, AI has very little value within itself, yet it has attracted a lot of value around it. This value comes from research and manufacturing of computing hardware, construction of highly sophisticated plants to house that computing equipment, and design of complex distributed systems to utilize that computing power for AI. All of these things bring new jobs and money to the economy. However, AI aims to reduce the number of people needed to perform a specific task. Moreover, due to AI’s inherent inaccuracy, since the data used for its advancement comes from human creative activity, which is also inaccurate in its own way, it seems that it will heavily reduce the quality of goods and services that were produced with the help of AI. These things are not on the surface level right now, but I expect them to become more revealed in the future. Although AI has certain drawbacks that may affect its desired widespread use, they are being heavily ignored in favor of monetary yield from investing in AI startups and companies that start adopting AI. Drawing parallels to the stock market crash, once the inherent drawbacks that AI possesses begin to reveal themselves, it is likely that AI-related companies will significantly lose their value, similarly to the stock market crash of 2008. Hopefully, not many companies and people’s assets will be in this field, which highlights the importance of having a diversified portfolio.
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