This week our focus is on resources. For good reason too. Our colleague, Jason Stevenson is our in-house resource specialist. And this week he released some incredible research about ‘Gigastocks’.
These are a new kind of stock, which he believes have the potential to increase more than 10,000%.
Now we know that might sound too incredible to be true. That was our initial reaction too. But we know the dedication Jason has to his research. And after seeing some of the research he’s put behind this Gigastocks project…well let’s just say we you’d be crazy if you didn’t at least check it out.
There’s another reason our focus is on resources this week. We think it’s time to change your thinking. Perhaps ‘change’ is too strong a word. But we want you to consider the idea that ‘resource’ stocks aren’t just ‘dirt diggers’.
The true definition of ‘resource’ talks about ‘assets’. A person or organisation must draw on these assets to function effectively.
Immediately this opens our mind to all kinds of different companies. Yesterday the focus was taxi operators. Their problem is they’re drawing on an increasingly worthless asset. That’s the kind of resource you want to steer clear of.
But there’s one resource that we all need to focus on more. This resource is in serious trouble. However, the more trouble it gets into the more valuable it becomes.
This resource is the single most important one that exists today. This resource is a job. That’s right, a job. Being employed is the most valuable resource any of us will ever have.
It’s far more important and valuable to a person than any gold, copper, cobalt or lithium deposit.
Without a job a person struggles to operate effectively in society. And when you have multiple people without jobs, it spells real trouble. If you multiply it out further in a growing, ageing population, and you start to see serious economic problems.
Speaking of a resource in trouble…
The free market should decide the fate of the taxi industry. The supply and demand of a resource determines its price. The movement of price impacts the companies involved. It can make a company worth billions. It can make a company worthless.
And sometimes industry like the taxi industry finds itself in deep trouble. It gets into trouble because of innovation, disruption and the market forces it has to deal with.
As the market puts pressure on the prices and players in the market some thrive, others fail. That’s the free market.
The jobs market, like the taxi industry, is struggling. It’s also due to innovation and disruption, which we’ll get into shortly.
But if there’s no longer term plan to fix things, then it’s a problem that will only get worse. And the deeper in trouble it gets, the harder it will be to swim back to safety.
If it gets too deep then it could spell economic disaster for Australia. And right now things are getting worse, not better.
The Age published an article on the troubles of the employment market.
‘“Hidden unemployment rose while official unemployment fell,” said Bill Mitchell, director of the Centre of Full Employment and Equity at the University of Newcastle. “Overall, the market is weak and showing no signs of improvement.”’
It continued to explain,
‘Female part-time employment climbed 4.6 per cent in a year in which male full-time employment stalled. Male part-time employment climbed 3.3 per cent. “A lot of these employees are working part-time because they can’t find full-time work,” said Capital Economics chief economist Paul Dales. “It’s restraining incomes and keeping wage growth low.”
None of this is good news. The CBA [ASX:CBA] annual results presentation says, ‘recent trends in the Australian economy are positive’. Well we don’t see it. Not if you look at the most valuable resource in the country, jobs.
We don’t see the jobs market getting better without a longer term vision. Our view is that it will get worse before it gets better. Without action now it could spell difficulty for generations to come.
Who benefits from hidden unemployment?
Hidden unemployment is perhaps the most serious issue Australia faces today. In our view, the reason it will get worse is because of the transition of jobs from man to machine.
We’re talking about the rise in automation and artificial intelligence (AI). These disruptive technologies were previously limited to manufacturing. All industry is at stake, as the world gets more high-tech.
A decade ago you would be comfortable knowing a robot was putting together your car. Today you know that it’s automation that assembles your LED TV and your smartphone.
This is automation we’ve come to accept. It’s just a part of our advancing world. However, will you be comfortable when an ‘intelligent’ system is asking you questions when you apply for health insurance? When you are seeking legal advice, will it be okay for a robot to access the world’s history of court cases for you? When you jump in a taxi will you be able to handle the fact there’s no one else in there at all, while the car drives itself?
Right now many people we speak to aren’t comfortable with these ideas. But we have begun to notice a shifting tide. And the many that aren’t comfortable today, become few tomorrow.
It’s inevitable that automation and AI will seep into white-collar jobs. It is already doing so. It is going to replace millions of worker of the coming years. It will take jobs. Hidden and visible unemployment will both rise.
However, it’s not at a point yet where we should all give over power to our robot overlords. We have time. But time is running out. With this rise of automation and AI, there will be new opportunities for work. But they won’t be plentiful enough to keep everyone in a job.
The way forward is to rethink what employment will look like in 20 years. What a job will need to be for a person to operate in society. Whether people will need to have multiple part time jobs to tally up to an equivalent full time one. Maybe micro work is the way forward. Maybe we’re just all doomed.
We don’t profess to have all the answers right now. But we’re at least aware of what’s coming — and you should be too. We don’t have an absolute answer. However one thing we know for sure; the companies making the automation and AI today will benefit from this future. They will become the most important companies on earth. And if you’re smart and invest in these companies, then perhaps you and your children won’t even need a job.