Obviously, AI did not come up with the Pod headline, but it did assist with Dave’s NCAA pool selections. Steve decided to go “Au naturel”, using only brain power for his picks. Who will win? In other tech news, will AI crater the stock market, the job market, and humanity in general? “As long as I win my bracket!” is not the answer we’re looking for on episode #127 of Plan For Life Now.
Steve:
Welcome to Plan for Life Now, episode 127. Dave, are you ready for March Madness?
Dave:
I am totally don’t care about March Madness.
Steve:
Oh wait, I was talking about the stock market March Madness.
Dave:
I was about to say, I want to make a comment about March Madness the first. All
Steve:
Right.
Dave:
This is the first March Madness with AI. The real first ChatGPT, et cetera, whichever thing you use, March Madness. So I filled out my bracket using the aid of ChatGPT and it’ll be interesting to see how it goes if it’s any different. Now, ChatGPT does not tell you what to pick. It basically says based on the history of the teams and this, you might want to think about that. The percentages of something happen are this.
Steve:
It’s
Dave:
An aid. It’s predictive. It’s not going to win the pool for you, but it’s interesting.
Steve:
Well, I mean, it can’t hurt, right? I mean, considering I- For people who
Dave:
Don’t watch any college basketball,
Steve:
Are you kidding?
Dave:
It’s going to be an amazing tool.
Steve:
Well, okay. But since you put it mildly kind of mocked me for saying that I wasn’t going, or I didn’t say I wasn’t going to, but it didn’t occur to me to use it. I’m going to submit my bracket against you not using ChatGPT, just using my brain and my absolute lack of knowledge of college basketball. And we’ll see how it goes.
Dave:
Right. Well, we’ve been doing this little pool with you, me, and my son, Eric, for how many years?
Steve:
I think this would be 16 years.
Dave:
16 years. And just your brain has done pretty well. You won once last year of 16. It’s like a pool of three people. So yeah, go with that. But obviously we’ve always used our brain before and I did okay. I’ve done okay in this pool. So this’ll be an interesting test this year.
Dave:
Right. I just think it’s interesting. Something like March Madness where everybody’s going to, in my opinion, everybody who knows about AI, whatever, is going to use it. We’ll see how that goes.
Steve:
I’m curious, did you just basically ask for a full bracket or did you
Dave:
Just go? No. No. I went through different games that are more difficult to look at, like an eight versus a nine, whatever. These various seven versus 10 seed and then go and then I pick and then I go to the next ones that I’ve picked. Okay, now I’m in the round of whatever, 32 and these two, what do you think? And then I think there is still knowledge because they’ll talk about if you know nothing about basketball. I know enough to know that I like teams that maybe play good defense or if you like teams that are good three. So they’ll talk about things that I don’t know if non-basketball people at all would get. Like everything else with AI, if you know something, it enhances that. If you have a clue about these pools, it would enhance that, I would think.
Steve:
All right. Well, we will see our very scientific study there of me versus you, AI versus absolutely no knowledge of college basketball. Okay. But that is of course not what our podcast is about, not
Steve:
We want to focus on. So I went back and I was trying to remember when we had talked last, when we had last done a podcast. So it was February the 11th. And this is a comment I’ve been making in client review meetings a lot is I’ll show a chart of the market over the last year and I’ll say, honestly, it feels like three or four years. It really feels like it’s been forever since Trump’s liberation day when he announced all these tariffs. I mean, that has to be five years ago, right? No, it was about 13 months ago or not even. It was-
Dave:
No, not even the
Steve:
Anniversary of that year ago.
Dave:
Coming up.
Steve:
That’s right. It was less than a year ago. Less than
Dave:
A year.
Steve:
Oh my gosh. Proving my point even further. So before we talk about what’s going on right now, I wanted to go back and I couldn’t remember if we talked about this, but I went back, reviewed the last podcast. And Dave, we never talked about this Citrini research publication that came out. And this came out in around middle of February. So if you haven’t seen this yet, good for you. I’m glad you’re not way down in the weeds of all this. Is AI good? Is AI bad for society? But it is interesting. So what Citrini Research is, they are a, I don’t know what they are, a research organization. They publish a lot of stuff. They’re, I believe the top Substack, Substack publisher in the financial press out there. So they’re pretty prominent and they’re not known for being crazy. They’re not known for just putting stuff out there that’s off the wall, tinfoil hat kind of stuff.
So what they published was, it was a pretty long piece. I think it was a couple thousand words. And it was this fictional, this work of fiction that took a look at what might happen based on AI. And this was written as if it were in 2028, looking back at the last couple of years. So it was basically this sort of recap of, okay, this is what we’ve experienced over the last couple of years. And it was a really dire piece. It was basically that the stock market at this point was down about 40%, that AI had wiped out the value of many, many different companies, that companies like DoorDash or Uber, things like that, they’re basically saying that, well, because it’s so easy to write software that anybody could do it and it basically would wipe out any of the value for companies, I’m just picking on DoorDash there, companies like DoorDash because anybody in a couple of weeks could vibe code.
Do you know this term vibe code?
Dave:
Fortunately, no.
Steve:
Okay. I kept hearing it and I didn’t really know what it meant, so I had to look it up. And it’s basically where you go to one of these AI platforms and you tell it what you want to do, but you’re not a technical person. And you basically go to Claude or ChatGPT and say, “Okay, program me a restaurant delivery app.” And you go through with kind of natural language and it does all the technical stuff. Now, obviously it’s not quite that easy, but the idea was that everybody would be able to vibe code all of these things that would replace DoorDash. It’s going to replace all these software companies. It’s going to basically put any sort of white collar profession out of work, right? We’re not going to have jobs, attorneys are not going to have jobs, accountants are not going to have jobs.
So in this fictional piece, we had massive unemployment, we had an economy that’s right now so much based on consumer spending that totally collapses. So this was, as I said at the beginning, a work of fiction. It was going to the extremes of things that might happen, and this was all said upfront, but it had a real world impact on the stock market. And companies like DoorDash immediately saw these declines of nine, 10% the next day. And it led to this real freakout in the real world based on this hypothetical, this might happen fictional work there.
Dave:
Right, which was very interesting actually. I mean, it’s just interesting, but it starts with the investment that some of these companies are making into AI, a lot of the tech companies. Absolutely. The investment is so huge. And then you see layoffs of those companies. Right now we’re going through, I haven’t looked at today’s headlines, but Meta was planning on a big time layoff. By
Dave:
Time you hear this, it may have already happened, but just one of many. So you look at some of the layoffs, you look at the investment, and then that could be the seeds for something like this affecting the stock market, which usually doesn’t happen.
Steve:
Yeah. And I mean, and we’ve talked about this before. There absolutely will be, as all of this AI technology shakes out, there absolutely will be winners or losers. There will be software companies that are made obsolete because you could do things easier, faster, or whatever with AI there, but it’s
Dave:
Just- But here’s my problem with all this stuff. Similar, extremely similar to what we deal with all the time in the stock market. How often do we deal with people making dire predictions? Oh, absolutely. And you can look at those. I mean, we’ve talked about this on this podcast, ad nauseam. The dire predictions come, when you read them, they’re like, “Yeah, I guess I get it. ” And then they never come true or they sometimes come true as a blip on the screen and then things are adjusted. And in a specific example to this topic, look at the field of radiology. Five, six years ago, predicting even before on the cusp of AI, but even before, let alone when AI started, then this prediction became, oh, it’s going to happen two years from now, three years from now, this is five years ago, the radiology field of all fields will be eliminated or don’t go into it because obviously the thought was that AI and technology will be able to read x-rays and MRIs and all that stuff, and there’s no need for this job in the future.
Now you look at now, which is the future of those predictions, also knowing what’s coming with AI and radiology is a field that will not be eliminated by AI. As a matter of fact, I have a couple friends who are radiologists. They’re older radiologists, so they’ve been in it a long time and a couple of them are still in it and older radiology and they’re like, we’ve never had a bigger shortage. And the future of this is there’s going to be a need for radiologists going out into the foreseeable future because as much as AI can help us, it can’t be liable for reading these things. There has to be one of us using the tool not, and one of us meaning lots of one of us is that there’s a shortage in the field, and that foreseeable future of that is more income and more need for at least the amount of radiologists we have.
So when you look at something like that, what does that say about the prediction of the past? It was wrong. Some of these predictions will be right, some will be wrong.
Steve:
I don’t know anything about radiology, but I imagine that it’s going to be something similar to what we’ve been hearing, which is you have this shortage of radiologists. We’ve also been hearing there’s going to be a shortage of financial advisors. So AI is going to be this tool that helps financial advisors and probably radiologists as well do more work and service more clients, that it’s going to be something that not replaces financial advisors or radiologists, but makes them more efficient and allows them to do more. Now, when you talk about all of this, like I said before, there are going to be very specific occupations that are replaced and go away. The one for whatever reason I keep seeing mentioned is the fact that there used to be these banks and banks of switchboard operators. This was a huge job for women in the 1940s and 50s was being a switchboard operator.
And you had to have all these people plugging things in, connecting them here and there, and then along came automated computerized phone systems, and that job just doesn’t exist anymore. If those people have other skills and are able to learn other skills, then they can get better jobs. Yeah.
Dave:
Okay. But look at that though. Remember, is this a cataclysmic crisis or not? So the number one thing now they’re saying, and I wish I knew more about it because I know nothing. As you know, I can barely turn this thing on. But coding, I’m not going to comment on coding. I don’t know what it is, but it sounds to me like you’re basically working within the inner workings of the software or something like that.
Steve:
Dave, I need you to weigh in here. Do you prefer Cobalt or do you think Basic is really … Or C++? I’ll give you three choices. Cobalt.
Dave:
Cobalt, because you get on the T and you get hit at 300. Oh, that’s Cobra. Okay. So you look at that and you say, well, coding’s going to go away. Okay, maybe it will. But if I’m a coder, that’s probably not what they’re called. If I’m a coder, look at how transferable that is to doing something in AI.
Steve:
Yeah.
Dave:
Come on. That’s a transferable skill. So it’s like, I don’t know. Obviously you could tell I’m on the side of the fence of AI is not wiping out or obviously some jobs, just like you said, a switchboard operator in the past is a thing of the past. Some things AI will be a thing of the past, but I certainly feel there’s time to be transferable, which leads me to, if you’re saying for some of these companies right now, putting all this money in now, will there be a bubble or something will happen that will be, I think, temporary, but certainly a bubble? I’d be on the side of that at some point in the near future. Then being on the side of two years from now, oh my gosh, there are no
Steve:
Jobs, or
Dave:
There’s such a hit on jobs.
Steve:
Yeah, I’m totally on board with that. I mean, I think, and we’ve seen this in the past with any sort of innovations, there always is this frothiness, this overexcitement around certain areas, and you don’t know exactly what that’ll be or when that’ll melt down, but I think that could certainly happen there. So when I was going back to look and see if we had even discussed that, I couldn’t even remember the last podcast, did we talk about that Citrini piece, which a couple weeks ago or a month ago seemed like a really big deal. And then the weekend of February 28th, of course, we heard news of a tax on Iran and their supreme leader was killed and all of that. Now, as we were hearing this, coincidentally, I got a couple of emails from clients and these clients were saying, “Hey, Steve, turns out we’re going to need to make some pretty big withdrawals coming up.” And I’m getting this news and getting these emails.
And my initial thought was, “Oh my gosh, the stock market’s going to be way down on Monday.” And so I’m kind of mentally thinking, all right, we’ve got to make plans as we always do. Where do we take the money from if the stock market is way down? And then Monday comes around and the stock market was actually positive. And now we sit here a couple weeks and of course we keep hearing news about a tax and this and that. I’m glad you
Dave:
Brought this up. It’s like I’m looking today just now before we started and on the CNBC website, there’s a picture of smoke billowing off of a United Arab Emirates infrastructure hit gas field deblaze. Something struck near the strait of hormones, horrific war go up S&P right this second as of 11:02 today, up 40.
Steve:
Yeah. And that’s on the heels of being up yesterday over 1%.
Dave:
Yeah.
Steve:
And I mean, I had a client and there’s a smart guy, he pays attention, not saying you have to pay attention to what we say to be smart, but he does listen to what we say. And we always talk about, for him and for other clients, when we’re going to do Roth conversions, we like to look for a dip in the market to take advantage of that. So he emailed me last week and he said, “Well, Steve, because the market’s weighed down, should we go ahead and do these Roth conversions that we’re probably planning on doing?” And I said, “Hey, I love where your head is at, but the market at that point was off 2.6%.” And I wrote that back to him. I said, “Hey, let’s keep an eye on it. But right now, 2.6% I would not qualify as being way off of its highs.” And I’m not scared to admit that I’m shocked and a little surprised that with everything going on, that’s all that it’s off, but maybe that just goes in the camp of who’s to say if you were given the headlines in advance that you’d be able to make great investment decisions.
Dave:
Right.
Steve:
We
Dave:
Always say picking, on the short term, figuring some of this stuff out is humbling.
Steve:
So now, what else has happened during this time period? Oil prices are up, whatever, 40% over this time period. So oil prices have gone up quite a bit. Now, I was having this discussion with someone about how does this differ from the 1970s when we had oil embargoes and oil shocks? And I think the biggest difference from what I read is the fact that the US is much more energy independent now than we were in the 1970s. The US-
Dave:
Way more. You don’t remember the 1970s.
Steve:
I don’t, because I only lived in about six … I got six months of it in, Dave. I was born in June of 1979.
Dave:
Okay. We weren’t just energy. My dad had to get up at four in the morning to find a gas station to wait in line in for two hours to get gas. That was crazy times. I’m so glad by the time I had my driver’s license, that part was over because he would’ve made me go get up early and wait in line to get gas on a weekend day, which isn’t fun to do when you’re a teenager. But yeah, that is a huge part of this. You’re absolutely right.
Steve:
Yeah. So of course the discussion with anyone goes to, “Okay, what’s your plan for dealing with this? What are you going to do? ” And like I said, right now the markets might even be off less than 2.5% with the rise yesterday and today, but certainly if we have that chance to do some Roth conversions at lower prices, we certainly did that last year with a number of clients right around the beginning of April, and timing on that worked out pretty well where everything bounced back. I always talk about tax loss harvesting. So if you’re talking about investing in a non- IRA account, and if you’ve put that money in pretty recently and the market’s down, what are you allowed to do? You’re allowed to sell one fund that invests in large cap US stocks and buy another fund that invests in large cap US stocks.
As long as it’s not the same fund, that’s substantially different and you can harvest those losses. You keep yourself invested, but if I put in 100,000 and it’s only worth 97,000 right now, I can take those $3,000 in losses on my taxes this year. And like you always say, and I think this joke never gets sold, you can sound really smart at a cocktail party by saying, “Hey, I’m doing a little tax loss harvesting.”
Dave:
It is. The number one thing, it’s the easiest thing to understand that you could then be a bragger about with your friends. It really is. Just understand what tax law is pretty simple to understand concepts and all of a sudden you sound like you know what you’re doing and you know where you are and you make other people feel like they don’t know what’s going on. And if you do it in front of, even better, if you’re going to take it to the next level, like there’s a husband and wife and you’re talking to whichever spouse is sort of in charge of the money and say, “Yeah, well, the tax loss, I took advantage of tax loss harvesting back during the April crash and wow, it looks like another opportunity. Did you take it that you look at … I don’t even know what that is.
” Well, find out what it is.
Steve:
Oh yeah, classic.
Dave:
Classic.
Steve:
Okay. What else is on the list? Roth conversions, tax loss harvesting. I don’t think we’re there yet, but usually our threshold for changing withdrawal strategies is when we see a decline of 10%, we no longer want to be taking any sort of withdrawals that are tied to the stock market until things recover. So when you’re taking withdrawals and you’ve got that automated and you say, “Okay, every month, $2,000, $5,000 coming out of my account, sure, when the market’s up or near all time highs, that’s fine. Take it from stocks.” But when it’s declined and hit that 10% threshold, we want to switch everything to be coming out of bonds, everything to be coming out of cash and wait for all that to recover. And then if we get to that point of 10% declines or even further, 15 or 20%, then you want to be taken advantage of rebalancing.
And rebalancing is that idea that everybody loves in theory of buying low, but in actuality, it doesn’t feel so great. It doesn’t feel so great to basically say, “Gosh, stock market’s down 20%. I’m going to take some of my money in cash or bonds that’s probably doing pretty well during that time period, and I’m going to buy some of this asset that’s down 20%.” And I’m doing this knowing it might go down to 25 or 30%, but I’m okay with that because eventually it’ll recover. But that’s what rebalancing is and that’s how you take advantage of it long-term.
Dave:
Right. It’s basically buying low and selling high, but instead of having to deal with all the emotional aspects of that, we just call it rebalancing, which sounds more like a tire situation.
Steve:
Yeah. It reminds me, I need to rebalance my tires. They’re a little out of whack there. All right, well, we’re not there yet, but who knows? With this market, there could be anything that could happen any day and things freak out and people sell and you blink and we’re down 10%.
Dave:
Right? You never know. It’s March Badness. Back to the original theme. Now you know what the title’s going to be when I write the blurb for this. I have one last question. Are we at the end of this?
Steve:
Yeah, we are.
Dave:
One last question for you. Are you a Cobalt guy or a Ping guy?
Steve:
A ping guy. I’ve been a Ping guy all along. Did
Dave:
You hear the Joe Cobalt, not Cobra? I got it. Going back to the software thing. It was a recall. All right. Oh, well, a lot of people don’t listen this far anyway, so that’s
Steve:
Positive. Yeah. The theme music is already ramping up, so you can’t even hear it. All right. Thanks for joining us. We’ll check in again next month.