Man + Machine

I’ve been asked a lot about the future potential of Artificial Intelligence, and whether or not it’s merely hype. While I certainly can’t predict the future, there are enough signs out there to signal that this emerging technology has found its footing, and along the way attracted billions and billions of dollars in invested capital.

My humble opinion is that customer-facing AI will be one of the areas facing the highest barriers. For instance if you use an AI bot to discuss medical remedies, that comes with significant risk to the company making those recommendations. Everything needs to be seriously buttoned up so that anything contested in a court of law can hold up. Same goes for tax, legal & investment decisions.

On the flip side, less “serious” consumer decisions like shopping for a new car, planning a vacation or talking to a virtual wine sommelier have fewer legal risks and faster runways to achieve scale.

Where I see the biggest opportunity is in areas where people oversee AI bots who do most of the blocking & tackling on mundane, highly repeatable tasks. This has always been the argument when faced with a future of robots replacing humans….”but someone has to manage the robots!” they say.

Look no further than Wall Street. The CEO of Goldman Sachs recently commented how AI has the ability to streamline the IPO process for its investment banking clients at light speed. What used to take a team of people weeks to accomplish can now be done in a matter of minutes. This not only saves time but also millions of dollars in labor. However, the most critical component to this new technological application is that there remains an important cog in the wheel….a person still needs to review everything and give a stamp of approval before sending it out. Solomon refers to this as the “last 5%” of the task….

So while AI may certainly replace lots of job roles in the future, there will also be plenty of opportunity for skilled folks to oversee and approve those tasks. These highly important roles can also come with significant compensation due to the scale now afforded to users of AI.

I have no idea what the next 5 years will look like in the AI space but it seems to me that anyone willing to take a bet that we’re past the "Hype/Fad” phase stands to profit handsomely.

Finally, here is what’s on my radar:

taxes

As the Trump administration takes a wrecking ball to nearly every corner of government, one area that sticks out to many is what exactly goes on at the IRS? Sure, they are tasked with collecting taxes and pursing deadbeats but they also have perverse incentives as it relates to deductions & inflation. Consider these deduction limits posted by a CPA on Twitter recently:

Keeping these limits artificially low keeps your income tax rate artificially high. In addition, these types of deductions impact working families the most….a demographic reeling from high inflation. IMO, the sooner we can tackle this, the better.

real estate

Zillow is out with their 2025 residential real estate predictor map which highlights every area of the country and its outlook on prices for the coming year.

They predict the areas that should do the best this year are largely concentrated in the Northeast. This is due to such factors as cheaper insurance costs and a modest price recovery from the 2020-2022 era when millions of residents fled these areas for places like FL, TX and AZ.

The areas that Zillow believes will do the worst are largely concentrated in Louisiana and parts of Texas. As someone with friends & family in both of these states, I hear every day how the impact of a disastrous property insurance market is crushing many of these homeowners. Demand from buyers is scant as the carrying costs continue to skyrocket. Jerome Powell recently commented on the possible future of the property insurance market….and it’s grim. He believes within a decade there will be areas of the country where you simply cannot get a mortgage due to lack of insurance coverage.

bitcoin

There’s an increasing amount of FUD (Fear, Uncertainty, Doubt) surrounding Bitcoin lately and in my view it’s not surprising at all. After breaching $100,000 early this year the price has pulled back roughly 15% and treading water.

I remind myself that Bitcoin continues to usher in new investors every day…and many that came into this asset in the last 60-90 days experienced the same rite of passage that all seasoned crypto investors go through initially: the immediate drawdown!

When asked if there’s a reason to be bearish of scared of owning Bitcoin now, I point to the following:

• Bitcoin’s volatility is 3-5x higher than the S&P500, therefore price swings are to be expected. This asset does not go up in a straight line.

• More & more institutions and Sovereign funds are buying Bitcoin or a Bitcoin ETF.

• Bitcoin is still up almost 50% over the last 12 months.

• Although very early, the Trump administration appears to be pro-Bitcoin and pro-crypto.

• While Altcoins and memecoins are experiencing 30-90% declines, Bitcoin has held up much better.

• The percentage of Bitcoin on exchanges is very low right now, historically this has been an indicator that current holders do not want to sell..therefore it could create upward pricing pressure as demand returns.

Is Bitcoin still inevitable? Maybe!!

Clark Gaines focuses on alternative investment strategies at Almanack Investment Partners, and is based in Charleston, SC.

Please refer to our disclaimers below!

This communication has been prepared solely for informational purposes and is not an offer, or a solicitation of an offer, to buy or sell any securities or products or to participate in any product or trading strategy. No sale of securities will be made in any jurisdiction in which the offer, solicitation, or sale is not authorized or to any person to whom it is unlawful to make the offer, solicitation, or sale. If any such offer of securities or products is made, it will be made pursuant to a definitive confidential offering document or other documentation which contains material information not contained herein and to which prospective investors will be referred. Any decision to invest in such securities or products should be made solely in reliance upon such documentation and not this communication. .Information contained herein is based on data obtained from statistical services, company reports or communications, or other sources, believed reliable. However, we have not verified this information, and we make no representations whatsoever as to its accuracy or completeness.  The views and opinions expressed in this communication represent those of Clark Gaines and should not be construed otherwise.Investment Advisory products and services are being offered through Almanack Investment Partners, LLC an SEC registered investment advisor. For additional information about Almanack Investment Partners, LLC, please visit www.adviserinfo.sec.gov.

No part of this material may be duplicated in any form by any means or redistributed without Clark Gaines’s prior written consent.