The Stock Market and Technology Innovation

This is Brad Barrie, Chief Investment Office and Portfolio Manager with Dynamic Wealth Group. Welcome to this market and economic update. In this video, we’ll discuss recent trends in artificial intelligence and how technological innovation has affected the stock market over history.

This is important today since enthusiasm for AI has driven many parts of the market over the past two years. AI breakthroughs are occurring at a rapid pace, and it seems that many companies are rebranding themselves as AI companies.

In the next few minutes, we’ll try to provide a long-term and historical perspective on innovations and how they have impacted investors in the past.

First, this chart shows the stock market over almost a century with select innovations labeled. This covers many different eras from the industrialization of the 19th century and early 20th century to the atomic age, to the space age and putting a man on the moon, to the modern era.

Since the mid-20th century, there has been the adoption of personal computers and the growth of the internet. Today, these technologies are everywhere and it’s hard to imagine our lives without them.

What’s clear from this chart is that the stock market did not move up in a straight line with past innovations, and many of their effects took years to materialize. This was especially true during the dot-com boom and bust.

This is true today as well since, just like the internet, it’s difficult to gauge what the ultimate impact of AI technology will be on businesses and society. In the case of the internet, it took decades for the true effects to be felt across all parts of our lives – a phenomenon that is still playing out today.

That said, there is no doubt that enthusiasm for AI has driven market returns. Technology-related sectors have performed very well over the past few years and have led the market again this year, despite periods of volatility.

However, other sectors have done well this year too. Utilities, Energy, Financials, and others have generated over 10% year-to-date returns. This is partly due to interest rate expectations around the Fed. It’s also partly due to the idea that other sectors will benefit from technological innovations like AI as well.

The Internet revolution showed this same pattern. While many investors focused on a few stocks in the 1990s, the true benefits to these technological trends were widespread across all parts of the market. This took much longer to materialize, but that’s why it’s important to maintain a long-term perspective. And also remember that the market can be impacted by many different variables, so even if a ‘prediction’ about AI is correct, other variables could impact market performance separate from the AI innovations. As we say, Preparation over Prediction.

When it comes down to it, the one economic measure that encapsulates the importance of technology is the idea of productivity. With better technology and tools, companies and workers should be able to do more with less.

Through this lens, the power of the information technology revolution was to enable knowledge workers to be far more productive. When we look at the long history of the economy and what causes it to grow consistently over decades, it all boils down to productivity growth.

The same could be true of AI as well. In fact, AI could be the culmination of the information age. That said, it is very difficult to predict what might happen with these technologies. Some believe this will result in artificial general intelligence, or AGI, that could eventually replace human workers. Causing havoc on unemployment and many other issues.

More likely though, AI will represent a set of tools that will need the right applications. If they are adopted by businesses, this could improve productivity. Naturally, this will take time.

For long-term investors, it’s important to stay diversified to benefit from both the performance of technology sectors as well as these longer run trends.

We’ve only scratched the surface on this topic, but I hope you found these insights valuable. If you are a financial advisor and would like more information on our Multi-Dimensional Approach towards asset management, please visit our website, or reach out directly by emailing us at: If you are an individual investor, we are happy to address any questions you may have and put you in touch with a qualified advisor if so desired. Until next time, take care everyone, and make smart, logical & fact-based financial decisions.

Clearnomics and Dynamic Wealth Group, LLC are not affiliated entities. No part of this should be taken as investment advice. Consult your financial advisor for specific investment recommendations tailored to your specific situation.
Dynamic Wealth Group (“Dynamic”) is an SEC registered investment adviser. SEC registration does not constitute an endorsement of Dynamic by the SEC, nor does it indicate that Dynamic has attained a particular level of skill or ability. This material prepared by Dynamic is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Opinions expressed by Dynamic are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. Dynamic, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.
Dynamic does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice.
Any reference to an index is included for illustrative purposes only, as an index is not a security in which an investment can be made. Indices are unmanaged vehicles that serve as market indicators and do not account for the deduction of management fees and/or transaction costs generally associated with investable products. Past performance is no guarantee of future results. Actual returns may be lower.

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