Charting the Automation Potential of U.S. Jobs
In last week’s Chart of the Week, we noted that 1.3 million industrial robots would be installed between 2015 and 2018, and this would more than double the stock of active robots around the world.
While many of those robots will be used in the automotive and electronics sectors, there are many other roles that robots will be filling in the future. Surprisingly, according to global consultant McKinsey & Co, not all of these jobs are low-skill, low-wage jobs, either.
Mckinsey ran a comprehensive study of nearly 800 different jobs in the United States, ranging from CEOs to fast food workers. Between these roles, they found 2,000 individual work activities, and assessed them against 18 different capabilities that could potentially be automated. In their analysis, they found that 45% of work activities representing $2 trillion in wages can already by automated based on proven technology that currently exists. A further 13% of work activities in the U.S. economy could be automated if the technologies used to understand and process human language were brought up to the median human level of competence.
Who’s in, Who’s Out?
The interactive visualization above charts specific careers on their automation potential (out of 100%) along with the hourly average wage of the job.
What is most interesting about the analysis is that automation potential doesn’t correlate with low-skill, low-wage jobs as much as one may think. While it’s true that the three million fast food workers across the country have an automation potential of 74%, and that heavy truck driving activities can be 69% automated, there are also great counter-examples: for example, only 7% of manual labor and 22% of janitorial activities could be automated.
Likewise, high-paying jobs are not necessarily robot-proof.
Doctors (23%), nurses (29%), and even CEOs (25%) all have significant amounts of their jobs that can be automated with current technology. Almost half (47%) of what pharmacists do can be done by a robo-pharmacist, and 72% of commercial pilot activities can be done through computers.
Not interested in having a robot fill your shoes? Mckinsey notes at the end of their analysis that both creativity and sensing emotion are extremely difficult to automate. Focus on building skills and competencies in these categories, and you’ll be just fine (for now, at least).
How Decentralized Finance Could Make Investing More Accessible
Under the current global financial system, billions of people do not have access to quality assets. Here’s how decentralized finance is changing that.
Infographic: How Decentralized Finance Could Make Investing More Accessible
Did you know that a majority of the global population doesn’t have access to quality financial assets?
In advanced economies, we are lucky to have simple options to grow and protect our wealth. Banks are all over the place, markets are robust, and we can invest our money into assets like stocks or bonds at the drop of a hat.
In the United States, roughly 52% of people are invested in the stock market – but in a place like India, for example, this portion drops to a paltry 2%. How can we make it possible for people on the “outside” of the financial system to gain access?
Breaking Down Barriers
Today’s infographic comes to us from Abra, and it shows how decentralized finance could make investing a more universal phenomenon, especially for those that don’t have access to the modern financial system.
It lays out four key obstacles that prevent people in developing markets from investing in quality financial assets in the first place:
- The Geographic Lottery
Where you live plays a massive role in determining your ability to build wealth. In advanced Western economies, the average person is much more likely to be invested in financial markets that can help compound wealth.
- Financial Literacy and Complexity
Roughly 3.5 billion adults globally lack an understanding of basic financial concepts, which creates an impenetrable barrier to investing.
- Local Market Turmoil
Even if a person is mentally prepared to invest, local market turmoil (hyperinflation, political crises, closed borders, etc.) can make it difficult to get access to stable assets.
- The Cost of Investing in Foreign Markets
Foreign assets can be pricey. One share of Amazon is $1,800, which is realistically more money than many people around the world can afford.
In other words, there are billions of people globally that can’t take advantage of some of the most effective wealth-building tactics.
This is just one flaw in the current financial system, a paradigm that has created massive amounts of wealth but only for a specific and well-connected group of people.
Enter Decentralized Finance
Could decentralized finance be the alternative to open up access to financial markets?
By combining apps with blockchain technology – specifically through public blockchains such as Bitcoin or Ethereum – decentralized finance makes it possible to get around some of the barriers that are created by more traditional systems.
Here are some of the innovations that are making this possible:
Smart contracts could automate transactions and remove intermediaries, making investing cheaper, faster, and more accessible.
Fractional investing could allow partial or shared ownership of financial assets by using tokenization. This would make expensive stocks like Amazon ($1,800 per share) available to a much wider segment of the population.
Location independent investing is possible through smartphones. This would make it possible for people in remote parts of the developing world to invest, even without access to nearby financial institutions or local markets.
Like the internet with knowledge, decentralized finance could reshape the world by making financial access universal. Who’s ready?
How Macro Trends Shape the Market’s Future
From climate change to aging populations, macro trends are changing the future. Here’s how to use them to your advantage.
It’s hard to say for certain what the future holds.
Without the luxury of a crystal ball, investors must find opportunities by analyzing the market. There’s just one problem: the 24/7 news cycle is enough to make anyone’s head spin.
Where should an investor focus their attention, when almost every new venture is forecast to be the next big thing?
The Powerful Influence of Macro Trends
Today’s infographic comes to us from U.S. Global Investors, and it highlights how analyzing macro trends can serve as a key investment tool.
Two Main Investment Approaches
When selecting stocks, many investors fall into one of two camps:
1. Top-down Investing
- Analyze macroeconomic trends.
- Identify specific sectors and regions.
- Choose individual stocks based on company fundamentals.
Considering the aging Chinese population, a top-down investor may choose to invest in Chinese healthcare stocks.
2. Bottom-up Investing
- Complete in-depth company analyses.
- Select a stock that is outperforming others in its sector.
A bottom-up investor could analyze Home Depot and choose to invest if it had strong performance relative to Lowe’s.
These approaches can be used separately, or even combined together. Zooming out allows investors to identify the big picture opportunities. Then, a bottom-up approach can find the companies that best capitalize on each trend.
What is a Macro Trend?
A macro trend is a long-term directional shift that affects a large population, often on a global scale. For example, climate change is affecting industries in both positive and negative ways. While “green” industries have seen increased support, ski resorts are projected to have 50% shorter winter seasons by 2050.
There are a couple of main ways to identify macro trends:
- Government policy
Government policies are a precursor to change, shaping macro trends and creating opportunities. For instance, Obama’s Recovery Act fueled growth in renewable energy with a $90 billion investment.
- Economic cycles
The cyclical nature of the economy means that investors can also use history to identify macro trends. Consider fiscal and monetary policy, which is implemented in response to economic data:
- Expanding economy
The central bank raises rates and the government reduces fiscal stimulus. As a result, inflation is moderated.
- Contracting economy
The central bank lowers rates and the government increases fiscal stimulus. As a result, growth is stimulated.
- Expanding economy
Discovering Long-Term Value
Macro trends are a key tool for discovering long-term market opportunities. They are beneficial because they are:
- Unbiased and data-driven
- Not swayed by daily headlines
- Tend to avoid riskier, niche industries
- Can be diversified by sectors and regions
There are currently many macro trends at play. For example, Trump’s sweeping tax reform and deregulation boosted the U.S. economy, lifting GDP growth to a 13-year high of over 3% in 2018 Q3.
However, not everyone’s a winner. America’s reduced taxes have made Canada less competitive. It’s estimated that 4.9% of Canada’s GDP is at risk due to ripple effects from U.S. tax reform. What’s more, regulators worry that the bank deregulations might put the financial system at risk.
The proposals under consideration… weaken the buffers that are core to the resilience of our system.
— Lael Brainard, Member of the Board of Governors of the Federal Reserve
So, how do investors distill this wealth of information into a future of wealth?
Spotting the Next Wave
In today’s hyper-connected world, it’s easy to get lost in data overload. Thinking big picture allows investors to focus on trends that:
- Have a long-term outlook
- Affect a large population
- Create a clearer vision of the future
Then, an investor can target the most promising regions and sectors. When used effectively, this approach enables investors to ride the next big wave that will shape markets.
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