NWP Monthly Digest | February 2023
The technology sector is going through another reset. I think we can officially call 2022 the end of the second era of the modern technology boom, the first being the internet/dotcom hysteria that ended at the turn of the century, and the second was the movement into social media and the “everyone gets their 15 minutes of fame” era.
While it’s hard to say exactly what the third era will consist of, a good bet would revolve around Artificial Intelligence or AI. The concept of AI is extremely intimidating and it’s easy to fall prey to hyperbole. There are many that will immediately conjure up ideas of the Terminator movie franchise and Skynet, the highly advanced computerized defense system in the movie that learns through artificial intelligence that humans are the biggest threat to its existence, thus creating a need to destroy them.
There have been stories circulating the interwebs about members of Google’s AI team quitting because the technology began to scare them and started to show signs of sentience (subjectivity, consciousness). Elon Musk has quipped that we “are summoning the demon” by continuing to develop AI technologies. Scary stuff, indeed.
Baseball analogies are overused, but if we were to apply one to the field of AI, we’re barely in the first inning. Perhaps only a couple of pitches have even been thrown at this point. In other words, we have a long way to go before we start to see what this nascent technology is going to bring us, both good and bad.
The most popular talk recently in regards to AI surrounds “generative AI”, specifically Dall*E and ChatGPT. Both of these programs were built and owned by the company/non-profit group OpenAI, which recently sold a piece of its future revenues to Microsoft for $10 billion.
What the heck is “generative AI”, Jeff, and why would Microsoft take such a big swing on its future?
In normal-people language, it is a computer program that can generate either text or visual artwork with just a few prompts. ChatGPT will produce the text, Dall*E the artwork. If you haven’t experimented with it, I highly recommend doing it just for the entertainment value. If the obvious freak-out hasn’t hit you, yet, most people seem to be terrified that young students will never have to write a paper again and artists won’t actually create artwork anymore. The pro-AI folks, however, seem to believe that this will become a tool that is additive to the creative process. A common analogy is that math didn’t go away with the invention of calculators, and generative AI will not destroy, but enhance the creative process.
An image created with Dall*E using the prompt “a baseball pitcher playing baseball in the future in the form of a robot”
In this month’s newsletter, I decided to see what ChatGPT could come up with after a few prompts to potentially enhance what a financial advisor like myself might like to write for his or her audience. Let’s see what happens…
The first prompt I used was to compare the dreadful year the stock market had last year to the Great Financial Crisis of 2007-2009.
2008 vs 2022: A Comparison of the Stock Market
The stock market has come a long way in the past 14 years. From the financial crisis of 2008 to the growth of technology companies in 2022, there have been many changes and events that have impacted the stock market.
2008: The Financial Crisis
• The housing market crash of 2008 led to the collapse of many banks and financial institutions.
• The stock market suffered one of its worst declines in history, with the Dow Jones losing over 50% of its value from its peak.
• The government implemented measures such as the Troubled Asset Relief Program (TARP) to stabilize the economy and prevent further damage.
2022: The Rise of Tech
• The tech sector has dominated the stock market in recent years, with companies such as Apple, Amazon, and Tesla reaching record high valuations.
• The growth of technology and the increasing use of the internet have led to a surge in demand for tech stocks.
• The COVID-19 pandemic accelerated the shift to online shopping and remote work, further boosting the tech sector.
Overall, the stock market has seen a significant recovery since the financial crisis of 2008. While the tech sector has played a significant role in this growth, it is important to remember that the stock market is a volatile and ever-changing entity, and investors should always exercise caution when making investment decisions.
I certainly don’t love it. It’s a lot of very simple bullet points without the nuance you would hope to get from a more thoughtful writer. It would be incredible if it pulled out a mind-blowing stat like the one I saw from Aswath Damodoran (NYU professor, Sterns School of Business) this week - 2022 was the only year in the last 95 years that produced double-digit, negative returns for both stocks and bonds. That would be cool.
But, for some interesting reason, ChatGPT really doesn’t like to get into the discussion of past returns. When I prompted it to provide me with historical, annual total returns for the S&P 500 going back to 1973, I got this:
I'm sorry, I don't have a specific annual total return for the S&P 500 index going back to 1973. The S&P 500 index is a market-capitalization-weighted index of 500 leading US companies and its returns fluctuate from year to year. It is best to consult a financial advisor or historical data provider for a more accurate and comprehensive answer.
It seems as though every compliance officer in the country has already gotten their teeth into OpenAI! The only thing this response was missing was the obligatory “Past Performance is not Indicative of Future Returns”.
Could ChatGPT get a little more in-depth if I provided a better prompt? Or, at least, a much more specific prompt? I went with this to see what I could get and was hoping for an outline for a future piece on inflation - “describe the malicious impacts of inflation written like an economist”…
Inflation, defined as a persistent rise in the general price level of goods and services in an economy over a period of time, can have devastating effects on an economy and its citizens.
From an economic perspective, inflation erodes the purchasing power of money, making it harder for consumers to afford basic necessities such as food, housing, and healthcare. This can lead to a decrease in consumer spending, which in turn reduces demand for goods and services and contributes to a slowdown in economic growth.
Furthermore, inflation can also lead to uncertainty and instability in financial markets. When inflation expectations rise, investors may demand higher returns to compensate for the expected loss of purchasing power, leading to higher interest rates and increased borrowing costs for businesses and individuals. This can result in reduced investment and decreased economic activity.
In extreme cases, high inflation can also lead to currency devaluation and hyperinflation, causing a loss of confidence in the economy and leading to a further decline in economic activity.
To mitigate the effects of inflation, governments and central banks often implement monetary policies aimed at controlling the money supply and interest rates. However, these measures can also have unintended consequences and must be balanced against other economic objectives, such as employment and economic growth.
In conclusion, inflation is a complex economic phenomenon with far-reaching consequences for both individuals and the economy as a whole. It is important for policymakers to carefully consider the potential costs and benefits of any actions taken to address inflation and to implement policies that promote both stability and economic growth.
Taking a different turn, I was thinking of using the tool as a way to help with marketing content that someone might use on a website. I prompted ChatGPT to provide a summary of the best reasons someone would want to consider using a financial planner and got this:
1. Achieve financial goals: A financial planner can help you clarify and prioritize your financial goals and create a plan to achieve them.
2. Manage money effectively: A financial planner can help you manage your money effectively and make the most of your income.
3. Minimize taxes: A financial planner can help you minimize your taxes and ensure that you are taking advantage of all tax benefits and credits that you are entitled to.
4. Reduce debt: A financial planner can help you reduce your debt and create a plan to pay it off.
5. Plan for retirement: A financial planner can help you plan for your retirement and ensure that you have enough money to live comfortably in your later years.
6. Prepare for unexpected events: A financial planner can help you prepare for unexpected events such as illness, injury, or job loss.
7. Navigate complex financial products: A financial planner can help you navigate complex financial products such as stocks, bonds, and mutual funds and make informed decisions about your investments.
8. Monitor and adjust your plan: A financial planner can help you monitor your financial plan and make adjustments as needed to ensure that you are on track to reach your financial goals.
While this is a pretty good list, it’s very dry and not something I personally would use as a starting point for a piece on the benefits of our services.
Anyone working with artificial intelligence, either generative AI like OpenAI or something like the autonomous driving (read: autopilot) programs that Google, Apple, and Tesla are working on, will tell you that they’re just getting started. It’s not hard to make a leap into the future and see us all getting into taxi cabs with no drivers and young college students being busted for cheating because they used ChatGPT to write their term papers. But we’re not there, yet.
The most entertaining piece I was able to create with ChatGPT might have been from the prompt, “write about the benefits of insurance in the style of Shakespeare” - and it produced this masterpiece:
Good insurance, thou art a trusty friend, A shield against life's troubles to attend. Thou bringeth peace to mind, and heart's delight, In sickness and in health, thou art in sight.
With thee, dear insurance, worries do depart, And leaveth one with joy within the heart. Thou art a guarantee in times of need, And offer solace in life's every deed.
Thou helpeth with the costs of health so dear, And lessens burden on the purse so clear. Thou protecteth assets, wealth and home, And guardeth against fate, so stern and unknown.
So let us all embrace thee, good insurance, For thou art a blessing, so rare and immense. Thou art a comfort, a friend indeed, In this world, so full of woe and misdeed.
Noble Wealth Pro Tip of the Month
It’s February 1st, and as I continue to wish everyone a “Happy New Year” or forget to write the year 2023 (instead, I continue to write 2022), others are getting prepared for tax season.
Here’s a checklist you can use to get a head start on your taxes this year so you aren’t running around like a chicken with your head cut off on Monday, April 17th, and avoid having to file an extension.
Get started early
The best time to plant a tree was yesterday. And the best time to start getting ready for tax season is today. You should already be receiving your tax documents from your employer (if you have one) and your investment accounts.
Have a folder, both physical and digital, for all of your tax documents that apply to 2022
If you are using a tax preparer, utilize their “Tax Organizer” and take 15 minutes on a weekend to go through the whole document
Also worth noting: if you’re using a tax preparer, be ready to communicate quickly when they need information or have questions
Here is a checklist from the IRS if you are a DIYer - IRS Tax Preparation Checklist
If you still feel like you’re missing things, look at last year’s tax folder and tax return to help jog your memory
Taxes are not a conspiracy and they don’t have to be hard. Help yourself or your tax preparer by simply being organized and having the information you need in one place.
Things We’re Reading and Enjoying
This podcast inspired this newsletter and the discussion Ben and Derek (no relation) go into is fascinating about the current state of the AI world and its potential for the future. Derek’s podcast, like his writing, is easy to understand and digest.
"The story of 2022 was the emergence of AI," wrote Ben Thompson, the author of the Stratechery newsletter and podcast. "It seems clear to me that this is a new epoch in technology.” Ben and Derek talk about ChatGPT, Stable Diffusion, the state of generative AI, and how the biggest tech companies will try to wrangle this fascinating suite of new tools.
Surrender: 40 Songs, One Story | by Bono
Bono’s new book about his life, both personal and with his band, U2, is designed to be read in pieces so that you can pick it up and start from anywhere or simply allow the story arch to unfold in order. Each chapter is inspired by a song written by U2.
NEW YORK TIMES BEST SELLER • Bono—artist, activist, and the lead singer of Irish rock band U2—has written a memoir: honest and irreverent, intimate and profound, Surrender is the story of the remarkable life he’s lived, the challenges he’s faced, and the friends and family who have shaped and sustained him. • A VOGUE BEST BOOK OF THE YEAR
“Surrender soars whenever the spotlight comes on. Bono is never more powerful, on the page or the stage, than when he strives for the transcendence that only music can offer...[Bono] is open and honest, with language that can be witty and distinctive, addressing his competitive relationship with his father or growing up against the backdrop of Ireland’s political violence.” —The New York Times
-Your team at Noble Wealth Partners
“There is nothing noble about being superior to your fellow man. True nobility is being superior to your former self.” Ernest Hemingway