Swing Trading With The SPHB:SPLV Chart

The SPHB:SPLV ratio chart is showing a compelling setup for small cap stocks. The SPHB:SPLV ratio chart tracks high volatility (high beta with tendency to be small cap) stocks to low volatility (tendency to be large cap) stocks. This ratio chart is another barometer for the risk on versus risk off trade.

In a risk on market, higher growth and higher beta stocks are the name of the game. Investors go on the offense for maximum profits and their less concerned about the economy and a recession. In a risk off market, investors go on defense and move into safer and more stable (low volatility) large cap stocks.

SPHB:SPLV Ratio Chart

business sphb splv 1100x654 - Swing Trading With The SPHB:SPLV Chart

The market has consolidated a little over the last week and that was the swing long signal we were waiting for. Notice that SPHB:SPLV has broken through resistance at 0.8050 and now is pulling back to retest that level. This is a classic set up we can trade. If the 0.8050 level holds, it means previous resistance has become support and we can take a beautiful entry off that level (green arrow). Make sure to review this lesson on trading for beginners so that you know which stocks to screen for to take advantage of a turn in the SPHB:SPLV chart.

Border Adjustment Tax DOA as Retailers and Traders Celebrate Victory

Republicans have officially given up on trying to pass a border adjustment tax to even the playing field with our trading partners. The Retail Industry Leaders Association celebrated the news and said they are now ready to get on-board with the President’s tax reform.

The retail sector, and stock traders, won a significant victory Thursday when the White House and Congressional leaders announced that they have set aside a border adjustment tax that could have raised the cost of imported products by up to 20 percent.

Republican leaders said on Thursday that the proposed border-adjusted tax won’t be part of negotiations on how best to overhaul the U.S. tax code, giving a victory to retailers’ and stock traders that had opposed the measure. Retailers said that a BAT would be passed on to consumers.

For stock traders, this is a big win because 75% of GDP comes from consumer spending at the retail level. A border adjustment tax basically would play out as a consumption tax which would reduce consumer spending. You raise taxes and can do things like a border adjustment tax in a strong economy with runaway inflation where you’re trying to cool off the economy and so fiscal and monetary policy support each other. In a weak economy with flat wages and struggling consumers, you lower taxes and do things that increase consumption. We are in a weak economy and so a border adjustment tax right now would have hurt the economy and thus job growth.

Border Adjustment Tax Impact On Consumers

Some traders told me that if costs of a BAT were passed on to consumers then that would be inflationary and help the Federal Reserve achieve their 2 percent target. The problem with that logic is that what if it didn’t work? I mean it’s only inflationary if someone is willing and able to pay the higher prices caused by a BAT. What if consumption instead contracts as a result of higher prices? If demand contracts then supply contracts and that would work against supply-side economics.

A statement Thursday from House Speaker Paul Ryan, Ways and Means Chairman Kevin Brady, White House economic advisor Gary Cohn, Treasury Secretary Steven Mnuchin, Senate Majority Leader Mitch McConnell and Senate Finance Committee Chairman Orrin Hatch said that due to the unknowns associated with the border adjustment tax, they had decided to set this policy aside to be able to advance tax reform.

For stock traders this is a big win as tax reform will lower our capital gains tax and allow us to invest and trade even more. Anything that advances tax reform is a win for traders. We are very close to going into a Bear market unless President Trump’s agenda moves forward IMO.

Larry Kudlow said on CNBC:

BAT was holding things up and we buried that several times and it kept coming back… Small businesses are going to get a tax cut, that was a very important part of the Trump plan. They talked about expensing and will have unprecedented write-offs, this is very important from a cost of capital viewpoint… Repatriation is going to be in here… Unlike health care, on taxes the Trump Administration had its act together and secondly, the Republican party basically agrees with itself.

Pitched as a major revenue source in a Republican-backed tax reform program, the border adjustment tax was touted as a key to returning manufacturing jobs to the U.S. by making imported products less competitive.

Ryan and Brady, who spent over a year championing the border adjustment tax, told Republicans prior to the statement’s release that the concept would no longer be part of tax-legislation negotiations.

Target called the leaders’ joint statement a step ahead for tax reform.

By eliminating the BAT, the way has been cleared for swift action on a middle-class tax cut which will put more money in the wallets of the American taxpayer.

BAT would shift the supply curve inward as demand would drop as prices rise. Supply-side economics seeks to do just the opposite, to push the supply curve outward, not inward. Republicans taking BAT out of the tax reform bill is a victory for retailers and the economy.

I’m so happy to hear that Speaker Paul Ryan and Ways and Means Committee chairman Kevin Brady have decided to set the border adjustment tax aside and not include the controversial tax in tax-legislation negotiations. I think we finally have a chance at the first comprehensive tax reform in more than 30 years. However it leaves a question as to how to pay for these tax cuts. The BAT would have raised more than $1 trillion over a decade, according to estimates. A BAT would have helped pay for tax cuts for everybody. The problem though is that with a BAT included in tax-legislation negotiations, there’s no way tax-legislation would have passed. It was a catch 22.

Without BAT revenue, it is going to be more difficult for Republicans to keep the tax cuts permanent and to produce the kind of tax cuts that President Donald Trump has promised. Under the budget rules that GOP leaders plan to use, any tax-legislation changes that increase the deficit can only be temporary.

I think that the Federal Reserve should sell-off its balance sheet and use that money to send to the Treasury to pay for tax cuts. Have the Federal Reserve do something that’s good for the American people and main-street instead of always focusing on what’s good for Wall Street. We could corner the debt on the balance sheet of the Federal Reserve instead of the Federal Reserve spending our tax dollars and then leaving the debt cornered with the public. I’m just throwing that idea out there. That’s what we have to do. We need to come up with creative and alternative ways of paying for big permanent tax cuts.

Congressional tax writers will need to consider multiple ways of raising revenue to pay for tax cuts from various businesses by closing loopholes.

Here’s an idea. Let’s push NASA to advance the space-mining industry and then any proceeds gained from NASA mining an asteroid would go to pay for tax cuts. Just one asteroid mined could be worth trillions of dollars in tax cuts.

If you have any creative ideas for how to pay for a big permanent tax cut, leave your comments below.

FOMC Announcement Pushed US Dollar Down Big Time

The dollar did a big drop today after the FOMC announcement left rates unchanged. The Federal Reserve said the reduction of the balance sheet will begin relatively soon. I think relatively soon means September 2017.

The Fed seemed to indicate that “gradual” policy tightening will continue.

The Federal Reserve will begin winding down the stimulus program it embarked on to save the economy from the financial crisis. As expected, the Fed unanimously declined to raise interest rates.

The Fed predicts inflation will stabilize around the Committee’s 2% objective over the medium term despite inflation being below 2% in the near term. The Fed said they continue to expect “gradual increases in the federal funds rate”.

Fed Announcement Pushed Down the US Dollar

What the drop in the US dollar is telling us is that the Federal Reserve is dragging its feet. Just a few months ago, the Fed suggested we would get a rate increase in September. Instead, the Fed has backed off of that and now is toying with the balance sheet. The Fed seems to be telegraphing that it wants to slow down on tightening if inflation and wages don’t play out the way that they expect. I think the low inflation rate and low wage growth is really bugging the Fed because inflation should not be this low, at this time, in the economic cycle. Without a threat of runaway inflation, I think the Fed now feels that there’s no reason to rush another rate hike. This is all dovish which explains why the US dollar took a big dump today.

The FOMC announcement suggests they will begin quantitative tightening (QT) in September as they begin rolling off the $4.5 trillion portfolio of bonds it has accrued on its balance sheet, largely in the years after the crisis and the Great Recession. Balance sheet reduction is really the new QT as explained here.

The committee expects to begin implementing its balance sheet normalization program relatively soon, provided that the market evolves as expected.

The Fed also offered a bit more information on the balance sheet reduction strategy. Having ballooned to $4.5 trillion thanks to QE, the Federal Reserve has already announced a strategy of gradually limiting the reinvestment of proceeds of maturing assets. The question has been the timing. This statement suggests it will begin “relatively soon”, whereas previously they had merely stated it will start this year. I think traders are pricing in a balance sheet reduction to start either in September or October. Efforts will entail allowing a restricted level of proceeds from the bond portfolio to run off. The program will begin at $10 billion per month and increase to $50 billion. Fed officials estimate that once the program has run its course, the balance sheet will probably still exceed $2 trillion.

Chair Janet Yellen and many others have suggested that the balance sheet runoff should not be disruptive to markets, though it’s possible that QT may push up rates if demand for the bonds the Fed is rolling off are not absorbed by private markets and central banks in other countries. However, we do not see any sign of that happening yet.

Janet Yellen really tried to downplay the planned balance sheet reduction last month.

The other big focus in Wednesday’s FOMC announcement was the Fed’s perspective on inflation. The core personal consumption expenditures index has dropped away from the central bank’s target for the last four months. The softer inflation figures together with the probability of a September balance sheet reduction means that December is likely the next month the Fed will consider hiking rates.

General inflation, excluding energy and food prices, has declined and is running under 2%.

Fed Board Chair Janet Yellen told Congress that temporary variables like prescription drugs and cheaper cellphone programs were behind the inflation downturn.

Markets didn’t expect the Fed to increase rates at this meeting. Dealers from the fed funds futures market are assigning about a 50-50 chance the central bank does one more rate hike before the year’s end.

In assessing the economy, the FOMC announcement showed that the committee held to its assessment that action was rising moderately so far this year. On inflation, the statement removed the word “somewhat” from June’s verbiage and said simply that inflation was running “under two percent,” a subtle tweak which nonetheless probably signifies officials are somewhat more cynical about reaching their mandated objectives.

Average hourly wage growth was stuck around 2.5 percent. Other inflation measures are even lower, with the Fed’s preferred estimate, the personal consumption expenditures index, at 1.4 percent.

Looking further ahead, we are still on with the prediction for two rate increases in 2018, anticipating reasonable 2-2.5% GDP growth over the next year and a likelihood that inflation will slowly return to target, helped by a tight labor market and the possibility of a gradual uptick in wage growth.

If you have any thoughts on the FOMC announcement feel free to comment below.

Here is the full FOMC announcement.

FOMC Announcement

Information received since the Federal Open Market Committee met in June indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have been solid, on average, since the beginning of the year, and the unemployment rate has declined. Household spending and business fixed investment have continued to expand. On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

For the time being, the Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee expects to begin implementing its balance sheet normalization program relatively soon, provided that the economy evolves broadly as anticipated; this program is described in the June 2017 Addendum to the Committee’s Policy Normalization Principles and Plans.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; and Jerome H. Powell.

Corporate Bond Yields Spread Falling… Another Bullish Indicator

Corporate bond yields spreads are falling which suggests there is a low default risk. Using Fred and Moody’s we can chart the spread between lowest investment grade (Baa) and equivalent 10-year Treasury yields.

Corporate Bond Yields Spread Chart

Corporate bond spreads are at there lowest point since 2008. This suggests that markets are pricing in a very low risk of default which is bullish for the economy.

BAA Corporate Bond Yield

Corporate Yield of a Moody’s Graded Bond. For instance, a Seasoned AAA Corporate Bond of 30 Year is the yield return of bonds graded AAA by Moody’s with a maturity of 30 years. Bonds less than specified timetables are dropped along with bonds with redemption and rating risks.

Moody’s BAA corporate bond yields are instruments based on bonds with maturities of 20 years and above. For instance, a seasoned BAA corporate bond of 30 Year is the yield return of bonds graded BAA by Moody’s with a maturity of 30 years. Bonds less than the specified timetables are dropped along with bonds with redemption and rating risks.

The credit ratings of AAA and BAA are the two ends of the ratings spectrum for investment-grade corporate bonds as provided by the Moody’s rating agency. The yield difference between bonds with these ratings has historically indicated whether the economy was in a period of recession or expansion.

The credit-rating agencies Moody’s and Standard & Poor’s provide credit ratings on bond issuers and their bonds to give investors an idea of the investment reliability of the bonds, concerning the payment of interest and principal. AAA is the highest bond rating and indicates the safest bonds for investors. Bonds rated below BAA — BBB from Standard & Poor’s — are considered to be non-investment grade. That makes the BAA rating the lowest investment grade rating. The lower the credit rating, the higher the yield a bond will pay.

The corporate bond yields spread chart above shows riskier BAA rated bonds (lowest investment grade rating), versus 10-year Treasury yields. In periods of higher default risk, the plot rises. The plot falls in periods of lower default risk.

U.S. Treasury yields are falling because of low inflation. With inflation so low, the Federal Reserve will likely not raise interest rates again until 2018. Remember, the main reason the Fed raises interest rates is to combat inflation in an over-heated economy. Clearly we do not have that.

Tax cuts and a $1 trillion infrastructure spending program would push inflation higher.

With Congress failing to repeal and replace ObamaCare, it is pushing the Trump Administration’s tax cuts and infrastructure jobs program out further. Inflation is staying low for longer as a result.

The Federal Reserve now is in a position where they do not need to raise rates to combat inflation. As a result, the Fed funds futures rate has dropped and is now showing about a 40 percent chance of a rate hike in December 2017.

Next week when the Fed meets, we could get clarification on when they will begin unwinding their $4.5 trillion balance sheet.

If you have an opinion on what the drop in corporate bond spreads means, please add your comment below.

Stock Market Bubble Prediction News… NOT!

It’s funny how the same contrarians who said the stock market was going to crash because it was in a bubble back in 2011, 2012, 2013, 2014, 2015, and 2016, are still saying the same thing today.

Seriously, there are no contrarians still left today that trade. This 8 year bull market has killed them all off. Even the really rich ones who had millions of dollars to trade with back in 2009 are gone.

The only place today where contrarians can make money is through internet newsletters and selling their contrarian opinions to other traders and investors.

This week’s show features commentary on Madison Square Garden stock and trading outside your comfort zone.

Help us spread the word about what stocks are hot and what’s going on in the stock market and economy. We’re reaching thousands, help us reach millions by sharing this show with your family and friends.

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Breakout On Southern Copper Stock as Doc Copper Surges

Doc copper, our favorite indicator for the health of the global economy, is looking strong of late which has led to a breakout in Southern Copper stock.

Copper is close to testing its resistance zone at $2.88. A decisive break above this level would close the neckline of a Bullish Inverted Head and Shoulders pattern.

Southern Copper Stock

Fundamentally, this company is a beast. SCCO’s Return On Asserts of 6.89% is among the best returns of the industry. SCCO outperforms 95% of its industry peers. The industry average Return On Assets is 0.93%.

SCCO’s Profit Margin of 165.88% is among the best returns of the industry. SCCO outperforms 96% of its industry peers. The industry average Profit Margin is 100.09%.

Southern Copper’s EPS is expected to grow by 37.79% on average over the next 2 years. This is very strong growth.

The time to buy Southern Copper stock was on the pocket pivot (blue dot). Darn! Do not chase SCCO higher. This chart is not a good setup right now as prices have been extended to the upside. Here’s what I’d like to see SCCO do and where I think we could enter.

The idea is to wait for a pullback and then consolidation on a momentum squeeze off support. If previous resistance becomes support and we get a candle over candle reversal off this level, that’s the time to go long. Add Southern Copper to your watch list and look for the setup.

Jolts Job Openings Down But Hiring Up

The JOLTS Job Openings report showed U.S. companies posted fewer job openings in May but hiring picked up and people are quitting their jobs — both bullish signs for the economy.

New government statistics show American companies have made progress filling their record number of job openings, as hiring rose in May while the amount of job openings in the labor market dipped to just shy of 5.7 million.

JOLTS Job Openings

There were broad increases in professional, retail, and business services. That narrowed the gap between job openings and hiring, which had raised concerns of a skills mismatch in the market.

JOLTS job openings dropped 5 percent in May to 5.7 million, the Labor Department said Tuesday. Meanwhile, hiring rose 8.5 percent to just under 5.5 million.

The hiring rate rose two-tenths of a percentage point to 3.7 percent.

The Bureau of Labor Statistics’ monthly JOLTS job openings report — an acronym for Job Openings and Labor Turnover Summary showed openings in May dropped off to the lowest level since January.

The job openings dip in May shows further evidence that the economy is hitting the wall of maximum employment.

This JOLTS job openings report is a sign the market at 4.4 percent unemployment is nearing full employment when almost all people who need a job have one and the unemployment rate mainly reflects the normal churn of people that are temporarily out of work. Usually when unemployment drops this low, companies have to offer more pay. I think faster wage growth is coming.

As the bull economy ages, there is going to be fewer available jobs out there simply because companies have hired all the workers they need for now.

Hiring, meanwhile, surged north of 5.4 million to the highest level the market has seen since December 2015. Substantial upticks in hiring from business and professional services, and educational services, resulted in 25,000 and 121,000 more employees than the month before.

The JOLTS report is among the data watched by Federal Reserve officials as they track both inflation and the labor market.

Quits are typically regarded among analysts as a sign of optimism that employees feel good about their choices.

The amount of people quitting their jobs has increased 7.1 percent to 3.2 million. People usually quit when they either find a new job, often at higher pay, or are convinced they will be hired elsewhere. Quits gauge workers’ willingness to depart present positions in search of higher wages. Coupled with increased hiring across sectors, the equally broad-based increase in the quit rate bodes well for continued wage gains.

Average hourly earnings have failed to break above 2.5 percent on a year-over-year basis. Economists say a growth rate of between 3 and 3.5 percent in salary is needed to bring inflation near the Fed’s 2 percent target.

Layoffs were also up in May at nearly 1.7 million, tying March for the second-worst month so far this year. That’s still a respectable level at this stage in the economic recovery, but layoff upticks were seen across many different industries such as education and health services. Still, current job growth is more than enough to absorb the uptick in layoffs.

Corporate Tax Revenue By Year Is Down Suggesting Economy Is Weakening

If the economy is booming tax revenues rise as companies generate greater revenue, resulting in them paying more in taxes. If the market is rolling over, the effectiveness of corporate taxation drops as companies close up shop and stop paying taxes.

Corporate Tax Revenue By Year Shows Economy is Rolling Over

In 2014 tax revenues were about $55 billion. In 2015 tax revenues were about $57 billion. In 2016 tax revenues were about $60 billion. In 2017, tax revenues have plunged to about $50 billion.

The last time we saw local and state tax revenues roll over like this was in late 2007 and early 2008.

Source: WSJ Daily Shot

Corporate tax revenue by year has turned down prior to every post-WWII recession. It suggests that America’s corporations are experiencing a deterioration in earnings.

With financial indicators flashing warnings signs, it seems like the US market is heading toward big trouble rather than revival.

Corporate tax revenues by year are difficult to fake. The money either came in the door, or it didn’t.

Despite a surge in optimism after the election of President Trump, nominal GDP growth in 2016 was just 2.95% making it the second-worst year on record since 1959.

Each time corporate tax revenue by year declines, the stock market sells off.

Source: Graham Summers, Chief Market Strategist, Phoenix Capital Research

In its latest report, the Congressional Budget Office said the tax income of the government is currently currently running -3% below projections within the previous eight months, which works out to a shortfall of as much as $70 billion.

Machines and Computer AI Are Not Going To Take All Our Jobs, Here’s Why

A vigorous debate is going on between economists, stock traders, and investors on if computer A.I. and automation will take all our jobs and destroy the economy. I have been studying this issue for more than a year and I’m ready to give you my final opinion on the subject.

Please take a moment to watch this video of two of my economics teachers debating if machines will take all our jobs and thus destroy the economy. This will give you a good economics foundation on both positions so I can give you my opinion without rehashing the entire argument.

At first, most people will support Tyler Cowen’s position that computer A.I. and automation is bad for the economy. But over time, I think you’ll come to the decision that Alex Tabarrok’s position is the right one.

Let’s take Tyler Cowen’s argument to the extreme. Let’s say that computer automation continues to eliminate good paying jobs and that rich CEOs and business owners make crazy profits while the rest of us go broke without a job. In this scenario, millions of people will be without jobs.

The unemployment rate would rise about 10%, then 15%, then 20% and beyond. What would happened to consumer spending? It would drop as nobody would have any money to buy what these rich CEOs and business owners are producing.

For example, Amazon takes over Whole Foods, eliminates thousands of cashier jobs, and replaces those jobs with automated checkout stands. This lowers the price at which Amazon sells food because of lower labor costs. Now Albertson’s and Walmart, they follow what Amazon does so they too can compete on price. Soon the entire grocery industry becomes mostly automated. Now imagine that this plays out across many sectors beyond just grocery as millions of jobs are replaced by computer automation. If that happens, who is buying what the computer automation is producing? Nobody.

The rich will stop getting richer and the entire economy will implode as the human race destroys civilization through expanded automation and the pursuit of greed at any cost.

Rich people are not stupid. They know that employees are also their customers. Rich corporations and CEOs are not going to advance an agenda that is ultimately going to result in their own destruction. But it’s more than just that, it’s economics.

If computer A.I. and automation caused massive unemployment and poverty, consumer demand would fall through the floor and there would be no demand for the products that computer A.I. and automation creates. Therefore, economics tells us that if there’s no demand, these services and products would cease to exist. Corporations would have no need for automation and so they would stop investing in it and developing it.

Here’s another example. Back in the early 80’s, I was a computer programming prodigy. I learned programming on a Commodore 64 and did things that blew people away. I was going to be a computer programmer when I got out of high-school, or so I thought. By the time I graduated high-school, coders like me with mad skills were obsoleted by “canned software”. Was I out of a job opportunity? Not really. 3D video games used canned 3D engines which allowed games to be produced by a greater number of businesses. Because the engines driving the 3D games were “canned”, it brought down the cost of video games. More people could afford video games at $30 instead of at $90 or more back before canned software. An entire gaming industry rose up and is now a multi-billion dollar industry.

The Internet came soon after and so I started programming websites. I learned Java, HTML, SQL, and PHP. Just when I was getting really good at programming websites, along came the “canned” software again. AOL came out with Rainman in the early 90s and back then, AOL pretty much was the internet for most people. I still got a little bit of work from various businesses but then came out BBS’s which allowed anybody to set up a message forum and put up a dial up website. In the early 2000s came WordPress, another “canned software” that greatly reduced the need for my programming skills. Every business on the planet began putting up a website and shopping cart and the ability to buy things online was born. People began making money selling things online. Was I out of a job? Not really. WordPress lead to millions of people putting up websites and so I finally got smart and realized the money was in content production and selling online and not in computer programming.

If computer automation was something that was so bad for the economy, then why has the internet and automation made the world better for so many people regardless of their income class? If automation (which is what “canned software” essentially is) was something that was bad, economics and the law of supply and demand tells us that its value would eventually go to zero and such automation would stop because their would be no demand for it. But that’s not what has happened. Today, millions of Americans make money online with automated CMS platforms.

I could go on. What about stock trading? Back in the 70s and early 80s, you had to call a broker on the phone and pay $120 a trade or more if you wanted to invest in the stock market. When the internet came out and the discount broker industry sprang up, brokers said it was going to destroy their industry. Did it? Not really. With cheaper trading fees of $10 a trade and lower, millions of Americans began investing in the stock market. Brokers went to work for online discount brokerage firms as more people than ever started investing and stock trading. If the internet and automation was a bad thing, the value of online brokerage firms would eventually drop to zero as demand for their services would eventually come to an end. That’s not what happened. In fact, entire new trading software companies sprang up and even stock trading blogs like GuerillaStockTrading came into being.

Computer automation has created new jobs that no one could even imagine 40 years ago. Automation has increased wealth across all income classes as prices are lowered so consumers are happier and can buy more with their hard earned dollars. The economy becomes deeper and more diverse as life becomes richer with greater opportunities for everyone, even someone who is disabled with Muscular Dystrophy (M.D.) like myself that can’t do a more physically demanding job.

Computer automation has led to so many opportunities that years ago, a disease like Muscular Dystrophy (M.D.) would have doomed me to poverty because physically I’m unable to do a lot of jobs. Today, I can work a day job in an office as a bookkeeper and in IT support, and at night I can stock trade and produce value for others over the internet blogging about the stock market. I’ve never been on government assistance and a burden to tax payers even though I have M.D. thanks to computer automation creating a deep and diverse economy.

For every change there’s always another opportunity of equal or greater value waiting.

Therefore, my final opinion on computer A.I. and automation is that it’s a positive for the economy. I don’t believe that computer A.I. and automation is going to take all of our jobs because of economics and the law of supply and demand. If it did take all of our jobs, it would cease to be. Our goal then is to find emerging opportunities in this space that we can invest in and make a fortune over the coming years.

You may be angry because you lost your job to automation and so you don’t agree with me. That’s fine. I understand this is a highly debated topic even among brilliant economists. This is only my personal opinion based on my own life experiences and observations that I wanted to share with you.