Technomyopia
Client Newsletter Volume XXXIII Number 4 August 1, 2026
Technomyopia
Published March 18, 2026 in The Economist:
“Stockmarkets are, in a literal sense, fortune-tellers: their job is to foresee which businesses will make money in the future and which won’t. When things aren’t changing much, this is a simple matter of extrapolation. When change happens, it gets harder. This is obviously true in times of acute change, such as the fog of war currently enveloping the world. Yet it is also true of slower-moving but more profound disruption, like that being wrought by artificial intelligence.
Confusion over AI is everywhere. Goldman Sachs has created a share-price index of firms at most risk of disruption. Over the past year this has fallen by more than 20%. The bank’s mirror index of ‘long-term AI beneficiaries’, whose earnings stand to get the biggest boost from higher AI-fueled productivity, is down by about 5% even though many stockmarkets are near record highs. Often investors cannot even decide whether the firm is an AI winner or loser.
Bond traders, for their part, think it is all much ado about nothing. In a world of AI-fueled economic growth real interest rates should rise. But at 4.9%, yields on 30-year Treasury bonds are little different to where they were at the start of the year. When [two authors} at MIT analyzed bond-market moves around big AI model releases, they found that long-term bond yields fell. Depending on where you look, then, AI is both everything and nothing; an existential risk for firms and a rounding error for the economy.
[The Economist’s] research results suggest the stockmarket struggles to capture structural economic changes. This chimes with the work of Song Ma of Yale University. Even when companies’ technological base is becoming obsolete (measured by how cutting edge their patents are), analysts tend to overestimate future profitability, Mr. Ma finds. This props up the share prices of obsolete firms.
It would not be a surprise if today’s investors, following Mr. Ma’s results, were overestimating the AI threat to some firms but underestimating the danger to others. There is, after all, even more uncertainty about AI transition than there was about previous technological shifts. Two reasons stand out. The first concerns the technology itself. AI capabilities have improved rapidly in certain domains, notable coding. But progress is uneven across tasks. Performance on open-ended writing and idea generation is not noticeably better than it was a few months ago.
The second source of uncertainty concerns the economics of superintelligent AI. No one knows to whom the profits of such ‘artificial general intelligence’ would accrue.
In a world where fundamental views of AI switch quickly, today’s losers could end up as tomorrow’s winners. Much will depend on how well firms deploy AI to improve their offering to clients. Innovating your way out of supposed technological threats is a common theme in business history.
Fans of efficient markets may be maddened by this inability to peer accurately into the future. But markets reflect only the collective wisdom of today’s investors. For as long as conversations between two Silicon Valley technologists produce three answers about AIs impact on the world, no one will be the wiser.”
Smartt comment: our very broadly based exposure to the stock of individual enterprises reduces, to some extent, both our ability to pick winners and to avoid losers. We generally own the stock of both.
Turning to the effects on individuals, not as investors, but as employees is the following article from Yahoo Finance published on June 5th of this year:
“The AI Labor Shock is Starting to Show up in Layoff Data<
The AI trade has mostly been measured in stock prices, capital expenditure plans, and chip demand. Now its starting to gain momentum in layoff notices. Employers cited artificial intelligence for 38,579 job-cut announcements in May, the highest monthly total for AI since outplacement firm Challenger, Gray and Christmas began tracking layoff reasons in 2023.
[The] technology [sector] remains the center of pressure.
The sector announced 38,242 cuts in May, its highest monthly total since August, 2024, bringing the total to 123, 653 so far this year. That is up 66% from the same point in 2025.
That does not mean AI is suddenly breaking the whole labor market.
Challenger itself framed the shift more narrowly, saying AI is not yet the ‘jobpocalypse’ some predicted. That distinction is important. The signal is not that the whole labor market is cracking. It is that companies are increasingly using AI as a reason to restructure, reduce headcount, and rethink what kinds of workers they need.
Official labor market data still shows a more mixed picture. Professional and business services job openings bounced [up] in April, according to BLS JOLTS data even as hires and layoffs fell. In other words, employers may still be looking for workers—just more slowly, more selectively, and with more pressure on white-collar roles that can be automated, consolidated, or delayed.”
If you have questions about this, please contact me.
What are YOUR and MY Asset Allocations?
Each of us has a different ability to live with uncertainty (risk) and so our investments will be different:
| As of June 30, 2026 | Clients | John Smartt |
| Money Market Funds | 1.0% | 2.7% |
| Bond Funds | 28.6 | 12.0 |
| Stock Funds | 70.4 | 85.3 |
| Totals | 100.0% | 100.0% |
Remember each of us has different goals and needs, and our asset allocation should fit us and our family. If you have questions about your asset allocation, or your retirement plan investments, I’d be pleased to assist.
If you have questions, don’t hesitate to contact me.
Vanguard Rates of Return (through Latest Quarter End)
| Performance percentages are per Morningstar. Amounts in parentheses are percentile rankings.(1= best and 100= worst) within category. | ||||||||
| Periods ended June 30, 2026 | Yr.-to-date | 5 Years | 10 Years | |||||
| Total Stock Market Index Admiral | 11.1% | (29) | 12.2% | (48) | 15.0% | (34) | ||
| Tax-Managed Capital Appreciation Admiral |
10.4% |
(37) | 12.7% | (37) | 15.4% | (21) | ||
| Tax-Managed Small Capitalization |
24.2% |
(29) | 7.4% | (60) | 11.5% | (47) | ||
| Total Int’l Stock Index Admiral | 14.0% | (23) | 8.8% | (46) | 9.9% | (37) | ||
| Balanced Index Admiral | 7.0% | (47) | 7.5% | (30) | 9.7% | (23) | ||
| Total Bond Market Index Admiral | 0.7% | (36) | 0.1% | (45) | 1.5% | (57) | ||
| Interim-Term Investment-Grade Bond | 0.6% | (86) | 1.2% | (18) | 2.7% | (41) | ||
| High–Yield Corporate Bond | 1.5% | (79) | 3.9% | (45) | 5.2% | (47) | ||
|
For comparison, here are several stock and bond benchmarks: |
||||||||
| Periods ended June 30,2026 | Yr.-to-date | 5 Years | 10 Years | |||||
|
S & P 500 (large stocks) |
10.2% | 13.4% | 15.5% | |||||
|
Russell 2000 (small stocks) |
22.6% | 7.0% | 11.6% | |||||
|
MSCI World Index |
9.7% | 11.5% | 13.1% | |||||
| Bloomberg US Aggregate Bond Index | 0.6% | 0.1% | 1.5% | |||||
| ICE BofA US High Yield Master TR (bond index) | 1.9% | 4.1% | 5.7% | |||||
Vanguard mutual funds and ETFs (exchange-traded funds) continue to perform as expected. I expect each Vanguard fund or ETF, for each ten-year period to be in the top 1/3 before taxes based on low cost, and they ought to be in the top 1/4 (stock funds) after income taxes.
The Vanguard High Yield Corporate Bond fund takes significantly less risk that the average “high yield” (also known as “junk bond”) fund. The Vanguard fund, which takes less risk, continues to rank highly in the rankings over the last ten-year period. Over the last ten years, the Vanguard fund has captured about 3/4 of the excess of junk bond returns over good quality bond returns—meeting my expectation. I continue to believe that, for tax-deferred accounts, this fund is a reasonable, additional diversification and comprises some of my personal bond holdings.
If you have questions about your investment asset allocation, please contact me.
15 Everyday Purchases that Secretly Drain…Wallets
This was published December 5, 2025 in Money Magazine. If none of the items below are busting your budget, give yourself a pat on the back.
“Every purchase adds up, and sometimes it’s the small ones that eat away at your budget. This is called ‘invisible spending.’ That’s why it is important to regularly review how you spend your money.
If you haven’t looked at your spending in a while, chances are you might be making one of these 15 everyday purchases—and getting rid of these expenses can free up space in your…budget.” Here are some of Money’s suggestions:
Daily coffee runs: Buying coffee out everyday instead of making it at home can turn into a significant amount of spending over time.
Bottled water instead of filtered tap.
Restaurant meals. Cooking instead of eating out can save a lot of money. Try saving your trips to restaurants for special occasions.
Extended warranties: You may not need an extended warranty for every expensive item you buy. Opting out of extended warranties can save a lot of money in the long run—though you’ll want to do some research to make sure foregoing one makes sense for your specific purchase.
Name-brand purchases: Buying cheaper brands can often give you the same quality items at a lower price.
Gas station snacks: Try bringing your own food instead of buying overpriced snacks on your next drive.
Monthly subscriptions: You may be paying for subscriptions that you don’t use anymore without realizing it.
Overtipping: Familiarize yourself with tipping etiquette before automatically hitting the tip button on every purchase.
Pricey greeting cards and gift wrap: You don’t have to go over the top with greeting cards and gift wrap… Affordable options get the job done…”