“There are no mistakes, only happy accidents.” – Bob Ross, Painter

Dear Clients and Friends,

When John D. Rockefeller built his oil empire he was focused on one major product — Kerosene. Prior to the use of Kerosene lanterns for lighting, the whale population in the Atlantic and parts of the Pacific oceans had been decimated by the whale oil industry, as whale oil was the fuel used for lighting. So, Rockefeller saved the whales, but the Kerosene business was slowly being destroyed by electrification. Rockefeller had another problem - a byproduct of Kerosene production was a useless, unstable and highly flammable liquid — a product we know today as “gasoline”. Once the automobile started being mass-produced, Rockefeller had his new market and the rest is history. This is a prime example of a ‘happy accident’; technology allows the markets to benefit from the progress happy accidents create.

For the last 40 years, computers have been a part of business and a part of our lives. The more we use them the more data we create; loads and loads of data that just piles up as data is the byproduct or “exhaust” of computation. Everything from how we click or move on our mouse pads, who we talk or text with, what websites we visit to what type of questions we ask search engines produces useful data. For decades this data was known as “exhaust data”, and up until recently, this data has been seen as useless by those outside of big tech. With the advent of AI, I think you are going to see a profound shift in how business and individuals view their data exhaust — something akin to the shift that happened with Rockefeller and gasoline. Just as gasoline is the fuel for transportation, data is the fuel for AI. AI is only useful if it has properly designed data sets and loads of compute. So, let’s take this big idea and see how it might work for investors.

Had you been an investor with Rockefeller in the late 19th century and foresaw the shift in business, you would have been well-served to pile up Standard Oil stock. Standard Oil had a near monopoly on gasoline, and today we don’t really have a pure corollary for this, but we do have something that rhymes. There are lots of companies that have reams of data which present almost no value without AI, but with AI the data can lead to powerful insights into the business. Think about a large hospital, a subway network, a large restaurant chain; data is pouring from these institutions on a daily basis, but that data is meaningless if you don’t have the computing power to make sense of it. As Bob Ross took an errant stroke of the brush and made an amazing waterfall or beautiful cabin in the woods, so will AI take the chaotic data in business and make new products and services to better serve the customer. Data is the commodity that feeds the machines, services and products that companies use and sell. It will enable companies to make better decisions, but only if it has the data to analyze. There is simply no question that this theme will affect investors in the coming decade, and there will be those who understand it’s value and others who don’t. As investors, we don’t have to understand the inner-workings of AI, rather we have to place our money with those who do and therein lies the guiding principle.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All investing involves risks including loss of principal. No strategy assures success or protects against losses.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

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