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The Bot Brief

POSTED 05/22/2022

"There is no force on earth more powerful than an idea whose time has come."     

Victor Hugo


Bots In the News:Bot Index vs. S & P 500

Following six weeks of underperformance relative to the S & P 500, the Bot Index finally exceeded the broad index’s return by 179 basis points in trading last week. The bots’ return was due to strength in many of the Japanese holdings and a 14.88% jump in electric vehicle company NIO Inc. NIO’s rise was based upon an upgrade by Bank of America to buy and a price target of $26 (the stock closed at $16.44. In addition, the hedge fund of George Soros established an initial position in the stock and the stock became listed on the Singapore Stock Exchange.

The drone maker AeroVironment gained almost 5½% after the company was upgraded  by RBC Capital and the price target was raised to $100 (the stock closed at $84.54).

The sole double-digit decliner for the week was the other EV company in the Index – Tesla. Tesla’s decline of 13.76% was likely a result of S & P’s removal of the stock from its ESG Index. Chunked from the Environmental, Social and Governance Index requires liquidation of the holding in many portfolios that use the ESG as a guideline.

Both Apple and Google, mainstays of the technological world, each declined over 6%.

2020's Decade of Bot Index Performance

Artificial Intelligence again:

This week, INC. Magazine, released an article discussing the merits of corporate use of Artificial Intelligence to make their products and services with ‘greater productivity, faster insights, better decision-making and enhanced employee and customer experiences.’ The feature took the reader through the short history of AI corporate use and cited that ‘business is only about 10% of the way to realizing AI’s full potential.’ That level is expected to grow as was noted in an IBM study which indicated one third of corporations surveyed are using some form of AI to save time and streamline operations.

INC. noted that AI is innately more capable of detecting and solving cyber-crimes. A statistic the writers cited was that there are currently 500,000 cybersecurity jobs that are unfilled currently in the U.S. and cyberattack breaches take 287 days, on average, to be resolved, With AI’s ability to detect and react to hackers, the downtime could be reduced to a few hours. The increased corporate application of AI to combat these crimes will save time and ransomware costs.

To counter the consistent argument that AI, if left uncontrolled, is an undesirable pandora’s box of unintended consequences, the article devoted space to the need for checks and balances on the data that is fed into the ‘reasoning’ ability of AI in order for it to be deployed responsibly. As George Washington once stated, “Government is not reason, it is not eloquence, it is a force. Like fire it is a dangerous servant and a fearful master. Never for a moment should it be left to irresponsible action.” Most certainly, there is a strong parallel between the forces of government and the unknown capabilities of Artificial Intelligence. Both should be constrained by reasonable people. In any regard AI is here to stay and can be the technological leap forward that the byline suggested: Why Artificial Intelligence Creates an Unprecedented Era of Opportunity in the Near Future.



Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association, Member IEEE.

The Bot Brief is a weekly newsletter designed for economists, investment specialists, journalists, and academicians. It receives no remuneration from any companies that may from time to time be featured in the brief and its commentaries, analysis, opinions, and research represent the subjective view of Balcones Investment Research, LLC. Due to the complex and rapidly changing nature of the subject matter, the company makes no assurances as to the absolute accuracy of material presented.