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- 🤖 AI is taking jobs
🤖 AI is taking jobs
and car insurance
Morning Download
Personal finance + economics + markets
Good morning, investors! December has proven to be good but things are appearing to change now.
Fun fact: 97% of day traders lose money.
Today we cover:
AI is replacing humans. 🤖
How is deflation going to impact stocks? 💰
All about car insurance. 🚙
Follow us on Twitter for more.
🔈 Audio version: Apple Podcasts | Spotify | YouTube
📊 Economy and News
AI is indeed replacing workers, the latest research shows. About 37% of business leaders say AI replaced workers in 2023. Moreover, about 29% of workers feel that their work tasks are replaceable by AI. However, AI is not fully reliable yet.
Companies will still need someone to create compelling prompts, make sense of the results, ensure it’s correct, and take action. Also, AI is not affecting all countries equally.
About 34% of the global population still does not have access to the internet. Third-world countries such as Rwanda, Zambia, Tajikistan, and Togo still have low internet penetration rates. This indicates that while AI might have a huge impact on the US job market, some countries will be largely immune for the next few years.
Global hits:
Global coal demand set to fall as China uses more renewables.
US homelessness hits highest level as rents have soared.
Biden’s top economist bets on soft landing as recession fears fade.
📈 Stocks
S&P 500 4,719.19 (-0.00067%)
DJIA 37,305.16 (+0.15%)
NASDAQ 16,623.45 (+0.52%)
BRENT CRUDE 76.84 (+0.38%)
* Prices as of Dec 18th, 12:20 AM UTC
How is deflation going to impact stocks?
Deflation is the opposite of inflation. It refers to falling prices, a phenomenon we have been noticing in the US.
The numbers: The annual inflation rate in the country has fallen from 6.4% in January and 9.1% in June 2022. It currently stands at 3.14%, compared to 3.24% last month and 7.11% last year. The Fed wants to bring it down to 2%.
Shall I worry? Investopedia says “when the rate of deflation increases, equity prices can begin to decline as people sell off equity investments that no longer offer satisfactory returns. The stock market can then weaken further, reflected by a dropping price/earnings ratio.”
This indicates a direct connection between the market and falling prices. it is important that you adjust your portfolios based on the prevailing economic conditions.
Deflation can have a positive impact on defensive stocks, such as those in the utilities, healthcare, and consumer staples sectors. These industries offer products and services that remain in demand even in economic downturns. In addition, dividend-paying stocks also tend to do well during deflation.
Cash or savings accounts tend to take a hit. The interest rate is falling, which means your returns from fixed-income securities will fall, unless fixed for a specific period of time.
On the other hand, growth stocks tend to suffer during deflation. Consumers and businesses may cut spending, impacting sectors like technology, industrials, and materials.
In addition, value stocks and financial stocks may also have a negative effect. Reduced consumer spending, lower interest rates, and potential credit concerns can adversely affect banks and other financial stocks.
So, revisit your portfolio before inflation falls any lower.
Also check: top performers and losers from the previous week(sponsored by The Yellowbrick Road)
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💵 Personal Finance
Get auto insurance
Auto insurance is mandatory in most countries. Its purpose is to protect the owner in the event of an accident or theft.
Most people in first world countries have car insurance but the rate is very low in developing countries such as India where less than 50% of vehicles are insured despite it being mandatory.
Cost is one of the major reasons why people don't buy vehicle insurance. The average in the US is about $2,150 per year. However, it is worth the money since accidents are common and vehicle insurance is the only way to protect against financial losses in the event of an accident or if you get sued.
Nearly 215 million drivers carry car insurance in the US, and about 6% of drivers on the road are uninsured. If you find car insurance too expensive then check these tips to reduce the cost:
You might be able to get a discount if you opt for 'multi car' insurance. In most cases, you will qualify if all drivers are related and live in the same house, or own the vehicle jointly.
Don’t worry about young drivers costing a lot because there are ‘student’ discounts. However, these are typically only for 'good' students.
Get enrolled in an approved defensive driving course since a large number of insurance companies offer discounts to drivers who have completed such courses. Plus, such courses can help reduce the number of points you have on your license.
Using your vehicle for a three-hour daily commute typically results in higher insurance premiums compared to driving just one mile a day. To reduce mileage, consider utilizing mass transit. However, be aware that a substantial reduction in mileage is usually required to qualify for a discount.
Big cars are typically costlier to insure, so consider choosing a smaller vehicle. Plus, there might be discounts for hybrid or e-vehicles.
Remember how deductibles work: the lower the deductible, the higher the annual premium. Conversely, the higher the deductible, the lower the premium.
Your credit score could impact the quote so work on it.
Install an anti-theft system to save money since companies are known to give over 20% discount to drivers who have installed a reliable system.
Black box insurance can be a great money saver. Designed for people who drive less and safely, this option uses technology to track and record a policyholder's driving behavior and base the premium on it.
Got questions? check this video for more:
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👩🏽⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.