| | | | | By Jeff Brown, Editor, The Bleeding Edge | | |
First, a big thank you to everyone who has been writing into our feedback file. We've got a great range of questions lined up for this week's AMA. | | We are always looking for ways to connect with our readers and to ensure you are all getting the most out of your experience with Brownstone Research. All of your feedback is essential for us to know what's working and what isn't. | My team and I love hearing from you. We read everything you send in, so feel free to reach us by clicking right here. | | On the docket today, we've got a forward-looking question about how the widespread adoption of artificial intelligence might impact employment requirements and education. | It's a great question that allows us to expand on a topic we covered earlier this week in The Bleeding Edge – The Future of Education on how AI will be the great equalizer the global education system so desperately needs. | | We also have questions on Tesla… how the threat a rare earths shortage poses to technological progress only reinforces the need for the U.S. to diversify its supply chains… and the potential risks of widespread trading under AI's guidance. | | It's a stacked AMA today, so let's get into it… | | AI’s Impact on Academic Requirements for Employment | | | Hello, | | I have recently been wondering how or if AI will impact the academic requirements for employment. Whether it is a high school diploma, certification, undergraduate, and, in some cases, graduate degrees, companies have different requirements to be considered for employment with them. | | Could we see these degree requirements change form or even be eliminated? Would industries or companies use AI to create their own customized version of education and training specific to what each company or industry needs? With quicker access to more information, tools, resources, etc… I feel like AI would have an impact in this area, and I would be curious to hear your perspective on it. | | Thanks for what you and your team do! | | – Jonathan W. | | | | Hello Jonathan, | | | | Artificial general intelligence (AGI) as it applies to education will become the great democratizing force that will level the playing field for anyone with access to the internet. Regardless of socioeconomic status, everyone will be able to afford and receive the kind of education that has historically been reserved for the world's best private schools. | | Anyone, and I mean anyone, who has the desire, will, curiosity, and work ethic to learn will be able to study and master any field that catches their interest. | | And not only will they be able to learn all of the "basics" from kindergarten – 12th grade, they'll be able to learn everything in their chosen field of study in university (either online or in person), as well as industry-specific training either through nanodegrees or courses offered by the company providing employment. | | Fields that typically rely on pedigree – top law firms, investment banks, medical institutions, and a few consulting firms – will still place an emphasis on where your degree comes from. | | These are businesses that primarily serve "the money," so they will continue with their designs of exclusivity and careful selection to be seen as elite, powerful, connected organizations. | | But to your point, in most areas, the pedigree or degree won't matter that much anymore. What will matter is what each individual can do when augmented with technology, specifically artificial intelligence. | | The single best advice that I can give to any student right now is to pursue a dual degree. Pursue your desired field of study AND a degree in computer science/artificial intelligence. At a very minimum, have computer science as a minor. | | There's no better way to make yourself more marketable in the workforce. Those who embrace this change that is coming will do much better than those who fight it. | | Also, to your point, not all learning will have to happen in school. Nanodegrees and certifications will become far more important. Ongoing education will become critically important to stay on top of technological change and innovation. | Udacity is one of those companies that has leaned into providing this kind of learning by offering nanodegrees and certifications for technology, and specifically artificial intelligence. Interestingly, about one year ago, Udacity was acquired by consulting giant Accenture (ACN). | | Accenture openly acknowledged the importance of generative AI and how the learning requirements will continue to change more rapidly. Its unique positions as one of the world's largest consulting firms for the private and public sectors around the world put it in a unique place owning the Udacity platform. | | Accenture will be able to provide its training resources to its clients around the world to assist them in updating their clients' workforce, as well as keep them on top of the latest technological trends. | | If we really take a step back, for many fields of study, an in-person university experience really isn't necessary. Learning will be more effective with a personalized AGI that can tailor teaching style to match an individual student's optimized learning style, not to mention it will come at a tiny fraction of the cost. | | It will probably take two or three decades to restructure the entire education system. Those universities with massive endowments will have the financial wherewithal to survive and maintain the façade of their ivory towers of intellectual and moral superiority, but weaker, less well-funded institutions will collapse under this disruption in education. | | We are on the cusp of all knowledge being right at our fingertips, basically for free, and able to be taught to us by a personalized instructor with the skills of the best teachers in the world. | | Just imagine the empowerment this new reality will give the world. | | | Hello. | | I used to follow news about Tesla regularly, but not as much lately. In their emails a few years ago, they published Musk's master plans – I think there were 3, that came out annually. | | I found them intriguing. I remember reading their conclusions, summarizing the rather lengthy findings of their research: to combat climate change, they wrote, electrification of the entire transportation sector of the economy would be one of the imperative actions that we, as a society, must undertake. Furthermore, they asserted that to NOT undertake the actions (i.e., maintain the status quo) would be MORE costly, in the long run. | | They claimed that this conclusion was backed up by extensive research. Do you have any info about their sources of info for their research? Thank you very much | | PS: I would be interested in any further info you can provide, esp. numerical data – especially related to carbon emissions, etc. The study indicated that a thorough COST/BENEFIT analysis was performed, but their email was short on details. | | – David M. | | | | Hi David, | | I share your interest in this topic. These are the right kinds of questions that allow us to objectively assess the benefits, or not, of the adoption of a technology – in this case, electric vehicles. | | I have not seen any specific research shared by Tesla. I don't believe the company published its own internal analysis. If I had one gripe about Tesla, it's that the company ignores the environmental cost of battery production and the particulate pollution caused by the excess use of brakes on an EV (due to regenerative braking). | | But I understand why they do that. It's marketing after all. Every EV company does it. No emissions. No gasoline. | | But to your point, that doesn't tell the whole story. And it's not true. | | The real problem is the lithium-ion batteries. To mine the minerals and manufacture these batteries requires an intense amount of fossil fuels, far more than that of an internal combustion engine vehicle. For example, mining and manufacturing an 80 kWh battery for a Tesla Model 3 requires as much as 16 metric tons of CO2 emissions. Is that clean energy? No way. | | The reality is that the production of an electric vehicle produces around 80% more CO2 emissions than a comparable internal combustion engine vehicle. | | | | The volume of increased CO2 emissions required to manufacture an electric vehicle is usually referred to as a "carbon debt." We never hear anyone talking about that, do we? An inconvenient truth. | | A few years back, some research indicated that it takes 60,000 to 70,000 miles driving an EV to recover the carbon debt from manufacturing. I believe that number is a bit high. I suspect a more accurate number is between 30,000 and 50,000 miles driven. And that's just to get to carbon-neutral breakeven. But it also assumes that the EV is being driven by 100% clean energy sources that produce no CO2 emissions. | | This is possible in Norway where most electricity comes from hydropower. But everywhere else, the majority of electricity comes from fossil fuel sources. | | If an EV gets its electricity from fossil fuel sources, it will likely never recover the carbon debt from manufacturing. Said another way, a comparable internal combustion engine vehicle will produce fewer CO2 emissions if the electricity is "dirty." | | In the U.S., on average, an EV will produce about 25% fewer emissions than a gas-powered car. That's comparing emissions at the source of electricity production to the emissions of the gas-powered car. But again, these are just averages. And a lot of electricity is lost through transmission across the power grid (as much as 7–15%), which isn't accounted for in the calculations. | | So, in summary, for anyone who has access to 100% clean electricity (hydro, nuclear, solar, geothermal), there is a net benefit for an EV after 30,000–50,000 miles. For those of us getting our electricity from coal and natural gas, most likely no benefit at all for the environment (other than displacing where the fossil fuels are burned, i.e., not in your neighborhood). | | Am I suggesting that we stop with EVs? No, definitely not. We will decarbonize the power grid. Nuclear fission and eventually nuclear fusion are the answers. Natural gas and coal will no longer be necessary in time. Tesla is building for that future. | | And EVs are absolutely the answer to autonomy. Teslas are literally intelligent robots on wheels capable of full autonomy. EV technology is far better suited for autonomy than gas-powered cars. And the societal benefit from autonomous driving technology will be immense, a topic that we've been exploring a lot in The Bleeding Edge. | | Technological Progress in the Event of a Rare Earth Elements Shortage? | | | President Trump is backing development of rare earth elements and China is now blocking their sale. How can technology move forward without them? Is REEMF and any others rare element stocks a good investment? | | – Fred M. | | | | Hi Fred, | | Rare earth elements (REEs) were an obvious tool to be used in trade negotiations by China with the U.S., considering how China has such a stranglehold on the world's mining and processing of so many REEs. And when it comes to heavy REE processing, China basically has 100% of the market. | | The Western world has known about the supply chain risks regarding REEs for the last two decades, but has largely failed to solve the problem. Finally, this year, it appears the U.S. is actually going to take action and do something about it. | | But this isn't an overnight solution. It will take years to restructure supply chains and also build domestic processing facilities. | | So everyone is on the same page. Earlier this month, China's Ministry of Commerce imposed export restrictions (not bans) on seven rare earth elements (REE) and magnets primarily used in the energy, automotive, and defense sectors. | | The restrictions are not a ban, they simply require U.S. firms to apply for a license to get those REEs from China. There are a couple key points: | - This new structure will certainly cause some short-term delays in REE supply chains.
- The primary disruption will be for 16 U.S. firms that have been named by China on its export control list. Worth noting, all but one of the 16 companies are in aerospace and defense, making it clear that the target is the U.S. government and its military.
| | The other key point is that these are just negotiating tools. This is a fluid negotiation between two massive economic powers that currently have a massively lopsided trade agreement. | | I am confident that both sides will come to an agreement that will be more mutually beneficial. The fact is that China needs trade with the U.S., and the U.S. needs trade with China to avoid supply chain disruptions. A deal will get done. | | As for your specific question, any disruptions in REE supply will not impact technological advancement in any way. Innovation and research and development of products that use REEs will continue unabated. | | What will be impacted by any supply chain disruptions will be short-term manufacturing, specifically in the aerospace and defense sector. | | This friction between the U.S. and China on trade is a wake-up call. The West must diversify its supply chains in ways that ensure secure supply from countries and companies that respect the international rule of law and provide for fair labor markets for workers. I'm happy to see sectors like REEs, pharmaceutical compounds, and medicines getting so much attention. These supply chain issues must be addressed. | | Unfortunately, I can't give any personalized investment advice. There are interesting investment opportunities in the rare earth element industry, especially with this shift happening with supply chains. | | MP Minerals (MP) has received quite a bit of funding from the U.S. government, as has Lynas Rare Earths (LYSDY) for the development of mining and processing in the U.S. Energy Fuels (UUUU) has diversified into REEs, NioCorp Developments (NB) has a project in Nebraska, and American Resources (AREC) has a subsidiary ReElement Technologies which is also now active in the space. | | My team and I have not done a full analysis on these companies, so I don't have an opinion right now as to whether any of them represent good investment opportunities right now. | | Rare Element Resources (REEMF) is very small, zero revenue, negative free cash flow, has only $26 million in cash right now, and is trading at a $453 million valuation. Very speculative and very risky. | | Again, I haven't analyzed the company for more than 10 minutes, so I don't have an opinion on valuation. But the company hasn't published a corporate presentation since March 2023, and it will need to raise a lot of money for its projects, which will result in dilution of existing shareholders. | | Investor AI? | | | Jeff, | | Due to all Big Traders using AI with the same Large Language basis some are saying it will lead to a DOOM LOOP with the first downturn of any size. | | Scares the heck out of me. What say you? | | – Pat O. | | | | Hi Pat, | | Yes, I've heard this concern quite a bit, but the reality is that the risks of widespread algorithmic trading have been with us for decades. And it has resulted in various crashes over the years. | | Just to clarify, large traders and institutions aren't using large language models (LLMs) for trading. Almost all of them now use pre-programmed machine learning models for high-speed algorithmic trading. These systems are designed to make thousands of trades every day and small percentage gains over and over again. | | It's kind of hard to believe, but about 75% of all equity trades in the U.S. are done via algorithms. | | And you're right, when all of these algorithms, which are mostly using all the same data and statistics to determine when to trade in/out of a stock, are seeing large movements in one direction, it amplifies the moves in the stock market. | | The net effect can be more volatility in the stock markets. | | A great example is what happened in March of 2020 when the market collapsed from COVID-19 panic. The algorithms fed on each other, and the stock market collapsed by about 30%. It was completely irrational, not based on science, and resulted in some incredible buying opportunities. | | I called the bottom within two days and pounded the table that the pullback presented one of the best buying opportunities that we would see in a decade. I told my subscribers not to panic sell, and to increase their positions in our portfolio companies. As we now know, the NASDAQ has screamed almost 200% higher since then. | | My point is that the algorithm-driven collapse in March 2020 overextended the market to the downside, resulting in incredible companies trading at grossly undervalued prices. The algorithms also pick up on these extremes, which is why the market screamed higher in the months ahead. | | What does/would scare the heck out of me is if the U.S. government would continue to run $2 trillion fiscal deficits for another four years. If that were to happen, we would experience a Doom Loop as you described. The whole system would enter collapse of the U.S. dollar and the U.S. bond market, as well as experience hyperinflation. | | Bad fiscal, monetary, and economic policy is a far larger risk for market collapse than algorithmic trading. | | Thanks to all. Have a great weekend, | | Jeff | | | | | | | Imagine going from a first capital raise in 2015 to a trillion-dollar company by 2027… | | | | | | Alexa just got a major upgrade… | | | | | | Of all the potential applications of AI, the most underappreciated is the impact it will have on education… | | | | | | | | | | | | | | | To ensure our emails continue reaching your inbox, please add our email address to your address book. This editorial email containing advertisements was sent to riku221199@gmail.com because you subscribed to this service. To stop receiving these emails, click here. Brownstone Research welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-888-512-0726, Mon-Fri, 9am-7pm ET, or email us here. © 2025 Brownstone Research. All rights reserved. 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