Last night, fintech firm Block (XYZ) reported that they were firing 40% of employees due to advances in AI.
Shares rocketed 23% higher in after-hours trading.
Chills crept up my spine after seeing the market’s reaction.
Because right now, every CEO in the country is considering a similar move. They’re evaluating AI agent frameworks, and drooling over the potential profit increases.
I’m worried this is the start of a trend. How many companies are thinking, “If we can fire 40% of our workforce and automate their jobs with AI, our stock will go through the roof too”?
And to make things worse, many firms are already outsourcing heavily overseas, to places like India. Others are bringing in foreign workers on visas, who are willing to work long hours for less money.
A storm is coming to white collar America.
What Changed in AI?
Since ChatGPT 3.5 was released back in late 2022, it’s been a useful tool for coders. A helpful assistant that can make programming faster.
But in the last 2 months, AI has taken a leap forward. Agents like Claude Code can now be assigned a big programming task (in plain english) and complete it.
Here’s Andrej Karpathy, Tesla’s former head of AI on the shift:
“It is hard to communicate how much programming has changed due to AI in the last 2 months: not gradually and over time in the ‘progress as usual’ way, but specifically this last December.
There are a number of asterisks but imo coding agents basically didn’t work before December and basically work since – the models have significantly higher quality, long-term coherence and tenacity and they can power through large and long tasks, well past enough that it is extremely disruptive to the default programming workflow.”
Andrej goes on to explain a recent advanced task he gave to an AI agent, which it completed all on its own:
“The agent went off for ~30 minutes, ran into multiple issues, researched solutions online, resolved them one by one, wrote the code, tested it, debugged it, set up the services, and came back with the report and it was just done.”
This is new. This is scary. Agents have reached the point where they can research, plan, write code, test it, and debug it all with a single instruction.
For years, young people were told that they should “learn to code” to find a great career. Now all of that is thrown into question.
Currently, experienced coders are still required in the loop to make sure the programming is secure and stable.
But in a year? Who knows?
And it’s not just coding. Agents are increasingly capable of handling marketing, accounting, legal, customer service, and administrative tasks.
Blue Collar is a “Buy”
About a year ago, my then 15-year old son told me he didn’t want to go to college. It was a waste of money, he said.
He wanted to become an electrician. I may have helped steer him in this direction, but it was really his own thought process that brought him to this conclusion. And it’s absolutely the right decision.
It’s now a year later, and today he’s meeting with electrical firms looking to hire apprentices.
If all goes well, next year (his senior year of high school) will be spent in an apprenticeship program to become an electrician. He’ll take a few classes at the local community college and graduate with his class.
But during the day, he’ll be learning a valuable trade, and getting paid around $25/hr.
Compared to the alternative of going to college, graduating with debt, and entering an uncertain workforce? It’s a no-brainer in my opinion.
Look, some professions obviously still need to go the college route. Doctors, lawyers, etc.
But the thought of shelling out $50k a year for my kid to get indoctrinated by Marxists is nauseating. The thought of them going into $200k of debt to get indoctrinated is even worse.
For many young people today, the best path is to enter the trades. It’s the career-path equivalent of the HALO trade we discussed yesterday.
Blue Collar Stocks
Lately I’ve been thinking about ways to invest in the skilled trades. And I got to talking with our colleague and friend Dan Amoss.
And it turns out Dan and Jim Rickards were way ahead on this idea.
Back in May of 2024, they recommended Lincoln Educational Services (LINC) to members of the Paradigm Mastermind Group (PMG).
The company is better known as Lincoln Tech. A leading trade school operator.
The thesis was solid. They explained how there was a shortage of skilled trade workers, and predicted the sector would boom for years to come.
“You’ve probably felt the impacts of this labor squeeze in your daily life. Shortages of mechanics, welders, electricians, and carpenters have made it difficult to get things fixed or built in a timely manner.
Lincoln Educational Services Corp. (LINC) is a for-profit education company that trains the next generation of skilled laborers.
Let me provide a few reasons why LINC stock has performed well. It could keep beating the broad market for years.”
He went on to explain the bullish thesis:
“…the U.S. faces a severe skills gap. It’s the gap between the skills required to perform the jobs being created, and the skill set of the available labor pool. This issue has existed for years and is likely to continue well into the future.
To attract more workers, wages in the skilled trades must keep rising.
Higher pay will incentivize workers to invest in the tuition to get valuable training.
Roughly 90% of Lincoln graduates land jobs in essential critical infrastructure roles per the U.S. government’s definition. With a nationwide shortage, they’ll have no trouble placing students.
Lincoln is still tiny with only 21 campuses and 13,270 students. It can reinvest the earnings from existing campuses into building or acquiring new campuses.”
LINC shares were trading around $11 when it was recommended to PMG members. It’s done very well since, and is currently trading at $34.95.
It’s still in the PMG portfolio today.
It feels a bit late to jump into LINC now, but who knows? Dan and Jim haven’t sold yet, so there’s likely more upside ahead.
This skilled trade trend isn’t going away anytime soon. And it’ll be decades before robots begin to threaten these jobs.
I’m searching for other ways to play this shift, and will report back if anything solid turns up.
In the meantime, the best idea might be to encourage young people in your life to consider a career in the trades.
Have a nice weekend everyone.
