Source
r/PersonalFinanceCanada•
achwas

Hedging against getting automated out of a job in the future? Does anyone here consider this in their portfolio, and if so - how do you do it?

Investing

I think it is pretty undisputed that a lot of people will lose their jobs to computers and machines in the not too distant future.

In case of some professions like mine, this requires hardware and software - in other cases it's just a software question. I am sort of in the middle of my career, at least 20 or 30 years to retirement, and I suspect that towards the end of that time my field of employment (aviation) will include significant automation.

While the exact time frame and scope of this transition is impossible to predict, I am wondering if anyone else here has thought about this for their field? Have you maybe put some measures in place to profit from such automation, should it happen in the future, and therefore offset possible job loss or reduction of income?

Posted Mar 4, 2018, 3:41 AM UTC

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FujiKitakyusho•

I was concerned about picking a career that wouldn't be rendered obsolete by automation, so I became an engineering technologist - specifically a control and automation specialist. Now, I design systems that put people out of work. If I time this right, I'll retire on the day I automate my own job.

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malica77•

If I time this right, I'll retire on the day I automate my own job.

You call it retirement day, Sarah Connor calls it Judgement Day.

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Frightenstein•

I fix the stuff you design. I should be good for a few years.

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achwasOP•

The skills/employment side of things is certainly also a consideration and may be more important than the investment side. I am thinking about that as well, but that's kind of a separate topic.

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kenmacd•

I'll just leave this here: https://i.redd.it/2cp0a6a99lj01.jpg

In general though, I don't see how you can hedge against this risk in the stock market. Will tech do well? Maybe, but they already have higher evaluations that factor that in. You don't really know anything that other people don't.

Or maybe tech will do horribly. It's possible that we handle automation poorly in the coming decades resulting in 'tax the robots' policies that drive tech out of their current locations, further reducing jobs and potentially leading to wars/revolutions.

Or maybe superbugs will be even more of an issue than they're predicted to be, and pharmaceuticals will be the sector that you really should have bough, and there'll be lots of jobs because a lot of people are dead.

Or maybe a major earthquake leads to a tsunami that wipes out silicon valley, and there's a spike construction and related fields.

If you find a way to hedge against automation using the markets I'd really like to know it. I don't currently see one.

Instead I'd look at hedging in other ways.

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achwasOP•

Will tech do well? Maybe, but they already have higher evaluations that factor that in. You don't really know anything that other people don't.

Well that's kind of the idea - the price is factored in, and expecting something to do better than the price already suggests is gambling of course. But in this case it would be gambling with a purpose. If everyone is right, the companies will simply justify their price more or less, and the stocks should perform ... average. I won't get rich with them. If tech doesn't do well because [reason], I'll possibly lose some money even, but I'll probably also still have a job. I'll stomach having part of my investments underperform, and keep going to work.

But if things happen faster, more, exceeding everyones already high expectations and putting me out of a job quicker, then there has to be someone that will make a lot of money from it, and I am trying to figure it a way to bet a bit of money on that.

Another way to look at it is that I am already invested, I am betting against rapid adoption of automated flying machines - through my career. I can't easily change that, so instead I am trying to figure out a way to balance that portfolio..

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Kassul42•

I have general worries about potential future job loss, whether due to automation or company getting sold and Future Owner wanting to shake things up, etc, etc,

Keeping your skills sharp and leaning new things and being friendly with everyone(so potential future employer/coworkers don't think of you as That Jerk) seems sensible to me, but to be honest I'm mostly just focused on saving as much as I can. Trying to get my average savings rate up to 50% this year of net income. Haven't got there yet in 2018, but trying!

There's no law of nature that says you have to work 'till 65/70, so I'm trying to accumulate as much in terms of savings/brokerage accounts/lowering my debts as quickly as I can to get me to the point where if The New Boss explains they no longer need my services I can be relaxed about the idea of starting retirement a bit early.

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achwasOP•

Yes, I am considering all this as well. What I'm trying to figure out in addition to this though is, where can I put (some of) my money, so that it will grow in proportion to how fast this automation comes in, and therefore help me if I am forced to retire before I would've otherwise saved enough.

Make a little portfolio of companies working on drones? AI? At this infancy stage of the industry, that seems like investing in a bunch of startups and could just as well backfire I think. A tech heavy portfolio? Not sure if that would work at all..

Surely someone smarter than me must've thought about this before!

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CitizenVectron•

But why wouldn't you just want to maximize your return, rather than tie it to the rise of automation? If you can get an average 5-7% annual return in an index fund, why would you choose to go for something lower if it's specifically tied to the trend of automation?

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achwasOP•

Most of my money will continue to go into index type funds as usual.

Think of it as insurance. I'm willing to spend some money every month on something that would ordinarily not be the greatest investment, but IF technologies like AI and such take off much faster than generally expected, (and I am out of a job) it will pay out. I'm insuring against something that could cost me lots of money (lost income), same as I would buy home insurance and such.

Unfortunately there is no such thing as AI-takeover insurance, and it's so easy to find a financial product that would do this

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CitizenVectron•

I don't think there is a way for this to work, though. Let's say that you get great return on some individual company stocks, even 50% increase. If you put $50,000 in (let's say an average year's salary), then you get $25,000 out (if you take it all out). But that's for a single year. And you didn't get to spend that original $50,000 on necessities of life.

Unless you manage to get a 1000%+ return on some lucky hit, the money you put in is never going to substitute for a regular salary. Any money put into this idea would be better spent in an educational-retraining fund so you can switch industries into something where you won't be automated (like a skilled trade).

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Targus8D•

Be the one doing the automation.

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