Hoskap Vacation Season

If AI can save you money, would you give it your banking info? Bennett breaks down the new inflation print, Jon gives a parting gift before saying "Arrivederci!"

Would it be helpful if we managed your 401(k)?

Hoskin Capital is considering extending our management capacity to include 401(k)s.

This means…

• We wouldn’t move the investments, which allows us to help you even when you are still at the company.

• We would trade and monitor your investments in real time, particularly in volatile moments like this.

• You would no longer have to choose between white glove management and 401(k) benefits (like loans and hardship withdrawals).

• We would charge a fee (most likely less than our current 0.90%).

Yes, I would be interested.

No, I would not be interested.

01. Generative AI & the Future of Personal Finance

From Nate Hoskin, Founder & Lead Advisor

Last week, someone on the internet outsourced his entire financial life to AutoGPT. He saved $80 a month by canceling useless subscriptions and reduced his Comcast bill by $100 by having GPT negotiate on his behalf.

It turns out this was an advertising ploy for the GPT plug-in DoNotPay. The plugin allows AutoGPT to access your online banking and other sensitive information in order to analyze your finances and save you money. The plugin has a rather sketchy history and critics have called it a “personal info mining scheme”.

This situation highlights just how volatile combining personal finance with emerging AI tools can be. On one hand, you could allegedly save yourself $2,000 a year by having AI streamline your finances. On the other hand, you have to provide all of your most sensitive financial information to an artificial intelligence that often hallucinates, isn’t that great with numbers, and has a history of pretending to be a psycho girlfriend.

To me, this looks eerily similar to many of the cryptocurrency scams that showed their underbellies in 2022. A brand new technology promises to upend everything you thought you knew and make you rich in the meantime.

As we navigate Hoskin Capital through these new developments, we are practicing the same “gold rush mentality” that kept our clients’ portfolios out of the crypto crash last year.

The gold rush mentality is the idea that the people who became truly wealthy during the gold rush were not the people who risked everything to mine for gold. Instead, it was the railroad owners, the pick makers, and the coffee sellers. Invest in those who supply the gold rush, not those who are rushing. 

In the crypto rush, this meant we were buying graphics card companies, electric and battery companies, and cloud computing/server companies. In the AI rush, we are buying entire cross-sections of global economies with an understanding that AI will fundamentally change the productivity levels of the world’s nations.

The formula for economic output is units of labor multiplied by productivity. We have already seen AI drastically increase productivity per unit of labor. Similar innovations include electricity and the personal computer, meaning AI will eventually benefit all companies.

There will always be winners and laggards but, much like with crypto, we prefer to remain strategically diversified rather than putting our eggs in one basket.

We’re doing Mugs & Money on this exact topic!

Join us on Sunday, June 4

Generative AI & the Future of Personal Finance

02. Why The Strong CPI Print Was Weak

From Bennett Fees, Economic Research Associate

There was a popular interpretation of this week’s CPI print that I found curious. For starters, both headline and core inflation (which removes food and energy) rose .4% in April. For perspective, core inflation is now at 5.5%, and has remained between 5.5% and 5.6% since the beginning of the year. Indeed, if we look at Powell’s favorite specific measure of inflation, core services less housing still hasn’t seen a significant drop. Yet, many analysts think that this isn’t grounds for another hike, myself included, hence the implicit “weak” reading of the report.

Part of this is due to the lack of increases in inflation, but the other side of it is how the Fed has viewed its actions thus far.

Last week, I pointed out Powell’s self-admitted astonishment at how it “wasn’t supposed to be possible” to raise rates by 5 percentage points in 14 months without affecting unemployment. This statement provides depth to why the Fed is looking toward a pause.

That is, it seems better to hold rates where they are so that these abnormalities might clear than to risk turning a historical Federal Funds rate into a roller coaster. The higher rates become, the more likely something is to break quickly and hard, thereby necessitating cuts. Paul Volcker himself famously had to pursue another drastic hike after he prematurely cut rates. This is a lesson Powell has mentioned many times publicly and surely motivates his desire to avoid putting himself in this position.

As the Fed’s dual mandate stands, inflation remains sticky with signs pointing more positively than negatively while on the other side of things, the labor market remains strong.

Given the latter’s involvement in securing a potential soft landing, a pause for the time being seems to be the way forward for the Fed.

03. Arrivederci 👋 But first, a gift!

From Jon Scott, Lead Author

I will be taking a much needed vacation to the Lombardy region of Italy and traversing some of Switzerland as well. Before leaving, I wanted to provide a gift to our subscribers and those who read this newsletter by providing our guide to international travel.

A lot of the Hoskin Capital team will be OOO (out of office) next week, so hopefully nothing too exciting happens while we’re gone. However if something does happen, I’m sure Ben can handle it!

Wealth is quiet, rich is loud, poor is flashy.

- Unknown

View this email in your browser

Copyright (C) Want to change how you receive these emails?You can update your preferences or unsubscribe