AI Automation The End of the Rat Race What Investors Must Know

Welcome back to Rich Dad Stock Cast. I'm your host Del Denny and today we're talking about one of the most important shifts in wealth and power of our time, artificial intelligence. Now, AI is changing everything from how we work to how we invest, but here's the truth, it's not the people using AI who will win, it's the people who own it. And if you want to build wealth in the next decade, you need to understand how to get in the ownership side of this revolution. Now, before we dive in, don't forget to go to stockcastbonus.com right now, grab your free investing tools. We've put together some powerful resources to help you to navigate and invest in today's fast changing world. And joining me again is Rich Dad expert, Andy Tanner, who's been tracking the rise of AI and what it means for everyday investors like us. Andy, welcome back. Thanks Del, this is a really timely topic for our time and I think it's under hyped actually. I'm very lucky in that I get to spend a lot of my time just learning and just reading and just learning. And the more I learn about AI, the more under hyped I think it is. So it's going to be interesting 12 to 24 months to see how the world changes and an even more interesting five to six years. It's going to be really fun. This is going to be one of the funnest conversations I think we might have had on the because just from our side conversations that we had, but we'll get more into that here in just a second. Stockcastbonus.com, great resources in there. Can you tell our listeners what they received by going there? Yeah, for sure. If you haven't dropped by and received your free stuff there, go get it. There's great resources there and the effort is to help people develop habits. We're content creators in this world now, people create a lot of content because people consume a lot of content. I was doing some research on how much leisure screen time people have or use and depending on who you talk to is between six hours and 8.5 a day. That's amazing. Eight hours a day, that's like a job. And I guess they do some of that at their jobs, I suppose. But the ability to act and to click your mouse to buy something instead of to watch something is a huge deal. In other words, you want to buy stocks, you want to buy assets, and that requires habits, daily habits and knowing how to find them and things like that. So if you'd like serious financial education, that's a great place to start. And of course, there's a lot of stuff there there's no charge for. So go get your free stuff. There we go. Love it. Now, let's also start with a basic AI question. Why is AI such a massive shift? And then kind of the second part of it is, you know, why do you say that ownership and not just using AI is where the real wealth is created or will be created? Yeah. And when I say ownership of AI, I don't mean even ownership of the development of it. I mean, the deployment of it. And so that's a really important distinction to make. What makes it different? Well, you know, if you look at if you look at humans in a very old way, you know, almost a nihilistic way, or maybe a like the matrix does, you know, they're nothing, these humans are batteries, right? What can a human robot do? Because that's really the dilemma, or the opportunity, however you want to see it facing entrepreneurs. Basically, the human resource department is hiring human computers, and human robots. That's what it's been since we've had employment. You duplicate yourself as an entrepreneur, you say, well, I can't do this over here. So I have someone that does. And you've hired a biological computer brain, a biological robot, a body to either move stuff around, perceive stuff, think about it, manipulate the environment, put part A on part B, write, you know, write a report, whatever you're asking it to do. Just if you all of a sudden you just reduce humans, as we all know, corporate America does to, you know, what production, it's a means of production. Well, you know, in the past, you have a guy with a shovel digging a ditch, and they invent, you know, a trackhoe. And so the guy sets down a shovel, and he climbs on the trackhoe. And you also need someone to paint the trackhoe, and to build the trackhoe, and repair the trackhoe, and clean it. You know, everything else that goes along with that. So it creates other need for more human robots. And we just get more done as a result. We're just getting more things built, more things done. Where this is different is machines now can perceive. So now we have a machine at Amazon who deployed their millionth robot last June. They didn't employ robots, they deployed. So now entrepreneurs have a choice. They can employ or they can deploy. Amazon has a million robots. One of them, you can upload every product in the database, every product Amazon sells. I don't know how many that is, but it's a lot, more than my brain can hold. And it can recognize, you know, a bottle of shampoo as opposed to a Bluetooth speaker. And it can sort them, you know, just like it's an arm robot. They have robots that walk and have wheels. You know, they can perceive. My Tesla drives itself, right? We're there. It can do all three things. It can perceive, it can think, and it can move stuff around. So the question is, you know, you have robots that can do drywall now. You can do robots to roof houses. You can, you can, you pretty much have this thing, and then I'll let you follow up. But you're asked the big question, you know, why is it different? It's not creative destruction anymore. I don't, I don't see, and neither does Geoffrey Hinton, who won the Nobel Prize and discovered the first large language model founded Google Brain. I mean, he's, he's the godfather of AI. And he quit his job at Google because he's alarmed. You know, he doesn't think we're ready, but it doesn't matter whether we're ready or not. It's happening. The question of being ready is irrelevant. You know, we're not ready. So, but there's this thing called comparative advantage, where we simply say, all right, any human task now from surgery, you know, we have robots that can do it more precise than a human. We say, what's the comparative advantage? When we compare employment to the deployment of technology, it's usually just expense. And that's getting cheaper. As AI thinks better, and as robotics get cheaper, there's really nothing left that, that you just compare. And is it still worth having a human do this? So, all those quiet quitters, don't give them a reason. You know, it, it, it's silly to try to outperform the AI. You can't, you can't beat that trend. So, as you said, that's why it's different. You should own it. And we can talk more about what that means. It doesn't mean buy NVIDIA and buy chips. It means buy the deployment because that's the bigger piece of the pie. Not that the AI piece is small. Well, let's talk about that because buying AI, what I love about this conversation that we've had is, you know, we foresee the future of AI, but the conversations that we've had about the future has, is really thinking big. And I think that's important. So, as you talk about ownership, let's dive in a little bit more. What do you mean by that? How can we expand our thinking on that? Well, think about this for a minute. It was, it's always been better to be the owner. There's a book by Michael Gerber called the E-myth. And the E-myth is the entrepreneur myth that people think they could just go start a business without any knowledge. You know, it's a myth. There's a lot to, a lot of ladders to climb to be an entrepreneur, a lot to learn. You know, just say, I'm going to open up a sandwich shop. But what he says, he has something called the E-myth triangle, which is very basic. But he says, look, at the bottom, you have a big base of technicians, people getting stuff done. And that's the majority of people in a company. They're just getting stuff done. Above that, you have a smaller part of the triangle, a manager that is managing, you know, a handful of people or more. The top of the pyramid, you have an entrepreneur, and he has the smallest part of the triangle because he or she, they don't do much. I mean, Richard Branson, his job is to, with all his companies, to get himself contained and hire enough human resource, human robots to run it to where it's automated. And that's where systems and the BI triangle come in and all that type of stuff. So, an entrepreneur really wants to create something where he has or she has her time or his time. You know, it's the freedom thing that the entrepreneurs really like, creating this automated machine, whether by employment or deployment, that does it. And so, ownership isn't, well, I've got to buy Microsoft. However, that's not a bad idea. Or I've got to buy Google. That's not a bad idea because it's going to get better. But it's also to buy, you know, trucking companies, to buy shipping companies, to buy agriculture. You know, there's a robot right now that's picking tomatoes, and it can tell when they're ripe. And, you know, the problem with robots is they break down, but humans get sick. So, it's pretty much a wash there. But I'll tell you, robots, they can work a lot more hours than a human can. They can stay awake all the time. They don't complain. They don't need a 401k. They don't need sick leave. They don't quiet quit. They don't sue you. There's just really hard to compete with an obedient, hopefully, remain obedient robot. And so, it's a big change. So, owning it means I own Amazon. See, Amazon, are they a technology company? No, they're a store. They're a retailer, right? People get on there and they buy their stuff. And the robots, there's a million robots doing that work. They're working on one right now that pops out of the delivery van where the driver doesn't have to get out anymore. He pulls up and the robot hops out the back, takes the package up, puts it on the thing. It looks like a human. It's crazy. They got robots doing, you know, a version of Kung Fu. They got, you know, if you look at Boston Dynamics, it's astounding and terrifying at the same time. So, owning that, owning that deployment is really, really important because you can't compete against it. And the first people that are finding that out, ironically, are coders, programmers. Have you heard the statistics on that? No. Well, not the official statistics, but I see the trends that are happening. I should say that, yeah, I shouldn't say statistics. I should say the trends. Yeah. So, you know, you have everyone across the board, you know, guys like Eric Schmidt, guys like, you know, Modi from Anthropic, you know, all these guys, and they call this the San Francisco consensus because, you know, it's all Silicon Valley. But every one of those guys say that within 12 months, within less than 12 months, essentially all coding will be done by AI. Now, think about that. Five years ago, smartest thing a kid says, I'm going to go code. They need coders. They need stuff. People to write these programs. Gone. And, you know, the Anthropic guys say that even little islands will be picked off of, well, you got to have the guy that, you know, decides which languages they're going to use and how they'll be working together, or the guy that does the outcome of the app and all that stuff. And you don't even need humans to manage this. So, that'll be the first industry. And if you look at the statistical side, the canary is in the coal mine. You've got Salesforce that made two announcements one day apart. The first announcement, I don't know if they're even a day apart, first announcement was they're going to lay off 4,000 people because they're really good at agents. And then agent is simply when you take an AI, not agent Smith yet, but agents, you know, you have an agent that has this little task. And if you can create a sequence of agents, you can replace the job with a sequence of agents. That's kind of the next step after LLM. How do you take the large language models and then twist AI into agents that can do something specific or chain of agents that replaces the human computer efficiently, where it has a comparative advantage. And so, they lay off 4,000 people and they said, why are you struggling? They go, no, we had a record quarter, but I need less heads. I just don't need the people. I just, I don't need them anymore. I got, you know, people that can do the work of those 4,000 better. We're going to have more production, not less. We're just leveraging the technology. So, that's the first announcement. We need less heads. The second announcement they made, which is more important is they announced that they've been approved for $50 billion buyback. Now that might be something for the second half of our conversation. I'm not sure, but that's a really big canary in the coal mine that they're saying, hmm, I'm trading employment for deployment and I'm trading payroll for ownership. In other words, rather than spending money on payroll, they're going to spend money on buybacks, more shares. And the amount of float they're going to suck up is a canary in the coal mine. And it is not to be trifled with. It is to be understood because that right there is changing everything. And Google's going to do the same thing. And, you know, we just saw Oracle become a trillion dollar company. Oracle was not a trillion dollar company before this last jump. And the reason is their guidance, they said, we've got a half a trillion dollars in orders. So here's a company that's not even worth a trillion yet. It gets a half trillion orders and that makes you a trillion dollar company. It's incredible. And they laid off 3,800 people to do it because the orders for AI and the building of the AI is big, but it's not Oracle. You could certainly own Oracle. It's the companies that are going to use it that are going to be so profitable. So everyone thinks that, like, I have a friend who's really into technology, which he should be, he likes it. But tech is only one sector. All to own AI. If you buy Oxy, Occidental, the exploratory abilities will get better. The efficiencies will get better. Everything, the transportation will get better. The logistics will get better. Everything will get more productive. Gross domestic product production, everything's getting better. AI gets it done faster. I mean, I use it in my life and I just think what's happened, what I hope is that there's not mass unemployment. I hope people can just do more. Do I want to cut my staff or do I want to do more? I want to do more. But Salesforce and these other companies are like, yeah, but there's only so much to do and we just don't need the heads. So let's take that money and buy more shares back. So the float is smaller, which if you know anything about hyperinflation or inflation or supply and demand, reducing the float puts value in those equities because they become more scarce. All right. I do want to pause you right there because I think it is good to go to break here in just a second. But that right there is what I'm really excited to jump into is this pattern that's happening and what we're seeing. So let's do this. Listener, if you're not paying attention to the AI boom, you're going to miss out on the biggest wealth transfer in modern history. But in a moment, we're going to talk strategy, okay? So don't forget to go to stockcastbone.com, grab your free tools and resources, start making better, smarter moves in this AI driven economy. Stick around. We're going to talk about patterns. We'll be right back. So far, it's been great. I needed a source where I could really enrich my education through stocks. I didn't really have an avenue for it and it's helped me a lot. The simplicity has really gotten me on the track to where I enjoy the learning as well as it's really solidifying in my mind. They're not just trying to sell you something. They really care about the people that are in the course and they really do care about you and your personal goals and what you want to do is to help you and your family and whatever your goals are in life through that. So it's really been great. Welcome back to Rich Dad Stockcast. We're talking with Andy Tanner about how the people who own AI will win and now we're diving into the practical side of investing in this trend. Now, before we went to break, we talked about patterns and I think it's really important that they say success leaves clues. We see patterns happening all the time. Andy started talking about Salesforce and buying back stock. Now, just to kind of paint the picture for us, why is that such a big deal? I don't want to gloss over the fact that companies are buying back their own stocks right now. Let's dig into that a little bit. Why is that so important to the average investor? Well, companies go public to raise cash for whatever reason, pay down debt. Usually it's to grow. Maybe it's to cash out, but companies go public to raise cash. So let's say you and I have a company and we're maybe making $100 million a year, something like that. And we're like, man, we're not going to make it to $100 billion the way we're going. The competitors will pass us. We need funding to grow. We need buildings. We need people. We need production. So we've got this great idea and this great company. We say, hey, look, we're going to grow, but we need your help. We'll share our company with you if you'll share your money with us to grow. And so you have this initial public offering where there's this massive influx of cash because you sold a portion of your company. Well, generally when you go public, there's these things called restricted shares where here you have the pizza, the company is a pizza, and you're going to cut it in 16 slices, let's say. So you send out 12 slices, but you keep four slices for yourself. So you can hire a CEO and lure in with the, you can pay him with stock. These are restricted shares. They're not allowed to be traded on the market. So if you look at sales, and so what they call the restricted shares, the shares the company retains, and then the shares that are out there, they call that the float. So they're floating around. And then those shares get traded amongst the world and they go up and down and whoever, whatever happens, happens. But the company really cares about that initial offering where they receive the cash. After that, they become a commodity in and of themselves, those shares. And if people want the company, there's not very many shares in the float. Well, it's scarcity. It's harder to get them. Well, in the case of Salesforce right now, they probably got about 26 million shares restricted and probably about 980, 70 million shares out there. So they got about a billion shares total, and the company only has 26 million of them. So not very much, 3% maybe, 4% maybe. Well, $50 billion at their current stock price would allow them to take back 21 more, about total, they'd have a total of 25% would now be restricted instead of three. So that means you just got Salesforce shares, scarcity-wise, they're gone by a fourth. That's significant. So what if they do that again in five years? So all of a sudden, if you did that to cash, if the Fed took out 25% of the money out of the system, the dollar would strengthen huge because there'd be less dollars around. You'd have deflation with a very strong dollar. Well, this makes their shares strong because they're more scarce. Now think about this. Institutions have been siphoning everyone's equities over the last 40 years through 401ks. Think about that. If you take one to 2% a year, 40 years down the road, you'll have accumulated a tremendous amount of wealth. So about 83%, 85% of Salesforce is owned by institutions. So they're going to have to buy them from personal investors and institutions if they want to buy those back, which they'll do it. So think about this. There'll be a moment, and most people won't listen to me, but that's fine. Most haven't anyway. I've been telling people to buy assets for a long, long time, and I look at the people I observe from afar, and they just work. They just go to the job and work. They're not interested in ownership because it's too hard to learn, I guess. I don't think it is, but there's something about it. I guess the job is just easy to get up and do what you're told. You train that way in school, right? Go to a building, be told what to do, do your stuff, and we train people from five years old up on that stuff. To think about getting out of that and owning something is foreign to a lot of people's mentality. Anyway, be that as it may, there'll be a point where people lose confidence in labor. In other words, they won't be coming to this podcast to say, I want to get out of the rat race. How do I get out? They'll be saying, the rat race is disappearing. We have robot rats now to run that race. I don't have anywhere else to go. I'll say, well, it would have been smart if you'd have been learning early about how to buy these assets because I already have a lot of shares. The one thing that chat GTP cannot do, there's one thing for sure it can't do. If I'm chatting and it says, hey, Andy, can I buy your shares? I'll say, no. You're a piece of technology. You don't get to own shares. You don't have the rights to ownership. That's a privilege for humans, not a right for robots. No, you can't have my shares. By the way, neither can Fidelity have my shares. By the way, neither can Vanguard. By the way, neither can the companies buy them back from me because I'm not going to be someone willing to sell when they buy those on the market. I won't do it. They're too precious. They're too precious. To own production now, I just never saw it coming. I always knew I wanted to own rather than to be the worker. But now, if you're an entrepreneur, if you can deploy a kiosk rather than deploy an order taker, why wouldn't you? If you can deploy the robot that makes the French fries, which by the way, they're already using them at Jack in the Box and Sonic, they cook things perfectly and they don't complain and they're efficient and they show up to work on time and they don't quite quit and they don't need sick leave. It's cheaper to repair a robot than to pay medical insurance, 401ks. The amount of money that's saved and headache, if you can automate a process, it's a no-brainer. You have to because your competitors will. And you can't compete with human labor if the other guy is using AI. So the competition will drive it out and people will start to lose their jobs. And you'll see it first with coding and over the next 12 months. Where are the 4,000? And I had a friend of mine say, well, it always creates more jobs. No, because we didn't always have AI. It's different. What mundane intellectual labor, like my son's going to college now and I said, go play hoop and find a sweet girl to start your life with. That's the best thing you can get from college, is have some fun, play some hoop, learn some stuff to your brain. But it's not what you're learning that matters, it's how you learn how to learn that matters. What you learn, it's going to be irrelevant because you're going to have the best physicist, mathematician, chemist in your pocket in a year. You'll have Nobel prize level intelligence in a year. In three years, they'll have general AI. That's the San Francisco consensus. Three years, you have self-aware general AI, which we've talked about that forever. And then in six years, you have artificial superintelligence. And the definition for artificial superintelligence is it's smarter than some humans. And if you remember back in your math days, you had to do these proofs. We knew something was true, but you had to know how to prove it was true. Well, there's problems right now that we know something's true, but we haven't been able to prove it yet. And as soon as an AI proves it, then we know it's smarter than we are. That's a milestone. It's smarter than we are. And it'll get there. Now, there's going to be good things. We're going to cure a lot of diseases. The molecular models for proteins that it's creating at Google in the biomedical field is phenomenal. Cancer's in trouble. It's a huge threat to cancer. Cancer might be in trouble because they're really working on it. And AI can do a lot of stuff. But jobs are also in trouble, bad. So ownership, though, is what I think it is, ownership. I think that's huge right there. So big picture thinking is ownership. So I want to paint the picture here. So we've talked about, I think we all understand AI is replacing jobs. I think people are starting to realize that the rat race is actually disappearing, which is a huge thought in itself. We have companies buying back stock, meaning there's going to be less stock available for us to purchase. So what do I do now as an investor? How do I prepare for the next five, 10 years starting today? Well, I'll tell you, it's tough for people because if you haven't been building ownership over your life and really caring about that, then you got catch up to do. It's like asking a question, well, I've had the opportunity to do my homework and do my homework and the test is tomorrow. Any suggestions since I've been doing my homework so far? What do you want me to say to people? Do I have a magic way to snap my fingers and make up for lost time for other people? I don't. So my recommendation for people is to run from people like Dave Ramsey that don't believe in leverage. I mean, that's the only way to catch up. And to learn, like right now, to learn what a long-term equity anticipation security is, that would give a person debt-free leverage to speculate a little bit. And then if you wrote calls on that, you could cashflow and help subsidize the cost of the leaps. So there's things you could do to play catch up and use lever and instruments. And I've never been a speculator. I've always been a cash flow guy. But I will tell you this, there'll be a tipping point. I don't know if I communicate that well. There'll be a tipping point where people realize, wait a minute, there's not an unlimited amount of stocks to buy. There's not an unlimited amount of shares. The institutions have 80% of it right now and the corporations are buying back more of it. The value of ownership is huge. And I think it's why, despite all the problems, we're hitting record highs in the market right now as people know and companies are buying back. What action could a company take to display more confidence than to say, hey, thanks for the initial public offering that allowed us to grow to a trillion dollars. But now that we're a trillion-dollar company, we're going to buy the shares back from you. What more confidence do you want? Salesforce, what could they do with 50 million? Well, they could hire more people to grow. Nope, got AI. They could acquire another company over here. Nope, we've got things running great. The best deployment of our capital right now is to buy back shares. Now think about that. You're only going to buy things that gives you a return on investment. So not advertising more, not trying to build more, but literally saying the best thing we can do with that money is to own more shares because we're about to make so much more. And the less shares that are out in the flow, the less dividends we have to pay to people or what have you. And so the less we have to share and the more money we get to keep. So there's nothing that is a better, bigger confidence builder when they're going to buy their own shares and Buffett's buying back his own shares. Well, you've seen a trend of buyback over time. So there'll just be that point where all of a sudden people realize there's no future in buy and sell. In other words, let's take some of the stocks I've had. I bought some Cameco last October. So about a year ago and I bought it in the fifties and today it's like 80. Doesn't matter to me. I can't buy at 50 and sell at 80 and take that money because I'd lose my shares. You can't like, okay, let's say you bought Google at $15 a share on the IPO. Okay. You're going to sell it now because if you sell it, you lose the asset. You lose the shares. Same with Bitcoin. You know, it's gone up and you sell it, right? So you need income producing assets. You can sell your real estate now because it went up, but then you lose your rent. So I just think shares are going to be, I mean, I'm not selling mine. I don't know that I'll ever sell another share again. They're too valuable. They're too scarce. And when people realize that, that, oh my gosh, the way to get ahead is ownership. They're going to run to shares. And I think it could be a, I've never really said this, but, but I think it's, it's going to be the, the biggest 10 years, five years that we've ever seen in stocks ever. It's, it'll be, hopefully we get the crash first and get a buy more cheap like we did in the.com, you know, 2000 March or so they, they dropped and we were able to now, God, imagine if you'd bought on that dip. So, so yeah, it's an interesting time to answer further your question about what should a person do? Well, what should you always should have done? You should learn how to buy things. School is, you know, $300,000 to go to school to learn something that everyone will know in their pocket in a year. You know, what, what, what, what textbook, all textbook is, is information, right? ChatGTP already understands that stuff better than you. What, what, what are you going to, what are you going to go to school and learn? What are you going to learn that an AI can't learn? What intellectual ascent can you have that it hasn't already made? Well, it's just a matter of getting more functional because as far as the knowledge goes, there's nothing that you know, that, that the chat GTP does know. It can write a song, it can do a movie. It can, you know, you 90s to see the Joe Rogan, 90 seconds, they got a song going, you know, it's just, it's, it's, and you're going to spend that money in college, learn how to own stuff, learn how to buy stuff. All right. Final question. Where do we learn how to buy stuff? Where do we go? That's a softball over the plate. Go to, go to cashflow.com. You started learning. If you haven't done it yet, go, you know, people are funny cause that stuff's free. So, you know, you can go pick it up for free. And if you like it, then you're like, wow, I got a new, new habit. I can start to build wealth. You don't let me add some free stuff. Got some great information. But people have three responses to this. It's fight, flight, or freeze. Most people will freeze. And some people just run away, put their head in the stand. But those that fight are probably already winning. They're probably already fighting and winning. But hopefully, hopefully AI becomes a spur for people to change earlier instead of later and say, you know, I've been thinking about learning how to buy things for a long, long time. So go learn how to buy stuff. That's the one thing that, that AI cannot do is it, it can't own things and you can. And the fact you can be an owner of this technology, you know, if you buy Amazon, you're owning those, those million robots that they have working there and all that they're going to build in the future. So it's a beautiful opportunity. It's exciting opportunity. And unfortunately, the poor are going to get a lot poorer. And fortunately, the rich will get richer. It just depends on which pile you want to put yourself in. But the rich will get incredibly rich because there'll be a concentration of that ownership and the people that are rich can buy it. And the people that are poor have to sell their shares. That might be worth mentioning, even though we're at the end of the show, if you have a 401k and it can't sustain you, then you got to sell those shares out of necessity. So having a positive cashflow is essential to protect your shares. Because if you don't have a positive cashflow and you know, the price of living goes up, then people say, well, now I got to start selling off what I've saved. I got to sell off my 401k, which, you know, we'll take those shares and concentrate them into the, you know, powers that be. There we go. That is a great note to end on. That's a good nugget to end with. You know, AI is already changing the world, but whether it changes your wealth depends on one thing. It's how you position yourself. Big thanks to Andy Tanner for breaking this down with such clarity. Listener, if you want to start thinking and investing like the rich do, you know, do what the rich do when the tech shifts, go out, you know, buy as much as you can, get educated first, go to stockcastbonus.com right now. We've got tools to help you to take action. And if you got value from today's episode, don't forget to like subscribe, share it with someone who's still sleeping on the AI boom. You're not here by accident. You're building something that most people won't stay smart, stay invested, and we'll see you next time.