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Originally Posted by phantom_lord
I worry that the old advice of just investing in index funds may be obsolete as tech companies lose their advantage.
My thesis is that the moat of large tech companies will be removed as everyone gets access to powerful large language models. Everyone will have the ability to become a FANG engineer. I feel like their margins will drop as anyone can create custom software.
FB and Alphabet killed local newspapers and advertising. Uber killed local taxi services. They were extractive businesses as silicon valley earned a tribute for providing software. Now anyone will do it. Local businesses will easily be able to create custom solutions. Business will move away from large corporations towards indie developers and small businesses.
I don't see how you are getting from a to b.
Where is the value in building your own FB or Uber? Even if it is completely costless to create your own personal Uber app what is the market? I'd certainly download an app to be driven around by you specifically (I am sure you are a nice guy and excellent driver), but that doesn't seem like even a niche market.
Same goes for FB and Alphabet and other services.
Tech innovations/revolutions have pretty much always moved us towards larger and larger companies. Although not impossible, I'm not seeing any indication this trend will reverse with this new innovation.
There will always be a need for customized stuff, but that need has always been small.
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I personally use google a lot less now that I have access to ChatGPT. I also program my own solutions now. This will only accelerate. Why would anyone buy off the shelf software anymore?
Basically because most needs are best met by mass-market stuff.
It is extremely easy and nearly free to grow your own tomatoes. They are even better in general and you can just as easily be choosy in variety to fit your individual taste. Yet supermarket tomatoes still are a thing.
Clearly developing your own Salesforce software is at least slightly more costly than the existing software and is probably no worse quality ratio than supermarket tomato to home-grown tomato.
(I've no idea whether cap weighted index investing will be better or worse than investing in heavy industrials over the next x years)