Recently, I watched the hit Netflix series, Adolescence, and it was both confronting and depressing.
The show is about a 13-year-old boy accused of murdering a classmate. Well-known UK actor, Stephen Graham, plays the boy’s father and he also co-created the show. He says the inspiration for Adolescence came from reading about a recent spate of teenagers killing other teenagers and he wanted to explore why that’s happened.
One of the show’s central themes is how the increasing amount of time that teenagers are spending online may be driving them towards behaving in ways that would otherwise seem unfathomable.
Another theme is how parents are often in the dark about what their children are doing online. They assume their kids are safe spending long periods at home on devices but how safe are they really?
The show seems to suggest that parents need to be more responsible for what their kids are consuming online.
However, it got me thinking about the responsibility of the technology itself, and how the costs of technology seem to be piling up.
A virtual world
After watching the show, I was chatting with a good friend who’s a tennis coach at a posh private school in Sydney. For those who don’t live in Sydney, the weather here of late has been atrocious with some of the worst rainfall I’ve ever experienced.
For a tennis coach, that’s normally bad news as it prevents outdoor tennis play. However, my friend relayed how he’d been using virtual reality (VR) glasses with his students and it had proven popular. He said VR could give you a great workout though it was suited to intermediate and advanced players who knew how to play the game already.
VR use for tennis lessons certainly surprised me. However, it shows some of the tremendous benefits that newer technology can bring.
Another related story: I’ve started playing chess with my teenage daughter. I’ve played chess on and off for a long time while my daughter is new to the game.
In my youth, chess was played on a board and you went to cafes and clubs to play matches with other people.
Not today. Almost all chess nowadays is played online and almost all the training happens online too. Players review games online and AI can tell them which moves are best at different times.
In many ways, chess has been a forerunner to what’s happening in AI today. As far back as 1996, the ‘Deep Blue’ computer program beat reigning world champion, Garry Kasparov, in a game, though Kasparov won the overall series of matches. A year later, Deep Blue won the series against Kasparov.
There are many advantages to chess going online. It’s made the game convenient to play. It’s increased the supply of players that you can compete against. It’s made learning and training both easier and more granular.
At what price?
The benefits of bringing games like tennis and chess online are obvious. The costs less so, though in my view these are adding up.
First, more screen time means less time being spent in the real world with real people. This runs counter to our evolutionary roots with our ability to get along in large groups distinguishing us from other groups in the animal kingdom.
Second, many studies now suggest that increased and unmoderated online or screen time - especially among children and adolescents - can reduce empathy and compassion, primarily by impeding facial recognition, real-world social skills, and non-verbal emotional cues. MIT's Sherry Turkle calls social media an "anti-empathy machine" because it creates a friction-free environment that eliminates the very struggles needed for emotional growth.
Third, there are also a growing number of studies connecting increased screen time to higher incidences of mental health issues, especially among younger people. This has been well documented by US social psychologist and author, Jonathan Haidt, who argues that increased screen time and social media use have contributed significantly to rising mental health problems among youth by fostering social comparison, undermining real-world connections, and exposing teens to emotionally charged content designed to keep them hooked, leading to anxiety, depression, and loneliness.
What can be done about it?
The downsides of technology are getting more attention. Recently, the Albanese government included YouTube accounts in its ban on access to social media for those under the age of 16.
I’m not sure if bans are the answer, though. As with any bans, people will always find ways around them.
I’m also not sure that putting more of the onus on parents is the answer, either. There’s only so much that parents can do.
Part of the answer must be to give more responsibility for preventing harm to the technology companies themselves. For what they show. For whom they show it too. For knowing who is accessing what. For the privacy issues that come with humans using data.
Europe has led the way with greater regulation of the tech giants, forcing them to pay tens of billions for breaking the rules. The likes of the US and Australia have lagged. Perhaps it’s time to play catchup?
What it means for investors in technology
This isn’t to say that you should sell your tech stocks. Far from it. These companies offer considerable benefits for customers. That’s helped them create trillions in shareholder value.
However, I do wonder if there is a tipping point where the public focuses more on the harms from various technologies, and that forces governments into more action.
Thus far, people have been happy to give up their privacy, their workplaces, and their communities for the convenience and ease of being online. There may come a time when that’s less the case and investors should be attuned to the prevailing winds to ensure their technology bets hold up.
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On technology, hedge fund manager Harris Kupperman - or ‘Kuppy’ as he’s well known as - has one of the most important articles that you’re likely to read in any publication this year. In his article, he lays out the numbers in detail for why AI returns won’t live up to the hype and a bursting of the bubble may not be far away.
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In my article this week, I look at the extraordinary surge in migration to Australia over the past two decades and how it’s helped kill economic productivity and put unprecedented strains on our housing market. I suggest it’s time we follow Canada’s lead and cut migration to more manageable levels.
James Gruber
Also in this week's edition...
Larry Bricks explores how today’s housing investors are betting on the numerous tailwinds of the past 50 years – falls in interest rates, a revolution in household formation, mortgages reaching entire working life lengths and significant wage growth – continuing in coming years. He thinks it's a tall ask.
Another ASX reporting season is almost done and Jun Bei Liu says we may be through the worst for company earnings. She says there's room for optimism as rates are cut and global trade starts to normalise.
Bunnings is a storied brand in Australia but the stock of its owner, Wesfarmers, is incredibly expensive. Stuart Cartledge says a cheaper and better way to play the growth in Bunnings may be via A-REIT, BWP Trust. That’s especially after some recent changes at the company.
Bank hybrids are being phased out from 2027 though investors may not have as much time to sell their holdings as they think because liquidity is likely to soon dry up and that will impact pricing and exit points. Tony Dillon runs through how to create a synthetic hybrid strategy that can offer similar returns but with greater control and clearer understanding of risks.
Nvidia’s CEO is selling company stock. Though it’s relatively small, it may be a good time to pause and ask why, according to Lawrence Lam. That’s particularly after the seismic run up in the share price over the past few years.
Finally, in this week’s whitepaper, MFS has five key market themes for fixed income for the remainder of this year.
Curated by James Gruber and Leisa Bell
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