Editor’s Note: There are a lot of distractions in the market right now – distractions that are overshadowing a sea change happening right under the surface.
You see, five years ago my InvestorPlace colleague Eric Fry made a bold prediction about how a phenomenon he called the “Technochasm” would split the economy and the stock market in two.
On one side of the gap are the companies (and investors) who leverage rapid technological innovation. On the other: Investors and businesses that get caught off guard and fall behind.
Fast forward to today, everything he predicted is coming true. And now, we think it’s about to shift into overdrive.
Now, over the next three days, you will be hearing from my colleagues Eric Fry and Luke Lango, as well as myself. And that’s because we want to warn you of this event – and tell you how to prepare. It all leads up to our urgent briefing on Thursday, March 27, at 10 a.m. Eastern. That’s when we will share a groundbreaking AI announcement you won’t want to miss.
Click here to immediately save your seat for this free event.
In the meantime, here’s more from Eric.
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For years, the American economy has been a tale of two realities:
- One where the rich continue to get richer bolstered by AI-driven stock market gains and asset appreciation…
- And another where folks in the lower-income brackets are falling further behind.
Now, Jamie Dimon, the head of America’s largest bank, is warning that the gap is widening at an alarming rate.
Speaking at Adobe Inc.’s (ADBE) annual summit in Las Vegas last week, the CEO of JPMorgan Chase & Co. (JPM)warned that while the economy is still in its “soft landing” phase, turbulence is mounting, and it’s hitting low income Americans the hardest.
“The bottom 20% [of earners in the U.S.] didn’t get a pay raise for 25 years. They’re dying younger,” he said. “Their schools aren’t good, and they live in crime-ridden neighborhoods.”
Meanwhile, he noted, wealthier Americans have benefited from decades of soaring stock and home prices.
Dimon’s warning highlights a stark truth: The wealth gap in America is widening at an accelerating pace.
According to an October 2024 report from the nonpartisan Congressional Budget Office, the top 10% of wealthy Americans now control 60% of the nation’s wealth, while the poorer half of the country holds only 6%.
As inflationary pressures mount, geopolitical instability rises, and tariffs threaten to shake up trade, the growing economic divide is deepening.
If you’re not positioning yourself on the right side of this divide, the risks are only getting bigger.
So, in today’s issue, let’s review everything you need to know about the growing wealth gap (and its real cause)…
How AI is supercharging this decades-old phenomenon…
And explore some ways to ensure your financial future doesn’t get left behind.
The Vanishing Middle
Decades ago, we were a country with relative wealth equality and boasted a vast and robust middle class.
Today, the middle class is shrinking… and not in a good way. Millions of folks are sinking below the poverty line.
As this massive socioeconomic shift continues, a shrinking sliver of our population controls an ever-larger portion of our national wealth.
According to a 2014 study by academics at the National Bureau of Economic Research, wealth inequality reached levels not seen since the Great Depression in 2012.
Since the early 1980s, according to the study, the share of household wealth owned by America’s top 0.1% increased from 7% to 22%. In 1980, the richest 1% of Americans owned about 30% of all household wealth in the country, while the bottom 90% owned about 24% of all household wealth.
I wish I could tell you this situation will be resolved soon… but it won’t.
If you want to avoid getting crushed by the force behind this wealth gap, you’ll have to take action yourself… and you’ll have to do it now.
Few people understand it, but there’s an incredibly powerful force behind America’s wealth gap.
Once you learn the story, I encourage you to make sure you and your money are on the right side of the chasm.
Here are the details…
Don’t Get Blockbustered
In the spring of 2000, a man named Reed Hastings traveled to Dallas with a big business idea.
Hastings approached the management of movie rental giant Blockbuster with a proposal. He wanted Blockbuster to buy his small business for $50 million.
At the time, Hastings’ company – Netflix Inc. (NFLX) – had a promising business model. It allowed people to rent movies through the mail. Netflix, at the time, was small and struggling to turn a profit.
Blockbuster essentially laughed Hastings out of the room.
You know the rest of the story…
Netflix secured investment from other sources and built a hugely popular mail-order DVD rental business. And around 2007, it began transitioning into America’s No. 1 video “streaming” service. This innovation crushed traditional brick-and-mortar rental companies like Blockbuster.
In 2002, Netflix had less than 3 million subscribers. As of late 2024, the company boasted 302 million subscribers and its stock had reached a market valuation of nearly $400 billion.
Blockbuster’s market valuation? $0.
The destruction of seemingly strong and dominant businesses by innovative technology-focused upstarts is a story we see over and over and over and over…
Consider Uber Technologies Inc. (UBER) demolishing the “old” taxi industry while making its founders billionaires…. or shares of Amazon.com Inc. (AMZN)soaring more than 2,000 while dozens of old-school brick-and-mortar retailers were driven into bankruptcy.
The rate at which these huge disruptions occur will speed up over the coming decade.
They will make the wealth gap grow wider every year.
And they’re why my InvestorPlace colleagues and I call this gap “The Technochasm.”
If you’re on the right side of the Technochasm, you’re virtually guaranteed to make a fortune.
If you’re on the wrong side, you could lose your job and the value of your portfolio could crater.
This is why new industries are springing up at an ever-increasing pace… while old industries are withering away even more rapidly.
It’s all thanks to technological exponential progress.
And now, this process is happening faster than ever before.
That’s thanks to the emergence, in 2022, of ChatGPT and other generative AI apps…
AI: The Next Wave of the Technochasm
AI is turbocharging the Technochasm.
Consider…
- AI will automate up to 70% of office work in the next decade, according to Goldman Sachs.
- Companies like Alphabet Inc. (GOOGL), Amazon, and Meta Platforms Inc. (META) are cutting tens of thousands of jobs to replace them with AI-driven automation.
- AI-driven companies are growing exponentially—AI chip developer Nvidia Corp.’s (NVDA) stock has surged over 1,000% in the last five years, while AI-powered software companies like Palantir Technologies Inc. (PLTR) and Twilio Inc. (TWLO) have also skyrocketed.
But here’s the most important point: We are still in the early stages of AI’s impact. The biggest opportunities—and the biggest Technochasm risks—are yet to come.
That’s why on Thursday, March 27, at 10 a.m. ET, I’m going on camera along with my fellow InvestorPlace Senior Analysts Louis Navellier and Luke Lango to share a groundbreaking AI announcement that could make or break investors moving forward. You can instantly save your seat for that free event right now by going here.
During that broadcast, Luke, Louis, and I will show you the three critical steps you must take now to stay on the right side of the Technochasm.
We’ll also explain how a trillion-dollar flood of money could soon surge into AI, thanks to moves by President Donald Trump.
We are at an inflection point—those who act now will reap the rewards. Those who ignore this shift risk being left behind.
Learn how to get on the right side by joining us on Thursday, March 7, for our urgent AI briefing. Sign up automatically here.
Good investing,
Eric Fry
Senior Global Macro Investment Analyst, InvestorPlace