Investors are suddenly fixated on “personal AI agents.” They are wondering: Are personal AI agents going to replace all apps (or at least replace travel apps)? Are they going to collapse all software into a single user interface (or at least eliminate many single-purpose apps)?

On social media, posts abound about using personal AI agents to accomplish varying tasks: cancel subscriptions, negotiate bills, book trips, reserve restaurant tables, purchase fancy items, arrange an entire wedding… The list goes on.

Having used various personal AI agents like Muse, Instinct, and Dot, I have become increasingly convinced that what we think we are seeing—those use cases on social media, those expectations we have, those grand visions that feel so real to us—many of these are probably not enduring, but a mirage.

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Earlier this year, I wrote an article on agentic commerce (link), arguing that agentic commerce might not be as big a deal as some were saying. In the ensuing few months, agentic commerce and its related discussion waned. Few signs of adoptions were observed.

Since August, Instinct (a personal AI agent app developed by a startup) and Muse (a personal AI agent app developed by Meta) have attracted the attention of both consumers and investors. On the consumer end, as of today, Muse is the No.1 most downloaded app across both Apple and Android. On the investor end, investors sold consumer-related stocks, in fear of the “disintermediation” risk—consumers might ditch existing e-commerce and food delivery apps and order via personal AI agent apps going forward.

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I used to work in the software industry. For a period of time, I held this view: Over the long run, the American B2B software industry might wither away.

My old reasoning was as follows: The fundamental value of B2B software comes from the fact that software engineers are expensive in the U.S. That means client companies cannot easily afford to build software in-house (attracting and maintaining software talent is costly) and therefore, they buy from vendors instead. In China, however, an abundant supply of high-skill and low-cost labor means something quite the opposite—with inexpensive software coders, Chinese companies tend to build software in house. Therefore, as we can observe, China’s B2B software industry is nowhere near as successful as the country’s consumer internet industry or the U.S. software industry. So, I thought my reasoning had legs.

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“Agentic Commerce” is in fashion. The media talks about it. Investors are mesmerized by it.

Like many new concepts, “Agentic Commerce” has a definition that is a bit fluid. It can be roughly defined as a way of online shopping where AI agents autonomously shop on behalf of a human consumer. The AI agents can interpret human intent, discover product options, optimize for constraints (prices, features, delivery speed) and complete transactions.

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Interest rates are rising.  Investors are panicking.  “A crash like the dot.com” (link), “Worst inflation in 40 years” (link), “Recession is coming” (link), as if the world is coming to an end.

I understand the sufferings felt by people.  My intention is not to invalidate the pains.  But in this article, I want to make a point:  I increasingly feel that, if we enter a recession, maybe it has benefits.

How Did We Come To This Point?

You cannot clap with one hand.  Today’s problem is not solely caused by geopolitical tragedies in Ukraine or supply-chain problems in Asia.  There are domestic problems within the U.S. that contributed to today’s struggles. 

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Update on KWEB: The prediction I made in July 2021, titled “Two Hours of Almost ‘Free’ Money,” has been proven to be correct by the market. KWEB reached $55 a share on September 7, 2021.

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Full disclosure: I own KWEB the ETF. This article is NOT investment advice. Do your own due diligence.

I am increasingly convinced that the price collapse of overseas–listed Chinese stocks is probably coming to an end very soon. Take KraneShares CSI China Internet ETF (KWEB) as a market proxy for overseas–listed Chinese stocks. I believe the bottom is likely to appear between now and early 2022.

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[Full disclosure: I own the KWEB ETF.  This is NOT investment advice!  Do your own due diligence.]

“Reactive” is a word that sounds passive and negative. People do not like this word. In investing, I like to argue however, “reactive” can be a good thing.

To proactively predict the financial market is an extraordinarily hard thing to do. Proactively predicting companies’ futures is hard — that is why good stock pickers are rare. Predicting the market is harder — that is why there are extremely few investors who can make it big by just market-timing.

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This is NOT investment advice! Do your own due diligence.

Chinese equities suffered sharp selloffs due to policy-related concerns. KraneShares CSI China Internet ETF (“KWEB”), a popular Chinese ETF, declined by as much as 25% over the three-day period from last Friday to this Tuesday — a massive decline since KWEB has previously already declined by 40% from February to June! By Tuesday night, KWEB was down more than 55% from this year’s peak. See the chart above. What a financial “bloodshed”!

If one were watching the market close enough, he/she could discover an asymmetric opportunity during the Tuesday selloff. In a nutshell, between 11:30am and 1:30pm Tuesday (July 27, 2021), for KWEB, its exchange-listed long-dated call options were selling at a price so low that basically “guaranteed” investors great returns.

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