AI Stocks, Your Portfolio and the Great Horse Manure Crisis of 1894
June 23, 2025
By Michael List, CFA, CFP®
Investment Management Officer
Near the turn of the century, growing cities across the world faced a major urban planning nightmare. The challenge stressed governments, animated the media, and plagued citizens. Following decades of population and economic growth, cities like London and New York City were at a loss over what to do with the byproducts of their primary means of transportation. Worse, if current trends continued, forecasters predicted that by the middle of the next century, cities would be buried under yards of manure.
The world was entering the Great Horse Manure Crisis of 1894.
New York City alone was home to nearly 150,000 horses, used for personal and public transportation and for hauling goods throughout the city. These animals produced around 3 million pounds of waste every day. Beyond the obvious issue of stench, this waste created serious environmental challenges. Rain turned the streets into rivers of muck; sun baked the manure into dust. Cleanup efforts only shifted the problem—manure was piled into vacant lots, where it could reach heights of 50 feet. Naturally, these piles attracted flies, which in turn led to outbreaks of typhoid and other diseases.
Enter, the Automobile
Global leaders met to solve the crisis but, after three days, left unsuccessful and distraught. Fortunately, a new technology emerged that helped avert the environmental disaster: the automobile. This new form of "horsepower" was cleaner, cheaper, and more efficient—and it would change the world.
Like all new technologies, the automobile brought both investment opportunities and challenges. Over the past century and a half, there have been hundreds of automobile manufacturers, though most have since merged, been acquired, or gone out of business. Alongside them, thousands of companies sprang up to provide goods and services to automakers and car owners alike.
Technologies On the Horizon
Today, everything moves faster—cars, the internet, innovation, and adoption cycles. Artificial Intelligence (AI) is the latest transformative technology, bringing with it both significant investment opportunities and new challenges. Much like the early days of the automobile, it's hard to predict which companies will become the ultimate winners in the AI revolution.
When thinking about investment opportunities, an old proverb comes to mind:
“If you want to get rich during a gold rush, sell picks and shovels.”
While some struck gold, it took a lot of hard work and even more luck. Many who sought their fortune left unsuccessful and distraught, but the ones selling tools had streams of new eager customers.
What Will Replace the Picks and Shovels?
Investor excitement today has largely focused on companies developing AI models and producing advanced processing chips. But other parts of the AI world have attracted far less attention. There are investment opportunities all along the supply chain—from energy and data centers to corporations and employees using AI to boost efficiency and profitability.
Like the Great Horse Manure Crisis, the real winners in the AI revolution may emerge from unexpected places. Rest assured, we're diligently monitoring the evolving AI landscape, keeping a close eye on emerging trends and the companies poised to be the true AI winners (not just those making the most noise). Our goal is to help your portfolio navigate this exciting new era and capitalize on the most promising opportunities, wherever they may arise. Reach out to your advisor if you have any questions. Your financial success matters to us.