Imagine the United States in the 1870s, when the world was in the teeth of the Panic of 1873, the worst economic gut-punch since the Civil War. Banks were collapsing, railroads were going bust, and unemployment was spiking.
It was a time when most folks were running for cover, but there was one scrappy young immigrant by the name of Andrew Carnegie who saw through the smoke and liked the picture. That Scottish immigrant saw opportunity in the chaos, and his moves back then are a masterclass for investors.
We are about to see a productivity boom like we haven’t seen in 150 years. And this current market correction is giving you the perfect opportunity to make huge profits.
Carnegie’s Recession-Proof Hustle
Carnegie didn’t just survive the Panic of 1873; he thrived. While competitors were slashing production and praying for better days, Carnegie doubled down. He poured money into his steel operations and bought up distressed assets like the Edgar Thomson Steel Works at bargain-basement prices. Why? Because he knew the demand for steel—railroads, bridges, ships—wasn’t going away.
He bet big on the future, even when the present looked bleak.
But it wasn’t just about throwing cash around. Carnegie was a pioneer in squeezing every ounce of efficiency out of his mills. He introduced rigorous cost-accounting, a precursor to what we’d later call “man-hours,” to track labor productivity down to the minute. This let him compare workers, optimize shifts, and cut waste.
And then there’s the furnace story—Carnegie’s team figured out “hard driving,” blasting furnaces with high-pressure air would boost output, even if it meant wearing out the linings faster. Relining a furnace every three years instead of twelve would cost a fortune.
But that was a tradeoff he’d take, because the math checked out: higher production, lower costs, bigger profits.
By 1890, a hard-driven furnace could pay for itself in two years. That’s the kind of edge that made Carnegie the richest man alive.
Carnegie’s playbook was simple: invest countercyclically, obsess over efficiency, and embrace disruptive tech (like the Bessemer process). He didn’t wait for the economy to recover; he built his empire in the storm.
Today’s Productivity Revolution: AI, Robotaxis, and Robots
Fast-forward to 2025, and we’re on the cusp of a productivity revolution that makes Carnegie’s steel boom look like a lemonade stand.
Artificial intelligence, autonomous vehicles, and robotics are about to rewrite the rules of work, just like steel rewrote infrastructure. The parallels are uncanny: economic uncertainty (inflation, debt, geopolitical noise), transformative tech, and a chance to get in early before the herd catches on.
Here’s the deal: AI and robotics are slashing costs and boosting output just like Carnegie’s hard-driven furnaces. These technologies trade short-term costs for long-term gains.
Companies that are adopting them now — while others hesitate — are positioning themselves to dominate. And like Carnegie buying up mills in a recession, the smartest investors are scooping up AI and robotics plays while valuations crash.
Why This Matters Now
We’re not in a full-blown recession. Today’s unemployment numbers came out flat, but the warning signs are blinking—global debt at $315 trillion, inflation refusing to die, and markets wobbling on tariff threats.
Meanwhile, AI and robotics are hitting escape velocity. A 2023 study from the University of Cambridge showed robots initially dent profits as firms integrate them, but once they’re fully embedded, they drive innovation and revenue growth through new products and market power.
That’s Carnegie’s furnace logic in silicon form: take the hit now, win big later.
The World Economic Forum pegs 2025 as the year machines outpace humans in task volume, creating 58 million net new jobs by 2027 through reskilling and new industries.
Robotaxis alone could disrupt 4 million driving jobs in the U.S., but they’ll also spawn new sectors—think software, maintenance, and data analytics. This is creative destruction on steroids, and it’s happening fast.
Carnegie’s Lessons for Today’s Investor
So, how do you play this like Carnegie? Three rules:
- Buy the Dip: Carnegie snapped up assets when others were panicking. Today, that means investing in AI and robotics firms during market pullbacks. Valuations are frothy in some spots, but corrections are your friend.
- Bet on Efficiency: Carnegie’s man-hours obsession is AI’s bread and butter. Companies leveraging AI to optimize workflows or robotics to cut labor costs are your steel mills.
- Think Long-Term Disruption: Carnegie didn’t care about relining furnaces; he cared about market share. Pick companies that can scale and innovate, even if it means short-term burn.
All the best,
Christian DeHaemer
Outsider Club
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