The Kindergarten Trade:
Betting Big on What AI Can't Do By Josh Baylin, senior analyst, Stansberry Research In 1856, Margarethe Schurz started America's first kindergarten from her Wisconsin farmhouse. No lesson plans... no standardized tests. Instead, she spent the days singing songs, playing games, and telling stories with her daughter and four other children. Most schools worked differently back then. Education meant memorization... And teachers expected children to act like miniature adults. But Schurz had studied under Friedrich Fröbel, a pioneering German educator. She shared his belief that young minds flourish through creativity, play, and emotional connection. Today, kindergarten is still a place to learn through play. It has become a staple of childhood. But the classroom as we know it is transforming again... Artificial intelligence ("AI") and large language models like ChatGPT are disrupting education at an unprecedented pace. Investors are scrambling to understand what will survive the automation wave. On one hand, AI excels at information delivery. For example, Khan Academy's AI tutor now serves 65,000 students for just $44 a year – less than a single traditional tutoring session. AI is also an incredible productivity tool. In a recent Gallup poll, teachers who use AI the most reported saving nearly six hours a week. But Schurz was on to something that hasn't changed... She offered what rigid memorization could not – a human-centered approach. Similarly, as AI takes over some services, the value of human-centered learning is growing... not shrinking. And for investors, that points to a major opportunity in the companies that do what AI can't. | Recommended Links: | | Trump's Secret Plan to Crush the National Debt Forget about the "One Big, Beautiful Bill." At a recent gathering of some of the most powerful people in America, Jeff Brown discovered the Trump administration's radical plan to smash the national debt. He calls it President Donald Trump's "Project MAFA." In short, the administration has devised a way for trillions of dollars to flood into America's coffers – from an unexpected place. And upcoming legislation could make it the law of the land – by July 25. See the story here (includes a free stock giveaway). | |
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The Human Edge Over AI While AI democratizes information, another trend is creating new investment opportunities at the same time: the rise of social emotional learning ("SEL"). SEL programs teach children social skills, emotional regulation, and interpersonal communication... things that computers and AI can't teach. They're the modern version of Schurz's human-centered approach. And these SEL companies are commanding pricing power. The numbers tell the story... SEL is growing 24.3% annually, compared with 15% to 17% for general educational technology. Vendors charge $1,000 to $3,200 per SEL implementation – up to 10 times more than traditional educational software. SEL programs deliver a remarkable $11 return for every $1 invested. Finally, SEL has lifted graduation rates from 62% to 84% and cut expulsion rates in half. These aren't marginal improvements. They're transformational outcomes – and they're only possible through human connection. As Margarethe Schurz understood back in 1856... the highest value in education doesn't come from delivering information. It comes from developing people. That's why human-centered education is becoming a trophy asset class... As AI races toward low-cost, high-scale knowledge delivery, the companies investing in human growth are building the only moats machines can't cross – based on trust, connection, and personal impact. For investors, the message is clear... In a world of automation, the edge belongs to the irreplaceable. Companies Are Betting on Human-Centered Education This isn't a fight between AI and humans. It's about knowing where each one works best – and how to invest accordingly. The divide is showing up throughout the education sector... Stride (LRN) is one example. It's a virtual-learning "EdTech" company that's seeing a huge surge in growth. Third-quarter 2025 revenue hit $613.4 million (up 17.8% year over year), with net income soaring 42% to $99.3 million. Most telling, though, is Stride's career-learning program, which focuses on human-skills development. This program grew its enrollment 34% year over year. It now serves 98,700 students while maintaining 40.8% gross margins. Another example is language-learning app Duolingo (DUOL). At first glance, it looks like an AI pure play... It makes an addictive game for 130 million-plus monthly active users. And it notoriously laid off employees to shift to AI. Yet even Duolingo recently added chess and music offerings that encourage human creativity and strategic thinking. All of this is leading to one thing... The 2030 Education Vision By 2030, I expect education to split into two distinct markets. AI will dominate simple "knowledge transfer" learning. It will be nearly free... and universally accessible. Meanwhile, folks will pay a premium for human development. This part of the market will determine life outcomes, career success, and social mobility. Money will increasingly flow to companies that either achieve massive scale through AI efficiency... or defend premium pricing through uniquely human capabilities. Investors don't have to worry about choosing a side. Both will win – the overall trend is what matters. In a way, Silicon Valley is finally catching up to Margarethe Schurz... The "kindergarten trade" isn't just an investment strategy. It's a bet on what will still matter when everything else is automated... and where we can find the highest premiums in a soon-to-be AI-saturated world. As I always say... you're either early, or you're obsolete. Good investing, Josh Baylin Further Reading "One technology is about to give ordinary people extraordinary capabilities," Josh writes. Modern smart glasses leverage AI to connect us more deeply to the world around us. The transformation to this technology is inevitable... and that means demand is about to explode. "Trusting AI for investing advice is risky – and that's not likely to change anytime soon," Sean Michael Cummings says. Tech-savvy investors are flocking to AI for investment advice. But this isn't such a good idea – and the reason why lies in how these models are trained. |
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