Investing in technology’s ‘true warriors’
Tuesday, 12 February 2019
By Bernd Struben
- When billions are spent like loose change…
- ‘Need a Home Loan? Ask the Machines’
‘If you’re a true warrior, competition doesn’t scare you. It makes you better.’
When it comes to competition, I’m not sure I qualify as a ‘true warrior’. At least not in the sense that Andrew Whitworth uses in the opening quote above.
Competition — in sports, academia, and my professional career — has always spurred me on to do better. But I can’t say it never scared me.
This was especially true early on in my working life. That’s when I realised how many other talented people were gunning for the same jobs or promotions I was after. But I used that sense of angst to my advantage by putting in the extra effort to gain an edge over the competition.
Whitworth may be bragging about his lack of fear. But looking at his mug shots in the team roster, I doubt it.
As you may know, Whitworth is an offensive tackle for the Los Angeles Rams.
The Rams made it all the way to the Super Bowl this year, where they lost in a low scoring defensive battle (13 to 3) against the New England Patriots.
The intense competition in professional gridiron certainly makes the players better.
Think about it.
If their opponents all year had been slow and uncoordinated, you can bet the players of the LA Rams would have cut back their training regimen. And spent more time at the pub.
The same holds true for competition between companies in the free market.
Companies are constantly striving to bring you better products and services at lower costs than their rivals. Which, incidentally, is why the oligopoly enjoyed by the Big Four Aussie banks has delivered such shoddy results for customers. But that’s a story for another day…
On an international national level, competition also tends to drive rapid innovation.
The space race between the US and the former USSR is a classic example.
If the Americans hadn’t been stimulated into action by the Soviets beating them into orbit, mankind probably wouldn’t have taken its giant step onto the moon until many years later.
I bring this up to you today for a reason.
And that’s because a new international competition is heating up. One that puts the Olympics to shame. And one where early investors could see life-changing gains.
More after a look at the markets…
Overnight, the Dow Jones Industrial Average closed down 53.22 points, or 0.21%.
The S&P 500 gained 1.92 points, or 0.07%.
In Europe, the Euro Stoxx 50 index finished up 29.99 points, or 0.96%. Meanwhile, the FTSE 100 rose 0.82%, and Germany’s DAX closed up 107.81 points, or 0.99%.
In Asian markets, Japan’s Nikkei 225 is up 412.11 points, or 2.03%. China’s CSI 300 is up 0.58%.
In Australia, the S&P/ASX 200 is up 23.45 points, or 0.39%.
On the commodities markets, West Texas Intermediate crude oil is US$52.30 per barrel. Brent crude is US$61.51 per barrel.
Turning to gold, the yellow metal is trading for US$1,307.95 (AU$1,851.83) per troy ounce. Silver is US$15.71 (AU$22.24) per troy ounce.
One bitcoin is worth US$3,586.04.
The Aussie dollar is worth 70.63 US cents.
When billions are spent like loose change…
Now back to what’s shaping up to be among the biggest and potentially most lucrative investing trends of the coming decade.
Once more, it’s all thanks to competition. In this case between the US and its Western allies, and the fast rising might of China and its…well, mostly just China.
Like the space race between the US and former USSR, this new competition centres on technology. It encompasses both space and military tech…and much more.
As we move into the 2020s the race is on between East and West to develop truly smart machines. Whoever wins this race will gain a crucial edge in projecting their power across the globe.
The stakes couldn’t be higher.
And yesterday, Donald Trump officially put the full might of the US government behind it.
‘President Donald Trump signed an executive order Monday directing the U.S. government to prioritize artificial intelligence in its research and development spending, the White House said…
‘The administration’s action follows moves by China to establish dominance in a technology with far-reaching implications for national security. The Chinese government has made a 10-fold increase in AI output a national priority for coming years, and many companies there are deploying machine-learning systems to update banking services, identify faces in crowds, and control drones.’
Now deep learning machines in the hands of any government is a frightening prospect.
The Chinese government is hoping to do far more than just identify faces in crowds. They’re planning to use AI for a vast new social control experiment. One where citizens’ every moves and actions are tracked and graded, and they’re rewarded or punished accordingly.
The US government is only marginally better. Police in places like Florida’s Orlando have already deployed facial recognition tech (courtesy of Amazon) across a range of CCTV and officers’ personal body cameras.
The potential for future misuse is frightening.
But we’re not here to argue for or against the virtues of this next generation of technology. We’re here to try to make the most out of it.
Ethical investors may wish to look away. But the truth is the competition to create the fastest, smartest and arguably most dangerous machines in history is already underway. And with hundreds of billions of dollars likely to be poured into winning this race over the next few years, it’s something you should seriously consider putting some money into.
Now Trump’s executive order didn’t give any specific funding goals. That will be up to Congress. And if the US government shuts down again over the border protection squabbles, that may be a while.
But that’s OK. This competition is a marathon, not a sprint. The winner won’t be known for years yet.
In the meantime, private industry and the biggest governments in the world will be spending vast sums on AI technology. The White House said yesterday is ‘critical to creating the industries of the future like autonomous cars, industrial robots, algorithms for disease diagnosis and more.’
By the way, the White House also stated that Trump’s executive order ‘envisions regulatory guidance to ensure the technology is trustworthy’. That may allude to ensuring the new tech can’t be hacked by malicious players. But since we’re talking about intelligent machines here, you have to hope they’re also taking steps to avoid creating a real-life Skynet.
Dystopian outcomes aside, as the Chinese work to increase their AI output by 1,000%, the biggest players in the US tech industry are rapidly stepping up their own investments.
This headline comes from Bloomberg (on 6 February): ‘Microsoft Invests in “Boring AI” Startup Valued at $2.75 Billion’. The article continues:
‘Databricks Inc., which says it makes software to help companies satisfy their “boring AI” needs, raised a new round of funding that values the business at $2.75 billion.
‘Microsoft Corp. was among the investors in the $250 million financing…’
Granted that’s a rather small sum for the likes of Microsoft. So how about US$2 billion (AU$2.83 billion)?
Also from Bloomberg:
‘IBM is plowing $2 billion into a new artificial intelligence research hub in New York as part of its efforts to boost growth from emerging technologies…
‘[IBM] has been pushing into fast-growing new technologies, like AI, cloud-computing platforms and analytics to spur growth and shift away from legacy businesses such as mainframe computers. IBM lags Amazon.com Inc and Microsoft Corp. in the cloud, where many AI applications are accessed.’
I could go on.
But I’m sure you get the picture.
The world’s two biggest economies are locked in an epic new competition where billions of dollars are thrown around almost like loose change.
There will be winners and there will be losers.
Companies like Amazon, Apple, Alphabet (Google), IBM and Microsoft are investing heavily to gain a spot among the winners.
An investment in any of these blue chip companies or their Chinese counterparts could pay off handsomely over the next few years.
But if you’re after the really big potential gains — and able to stomach the greater risk that comes with that — you’ll want to look at the lesser known players. Up and coming companies bringing revolutionary new approaches to this trillion-dollar international competition.
Those are the kinds of stocks Sam Volkering targets in his premium investment service, Revolutionary Tech Investor.
Now before you log off, don’t forget to check out the latest from The Australian Tribune:
‘Need a Home Loan? Ask the Machines’
‘No matter how you feel about smart machines taking human jobs, when it comes to the banking sector, at least machines won’t be prone to misleading practices in order to pad their bonus cheques.
‘Perhaps it’s fitting then that National Australia Bank (NAB) is leading the way in introducing artificial intelligence in its loans department.
If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.
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