How to invest in exponential growth
Wednesday, 4 September 2019
By Bernd Struben
In yesterday’s Port Phillip Insider, we dipped our toes into the world of technology.
Specifically, we looked at the rapid changes in technology over the past 50 years. From rotary phones to smartphones in barely a generation.
The opportunities presented by every new iteration of must have technology have minted countless millionaires. And dozens of billionaires. Think Musk, Zuckerberg and Ma…
Fortunately, you don’t need to pioneer your own revolutionary company to gain from their tech innovations.
With listed companies, every day investors can ride along with the stocks involved in developing and delivering tomorrow’s technologies. And if it seems that those technologies are rolling out faster each year, it’s because they are.
You’ve probably read that technological innovation doesn’t progress in a linear fashion. That true. It’s, in fact, speeding up. And as it continues to hit us faster, it will open the door to ever more investment opportunities.
You may have heard of Moore’s Law. It’s based on the fact that the number of transistors on a single chip have doubled regularly. In other words, a doubling or more of computing powers.
That’s called exponential growth.
To give you an example of the power of exponential growth, here’s a great example with USB sticks…or thumb drives…or flash drives…or whatever you wish to call them.
In January 2017, tech developer Kingston created a two terabyte (TB) USB flash drive. According to Extreme Tech, ‘that’s enough space for more than 70 hours of 4K video at 30fps; on a flash drive.’
30 fps, by the way, is frames per second. That’s high quality video.
And two TB, is far more memory than anyone was able to pack into a desktop computer just a few years ago.
Have a look at the graph below. It shows Moore’s law in action over the last 120 years:
Source: Steve Jurvetson
Click to enlarge
You may need to enlarge the graph to see just how rapidly things have been speeding up.
And judging by the explosive growth in the amount of data humans produce, that’s a good thing.
According to Scientific American (emphasis added):
‘The amount of data we produce doubles every year. In other words: in 2016 we produced as much data as in the entire history of humankind through 2015. Every minute we produce hundreds of thousands of Google searches and Facebook posts… It is estimated that in 10 years’ time there will be 150 billion networked measuring sensors, 20 times more than people on Earth. Then, the amount of data will double every 12 hours…
‘Artificial intelligence is no longer programmed line by line, but is now capable of learning, thereby continuously developing itself… Algorithms can now recognize handwritten language and patterns almost as well as humans and even complete some tasks better than them. They are able to describe the contents of photos and videos. Today 70% of all financial transactions are performed by algorithms. News content is, in part, automatically generated.’
The advent of the typewriter may have dramatically improved efficiencies for journalists and secretaries alike. But the development of true artificial intelligence is going to be a game changer like none we’ve seen before.
Let me show you one more chart on the power of exponential growth:
Source: Dirk Helbing, Scientific American
Click to enlarge
Now as I’ve written before, there are serious implications involved for future labour forces. And not just people involved in simple, repetitive manual tasks. In fact, Scientific American estimate that half of today’s work could be done by automated systems within 10 years.
This will bring major changes to the way we live and work and play. Major changes that will deliver major opportunities.
We’ll get back to that after a look at the markets.
Overnight, the Dow Jones Industrial Average closed down 285.26 points, or 1.08%.
The S&P 500 closed down 20.19 points, or 0.69%.
In Europe the Euro Stoxx 50 index finished down 11.80 points, or 0.34%. Meanwhile, the FTSE 100 lost 0.19% and Germany’s DAX closed down 42.92 points, or 0.36%.
In Asian markets Japan’s Nikkei 225 is up 23.35 points, or 0.11%. China’s CSI 300 is up 0.22%.
In Australia, the S&P/ASX 200 is down 30.90 points, or 0.47%.
West Texas Intermediate crude oil is US$53.93 per barrel. Brent crude is US$58.24 per barrel.
Turning to gold, the yellow metal is trading for US$1,545.78 (AU$2,285.31) per troy ounce. Meanwhile silver rocketed overnight, up 5.8% in US dollar terms. Silver is US$19.43 (AU$28.73) per troy ounce.
One bitcoin is worth US$10,577.93.
The Aussie dollar is worth 67.64 US cents.
Up top I mentioned that Moore’s Law is based on the fact that the number of transistors on a single chip have regularly doubled since the first chip was unveiled.
Now, you’d think there’d be some eventual limit to that. That physics would come into play and say enough! You just can’t make these transistors any smaller. You can’t pack any more in.
Enter human ingenuity.
‘Chipmakers have spent two decades pouring investment into a revolutionary new technique to push the limits of physics and cram more transistors onto slices of silicon. Now that technology is on the cusp of going mainstream…
‘Ushio Inc. announced July it had cleared a key milestone, perfecting the powerful, ultra-precise lights needed to test chip designs based on extreme ultraviolet lithography or EUV, the process through which the next generation of semiconductors will be made.’
I’d never heard of USHIO INC. [TYO:6925] before reading the above article yesterday morning.
A quick chart scan tells me its share price has bounced around quite a bit over the last decade. It’s had a good run in 2019 though. While still well down from its February 2006 highs, the stock is up 21.6% year-to-date.
Ushio also happens to be hip deep in what tech expert Sam Volkering calls ‘colony technologies’.
As I understand it, there are two aspects to this.
First, with ever more complex technology evolving ever more rapidly, no single company can design and develop all the essential components themselves. Like ants working together to create massive colonies, they need to collaborate.
That opens the door to small niche players to fill the gaps with their own revolutionary innovations. And it’s precisely these niche players that can deliver early investors eye-popping gains…provided these niche players succeed, of course.
Secondly, it’s not just companies that need to work together to achieve success. It’s the technologies themselves. In the coming world of smart-homes, smart-cars, and smart-pretty-much-everything, all that technology is going to be interconnected. Meaning the machines will need to be able to operate together as a single ‘colony mind’.
Self–driving vehicles and the coming Internet-of-Things (IoT) is sure to offer up some outstanding investments…and its fair share of duds. As you’d expect then, Sam Volkering covers this closely over at Revolutionary Tech Investor.
But there’s a lot more to tomorrow’s technology than this.
The world of medicine, for one, is being upended by tech advances in bionics and genetic engineering.
Then there’s the financial world. It’s rapidly being reformed by the advent of cryptocurrencies and blockchain technology.
It’s called revolutionary technology for a reason!
In fact, Sam believes the next wave of technology will lead to a realignment of power structures — especially in the developed world.
More importantly, from an investor’s perspective, this will create a battleground for market share…and profits. If you get onto the right big ideas early, the potential gains could be life changing.
And according to Sam, identifying that big idea, the next big tech megatrend, is more than half the battle. Here’s what he wrote earlier today in Money Morning:
‘Finding the massive profit-making megatrends is the hard part. Looking through a company’s financials, roadmap, technical papers, that’s a breeze. And that’s why getting the bigger theme right is as important (if not more) than the stocks themselves.’
If you’ve never checked out Sam’s work over at Revolutionary Tech Investor, now is the time.
As I told you yesterday, in a recent major reshuffle, Sam and publisher James Woodburn decided to combine all four of Sam’s premium investment services into one.
That means that Sam Volkering’s Crypto Tech Investor, Microcap Trader, and Microcap Global Trader are all now part of Revolutionary Tech Investor.
For the next five days, you can still subscribe to the greatly expanded Revolutionary Tech Investor for its original subscription price set back in 2013. And you’ll never pay more than that as long as you maintain an active subscription.
But here’s the thing.
At midnight AEST on Monday 9 September, the subscription price goes up by $2,000 per year. And James is adamant it will never go down.