The $22 trillion growth megatrend you don’t want to miss

Friday, 15 November 2019
Adelaide, Australia
By Bernd Struben

  • Confessions of an early ‘techno shamer’
  • No breaks, penalty rates, or strikes…
  • We need your help!

A few weeks ago I stumbled onto a new term.

It drove home just how delicate many Australians have become.

This term has nothing to do with any supposed slight of race, religion or body mass…the usual suspects that send our snowflakes’ into meltdown tantrums.

No. This one took a swipe at technology. Specifically at the cherished supercomputers clutched in so many hands.

You may have seen Michael Leunig’s cartoon, published in The Age on 23 October. It shows a woman talking on her smartphone pushing an empty pram, while her baby lies forgotten on the path behind her.

I usually skim The Age over breakfast. And I had a chuckle over this one. Turns out, not everyone was laughing. In fact, many phone addicted mums were outraged.

As The Age reported the following day:

The cartoon prompted a quick and fierce backlash with many dubbing it sexist, condescending and judgemental of mothers.

The article quotes Kirsty Goodwin, the author of Raising Your Child in a Digital World . It’s to Kirsty I give a nod of thanks for enlightening me to this new term:

To be perfectly frank it’s techno shaming and making people feel guilty for their digital behaviour. If we see a mother on her phone we are only seeing a snapshot. They could be dealing with a personal crisis or responding to an appointment for an employment opportunity.

Techno shaming!

I got more of a laugh from that than from Michael’s cartoon.

Now, sure, there’s a chance a mum — or dad — is ignoring their child and consulting their phone in public to deal with a personal crisis. On the other hand they could be playing Angry Birds. (Do people still play that?) Or sharing photos of their smashed avocado on toast brekkie. Or…

Of course, people’s addiction to smartphones is nothing new.

More, after a look at the markets…

Markets

Overnight, the Dow Jones Industrial Average closed down 1.63 points, or 0.01%.

The S&P 500 closed up 2.59 points, or 0.08%.

In Europe the Euro Stoxx 50 index closed down 10.69 points, or 0.29%. Meanwhile, the FTSE 100 lost 0.80% and Germany’s DAX closed down 49.84 points, or 0.38%.

In Asian markets Japan’s Nikkei 225 is up 170.37 points, or 0.74%. China’s CSI 300 is down 0.03%.

In Australia, equity investors are taking heart from the latest bad economic news. The latest employment report revealed the first fall in the number of jobs in three years. That brings the unemployment rate up to 5.3%, upping the odds of another interest rate cut from the RBA. And stocks, as you know, like nothing more than cheap money.

Confirming the ‘bad news is good news’ trend, the S&P/ASX 200 is up 51.55 points, or 0.77%.

West Texas Intermediate crude oil is US$56.94 per barrel. Brent crude is US$62.28 per barrel.

Turning to gold, the yellow metal is trading for US$1,469.79 (AU$2,165.92) per troy ounce. Silver is US$17.01 (AU$25.07) per troy ounce.

One bitcoin is worth US$8,658.21.

The Aussie dollar is worth 67.86 US cents.

Confessions of an early ‘techno shamer’

You can call me old fashioned.

It’s OK. I take it as a compliment.

That doesn’t mean I don’t understand modern tech. Or make use of it. My laptop and the internet are key tools of my trade, after all. Not to mention a little Netflix winddown in the evenings.

But when I’m done with work or play, I leave my tech toys behind. I generally don’t even carry my dumb phone outside of office hours, unless I’m meeting someone on the fly.

I’ve seen the addictive nature of smartphones evolve from day one.

In 2008 I attended the MIPIM real estate conference in Cannes, France for the financial media company I worked for at the time. That was less than a year after the first iPhones flooded into Europe.

I was at a fancy French restaurant with six colleagues, including the company CEO. As we waited for the hors d’oeuvres to arrive it dawned on me that all six colleagues were engrossed in their devices. Conversation had stopped.

When I pointed this out — techno shaming them! — there were some sheepish looks and the phones were placed on the table. But not for long.

These brand new, handheld supercomputers were too much to resist. By the time the main course arrived I was again left staring at the back covers of their tiny screens.

That was 11 years ago.

Today’s phones are smarter, faster…and more addictive.

And with the rapid evolution of artificial intelligence, tomorrow’s phones and devices of all shapes and sizes will be truly inseparable from the vast majority of people.

If you’re like me, that thought may make you a tad uncomfortable.

But regardless of how you feel about it, you shouldn’t ignore the tremendous amount of money the new waves of mass tech adoption is going to unleash.

No breaks, penalty rates, or strikes…

True artificial intelligence (AI) doesn’t exist yet. But deep learning machines — ones capable of learning from other machines or by observing their surrounds — do. And their capabilities are growing at exponential rates.

The smarter they get, the more disruptive they’ll be. Both in the workplace and the investment world.

Take mining giant BHP, for example. Earlier this week the company announced it will deploy the first of 86 planned self-driving ore trucks at its Queensland Goonyella Riverside coal mine.

We’ll steer clear of the impact on jobs that may or may not have. The point here is that this new smart tech is going to save BHP a lot of money over time. The self-driving haulers can operate around the clock. No coffee breaks. No overtime. No union led strikes.

As this technology develops — and approaches real AI — every mining and transportation company is going to demand it. To stay competitive, they won’t have any choice. That will boost the productivity and profit margins of the companies adopting the tech. But the biggest winners will be the companies developing and providing that technology.

This excerpt, for example, comes from Tuesday’s AFR, reporting on IBM’s Cloud Innovation Exchange event in Sydney.

Woodside Energy expects artificial intelligence technology to slice maintenance costs in its plants by 30 per cent a year – or around $300 million – and says this is one of several applications being developed with IBM that also include automating production and improving cybersecurity.

Westpac, Qantas and Vodafone also described how AI is helping to improve customer service, and in the case of Qantas reduce fuel consumption…

Woodside had been “glacially slow” adopting new technologies but the combination of AI, quantum computing and robotics had led to “a complete change in mindset”.

“We can see these things coming, they are coming very, very rapidly, and those who are not already dealing with it are going to get left behind very quickly… Suddenly we are on Moore’s law, and we are changing things every two years,” [Woodside chief Peter] Coleman said. “The culture has fundamentally changed, with the acceptance and adoption of [AI], and every day we are exploring new ways of what we can do with the technology we have never thought of before.”

That’s a projected $300 million per year savings in maintenance costs for just one company. You can see how the companies that don’t move quickly will be left behind.

The applications — and opportunities for investors — are truly endless. AI has immense potential in biotechnology, medicine, and education…to name a few.

And the AI technology stocks themselves could prove among the most lucrative of investments.

The government’s AI roadmap, released today (and summarised in the AFR) notes:

A 2018 AlphaBeta study which found digital technologies, including AI, would potentially be worth $315 billion to the Australian economy by 2028, and a British PwC study from earlier this year, which found AI could be worth $22.17 trillion to the global economy by 2030.

A $22 trillion boost to the global economy. With a $315 billion lift for Australia in just eight years.

Now those are just forecasts, mind you. They could turn out to be inflated. But they could equally well turn out to have underestimated the mammoth impact coming from the rollout of AI systems.

Either way the machines are coming. And early investors in the right tech stocks stand to make eye-popping gains.

One way to play the AI revolution is via the iShares Robotics and Artificial Intelligence Multisector ETF [NYSEARCA:IRBO].

The ETF, according to its PD, seeks to track the investment results of an index composed of developed and emerging market companies that could benefit from the long-term growth and innovation in robotics technologies and AI.

Year-to-date it’s up 27.33%.

Of course there are no guarantees the next 10 months will be as kind. But longer term, the future of AI related technologies is looking like a megatrend you won’t want to miss out on.

As a reminder, I don’t make official recommendations here in the Insider. Please do your own thorough research before investing a single hard earned dollar.

Finally…

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Thanks…and have a great weekend.

Cheers,
Bernd