Transformational Tech of the Twenty-Twenties
Tuesday, 14 January 2020
By Sam Volkering
Investing is a hard game. It’s hard to know when to hold ‘em, know when to fold ‘em. Getting in, getting out, topping up, averaging down, they’re all ways to think about managing your investment portfolio.
What’s even harder is deciding on what to buy and when.
And God knows as a subscriber to Port Phillip Publishing, deciding on which stocks to buy can be a bit of a nightmare.
I say this because I know of subscribers who subscribe to just one of my newsletters and have difficulty deciding on what to buy. If you subscribe to a few, or are even an Alliance member, it’s a tough old game.
But in a world where we’re continuously influenced from external forces, having the information to make your own decisions, I believe, is one of the most powerful things you can do.
The world in which we live in gets more technologically advanced every year. Every year technology creeps into our lives a little more. And in the blink of an eye the things that seemed pie-in-the-sky are now ubiquitous around us.
Being able to see these technologies before they creep up on us is as tricky as deciding on what stocks to invest in. It’s hard to see the impact certain technologies will have, before they make their mark.
That’s why I believe that we can leverage history to understand what the coming decade has in store for us. Also, because we’ve got a close ear to the ground in terms of revolutionary technologies we start to piece together where the opportunities really lie for investors.
Before we go any further, let’s take a look at the markets…
Overnight, the Dow Jones Industrial Average closed up 83.28 points, or 0.29%.
The S&P 500 closed up 22.78 points, or 0.70%.
In Europe the Euro Stoxx 50 index closed down 9.84 points, or 0.26%. Meanwhile, the FTSE 100 gained 0.39%, and Germany’s DAX closed down 31.79 points, or 0.24%.
In Asian markets Japan’s Nikkei 225 is up 176.24 points or 0.74%. China’s CSI 300 is up 0.23%.
The S&P/ASX 200 is up 49.20 points, or 0.71%.
West Texas Intermediate crude oil is US$58.23 per barrel. Brent crude is US$64.40 per barrel.
Turning to gold, the yellow metal is trading for US$1,540.32 (AU$2,234.15) per troy ounce. Silver is US$17.81 (AU$25.83) per troy ounce.
One bitcoin is worth US$8,394.79.
The Aussie dollar is worth 68.96 US cents.
Wind back the clock to 14 January 2010. What were you doing back then, 10 years ago?
I’ll tell you what I wasn’t doing. I wasn’t yet working for Port Phillip Publishing. In fact, I wouldn’t step through the doors and get introduced to our current publisher, James ‘Woody’ Woodburn, and former publishers Dan Denning and Kris Sayce, until three years later.
Three, whole, years.
In 2010, I was still slogging it out as a financial advisor in Melbourne. But I had stumbled across this weird online digital currency, bitcoin and was diving deeper into what it was all about.
I happened to be single at the time, which meant I had plenty of time up my sleeve to spend hours on weird forums online and on the deep web. Learning about this new world of bitcoin.
I also remember the apartment I was living in. It had normal light switches. I had a 32 inch LCD TV that cost me around $1,200 brand new. I used a Toshiba Laptop with 2Gb RAM. My car’s most advanced feature was cruise control. And at that point in time, there wasn’t a single electric car on the roads.
By the end of the decade I had been with Port Phillip Publishing for seven years. I was now married, with a kid, a cat, a dog and living around 16,000km on the other side of the planet.
My house hasn’t got a normal light switch in it. Some woman called Alexa just sorts it all out for me. The idea of ‘voice search’ to seek information from the online world was lightyears away in 2010. Now it’s the fastest growing opportunity for businesses and marketers to leverage their online presence.
My TV is now 60 inches, looks like a piece of art when on standby, is LED and cost less than my crappy LED TV a decade earlier. Screen displays are now punching out in 4K resolution. That’s soon to be replaced with 8K as the standard, and soon after that you won’t be able to tell the difference between what you see in the window or through the TV.
I’ve got two laptops in the house and a tablet. All have about 10 times the processing capacity of the old Toshiba banger. And within the next decade they’ll all be relics again. Most likely we’ll be using home quantum processors in our computers.
The car is a little more advanced as well. It still has cruise control, but decides when the car in front is too close and automatically adjusts its speed. It’s heads up display is a version of augmented reality that’s becoming standard now on many new cars.
Most new cars will also let you take your hands off the wheel while you drive and keep you safe. And not only are EVs popping up everywhere, so is the infrastructure to keep everyone powered on.
But these are just the things that crept up on us from a short runway in 10 years (or less in many cases). This kind of reflection on what your life looked like 10 years ago serves a good purpose.
It’s a good litmus test to start to get a grip on what the next 10 years could deliver. If you think about the companies that deliver the tech that’s ubiquitous today, many are household names.
They’ve transformed our world in just 10 years. Transformed the way we consume content. The way we connect and communicate with each other. They’ve transformed how we think about money, make payments, send money around the world.
They’ve delivered us the capacity to learn more, faster and then progress to another level at unimaginable speed.
You’d be a fool to think that’s all just going to stop dead in its tracks over the next decade. Even if there’s some kind of mass global market ‘correction’ or ‘crash’ none of this progress will stop and revert course.
That’s why we sit on the precipice of immense opportunity once again. A time to reload and fire at the tech that’s going to transform our world over the next 10 years (or likely less).
And I believe that through advanced artificial intelligence (AI) we’ll see the world reshape again. Now to just blanket say AI is going to change the world isn’t ground breaking. What’s critical is to know where and how, and what companies are going to benefit from it the most.
Importantly as Aussie investors, where on the ASX will we find these companies? Where will the next Appen be? Or the next Afterpay? Is there another REA Group or Xero Ltd kicking about in the mid- to small-cap space that you must get on board today?
You bet there are. Over the next decade ‘tech’ stocks will come to be most companies. As most companies are going to implement high-level technology in some way shape or form. That’s the beauty of being Port Phillip Publishing’s tech specialist, the breadth of opportunity in the ‘tech stock’ space is unparalleled.
What we’ll see is that ASX companies will adapt and implement AI in their systems more and more. This will drive cost to serve lower, efficiencies higher and enable smart companies to deliver strong financials when we’re moving into a world where margins get squeezed.
AI will help to transform areas like retail, banking and finance, healthcare and biotech. These are just some of the areas I’m hunting in where AI is going to make sweeping industry wide change.
But at the heart of it will be AI. This is the fundamental game changer tech opportunity for the next decade. Combined with the potential for quantum processing — these two go hand in hand.
My aim is to land on the right stocks at the right time for my subscribers that leverage both of these transformational technologies. And if we get it right, and I think we will, then quantum and AI could make a lot of investors very wealthy by the time this decade is out.