Technological change has one thing in common with viral pandemics in that change is not linear but exponential. We will experience more technological change in the next two decades than in the last two hundred years and as investors we must be prepared. Often progress appears to plateau before leaping dramatically forward as we enter periods of technological convergence. Convergence is the result of an alignment of capabilities that allow the next generation of technologies to reach a state of rapid growth and adoption. Netflix, for example, was not possible prior to the introduction of universal broadband internet service to millions.
We are undergoing the largest disruption of our lifetimes as we transition from the physical world to the digital world. Just as we went through a wave of electrifying everything (creating drills to washing machines) we are now in the process of taking everything that was formally electrified and ‘cognifying’ it. We are now entering a period of convergence which will radically alter world economies as we know them, transforming industries and making others obsolete. Millions of jobs will be both created and destroyed. The opportunities to invest in the new “Amazons” and “Googles” of the next decade are close at hand. It is estimated that close to forty percent of the Fortune 500 companies we know today will cease to exist in the next ten years.
A world dominated by 5G networks is already in place in some countries. As it gets deployed around the world, it will transform our lives with faster download speeds, low latency and more capacity and connectivity for billions of devices around the world. It is crucial for the deployment of AI and virtual reality and the Internet of Things.
Car manufacturers will see the end of the car as a possession of the average individual, marking the beginning of using cars as a service. We will see fleets of autonomous vehicles take to the streets, dramatically reducing the cost of vehicle ownership by up to eighty percent as ridesharing in autonomous cars begins to dominate.
Travel will become less essential as we attend conferences in avatar form either digitally or in robotic form. Zoom conferencing is only the very beginning. Recreational travel will include flying remote drones through exotic locales from the comfort of our living rooms, all in spectacular 3D virtual reality.
Customer service will be managed by Artificial Intelligence that will be indistinguishable from real humans. Not only will they track our emotions and respond accordingly, they will never lose their tempers or behave inappropriately. AI is not only already being used for writing articles for the daily news, but also generating entire books. In 2017 an AI generated book made it to the finals in a Japanese national literary contest.
Virtual and augmented reality will allow tradesmen and neophytes alike to learn skills on the job with instruction overlaid on a real time display of the project being worked on. It will have the ability to guide the worker on best practices while identifying problems and solutions.
3D printers are already being used to build everything from houses to replacement organs and body parts. 3D printing will reduce the need for inventory and thus has the potential to disrupt every supply chain in addition to requiring smaller footprints to operate in.
Nanotechnologies are being used to build new materials, one atom at a time, that display groundbreaking durability and strength in lightweight structures for advanced jet engines and biomaterials.
We are creeping ever closer to the fountain of youth as the aging process is better understood leading to drugs and genetic changes that will have the ability to alter our life spans.
Virtual reality and the internet will revolutionize education, tailoring educations to the individual’s interests and learning abilities. No longer will one size fit all which results in holding back the gifted and leaving those with learning disabilities behind. Online education will be accelerated this year because of COVID leading to earlier acceptance than would otherwise have occurred.
Health care will be transformed into advanced preventive healthcare with DIY diagnostics and personalized medicines based on your own genome. Robots will perform less invasive more accurate soft tissue surgeries that reduce hospital stays and speed up recoveries. Tele-health, with higher resolution video feeds and because of COVID, has already become widely adopted and accepted as a good alternative to physical visits.
Food will be reinvented. Raising cattle is incredibly inefficient in the use of land, water and nutrients. Now proteins can be grown in laboratories from cells of actual cows that exactly mimic the desired texture and taste, because it is in fact real beef. Vertical farming in enclosed spaces will reduce pesticide usage, improve crop yields and bring fresh produce much closer to end markets, all while conserving water, land, fertilizers and waste.
Nations are being forced to re-evaluate the way in which they view their military defense. Wars of the future will not be settled with boots on the ground but rather digitally in the cyber world. This means that the build out of digital infrastructure is of utmost importance. The last time we saw infrastructure get political was in the 1970’s, where the power struggle amongst nations was all about securing access to oil and building out the needed infrastructure to support this. Today, the new political infrastructure is all about 5G and AI. This means that the traditional defense players will be replaced by the likes of Alphabet (Google) and Microsoft.
With the development of advanced utility scale batteries, wind and solar energy are poised to replace carbon based fossil fuels as the main source of global energy within our lifetimes.
Of all the technologies poised to transform life as we know it, we believe that “quantum computing” will be the most transformative. It will be a tool which will enable researchers to manipulate our world and discover new materials and drugs in record time by recreating the interaction of matter at a molecular level in a virtual digital laboratory. No encryption will be safe from the power of the quantum processor, except for that created by quantum computers themselves. The impact of this on the banking systems alone will be game changing.
Whenever technology increases productivity and output while at the same time lowering costs, there is no stopping it.
The future is coming at us faster than we know and our portfolios must adapt or perish. At Summerhill these trends are being carefully monitored and we will continue to research the investment opportunities of the future to position our portfolios accordingly.
The Summerhill Team