Megatrend 1 – Technology


As investors, we need to be aware of some transformational opportunities that are emerging. Small companies can access a global market instantly and at very low cost. Barriers to entry are crumbling. Whether you accept the stratospheric valuations placed on tech companies like Facebook and Amazon, the fact is that many investors have become wealthy beyond their wildest dreams by riding these tigers.

Finding the next unicorn or shooting star is becoming an industry in itself. And, I would argue, capitalism as we’ve know it is disappearing. Uber has become the biggest taxi company in the world without owning a single car. AirBNB the largest hotel group in the world without owning any bricks and mortar. The smart phone and cloud revolution is also enabling globalisation – by the end of this decade two thirds of the world will be on 3G broadband compared to just a quarter at the start of this decade.

Moores Law continues unabated, as we move from one hundred and twenty eight megabit chips to one hundred and twenty eight gigabyte processors. For half a century now, and that’s the bulk of my time on this planet, developments in technology have made us more efficient. I’m way more productive now than I was even a decade ago. Whether I’m in my office in Richmond or sitting on my balcony in Antibes, I can communicate instantly with Elite Investor Club members on five continents. Real time information on retail sales goes directly to the CFO without needing layers of accounts clerks to analyse it. And sophisticated software allows companies to communicate by email, in webinars or on video and reach a multinational audience at remarkably low cost. Except, there is a cost.

Technology is a huge opportunity for investors. But it’s going to create massive levels of unemployment. It started in factories with cars made by robots. Now the robots are working as housemaids in hotels. How long before taxis are driverless? Let’s make some comparisons of employment levels at what I’ll call old technology businesses and new technology businesses. Low cost supermarket chain Walmart employs a startling two point two million people. Amazon, the everything store, has just a hundred and fifty four thousand on its world wide payroll. Mobile phone company Vodafone has a hundred and one thousand staff, compared to the fats growing What’s App with a mere hundred and eighty people. Hilton Hotels need a hundred and fifty five thousand employees to look after its guests, while AirBNB gets by with two thousand. Rupert Murdoch’s Newscorp has thirty thousand people, Facebook just ten thousand.

In the past there’s been a conventional wisdom that new technology creates new opportunities. I think we have to accept that today’s technology is a destroyer of jobs. There’s a new verb I want you to add to your vocabulary, whether you’re an employee or a business owner. Being Amazoned. Take a careful look at your job, your profession or your business. How might you be eliminated or commoditised by new technology? And don’t for one moment think that this is a blue collar issue. It’s happening to accountants today. Its happening to middle management today. And of course its decimating the High Street, especially at Christmas time when many shops do the volume of trade they rely on to get them through the rest of the year.

Wise up to technology, or be wiped out by it.