In this article I’ll discuss industries that I believe will thrive in the future. This article is based on observations coupled with some reading and research. If you’re interested in a very deep dive, I suggest reading the book The Inevitable by Kevin Kelly. The structure of the article is broken down by industry.
- Artificial Intelligence
- Individualized Marketing
- Gene Editing
- Transition to Clean Renewable Energy
Artificial Intelligence
AI has been a buzzword that’s thrown around a lot, but what I’m specifically referring to here is the advent of deep learning networks. Deep learning networks, for example CNNs (convolutional neural networks), are used for applications ranging from facial recognition to autonomous driving. Other networks can be used for automated language translation, marketing recommendations, sequencing DNA, and the general processing of large amounts of data to uncover trends and patterns. All these networks will require computational power and data storage.
I believe eventually, the application of deep learning will be commoditized; self driving cars, facial recognition, and marketing recommendations will be deployable by many companies fairly easily, however, the companies that seek to benefit the most from the mass application of deep learning are those that provide the computational resources and infrastructure. For example, companies that provide data storage solutions, cloud computing to run computations on data stored anywhere, and the GPU and chip manufacturers that produce hardware capable of processing mass amounts of data fairly quickly.
- AMD, Nvidia, Qualcomm produce GPUs for computation
- Amazon, Google, Microsoft are providing the cloud storage
During the California gold rush, there were the miners and then there were the people who supplied the shovels and pickaxes. Not every gold miner was successful, but every miner still needed to buy a pickaxe or shovel. Likewise, not every company that comes out with a product that relies on deep learning will be very successful, but they will still need the resources and infrastructure to implement their deep learning application.
Individualized Marketing
Ads are everywhere: on your phone, in your newspaper, on your laptop. Nowadays, even humans are turning into ads as they become influencers and spokespeople for specific companies. Advertisem*nts are not only becoming more prevalent, but also more targeted; eventually, they will be tailored specifically for each of us. Instead of targeting all millennials, ads of the future can potentially specifically target an individual person because companies can combine data that can give information about our names, age, race, gender, income level, likes and dislikes, and other personal data.
As you walk into a mall, an advertisem*nt can popup on a screen that is created specifically for you. As another person walks into a mall, the screen will change to display an ad just for them. The companies which will thrive in the advancements of individualized marketing are the companies that have access to data, characterize us, and that can deliver us content to consume.
- Google and Facebook both have data about us, and deliver us content
- Amazon has data about shopping habits and can deliver us content
- Netflix focuses on delivering us content
- Salesforce facilities consumer data and delivering content
Micro Communities & Share Economies
In the long term, the prices of certain goods will outpace the wage of the median worker due to inflation. Although the income in of the top 20% has been rising rapidly, the median income has been stagnating. Worse yet, the median income of minorities has been eroding over time. This trend will result in the unaffordability of cost of cars and homes, and could potentially drive people to live in living spaces that provide shared amenities. Think of a large apartment complex with cars, bikes, tools, camping gear, appliances, and many more amenities that can be shared. In Chicago, we’re already starting to see this with condos and apartment complexes that have shared kitchen spaces and Zipcars in the garage for everyone to use.
- Look for a Real Estate Investment Trust (REIT) fund to help expose you to real estate (especially commercial real estate).
- Autonomous ride sharing from the likes of Tesla, Google’s Waymo, Uber, or Cruise may be cheaper than buying a car in the future.
Gene Editing
Gene editing technology in the next 1 to 2 centuries will have the ability to re-shape human beings into a species that is free from genetic diseases and disabilities. Although there are some ethical debates and discussions that need to happen, eventually we will have the ability to “engineer” the human genome to provide longer lifespans, free from diseases and disabilities caused by genetic defects. For example, CRISPR, a gene editing tool, is already being used to remove potential life threatening diseases in babies before the child is born.
- I have a portion of my portfolio invested in the ARKG (Ark Genomics Revolution), a fund that tracks gene editing and gene therapeutic companies.
The Internet of Things & The 5G Revolution
Everything will be connected to the internet; our cars, fridges, thermostats, pens, toothbrushes, our toilets, and perhaps one day ourselves via Elon Musk’s Neuralink! This connection of everything to the internet describes the Internet of Things.
For everything to be connected to the internet to communicate to everything else connected to the internet, we will need the next generation of internet – the 5G revolution. Like with artificial intelligence, there will be a lot of companies that take advantage of 5G networks and the Internet of Things: self driving cars communicating to each other and traffic lights, or your toothbrush sending data to your dentist. However, the main winners from this revolution will be the companies that develop the infrastructure to support 5G and the internet of things
- I personally don’t own any fund that tracks companies working on 5G technologies, mainly because there are only a few players in the space
Transition to Clean Renewable Energy
My pessimistic side tells me that by the time we transition to using renewable energy as the majority source of energy, global warming will have transitioned to a serious global problem. In the US, only about 17% of energy is derived from renewable resources , but the shift to cleaner energy will come rather as a dire necessity if we cannot figure out how to actively remove carbon from the atmosphere. This will mean the growth of solar power (companies such as Enphase and SunRun have had their revenue increase and their stock grown over 100% from 2019 – 2020) and perhaps even the adoption of nuclear fusion (the EU just funded the world’s largest nuclear fusion project to be built in southern France).
- I’m thinking of investing in either Invesco WilderHill Clean Energy ETF (PBW) or the newly formed ALPS Clean Energy ETF (ACES).
