I recently read a full-page advertisement from a respected Fund Manager. They were advocating that as a private investor your money should be placed in the hands of global businesses for the long term. That currently it was far too difficult to anticipate stock market movements with Mr. Trump being President of the U.S.A. Also, as a U.K. citizen with the uncertainty of Brexit, a passive approach with the bedclothes pulled over our heads was probably the best approach for the next few years. In other words, let the finance industry take the strain and “your money”.
Now that is strange, because after the declaration of the Brexit referendum as sterling fell in value it was straightforward to move your money into dollar based funds and reap the gain. Then as the months passed it became obvious that the U.K. economy was not going to hell in a handcart, in fact the reverse was taking place. The economy was strengthening and real inward foreign investment was taking place as exports rose and unemployment continued to fall. So moving your money back into U.K. funds as sterling started to strengthen was not a difficult decision, and those who did have enjoyed further substantial gains. This is not alchemy, but just common-sense if you have the knowledge from up-to-date Saltydog performance numbers, and the desire and ability to trade cheaply on fund supermarket platforms.
Another area of the market that continues to show the opportunity to make gains is of course the technology sector. This is being borne out by the numbers and by logic. Four out of five of the largest companies on the US stock market are technology companies. There are three main things that over millenniums have restricted the progress of human life and these are Energy, Life-span and Intelligence. All three are now under attack as science moves forward at an exponential rate.
At this point it is worth demonstrating what exponential growth means.
One common textbook example is that of folding a piece of paper that is 0.1mm thick. Fold it five times and it is 3.2mm thick, ten times and it is 10cm thick and at 25 times you are at several kilometres. At 42 times you are past the moon, and at 50 it’s toast time as you approach the sun! As you can see growth starts slowly and then it goes crazy, and that is what is happening with science at the moment.
We all know about gene editing technology and its potential for re-writing the rules of life, the removal of disease and the possibility of redesigning the human body to prolong life. Again, we have also read about the supercomputer named “Watson” which played and beat two human champions at the game of Jeopardy. What we may not know is that afterwards Watson was uploaded onto the cloud, and its knowledge and logic became available for other computers to use. Artificial Intelligence made yet another step forward; it is not of the future, it is already here.
The arrival of virtually free solar energy is only decades away and the modern lithium battery is going to transform solar into a genuine power option. The battery is to solar what the tanker and pipeline are to oil and gas. The world economies have invested more than £350billion into acquiring renewable energy. Companies like Amazon, Google, Apple and Microsoft are also leading investors. This spells the eventual death of carbon fossils as an energy source. No wonder that the Saudis are starting to dispose of Aracom, their oil company, and are also investing into solar technology. Imagine a world with free electricity, cheap fertilisers and abundant potable water. This is all on the near horizon.
A statistic that I read recently is that we humans consume around 400×10 to the power of 18 joules per annum. The earth however receives this amount of energy every HOUR. We just currently cannot capture it, but in the future who knows?
Three months ago, I discussed the progress of six technology funds all of which had made twelve month gains of between 40% and 50%. They have continued to make good progress in the last three months, although in sterling terms they have been battling with the dollar exchange rate as sterling has strengthened. This is due to the fact that so many technology companies are dollar earners.
AXA Framlington Global Technology fund …12%
L&G Global Technology fund …9%
Pictet Robotic fund …12%
Scottish Mortgage Trust fund …18%
Polar Capital Technology Trust fund …16%
Ishares IV plc Automation …13%
These funds are of course normally described as high risk and volatile. A question today however might be how true is this description in tomorrow’s world? You must come to your own conclusion, but remember that a conclusion is a place where you get tired of thinking!