How soon is now? The investment impact of disruptive technologies

It is claimed that technology is changing the world at an unprecedented pace. Whether the rate of change now is greater than in the 1840s with the railways and wider Industrial Revolution is debatable, but it is certainly true that a wide range of technological developments — some incremental and some radical — are fast changing how we live.

Such changes have profound investment implications. In the next few years, some companies will go out of business as their technology is rendered obsolete — these are the canal companies of their day. Others will survive by adopting and adapting new technologies. But even for those companies at the forefront of technological change, investment success is not guaranteed as rival technologies compete and development capital is eaten up. Investing in today’s railway companies will be no guarantee of success — it will be necessary to avoid the hype and invest in the companies with business models that can make money from the new technology.

The primary purpose of our investment reports is to guide our investment managers, so they can make informed investment decisions on behalf of their clients. The success of these reports is determined by their scope. Technological innovation is fascinating, but we have tried to focus on the investment implications of ‘disruptive technology’.

While nearly all sectors of the economy will experience change, we have focused on four areas where there is a real prospect of disruption to the status quo. This list is by no means exhaustive, but we feel these could be the areas that experience the most substantial investment impact:

  • personalised medicine: Mona Shah examines how the healthcare sector is vulnerable to the widely predicted shift to designer drugs.
  • automation and the impact on labour markets: Edward Smith looks at the threat to jobs from intelligent robots. Will capitalism self-destruct as swathes of white collar jobs are lost to machines?
  • alternative energy: Sanjiv Tumkur considers the potential impact of solar and wind energy generation and energy storage technology on the utilities sectors, as well as the outlook for electric and driverless vehicles.
  • blockchain: ignoring the over-hyped Bitcoin digital currency, Jakov Agbaba looks at the technologies that underpin much of the financial system to see how much impact blockchain could have on transactions and the current financial ecosystem.

 

 

Our writers consider the short (0—3 years), medium (4—8 years) and long term (9—15 years) — beyond that, this report would be too speculative to be useful. That said, in thinking through the primary and secondary effects of disruption, we have encountered questions that cannot be answered definitively at present. Given the scale of the potential technological changes, being aware of the risks and open-minded about the potential outcomes is the best way to protect our clients.

View the full report here.

Visit our disruptive technology hub.

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