Here's where money will be made over the next decade

Many will be familiar with the phenomenon of the FAANG stocks which have been a significant driver of the US stock market in 2017. The acronym stands for Facebook, Apple, Amazon, Netflix and Google (although Google is quoted as Alphabet but then the acronym doesn’t work!)

At the time of writing, each of these stocks had risen by 53.2 per cent, 47.6 per cent, 52.2 per cent, 47.3 per cent and 32.8 per cent respectively. To put this in perspective, over the same period in US Dollars, the broad-based S&P 500 Index is up by 20.4 per cent, the Dow Jones Industrials (30 largest stocks) is up by 26.4 per cent, which includes Apple, whilst the Technology laden Nasdaq, is up by 29.1 per cent.

To say this is a hot sector is an understatement in the extreme. Interestingly, each of these stocks was first listed in 2013, 1982, 2005, 2010 and 2014 respectively. At the time of the millennium technology bubble, only Apple existed but it was a very different and unremarkable company at that time, making personal computers. 

The point of this historic trip back in time is that if we had known back then which areas of the global economy were going to be impacted by the internet and all its inventions, we could have climbed aboard and made a lot of money.

Some believe that the current bitcoin craze is one such evolution although we beg to differ whilst it remains unregulated and highly volatile. However, one area of uncharted development that we can see coming is that of Artificial Intelligence and Robotics. We know there is a wave of development and innovation about to sweep through the car industry in the form of electric self-driving transport solutions. Everyone is having a go whether it be Tesla, Google, Dyson or current combustion engine manufacturers. Quite how Artificial Intelligence will play a part is unknown but clearly, self-driving vehicles that can learn to drive better will be safer. 

Some are predicting a fourth industrial revolution. The first was steam power and the mechanisation of the 18th and 19th centuries, the second was mass production and electricity of the 1900s and the third was computers, automation and the digital revolution of the last 30 years. Artificial Intelligence and robotics is only part of the predicted next phase with the internet of things, 3D printing, quantum computing and nanotechnology being others.

I suggest some time on Google to fully understand what these are all about and even then, like me, you will probably be only slightly wiser. As with all embryonic industries and brands, there will be winners and losers. Apple rose from relative obscurity to displace Blackberry, Nokia and Motorola with its iPhone as they failed to adapt. Amazon has evolved from an electronic bookstore to the multiple retailer of choice and is slowly killing the high street. 

There will be money to be made from Artificial Intelligence and Robotics over the next ten years. We would recommend leaving it to the experts and buying a dedicated fund rather than attempting to forecast the future winners.

The one thing we can be sure of is our world is about to change dramatically as the combustion engine gradually winds down to be replaced with electric propulsion, generated by clean energy, regardless of climate change scepticism and that has to be progress.

Most drivers would happily swap their combustion powered car for an electric alternative if the numbers add up in terms of cost and range and this is evidenced in the current dip in new car sales. Time to seek opportunity.

Guy Stephens, technical investment director at Rowan Dartington.

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