By: Bill and Cindi Porter, AILERON INVESTMENT ADVISORS
Q: Technology stocks are down significantly. Does innovation still offer a good upside investment potential in the future?
A: Absolutely. New things and new improvements bring the possibility of new investment opportunities. From taming fire, inventing the wheel, farming, ships, corporations, machinery, electricity, mobile phones, computers, or landing on the moon, mankind has always been on a successful, but challenging quest to innovate, discover, invent, and to create the future. There is no reason to believe that will stop. Consider this (1):
• Communications – 70% of all web traffic happens on a mobile device worldwide. More people now own a cell phone than a toothbrush.
• Entertainment – YouTube now reaches more 18–49 year olds than all linear TV networks combined.
• Transportation – The cost of lithium-ion has dropped by an average compound average growth rate of 13% over the past decade. Electric vehicles have the potential to reach cost parity with internal combustion engines in 2024.
• Finance – Globally, mobile wallet reached 25.7% penetration of all point-of-sale transactions in 2020, exceeding in-store cash payments of 20% for the first time.
• E-commerce – In a McKinsey survey, 20% of consumers surveyed tried a new digital shopping method during the pandemic, and 80% intend to continue to do so after the crisis subsides.
• Artificial Intelligence – AI can correctly identify tiny specks of cancer on CT scans about 95% of the time. That is a 45% increase in accuracy than radiologists typically achieve.
• Information Technology – In 2020, for the first time in history, we saw digital transformation spending accelerate despite GDP declining globally. New things and new improvements bring the possibility of new investment opportunities. Some of these new investments will be successful and profitable BUT some will not. A conversation with your trusted advisor about this piece of your portfolio would be time well spent.
(1) https://www.franklintempleton.com/forms-literature/download/FDTF-BR
Securities offered only by duly registered individuals through Madison Avenue Securities, LLC (“MAS”), member FINRA/SIPC. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM), a Registered Investment Adviser. MAS and Aileron Investment Advisors are not affiliated companies. AEWM and Aileron Investment Advisors are not affiliated companies. 01637824 01/23
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