There is a lot going on in the markets between social media, Reddit, the rise of the DIY investor, hedge funds, the battle, etc. Many people have a FOMO (fear of missing out) which is often counterbalanced with FOL (the fear of losing). It is said that John D. Rockefeller sold out of the stock market just before the 1929 crash after hearing stock tips from his shoeshine boy. Tips from an unsophisticated investor signaled to him that the market was overheated and due for a bust. Whether or not this story is true, it highlights an important point; when it seems that everyone is talking about the money they are making in the market and exchanging stock tips like recipes, the stock is probably overvalued.
So where does that leave you?
Disruption
The best investments are usually not the ones you hear about in the news, they most often are the ones that don’t make headlines, yet are innovating or creating a disruption in their respective field that might give you a better bang for your buck. The pace of change is accelerating with technological advances, innovative business models, and changing consumer preferences … think about this:
The rewards to investing in disruption can be quite significant and can be a powerful driver of shareholder value. Many technology sectors are hitting crucial points, pivoting from being hypothetical to realized technologies, or they’re seeing products finally become profitable. A lot of disruptive industries are hitting a pivotal point where their technologies are becoming economically viable or even becoming cheaper than incumbent technologies. Driving productivity improvement and cost savings to fuel investments and margin. “It is those organizations who achieve a truly integrated innovation strategy that can expect to derive the most value for shareholders”[1]
Innovation is Everywhere
After decades of incremental innovation, the pace of change accelerates. New entrants can disrupt established industries with little (or a lot) investment and a team of motivated, geeky developers, and other geniuses. It is no longer OK for a company to stay the same, technological advancements are happening at a rapid pace in virtually every industry from medical to farming. Here are a few examples:
 | Scientists have found treatments for 350 out of 7,000 known rare diseases and are racing to find treatments for the rest.[2] |
| Through 2022, projected market size and growth of the cloud services industry will be nearly 3 times the growth of overall IT services.[3] | |
| With the evolution from 3G to 5G, the average time to download a 2-hour movie has gone from 29 hours to 4 seconds.[4] | |
| The demand for food will be 60% greater than it is today.[5] State-of-the-art tractors drive almost autonomously across the fields. Drones and soil sensors can detect diseases in the fields at an early stage. This enables farmers to apply fertilizer and crop protection agents more precisely. |
Amid all the innovation it can be hard to find the needle in the haystack, the right company at the right time to invest in, but there are other options such ETFs that track the entire industry or combine the other elements of the company’s ecosystem from the suppliers of the parts to the downstream users, who all benefit from the innovative endeavors. These can still allow you to be invested but can help reduce the volatility and save you from pulling out your hair in deciding which company is the next up and coming superstar.
In the world that is now perpetually in the midst of change, your choices of what to invest in are limitless. You could be funding something that advances the areas you care about most, such as Alzheimer’s, space exploration, or genomics. Tell us what your interested in and let’s find an investment that works for you.
[1] Kate Benetely from Deloitte
[2] America’s Biopharmaceutical Companies, “Rare Disease by the Numbers.
[3] Gartner, “Forecast: Public Cloud Services, Worldwide 2016 – 2022, 4Q Update April 2019
[4] https://www.fidelity.com/mutual-funds/investing-ideas/disruption
[5] https://www.weforum.org/agenda/2016/01/food-security-and-why-it-matters/