Megatrends of this Decade
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In this discussion of megatrends we'll cover: • Where to look for opportunities • Why "trend blending" is a remarkable tool for finding even bigger trends • When demographics indicate the next major expansion for the U.S. economy • How to use trends in your own portfolio
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Megatrends of this Decade
- 1. Megatrends of this Decade Mid-Atlantic CIO Forum February 18, 2016
- 6. Source: Harry Dent The Demographic Cliff
- 17. Trend7 Automated
- 18. Trend7 Automated
- 21. Trend8 NewEnergy
- 22. Trend8 NewEnergy
- 23. Trend8 NewEnergy
- 25. Trend Blending + = The Internet ofThings
- 26. Trend Blending + = Quantified Self, Bioelectronics? + +
- 27. Trend Blending + = Aging in Place, Telemedicine? +
- 28. The Future is not a single monolithic “thing”
- 29. more information …and more choices than ever before
- 30. Fresh off the press…. www.fastfuturepublishing.com Contact info for Jim Lee jlee@stratfi.com www.stratfi.com Cell (302) 562-5132 Twitter @jhlinde
- 31. Strategic Foresight Investments LLC ("StratFI") is a Registered Investment Advisor ("RIA"), registered in the State of Delaware. StratFI provides asset management and related services for clients nationally. Information contained in this report is for informational and educational purposes only and is not to be considered investment advice or a recommendation to purchase any particular security. One should not engage in a market timing strategy without professional guidance or training, monitoring tools, and the ability to bear losses. Market data, trends and other content in this presentation are based on generally-available information and are believed to be reliable. StratFI does not guarantee the accuracy of the information contained in this presentation. Information is also time-bound and subject to change over time. StratFI will provide all prospective clients with a copy of our current Form ADV, ("Brochure") prior to commencing an Advisory relationship. Existing clients will receive a copy on an annual basis. However, at anytime, you can view our current Form ADV, Part 2 online. This document also details our firm's Privacy Policy. In addition, you can contact us at jlee@stratfi.com If you have any questions regarding this presentation, please contact us.
Hinweis der Redaktion
- My name is Jim Lee, and I write and speak about emerging trends in culture and technology. I run an investment advisory firm in Wilmington and have a certain degree of notoriety as Delaware’s only professional futurist. What you find out early on is that there are a few occupational hazards with being a futurist, as any statements made about the future, will, in hindsight, appear to be obvious wrong, or worse yet, obviously wrong.
- Woody Allen once said that “eighty-percent of success is just showing up”. In order to be at the right place at the right time, sometimes you need to show up a little early. So, I am sharing with you eight megatrends that I am writing about in my upcoming book on foresight investing.
- Trend #1 is Gray Boom. Soon, like the Rolling Stones, we will all learn how to age disgracefully. The first wave of baby boomers is hitting 70, and is now taking minimum distributions from their IRA accounts. Half of all Americans born today will eventually celebrate their 100th birthday. And there are a few implications of this. One implication is that we we’ll all be spending more time during each stage of our life. We are stretching out childhood, adolescence, middle age, and old age. My wife, Stephanie, is a physician and she spent the first thirty years of her life in training before she obtained her first job. We had a student loan that was so large that we called it the mortgage without a home.
- The irony is while human longevity continues to grow, organizational longevity is declining rapidly. Back in the seventies, corporate life expectancy was 50-60 years. By 2010, corporate life expectancy was halved and declining rapidly. Blue chip companies are only listed on the S&P 500 for an average of 18 years before they burn out or get bought out. Meanwhile, the average millennial is expecting to stay with his or her present employer for an average of just 3 years. So, this idea of working for a single organization for the course of your lifetime going away rapidly. So when you do the math, it’s not going to work well if you need to work for 40 years, and your employer is only around for another 10. Shift happens. We all need to be ready when shift hits the fan. And we all need to redefine retirement. The paradigms of work are already being changed (ladder, lattice, quilt). (Talk about the implications of baby boomers staying on at organizations – unintended implications for entrepreneurship and organizational donut-holes.) (This analysis by Boston Consulting Group looking at the patterns of entry, growth, and exit for 35,000 publicly listed companies in the US since 1950 )
- Because over the past few years, we’ve seen the disappearance of jobs, the workweek, and even the workplace. People ask me when we’ll start to get more confident in the economy and the markets. Stuck in Neutral is the second trend. You can also call it the Zombie Economy. There is no recession, but there is no growth. It’s not exactly alive, but it’s not really dead, either. What do we know is that people tend to buy stuff when they have kids. So, demographer Harry Dent feels that the millennials may save us all when they start to get serious about having families around 2018, and then things will start to ramp up as they hit their peak earning years around 2026-2029.
- So, this first chart is about personal spending at each stage of life. It grows steadily, until it peaks during the late forties. Age 48, to by most estimates. What we buy changes during different stages of our life changes. Peak potato chips (42), furniture (46), sports cars (50), cruises (70), nursing care (80). If you take the peak of the baby boom in 1960, and add 48 years, you get a peak economic cycle right around 2008. You get a bit of a rebound in 2018, but you don’t get serious growth until the 2020’s. This seems to be consistent with my research on long-term cycles. But keep in mind that if our lifecycles are extending, peak spending might start to happen later in life, as well.
- If you want to look for serious economic growth, you also need to take a look at South East Asia, which has been a beneficiary of declining energy prices. Once you get out of China and Japan, you’ll see better demographics and younger populations. As a result, I think that you’ll see a resurgence of Asian cultural identity, too. As you may know, video gaming industry is now bigger than Hollywood in terms of sales. One of my best trades over the last few years was in a company called Netease, which makes games based Eastern mythology and literary traditions. So, they moving towards developing their own markets and sensibilities. Soon we may be buying into their stories, too.
- This is the most recent forecast that I could get from the World Bank, which shows East Asia 6.5% GDP growth, Southeast Asia 7.5% growth, vs. about 2.5% for European and U.S. economies. Even though the emerging markets have been monkey-hammered last year, you want think about getting some portfolio exposure in this area, starting with Vietnam and India. Last year China repealed it’s one child rule, and this could stimulate eventually their economy, too. Right now, China and Japan are in trouble. (discuss sources of low fertility rates). The question of inverted demographic pyramids and the problem of loneliness. Japan has this “thing” now, where you can rent a friend. I’m not talking about a close personal friend, but someone to have coffee with or go shopping. This makes me wonder what the price of friendship is, and it varies, but it usually runs around $60 an hour. (What does a healthy economy look like without growth?) www.worldbank.org/en/publication/global-economic-prospects/data
- The trends in Asia, and almost everywhere else, is urbanization. People moving back into cities. And this includes the young and the old. Over half the world’s population now lives in urban areas, and this will continue to grow between now and 2050. There are some interesting things that happen globally when you have an urbanizing population. You get higher levels of education, literacy, and per capita income. But more significantly, it worth thinking about cities as social fusion reactors. You put a lot of interesting people together in a small space, and you get an explosion of new ideas.
- So this chart really blew me away. What they’ve found out is that the number of patents per capita tends to increase with population size. Also, when the population of a city doubles, economic productivity goes up by an average of 130 percent. It suggests that in Wilmington and Baltimore, that if we want to spur innovation, that we need to get more people living downtown. Sci-Fi writer William Gibson once wrote that the future is already here, but it is just not very evenly distributed. If the future IS already here, then the question becomes “where can you find it and where does it want to live?” I believe that the future wants to live at the edge of things, and cities exist at the intersection of all kinds of interesting edges, from geographic edges to cultural edges. http://www.oecd.org/rural/krasnoyarsk/37629794.pdf http://www.theatlantic.com/business/archive/2010/09/the-density-of-innovation/62576/ http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2556734
- Many of the new and disruptive business models that are coming out are internet-enabled. At this point, we are all pretty much addicted to the internet. And addiction is a terrible thing. Researchers once did a study on lab mice, and found out that they will run through a maze 30% faster if you let them check their email at the end. Mark Goodman’s work on future crimes, recommended with some reservation, as it makes terrible bedtime reading. This book will give you nightmares. Cybercrime hard to persecute if it happens from India. Cybercrime is becoming big business, with malware companies now offering healthcare benefits and retirement plans. There are many other implications to this trend. More specifically, Digitize Me refers to the shift away from mass consumption and toward mass communication. The millennials are becoming America’s first “post consumer” generation, and this has profound implications for their buying patterns and how they choose to work. This is a generation that would rather have an iphone than a car. And they are not buying as much physical stuff anymore. One hedge fund that I know of is shorting Best Buy, because they have all this extra space that they used for selling CD’s and DVDS, and now they don’t know what to do with it. Meanwhile, the most interesting things in housing are the so-called “tiny homes” of 500 square feet or less that can be build for the cost of a down payment of a conventional house. Imagine life without a mortgage or rent payments. This has radical implications for employment flexibility. But it will be interesting to see what happens when they start to have families of their own. Tech workers becoming somewhat migratory, settle down only where there is a healthy start-up environment with lots of opportunities.
- Trend 6 is called Smarter, Faster, Stronger. This trend is about rapid improvements in technology, including materials sciences. What you see here is a model for graphene, an anatomically correct form graphite that is thin as paper, ten times stronger than steel, two times harder, and a fraction of the weight. Anti-corrosive and anti-bacterial. Can easily be altered to become either hydrophilic or hyrdophobic. Imagine boats afraid of water! It is also a natural superconductor, and could be used to make batteries for electric cars and cell phones that fully recharge in just 5 minutes. Current costs a problem.
- Meanwhile, 3D printing is enabling us to make all kinds of things that we couldn’t make before, including these football cleats by Nike. These won’t make you smarter, but they could make you faster and stronger.
- We’re also seeing (the company formerly known as) Dupont roll out inexpensive printable organic LED displays that can be made for energy efficiency, flexibility, and even transparency. This is going to transform the lighting industry AND the display industry. Imagine having fully programmable wallpaper. Or having a window that could give you a weather foreacast. This last feature of making fully transparent displays is really important. Virtual Reality is hitting the market this year, with the Samsung Gear VR, and the Oculus Rift, but add in transparent displays and get something much more interesting….
- And that is something called Augmented reality. Here is a prototype for something called the Microsoft Hololens. It is a virtual reality headset that puts a digital overlay on top of the real world.
- This will lead to mass insanity. With cell phones, we’ve been talking to ourselves for years. With Augmented reality, we’ll be having collective public hallucinations. At some point, I believe that we have different frames of reference. You may have a digital overlay to Yelp when you are in a foreign city and looking for a good restaurant. Stop at a bar and you might pull up a dating app such as OK Cupid. Go to a networking event, and your augmented reality might include LinkedIn. This could be useful to remember the names of people that you should already know. This is why so many internet companies are in such a hurry to get into augmented reality. This is the fifth screen after movies, TV, PC, and the cell phone. VR – travel experiences, college tours, netflix. Google Glass an its alternatives. Carl Zeiss glasses with fresnel lenses.
- We are on the way towards automating almost everything. Let’s look at the investments being made by Amazon. A few years ago, they bought a company called Kiva systems. Kiva makes robots for inventory management, they roam around the warehouse floor and move stacks of shelves. The also made a $15m early stage investment in ReThink robotics. This company makes a robot named Baxter (seen here), which costs about $30,000, has visual recognition, and the ability to pick and pack things. Finally, Amazon is pushing towards drone-based delivery, and is now has developed more than 15 generations of delivery drones. If you look at the pattern here, Amazon is well on its way to becoming a pioneer in completely automated order fulfillment, from shopping online to delivering a package at your door.
- Tracking some of the technology innovations in fast food, there is now something called the Burger Bot, which can serve one freshly made hamburger every 10 seconds. The University of Texas employs a robotic barista (the “Briggo”) that serves coffee to 10,000 students a day. There is also a burrito bot, a pizza bot, and in airports now we are starting to see completely automated convenience stores. Robots used to be used for jobs that were dirty, dull, or dangerous, but that is changing quickly.
- The U.S. Department of Labor has classified four different types of jobs that are at risk of automation. These include categories of Cognitive vs. Manual, and Routine versus Non-Routine. Jobs that are routine and manual were the first to be automated. These included assembly line work and many domestic chores, such as washing dishes and doing laundry. We still have people doing these things of course, but we just don’t have as many. Another area that has been heavily automated is agriculture. At the turn of the last century, roughly half of all Americans lived on a farm. Today that figure is closer to 2-3%. The next classification of job to become automated will be those that are routine and cognitive. So for the first time ever, we are going to see displacement in white collar jobs.
- This started out with travel agents, but may include telemarketing, accounting, retail sales, real estate agents, technical writing and event investment management. Almost every day, I read finance articles written by robots. They are also already common in sports writing. Now I get calls and emails from friends asking if they should consider a robo advisor for managing their money. Let’s face it. This is a scary thing. It is what futurists worry about most, not solar flares or bee colony collapse. Not grey goo or nanotechnology. Not even global warming. But living with meaning and purpose in a world where there is massive technological displacement.
- So while we are moving toward automated and lower cost labor, the good news is that we may have a shift towards sustainable low cost energy as well. Iceland and Paraguay were the first countries to generate 100% of their power from renewable sources. People have been talking about solar and wind for a long time, but we are rapidly reaching a point of grid parity in the U.S. That is the point where renewables are as cost effective as traditional utilities. Deutsche Bank estimates that we’ve hit grid parity in 14 states, but may reach as high as 46 states by the end of next year. It is now possible to invest in shares of publicly-traded solar farms and pick up a 5% dividend yield. But the really interesting stores might actually be in energy transfer and storage. Electricity is really about moving electrons. One of the cleanest ways to carry electrons is in the form of hydrogen. When you combust hydrogen with air, you get h201 and free electrons.
- So there is a bit of a battle going on with electric vehicles. Tesla is building a mega factory to build rechargeable batteries using 30-year old lithium-ion technology. Toyota and Honda seem to be moving away from electric cars and into hydrogen fuel cells. We have one of the few hydrogen fuel stations on at the East coast at the University of Delaware. They also have fuel-cell powered bus, which is kind of like the stealth bomber of school buses, because you can’t even hear it coming.
- Most recently, I’ve been getting excited about wireless power transfer. This was a technology pioneered by Nicola Tesla 100 years ago, but seeing commercial applications today. There are two competing technologies. Nearcasting and farcasting. Nearcasting looks almost like a coffee coaster and charges on contact. Ikea is now building wireless chargers into furniture. I use a wireless charger for my Samsung phone. At some point, it may be possible to transfer password encrypted electricity throughout your house, via Farcasting in a way that is very similar to the WiFi system on your computer. I’m in love with my Sonos wireless speakers, and they will be even better if I don’t have to plug them into the wall. The password encryption is important, so that your neighbors don’t siphon off your electricity. For now, wireless pad chargers seem to have an advantage, in part b/c you don’t have as much power loss in tranmission. Down the road, you might be able imagine having one as a floormat for your garage, so that your electric car will be able to come home and recharge itself after a hard day’s work of making money for you as an Uber taxi while you are telecommuting from home.
- These trends don’t tell you how to invest, but where to find the best opportunities. You’ll see that about half of these trends are about demographics, and the other half deal with technology. But, these is where the magic happens, when we combine these trends, we get new trends that are potentially even more useful and informative…
- If you combine the digitization of everything, with sensors and automation, you get the Internet of Things. This is where autonomous vehicles come in. You know it is going to happen, because everyone is working on it. It is a world in which nothing remains lost, stolen, or broken. This was a very investable trend for me, although the Gartner group is suggesting that this particular trend might be hitting peak hype right now. Expectations have been so high, that we might be seeing a reality check soon. There is also the risk that everything connected to the internet becomes hackable.
- When we take internet of things and add aging demographics to the mix we start to get interesting things like the quantified self and rise of health trackers. Flexible bioelectronics are one area of wearable technology that is getting ready to explode. And this starts with smart bandages. We may see these hit the market within the next five years. Some of might be used to detect early stages of wound infection. At least two way to do this. One is to monitor the Ph levels of wounds, which become alkaline when infected. Others have artificial cells filled with ink that seeps out when the cell walls are weakened by bacterial toxins. Meanwhile, flexible Bioelectronic tattoos can be stamped on and used to monitor things like oxygen and glucose levels, temperature, and location. We all produce about 2 volts of energy at the surface of our skin, so if you really want to go on the edge (click), some of these bioelectronics may be powered by our own physical electricity. Things start to get strange here.
- Now, if we combine bioelectronics with the economic limitations of Stuck in Neutral, you may see incentives to provide healthcare monitoring as a service, and companies like ADT are getting ready. In this internet of things, nothing remains lost, stolen, or broken, including your grandparents. Nursing home care can easy cost $70-$80k per year. And we may at soon see alternatives to help mitigate or delay those costs, including aging in place and telemedicine. One of the first applications for artificial intelligence and IBM’s Watson system is going to be in healthcare. You can mix and match these trends and go in all kinds of different directions. The important thing to realize is that….
- The future is not a single monolithic “thing” and it is not set in stone.
- We have more information and more choices than ever before. This makes the future far more difficult to forecast, but also far more interesting, as well.
- So if you find this sort of thing intriguing, there is a new book out compiled by a friend of mine, Rohit Talwar, on The Future of Business, which talks about hyper-scalable business models, open government, blockchain technologies, and other very interesting, edgy things. It has essays by over 50 futurists in 20 different countries, including a chapter that I did on the alternative to alternative energy. (methane hydrates, a flammable type of ice that is super abundant on the ocean floor, but also super-effective as a greenhouse gas.) Thanks again for having me. Maybe we have time for a little Q&A?