Many investors will be familiar with the repeated advice that professional advisers provide with regard to thinking long-term.
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Investing is all about spotting trends and themes, then investing in companies and countries that stand to benefit over the longer term and letting this unfold. You have to be careful as you never know whether you are getting in at the best time, so a gradual approach can sometimes be more beneficial.
We should be wary when competing in a crowded marketplace. The latest successful round of financing for Tesla was based on a similar belief that they possess a product which will change all of our lives. However, this is where we must be careful, as those with a high profile today may not be the eventual winners.
PayPal, are obviously prepared to gamble on that future. If you have ever used Uber, you will be astounded at how convenient, quick and cheap it is. No need for cash, lots of availability and most convenient of all, they will pick you up from wherever you are.
There are alternatives to Uber such as Lyft, but the former has first mover advantage and for the consumer, there are few downsides. And remember, Facebook was unprofitable when it floated with many sceptical commentators.
We wish we had the answers as to who will emerge victorious in each of these markets. Those that do will be the billionaires of the future.
Amongst the largest companies of today are Apple, Microsoft, Google, Netflix, Facebook and Amazon and we all know why. The social media revolution involving Facebook and the like, with ‘youtubing’ now being an advertising career is making millionaires out of teenagers.
Additionally, we have witnessed the move into domestic TV-on-demand and box-set binging that we are all able to do, instead of making do with scheduled terrestrial TV. All of these are examples of technology-enabled consumer evolution and all have delivered investment opportunities and disturbed the incumbent status quo.
Returning to the flotation of Uber, many have questioned how a loss-making business could attract a valuation of $82bn and have noted that the prospectus stated that the business may never make a profit. One clue is revealed by the fact that PayPal took a $500m stake.
The key here is not what Uber achieves today, it is what it could become in the future with self-driving cars and a captive passenger who can be sold to whilst travelling. We recall China quietly landing on the dark side of the moon in January, just after Trump had announced his planned space force for US domination. Observe how US Western allies, including the UK, are being careful not to aggressively join the anti-Huawei US assault, nor support the US aggression towards Iran. These are all potential allies of China (and Russia) and smaller nations need to be careful how they play their cards.
This influences investment as most equity portions of portfolios are significantly exposed to Western businesses. If the future technological revolution is going to come from the East, so much so that the West may subsequently be in decline, then we need to take heed. History is littered with the rise and fall of great empires.
Guy Stephens is a technical investment director at Rowan Dartington