You’re well aware that our world is changing at an ever increasing pace thanks to new technologies. Have you positioned your investments to take advantage of these big shifts?
The business landscape as we know it is expected to experience very dramatic shifts in the next 10-15 years. Many well established companies are expected to decline, whole job categories will disappear, and unheard of companies will quickly rise to the top.
What are exponential technologies and why should every person with even a small investment portfolio be paying attention?
Exponential technology is exponential – in each period it doubles in capacity or performance – or halves in cost. Computers are an obvious example of exponential technology. We’ve all witnessed incredible growth in memory, speed, and capabilities over the past few years, all while prices continue to drop sharply.
The biggest exponential technologies that will impact our way of life are:
While none of the technologies listed are brand new, each of them has reached a tipping point where greatly increased capabilities at much lower prices make them ripe for wipespread utilization in people’s business and personal lives.
The growth cycles of exponentially advancing cycles of advancing technologies, according to Steven Kotler, Flow Genome Project founder and co-author of the book Bold: How to Go Big, Create Wealth and Impact the World, are broken up into Six D’s: digitization, deception (being dismissed as irrelevant); disruption (think of what Uber did to the taxi trade); demonitization (you no longer need to buy something – remember camera film?); dematerialization (physical object replaced by an app); and democratization (affordable so everyone can have one).
What’s an investor to do to profit from the growth of exponential technologies?
Ric Edelman, financial planner and author of ‘The Truth About Your Future’, recommends using his firm’s favorite investment tool, exchange-traded funds, to invest in exponential technology stocks. Edelman worked with BlackRock and Morningstar to create the world’s first technology fund, iShares Exponential Technologies ETF (ticker symbol:XT) that focuses on companies that both create and use new technology. Exchange Traded Funds (ETFs) are funds that invest in multiple companies but are sold as a single stock and trade on a major stock exchange.
When creating XT, Morningstar identified major technology themes and then looked at publicly traded companies to determine the degree to which each company engaged in the development or use of those technologies. Because of this approach, the fund contains both tech and non-tech stocks. In addition, the fund is well balanced by investing around the globe and holding small-cap, mid-cap and large-cap stocks.
Edelman recommends that to create a portfolio for the future that you include companies that are using or developing exponential technologies
The Motley Fool’s Dan Caplinger broke down three technology ETFs he considered to be “can’t-miss” in January of 2018. He included Guggenheim S&P Equal Weight Technology, iShares Exponential Technologies and the First Trust ISE Cloud Computing. Caplinger wrote “after a strong 2017, tech investors can’t necessarily expect the record-setting performance in 2018 that they saw last year. These ETFs, however, make a good case for giving investors what they need in order to succeed in the long run with their technology investments.”
Massive change is at our threshold and massive change is always disruptive. Investing in exponential technology via an ETF fund like XT could put you in the right place to profit from that massive change.
Be part of the future. Embrace exponential technology as part of your diversified financial plan.