So the machines are coming and are going to replace our jobs!
Well, it seems that view is becoming fashionable, rather than crank fringe.
What (currently profitable) companies would play to this theme.
I will start with £NVDA and £CGNX
Tournesol: £Goog
LON:BRSM Blue Prism might be worth looking at in this area, Looks like they are in the middle of the Robotic Automation Process (RPA) space. This McKinsey Consulting article summarises this emerging industry such as it is..
For me there are some issues here and some potential opportunities.
If the use of machines (or any new innovation) is to rise then the problem for me is predicting:
1) If said technology will come to pass
2) When it'll come to pass
3) What risks does that event horizon bring
4) If it is commercialised which of the many companies are going to be successful and if I'm on the wrong horse what risk does that bring?
So for point 1 & 2. At the turn of the century I was working in a small R & D software house when we became focused on the IETF protocol SIP (Session Initiation Protocol). The hype was that this protocol would sweep aside traditional telephony as everyone migrated their calls onto the internet. It was the HTTP of internet telephony. With two years of hard work we confidently, from a standing start, overtook the industry leaders (a US company) and we became 'the' platform to test compliance against. Our directors were convinced that the big pay day was coming in the form of being bought out. However the big boys just weren't interested. The technology was sound but the telcos weren't ready or couldn't find cost effective ways in which to integrate the technology into the services. In the end, as we ran out of money (after several VC fundings), we were bought out very much on the cheap compared to the ambitions of the management team.
So my lesson from that is that even if I spot a ground breaking technology that appears a no-brainer it doesn't mean that those with the purse strings will pay up.
In terms of 3, the risks of adopting the new technology. It's clear that along with the rise of technology, even before you consider the Internet of Things (IoT), comes the rise of cybercrime and I'd suggest that cybersecurity is the biggest challenge that is going to face business going forward. Whole IT networks crippled, services disabled (imagine BooHoo's or Stockopedia's website disabled), data encrypted to ransom, phising company employees, etc. etc. So for me with any increase in the rise of the machines comes increased risk from cybercrime. So if I was to look to an investment opportunity for the future it would in the field of cyber security.
4) Given that there are so many horses out there in the field of cyber security and given that my experience of working in a small R & D software house that out performed a larger more established company then I am loathed to try to pick a horse at all. I'd much prefer for the market to mature before a profitable front runner starts to appear, preferably after a catastrophic cybercrime, e.g. the BBC is running an article today that suggests a major bank will fail in 2017 as a result of a cyber crime.
I guess my approach is to buy winners in an established race as opposed to trying to guess who will win in a race that might not even start.
Best of luck
Phil
Thanks Phil, I agree very much on the speculation aspect. However I am not looking for the amazing tech story, rather I am looking for high QM shares which are growing rapidly and are also in fashion ;)
If i consider my investments the biggest theme is the automotive industry.
Currently I hold ...
US company Lear who supplying seating, electrical distribution systems and electronic modules, as well as related sub-systems, components and software, to automotive manufacturers. Stock Rank 99, Q (93), V (82), M (91). Increasing estimates. The PEG is starting to look a little more expensive now though. I'm currently sat on a 38% gain.
French company Trigano that specializes in the design, manufacturing and marketing of recreational vehicles and equipment. Stock Rank 91, Q (96), V (25), M (98). Increasing estimate. PEG does look expensive at the moment but perhaps new estimates need to filter through after recent proposed acquisitions. I've previously topsliced a 90% profit on this stock and I'm currently sat on a 186% gain.
German company Washtec who are engaged in the provision of vehicle washing solutions. Stock Rank 87, Q (92), V (28), M (90). Increasing estimates. Again the PEG is again looking a little expensive. I'm happy to hold but the PEG would stop me from buying from new. I'm currently sat on a 166% gain.
Given the high PEG's on these selections perhaps they have become too expensive but for now I'll surf the price momentum.
I sold out of Autonuem a Swiss provider of acoustic and heat management solutions for cars in November as the overall momentum and price momentum faltered. I made a modest loss as a result.
I'm not seeing any other strong patterns in terms of my screens or holdings.
Not sure if that helps
Phil
Surely the comments about the "rise of the machines" are referring not to the kind of stuff that we are all used to seeing but to the relatively new technologies related to artificial intelligence and machine learning and the automation of activities/work which currently requires human control/operation.
AIUI these technologies will affect many activities including:-
- driving -> driverless cars, buses, trucks, trains, tractors
- administration -> automated user interfaces (front office) and execution/fulfilment (back office)
- translation/interpretation
- accounting
- medicine/health -> diagnostic systems, automated procedures
- legal work
- farming -> robotic milk parlours, agricultural machines, crop management
- large swathes of other professional/white collar work
- large swathes of other admin/bureaucratic work
- large swathes of other expert/knowledge based work
- defence/security
The various companies mentioned in this thread do not, I think, sit anywhere near the centre of gravity of the new technologies that will change all our lives for better or worse.
One of my children is currently doing a Masters in this subject at an institution which is a world leader in this area. Most of what I hear about it goes way over my head. (I have a degree in IT and 40 years experience but the new world is a different place from the one I spent my career in)
The name I keep hearing as being the leading player in this field is DeepMind. This company was founded in London in 2010 and acquired by Google in 2014. As with so many things it might be that the best way to get exposure to AI/ML is via Google.
PS as an example of the non-obvious applications of this technology, I understand that DeepMind has developed a system which can lip read with a level of accuracy far far higher than the best human lip readers. Lip reading is a complex and subtle activity richly laden with nuance and context. It's not the sort of thing that traditional IT can do. However, with new technology, lip readers might be redundant. They might be added to the list of defunct skills rendered obsolete by technology.
Now think wider and imagine wearing google glasses that could lip read the person in front of you and could translate what they said into a different language and feed it into an ear piece. I understand that the quality of machine translation is improving rapidly so polyglot specs might not be so far away…….
Thanks tournesol, NVIDIA have shot up this year as they are providing the graphic chips used in image recognition of self driving cars, COGNEX are providing sophisticated automation of human tasks.
I will add Google to the list.
Thought I would return to this to see how these shares performed. I should have placed my money on my mouth!
