- A breath of financial fresh air
- Five ‘innovation platforms’ at the same time in history
- Plus, two countries that could adopt bitcoin in 2019…
Feel that gush of fresh air? How lovely, especially during this hot streak.
It’s thanks to ARK Investment Management, which just released its annual Big Ideas publication for 2019.
Here’s why this document is so refreshing for anyone who follows financial markets.
There’s no yapping on about the Federal Reserve and the endless and tedious commentary about its forecasts and interest rate projections…
There’s no hand wringing over the ‘economy’ and useless investment information like GDP…
There’s no outlet for permabears who are wrong every year and yet still get quoted in the press…
There’s no gold bugs boring everyone to death with what’s wrong with the credit system…and their unimaginative solution.
There’s no mention of the word ‘bubble’…
What do you get instead?
A great little document showing why the world could be going into a historic decade of technological transformation.
This will most likely result in staggering wealth creation over the next 10 years.
And here’s the key point: You can learn how to monetise these ideas in the share market.
Read on for a taste…
ARK claims there were seven key technological breakthroughs from about 1780 to 2000 that drove the major growth spurts in economic activity.
The first batch were steam power, railways and the telephone.
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After 1900 came the automobile, electricity, computers and the internet.
Today, however, we have five ‘innovation platforms’ that are happening at the same time.
This creates a dynamic that could see the biggest wealth expansion in all of history.
ARK says these platforms are:
- Blockchain technology
- Genome sequencing
- Artificial intelligence
- Energy storage
All of these could each result in trillions of dollars of wealth creation.
From here, the trails of potential disruption and further innovation spring.
It’s an exciting vision, and I go along with most of it, while accepting there’ll be setbacks and dips along the way.
Of course, none of this is to say that all of the analysis will be right. But it’s far more useful than anything else you’re likely to see anytime soon.
Here’s a point about investors: They are always chasing growth. We must follow the sectors where this is most likely to happen to find great stock ideas.
It can also help us avoid the companies likely to be left behind.
ARK gives us some good pointers here.
Let’s dig around some ‘big ideas’ the ARK team highlight in their report: Cryptocurrencies and mobile payments.
Both of these have the potential to rip through the established banking systems of the world. There’s trillions up for grabs in market share here alone.
We might get two early test cases this year too: Venezuela and Iran.
Bitcoin: Better than gold
A little-noticed report ran recently. Reuters reported that the US is not going to grant any more waivers around Iranian sanctions.
Most likely, after May, the existing ones will not be rolled over, either.
Why do you care?
Iran’s economy is already under extreme inflationary pressure. One estimate puts prices rising at a rate of 166% a year.
Further tightening around Iran’s oil exports will drive this higher.
The country might end up looking like Venezuela, where prices were recently rising nearly 100% per month.
There are few ways to protect your wealth — if you have any left in these societies — under this scenario…but crypto is one if you can access it.
Professor Steve Hanke is an expert on hyperinflation. He’s also been a vocal critic of bitcoin as a potential currency.
What’s notable is that he just backed a project to airdrop cryptos to people in Venezuela.
Venezuela’s currency is now worthless. That chokes off the supply of food and medicine to the country. It’s a humanitarian catastrophe.
Hanke’s team is going to try and raise US$1 million in crypto and distribute it to the needy.
They can bypass Venezuelan government foreign exchange controls and avoid the risk of moving physical US dollars into the country.
In other words, Venezuela and Iran have the potential to adopt bitcoin and prove the case for crypto as a functional basis for a monetary system.
This would be a massive endorsement for cryptocurrencies in general, and a shot in the arm for demand.
A related idea to this, more so for countries like the US and Australia, is the rise of mobile wallets.
These are not going to simply be a payment system. They will be a gateway to a myriad of financial services.
This has vast implications for banks, insurance providers and brokers of all stripes. Because unless you’re part of the wallet ‘ecosystem’, your entire offering could be bypassed.
Whoever controls the most dominant wallet will be valued for its enormous cross-selling power.
The example here is how the Tencent WeChat app does this in China. It has something like 900 million users.
The race is on to find the WeChat of America.
Regardless, there’s plenty of disruption coming to the world. I’ve barely touched on it.