The Future of Investing Presented by Greg Prost, CFA Chief Investment Officer Traditional Fixed Income September 18, 2017
Game Changer for Me
Game Changer for Me
Game Changer for Me
Game Changer for Me
Why is it So Difficult to See What s Coming? 1. It Involves Thinking 2. Memories Stored in the Same Place 3. You Said That 50 Years Ago 4. Artificial Intelligence is Mysterious 5. It is Scary!
You Said That 50 Years Ago
Moore s Law
Moore s Law 10 Quadrillion FLOPS = 1% of your Brain Power
Why is it So Difficult to See What s Coming? Treasury Secretary Steven Mnuchin The risk of artificial intelligence is not even on our radar screen Concern might be warranted in 50 to 100 more years.
Why is it So Difficult to See What s Coming? An Open Letter to the United Nations Convention on Certain Conventional Weapons Lethal autonomous weapons threaten to become the third revolution in warfare. Once developed, they will permit armed conflict to be fought at a scale greater than ever, and at timescales faster than humans can comprehend. These can be weapons of terror, weapons that despots and terrorists use against innocent populations, and weapons hacked to behave in undesirable ways. We do not have long to act. Once this Pandora s box is opened, it will be hard to close.
Some Advancements Happen Quickly
Other Advancements Are Already Here
Some Advancements Are Already Here Disrupted by Autonomous and Electric Vehicles 1. Auto Companies/Suppliers 2. Auto Insurers 3. Truck Drivers 4. Auto Repair 5. Gas Stations 6. Tire Stores 7. Restaurants at Exits 8. Rental Car Companies 9. Airlines? 10. Funeral Homes/Ambulances/Hospitals/Organ Donation
3 Levels of Innovation 1. Increased Productivity Machinery/Robotics 2. Better Access/Quality Mass Produced/Longer Lasting/Safer 3. Cheaper Not Just the Products
All The Best Inventions Have Already Happened Internal Combustion Engine Electric Lighting
All The Best Inventions Have Already Happened Indoor Plumbing Appliances
All The Best Inventions Have Already Happened Automobile Air Conditioning
All The Best Inventions Have Already Happened
All The Best Inventions Have Already Happened
Latest Industrial Revolution 1970 2017
Productivity Also Began Replacing Workers
Worker s Share of Compensation Falling 1970
Past 50 Years More Choices/Better Products
Past 50 Years More Choices/Better Products
Next 20 Years Cheaper Products
Next 20 Years Different Products
Not Enough Concern Over Falling Prices
Technology Becomes Cheaper Every Day Sample Monthly Cell Phone Plans 1995: $50 50 Minutes of Talk 1998: $41 100 Minutes of Talk/50 texts 2007: $51 3G and Smartphones 2008: $50 Unlimited Talk and Text 2017: $25-40 Unlimited Data 2020: Free for Amazon Prime Members??
Prices Falling to Zero? India 2016 A billionaire offered free voice call and texting for life, and data plans starting at $2.50 per month. He now has 1/3 of the market.
The Fed Chair Does Not Even Get It..... I do think there are some special one-time transitory factors. These unusual changes reflecting the move to unlimited data plans for cell phones.....
Technology Can Change Quickly for Firms
Augmented Reality Coming for Smartphones
Many Industries at Risk of Only One Winner VS.
3D Printing for the Masses
3D Printing
3D Printing for the Masses
3D Printing for the Masses
Energy
Land Mass Needed to Power Entire U.S. Approximately 10,000 Sq. Miles
Robotics
Healthcare
Healthcare
Direct Implications for Municipalities
Bitcoin and Blockchain Technology
Bitcoin and Blockchain Technology
The FAANG problem Source: NY Times, Reuters, Robinson
The FAANG Employee problem Source: Wikipedia, Robinson
The FAANG Employee problem Source: Wikipedia, Robinson
The Corporate Bond Has Different Problems 1. Large Tech Companies do not Need Corporate Debt 2. Small and Innovative Companies do not Need Corporate Debt 3. Generally, Issuers Have Large Sunk Costs and Thin Margins 4. The Return of Principal is in the Future
The Corporate Bond Index Problem Vulnerable Sectors 1. Auto Related 2. Retail 3. Energy Barclays Corporate Bond Index 4. Electric Utility 5. Healthcare/Pharma 6. Banking Source: Barclays, Robinson
Lack of Inflation Harming Debt Repayment Source: Bloomberg, Robinson
Innovation Won t Produce New Jobs This Time
5th Industrial Revolution 2020... and Beyond Silicon Valley Saying: We overestimate what can happen in 2 years, and underestimate what can happen in 10.
5th Industrial Revolution 2020... and Beyond