Trading & Investing with Disruptive Technologies
The term ‘Disruptive Technologies’ has become a catchphrase to many traders and investors. It evokes that proverbial call to action, requiring a sense of urgency on the part of the business community. Money management companies have studied the performance of various disruptive technologies and found them to be laggards in terms of growth and performance. Why is this? A leading fund management company surveyed 1,000+ affluent investors and asked them their opinions of high-tech investments of the present and the future.
Disruptive tech is everywhere; it features prominently in smart devices, smart energy, blockchain technology, FinTech and the IoT. These mainstream technological innovations are operating on the cusp of existing and emergent technology, and they are continually pushing the limits. Perhaps it is the dynamic nature of disruptive technology that warrants a degree of caution from the investment community; their rapid growth evokes sentiment from the days of old with a Shakespearean expression –
‘…they stumble that run fast’
. This allusion to being cautious with investments is not lost on the modern-day community of financial advisers, traders and investors.
Fund managers have already embraced
in the form of blockchain and over 2000+ digital counties which now populate this fantastic new arena. A caveat is in order however: the spectacular growth which saw this industry exceed $800 billion by Q4 2017 rapidly reversed to become a $133 billion market by present-day standards. This rather unflattering performance is symptomatic of many disruptive technologies and systems which enjoy popular appeal for a time, before deflating and losing favor with the masses.
For many, investments in disruptive technologies are the sole domain of the well-heeled community. This rings true, given the tremendous capital requirements needed to dabble in emergent technologies with little or no proven performance. Given that many investors are restrained by their personal disposable incomes, disruptive tech appears to belong to a niche group of traders and investors. There is a disconnect between society’s adoption of technology as a tool for everyday use, and the propensity to invest in this type of technology. Use of disruptive technology exceeds investment in technology almost across the board.
The global community has an insatiable appetite for new-age technologies. These include the explosive growth of social media (Facebook, Pinterest, Instagram, Twitter, YouTube), financial technology a.k.a. FinTech, autonomous vehicles and electric vehicles, the IoT (Internet of things), e-commerce applications, renewable energy, and AI technology/robotics. Of all these major technological investment opportunities, renewable energy, AI and e-commerce lead the way with over 60% of investments in the sector going their way.
When quizzed about how well disruptive technology will perform, most affluent investors associated a yield of at least 20% p/a across the board. Disruptive technologies have had such an impact on the investment community at large, that many affluent investors are considering changing their financial advisors and selecting new and improved brokerages, trading platforms and credible trading bots.
Remember: disruptive technology is everywhere. It is a prominent force in FinTech, trading and investing. The world’s top banks are finding it difficult to compete with FinTech enterprises which use streamlined online processes to fast-track the approval of loans, credit facilities, and customer interactions. FinTech is particularly impressive insofar as it reduces overheads by taking operations online, eliminating the need for high-fixed costs of operations and high labor costs.
As activity moves from bricks and mortar to virtual operations, cost savings can be passed on to end-users in the form of lower rates, lower fees, and more efficient systems and services. A classic example of disruptive technology in action is evident when
. As one of a handful of top-performing online trading and investment enterprises, this disruptive force eliminates the high fees, commissions and high account minimums that are typical of most brokerages today. Additionally, this company takes all the stress out of the investment process by pre-selecting affordable index funds with an eye to strong growth and high yields.
Disruptive Forces at Work in the Trading Arena
Modern-day financial instruments are tailored to traders and investors across the spectrum. Products for investors differ from those for traders. One of the biggest challenges that traders faced (and continue to face) is how best to select the ideal portfolio of stocks, bonds, currencies, cryptocurrency, indices, ETFs and mutual funds. The precise composition of an investment portfolio is difficult, if not impossible, for a novice to ascertain.
In an age where everything is being automated, it comes as a welcome surprise that autopilot-style investing is now available too. These disruptive technologies allow for quick and easy simulation of potential portfolios by simply selecting the desired risk level. A high-risk investor is a growth-oriented investor with a propensity for stocks, mid-cap stocks, small cap stocks, and foreign stocks. Bond holdings are a minimal component in growth-oriented investment paradigms.
A conservative investor tends to have a greater percentage of their portfolio invested in a mix of government bonds, high yield bonds, short-term bonds, real estate, and dividend stocks. Emerging markets, foreign stocks and other stocks tend to form a minor component of the overall portfolio, thereby reducing risk exposure and potential loss. Given the complexity of different types of individual investment opportunities, investors are actively seeking out ETFs (Exchange Traded Funds) which cover broad sections of the stock market and the financial markets. The trick to picking the right ETF is having the right management team in place with knowledge of the individual components of ETFs.
As a case in point, a review of Wealthsimple indicates that the most reliable way to grow income is via passive investment practices. Online brokerages offering different types of accounts make it much easier to find the right fit. For example, personal accounts, TFSA accounts, RRSP accounts, corporate accounts, joint accounts, LIRA accounts and the like can be selected to minimize tax obligations, maximise yield, and optimize age-related benefits. Such is the nature of new-age style investing practices that socially responsible investments are now also available. The use of encrypted technology (2-factor authentication) is standard, and account holders get to enjoy all the backing of the Canadian Investor Protection fund against bankruptcy.
Why Managed ETFs as the New-Age Investment Paradigm?
One overarching investment reality is now accepted in the financial markets: exchange traded funds are known as the wealth creators. With effective management behind these funds, it is possible to generate maximum yield with passive investment practices through disruptive online brokerages. ETFs now offer widespread exposure to companies in artificial intelligence (AI) robotics, biotechnology, bio pharmacology, cyber security and space-age innovation.
ETFs are the investment option of the future, available today. Many of the top disruptive stocks are listed on the
, including companies like Netflix, Amazon, Apple, Google, Facebook, Microsoft and the like. The lesser-known stocks have the greatest growth potential. The disrupted market, particularly technology is often deemed over-inflated by analysts, but the utility value of such technology makes these sound investment options. Simply look to the stars to understand just how far we’ve come, and where we’ve yet to go.
Written By Brian Wang