The future like Wall-E?
I feel like a broken record saying this, but my mentor, always reminds me:
"The stock market runs ahead of reality."
Consequently, something that I wrestle with constantly as an investor, is trying to make sense of the future. Historically, I've never put much thought into what the world could look like 100+ years. It's incredibly difficult to forecast that far.
You can go into Heisenberg's Uncertainty Principle which means you can simultaneously predict and not predict the future but that can be reserved for another time...
More practically then, to help in this quest to get a sense of what the future could look like, I look to those whom I consider the best CEOs as visionaries who were radical futurists of their time.
Bill Gates at Microsoft. Steve Jobs at Apple. Jack Ma at Alibaba. Jeff Bezos at Amazon. Elon Musk at Tesla. Warren Buffet at Berkshire Hathaway. Walt Disney at Walt Disney Company. John PierPont Morgan at JP Morgan Chase. Thomas Edison at General Electric. Henry Ford at Ford Motors. John Rockefeller at Standard Oil.
They all reminded themselves to think of the bigger picture. The longer picture.
Working in the Software, Internet and Media team in my work as an Investment Analyst, having a sense of what the future will be through technology has naturally evolved into a long term concern of mine.
In a 2006 research paper titled "Human-Automation Interaction", academic Thomas Sheridan, argues that there are ultimately 2 paths in which humans and technology will probably interact.
For simplicity, I compare it to 2 different films.
(1) Wall-E - means being "fat blobs" where the computer makes all decisions for us in the quest to maximise efficiency for the human. In Wall-E, set in 2805, the ship AI directs how people interact, eat, dress, etc. Consequently, maximum efficiency and convenience have led to the humans reverting to their most basic beings, being completely satisfied and stress-free, by the faceless corporation that is BNL (Buy N Large). We've exhausted all of the earth's natural resources and are colonising other planets.
(2) Star Trek - means replacing the daily grind, and focusing on higher order problems. In Star Trek (forgive me because I never started watching Star Trek until now), the computer feeds data (faster than any human can gather on their own), but the catch is that no insight is provided. The human makes the decision with the given data. Earth has become a utopia, a moneyless society, with a sustainable base of resources to meet the growing population and consumption demands of the year in the 2200s.
Ultimately perhaps the question is less about what technology will do to us in the future, but more about what path the humans will take and how will they use the technology of the future.
Are we biologically destined to make our lives gradually easier and less meaningful until we become blobs, or do we use technology to create new problems for us that challenge us to go where no one has gone before?
I confess I do not have the answer.
Certainly, I can understand the case for humans evolving and entering a higher order of thinking with every new century. That seems to be the case of history, the last few centuries. However, my sense is that humans like to take the path of least resistance. I suspect that neurological behaviours make us choose efficiency and laziness.
In his 2018 book, "Briefs Answers to the Big Questions" written by physicist Stephen Hawking, there were 2 key takeaways for me.
(1) He describes how humans will not be able to survive on earth because the human consumption demand unsustainably surpasses the supply of resource growth.
(2) He describes how the world should hopefully innovate to a point where humans can colonise other planets.
What stood out to me was how he urged the younger generations to:
"Look up to the stars and not down at your feet".
From my own interpretation, this is why I am inclined to imagine that the future will be a world where humans will take the path of one that looks more and more like Wall-E.
Whilst some may describe me as pessimistic, I like to think I am realistic more than anything else. That is the DNA of a healthy investor.
Here are just some of the general pieces of observable evidence that I have crudely noticed in one of my favourite Disney Pixar films, "Wall-E".
I am open to agreeing/disagreeing with what my readers think as always.
(1) The earth is becoming exhausted of resources, like a landfill of rubbish.
Notice there is no green. This pays homage to the reality of greenhouse gases, climate change, environmental pollution, etc. Come to think of it, the recent Sydney bush fires painted an eerily similar coloured skyline.
(2) Advertising is digitised, personalised, targeted and everywhere you go, even when you're interacting with friends
I see this trend having spent a lot of my time covering media companies, particularly with mobile, television and outdoor media. I've been suggesting to people that advertisements are a lot more sophisticated now than ever before. They tell us what we want, rather than us knowing what we want.
(3) Humans are expected to work longer now than their previous generations
I think this is why we talk about the "burn out" culture of our younger generations. In an effort to achieve maximum productivity to maintain the growth of economies that we so uphold ourselves to as the golden standard, we continue to work longer.
(4) One company to dominate the world, in the form of a "BNL"
The idea of small and medium businesses are gone. One company, BNL hijacks the very definition of human consumerism. It takes over our lifestyle. What if Amazon started controlling the oil supply of the world? What if Microsoft served all our groceries?
All things considered, I think there is a strong case for the world venturing towards what Wall-E has painted as a possible reality for humanity in the near future. What are the implications for an investor with this possible future framework in mind?
Consolidation of industries is here to stay.
It means companies that are winners in their industries, will likely keep on winning.
It means companies with lots of data advantage over peers will survive.
It means harnessing AI/ML (i.e. artificial intelligence and machine learning) in companies is absolutely vital.
It means branding is more important than ever before, in our new loyalty economy of the 21st century.
It means, holding renewable companies which serve the earth is not of much value if the earth is gone (I imagine lots of people will be annoyed by this view of mine, but I want to make clear this is my own personal view, and that does not mean I will always never invest in renewables).
It means the best space exploration companies are where you want to be.
I am certain there are more potential implications that can be thought up, but these are my 2 cents.
The world is changing at a much more rapid pace than ever before in history. Economies conventionally relied on land, capital and labour, as factors of productivity to drive economic growth. However, technology is the endogenous variable that will continue to drive this growth in the future.
With it, will become a question of what path we take as humans in our dealings with technology... I am not expecting everybody to agree with me. That's fine too.
If I have made you question the future, I think this blog post has done its job.
Wishing everybody a Merry Xmas,
Michael Li
