Sand Hill's Chief Investment Officer, Brenda Vingiello, CFA, joins Jenny Harrington on “Halftime Report” to go over their most recent portfolio moves. Brenda's commentary begins
Investing in the Fourth Industrial Revolution Before It Invests in You
Published Date : July 31, 2018
Throughout history, global economies have undergone several distinct transitions in the form of industrial revolutions marking massive transitions to new manufacturing processes. These revolutions have caused major tipping points in history altering many aspects of life, often enriching those who enabled the change. Not surprisingly, some of the most compelling investment opportunities have emerged during economic transitions. This is particularly evident now in the era termed the fourth industrial revolution – a period where technology has become so ingrained that it is shifting our career decisions, how we purchase goods, the path of our commute and how we communicate.
As times have changed, so too have the industries that built our nations. One barometer is the Dow Jones Industrials Average, designed in 1896 to encompass the major industrial companies into an index to gauge the American economy. As the economy has shifted, so have the Dow components whereby the “industrials” title has become largely nominal. To better incorporate the universe of investable companies shaping the modern economy, deletions from the index over the past decade include General Motors, Alcoa and, just recently, General Electric while Cisco, Apple and Visa were added.
Long before the Dow was established, the first industrial revolution occurred in the 1700s as production transitioned from handmade processes to the mechanical. Steam power and the creation of a factory system defined the era’s technological developments. This rapid industrialization of global economies cost many workers their jobs, including a group known as the Luddites, who rebelled by destroying the factories and machinery that caused their job displacement.
By the mid-1800s, the second industrial revolution commenced with the utilization of steel in mass manufacturing. Shortly thereafter, the birth of the chemical and petroleum industries led to the emergence of the auto sector and mass production. Transitioning from the 20th to the 21st century, the third industrial revolution began an era when electronics proliferated which produced the digital age and a shift from mass assembly to automated production.
Now the fourth industrial revolution is building on the third as technologies fuse together at an exponential pace, including the “advent of cyber-physical systems involving entirely new capabilities for people and machines” (1). Examples of the emerging technologies defining this revolution include artificial intelligence, robotics, Internet-of-things, 3-D printing and autonomous driving; all enabled by unprecedented computer-processing power, big data and advanced energy storage capability. International Data Corporation (IDC) forecasts that “worldwide spending on digital transformation will soar past $1 trillion in 2018” (2). While Silicon Valley has a major role in the technology revolution, the investment opportunities are global in nature. To benefit from the shifting economies, Sand Hill recently added an exchange-traded fund which invests in global robotics and automation companies. In addition, our actively managed funds can also lean into the fourth industrial revolution theme.
Unlike past eras, the evolving fourth industrial revolution presents a plethora of investment opportunities. Just as the dot matrix printer became archaic, so has the original robotic dog pet from the late 1990s. Given advancements in robotics, we might soon have to second-guess whether a given “emotional support” dog is real, albeit far longer before we question the authenticity of the owner holding the leash. In the meantime, we will continue to seek relevant investments to benefit from this Industrial Revolution, taking the futurists view via embracing change rather than Luddite’s looking backward.
Articles and Commentary
Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.
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All video presentations discuss certain investment products and/or securities and are being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect Sand Hill Global Advisor’s (“SHGA”) or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. Any comments, opinions, or recommendations made by any host or other guest not affiliated with SHGA in this video do not necessarily reflect the views of SHGA, and non-SHGA persons appearing in this video do not fall under the supervisory purview of SHGA. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.
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