Are we in the midst of a new industrial revolution—a wave of creative destruction?
Beyond the daily blather about oil prices, China, quarterly earnings, and Presidential politics, new technologies are changing the way we live, work, and relate. It’s impossible to walk down the street without seeing over half the people staring at their smart-phones. “Walking-while-texting” is a major safety hazard. Some have called this the fourth industrial revolution.
The first industrial revolution was based on steam power, the second on electricity, the third on computers, and now this one on robotics and mobile computing. It has the potential to dramatically boost global productivity. Disruptive technologies combined with changes in our everyday lives are what’s behind the eye-popping valuations of Netflix, Amazon, and private companies like Uber and other unicorns.
But we need to remember that it took decades for steam power, electricity, or PCs to affect how people live and work. Investors need to be patient. And we need to understand that new ways of providing goods and services often kill off old industries before the full benefits of the new technologies are realized. This is why political revolution often follows technological change. Think of France, Russia, and the many colonial independence movements of the 20th century.
Cyberpunk author William Ford Gibson says that the future is here, it’s just not evenly distributed. We don’t know who the winners and losers will be. But we do know that a tsunami is coming.
Douglas R. Tengdin, CFA
Chief Investment Officer