UnitedLife 02

A somewhat confused article

Union

Peter Bobik
Consultant
Bratislava, Slovakia

I didn’t understand much when I was reading Plato’s dialogue, the Allegory of the Cave, and it was only for brothers, or actually siblings Wachowski and their groundbreaking Matrix movie in 1999 when I entered (and not only me) the realms of this very idea.

   What is reality today and what it will become is indeed a terra incognita but the right point of view at existence is one of a lottery with the biggest jackpot available. Knowing the reality of tomorrow or what speculative investments are going to pay off is of unspeakable value. This very thought is hunting me, are we overlooking something that will be so obvious so soon? Of course all predictions can be wrong and that is the luxury of a prediction without a guarantee and that is, every prediction. Such are my confused contemplations that cast many shadows amongst which the new reality emerges.

The world stands in front of a colossal change that is being reflected in the activities of relevant subjects in the market. Call it a second industrial revolution if you wish. If this in fact turns out to be the case we shall contemplate the implications since they are what matters most. All of it, of course, only if….

   A second industrial revolution is represented primarily by an automated production process and secondarily by fully customized product families and services.

Have you asked yourself why is Google on buyer frenzy in robotics or why its competitors are doing the same? They won’t do it without a reason. Try to think about why they focus their attention on these exact areas. My next question is, where does the progress in the high tech industry, especially in the area of smartphones and tablets, combined with the unavoidable presence of modern technology lead? Will our cars need our assistance when they are basically able to park on their own today? Will you have to think about your shopping list when your fridge is able to take care of it and will there be a point of going to work when everything can be done from home?

   Yet the fundamental question remains the same. If we consider the benefits of technology integration in communication, fine mechanics (nanotechnology) and robotics and bear the exponentially increasing computing capacity (let alone artificial intelligence) in mind, what are our options?

The data volumes we are able to process are being doubled systematically, we can orient ourselves easily anywhere thanks to GPS, mechanics has long reached the point where it delivers any required task variation and other partial inventions add up to a hardly imaginable set of options.

   So what is it we can expect? I would bet on a fully automated production process as an extremely effective tool. Seven days a week, 24 hours a day with a constant quality level. Personnel cost plunge to an insignificant minimum, quality is guaranteed, production levels skyrocket and everything is cheaper. Margins determine price limits since the margin makes up a substantial part of the retail price, yet we are facing an overproduction while all that is having a direct effect on the consumer market. We stand at the gates of a new consumerism age, if that is where we are headed.

   And if it indeed is where we are headed what are implications on our economics? What will be in surplus and what in deficit? Who are the winners and who are the losers? Losers will be those with lower levels of qualification, winners are consumers and those who generate ideas. Education increases in value considerably since only a high level of qualification will be a dearly priced added value and that alone can transform the educational system to its roots.

   The educational period in one`s life will become crucial and it extends notably according to its significance up to a point where we can talk about an education industry. Let me think, what are the titles that go hand in hand with a society that is getting more educated, possibly the shares of certain universities?
I do not paint the entire picture for you on purpose as this topic is very popular in the world of sci-fi and I respect Mr. Asimov up to a degree where I don’t argue with him. Even if we don’t wage an open war against Skynet (although J. Cameron sees it differently), nothing will be as you know it. This will turn the S&P index upside down. The world had changed more at the beginning of the industrial revolution in one generation than it had for centuries before and our near future won’t be much different. The only question is how close we are. That I can’t tell. On the other side, I can tell clearly that online companies buy out ventures producing robots, we communicate everywhere and cars park autonomously. What is it we don’t see that clearly, the sketches on the drawing boards? Will Google be the General Electric of the second industrial revolution? I don’t have to be a contrarian in order to invest in ventures with focus on future. The future belongs to integrators who are able to apply their acquired competences which until recently formed separate business sectors. These sectors are ceasing to exist, believe it or not, we are going downhill and it won’t be a slow ride.
In case I am wrong, get your own point of view, nobody stops you. As Nietzsche wrote in the foreword to his Antichrist: How could I confound myself with those for whom there are ears listening today?
My efforts to look beyond the horizon and to read between the lines and hints can hopefully excuse my confused thought process which I apologize for.

Make sure not to follow my opinion when investing. And it makes me more than happy if my thoughts made you smile.
P.S. Google has a P/E ratio over 30, why is that? What is the market mood like?

 Peter Bobik



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