How technological disruption could affect your investments

How technological disruption could affect your investments

The FTSE is now comfortably above the 6,900 peak first reached in December 1999. As with the recent rise in the S&P, this has been driven by the expectations of monetary reflation under Donald Trump. But in the US, while the President proposes, Congress disposes. Even a Republican Congress may not be inclined to accept trillions of dollars of deficit financing.

Investing risks

Counting chickens before the eggs are hatched is one immediate risk, but others are even more significant. Financial Times journalists recently held forth on the industries likely to be affected by technology over the coming decade. They identified advisory services as first in line for difficulty. Online booking of holidays will be bad news for travel agents, while financial services will be hit by automated advice on portfolio construction. 

Article continues after advert

In addition, the metal-bashing industry will change radically through the proliferation of 3D printing, also known as additive manufacturing. They also envisaged automotive insurance as a major victim, and this is an important warning for all investors. 

It is not only that car insurance is at the core of insurance profitability, but also that this business model is under threat from an about-to-happen revolution of which most of us are completely unaware. Partly it is because of the electric car, but mostly it is because of the driverless car.

An electric car engine probably has fewer than a couple of dozen parts compared to the several thousand of an internal combustion engine, and the battery is something that neither we nor our local mechanic will have anything to do with, except to recharge it or replace it. 

Battery design has advanced so rapidly in recent years that electric cars, while being environmentally cleaner, can now compete with the internal combustion engine.


The real tech revolution

The real change will come with the driverless car. Battle is already joined between car companies – Mercedes, Toyota and their likes – and tech companies such as Google, Uber and Tesla. 

At stake is the future nature of motoring: will cars remain status symbols, owned by individuals, or will they become a public service, a small-scale, but personalised bus available via a telephone call and a credit card?

Driverless cars are already being tested in many major cities and, while safety concerns worry some local authorities, others are excited by the prospects. These include fewer cars on the road, assuming that the vision of the technologists wins out, as well as a reduction in road accidents and a gain in publically useful space as the need for garages and public car parks declines.

Town planners are already getting excited by the possibility of restoring towns to their inhabitants, significantly reducing the flow of heavy goods vehicles through urban areas, redesigning high streets as social areas for socialising and purchasing locally produced artisanal products, making shopping fun again and rebuilding the community spirit.

Much of this depends on a continuation of the changes that are already taking place in supermarkets, and being encouraged by Amazon’s entry into the grocery sector.

Already many chains have built dedicated delivery stores for those who buy online. The best of the online ordering systems compare this week’s shopping list with that of last week, and recommend other products that the shopper might like.