The Next Big Idea
I’m continuously evaluating potential market risks that can derail the market. I’m also always searching for new investment opportunities and the next big idea. There is one new technology that will have an enormous impact on the economy. My father just purchased a new car and he can’t stop talking about all the high-tech features. He is most excited about the driver-assist technology such as lane-assist features, and the adaptive cruise control that maintains a steady distance from the car in front of him. This is the next big idea. It’s not marijuana penny stocks. I’ve had many people looking for marijuana stock ideas, but I’ve found more companies that I’d like to bet against. I’m sure that there might be one or two big winners, but good luck finding them in the weeds.
The computer has evolved from your desktop, to your phone, and is now going into your car. The autonomous vehicle technology is going to change the automotive industry and disrupt transportation industries for years to come. Similar to the iPhone, which reshaped the telecom industry, I expect autopilot to have a substantial impact on the automotive industry. All the major technology companies are spending massive amounts of money to develop their own version of an autopilot system. Even self-driving trucks will become common on roadways. According to estimates by the American Trucking Association, there are approximately 3.5 million professional truck drivers in the United States. While these jobs are not currently at risk, there could come a time when this once stable industry is disrupted.
There is much debate over how safe these driverless cars are. The U.S. crash investigation into Tesla’s driver-assistance autopilot ended up suggesting that the feature actually increases safety. According to the data that Tesla provided investigators and data from a Bloomberg article, “installing Autopilot prevents crashes—by an astonishing 40 percent.” The group of people that this technology will benefit the most, are the elderly or people with physical disabilities. Florida’s roadways might one day be filled with more self-driving cars than actual real drivers.
There have already been many winning investments in this area. To name a few, companies such as Google, Tesla, STMicroelectronics, NXP Semiconductors, Apple, Nvidia, Mobileye, Delphi Automotive, Bosche, Tesla, Nissan Mercedes-Benz, Uber and Audi are the current leaders creating prototype vehicles. For select companies, investors are willing to look past quarterly earning misses and are focusing more on the potential for future market share.
I’ve been researching the companies with the most cutting-edge technologies. Even though we are still in the early infancy of developing this technology, many of these companies are already trading at rich valuations. As a value investor, I prefer to buy investments at a much lower price. If we get a market sell-off, this is one area that is at the top of my shopping list for my clients who have a higher risk tolerance.
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