Emerging technologies are those which are new and haven’t yet been widely adopted among the public.
But these trends and new markets that will be developed out of them can lead to outsized gains for traders and investors.
Emerging Tech and Trading
Many traders believe the future will be a slightly modified version of the past.
A lot of time is spent on stock picking. However, history has shown that the latest greatest thing that seems to be a no-brainer doesn’t last all that long.
For example, Apple, Google, Facebook, Amazon, and Microsoft are widely considered the top-5 most innovative companies in the US, if not globally.
While it may be hard to imagine what can knock them off their perch right now, chances are that in 20 years, the landscape will look very different.
Just as not too long ago companies like ExxonMobil, Wal-Mart, AT&T, Cisco, and IBM were the top companies over the past 20-40 years ago. But now their valuations are nowhere close.
If we look at any random 20-year period, we can see that things look markedly different.
For example, this chart below looks at 1999 (tech and dot-com bubble) and 2019 (pre-Covid).
Top Market Cap Companies 1999 vs. 2019
(Source: Visual Capitalist)
New companies are likely to take over the old
Definitions of what the top companies are, such as the Dow Jones, or the top-weighted companies in the S&P 500, change.
Emerging technologies will come and are likely to form entirely new companies that supplant the top companies based on technologies that emerge which promise to change the way we live and work.
Top companies typically fail to evolve and is all part of the evolutionary process.
These trends include technologies such as quantum computing, artificial intelligence and all its subsets, and 5G.
Let’s take a look at some of these emerging technologies are.
Artificial Intelligence (AI), Machine Learning (ML), Deep Learning (DL)
Artificial Intelligence (AI) is a technology that enables machines to learn and think like humans through the use of algorithms.
It has great potential in fields such as healthcare, transportation, and manufacturing.
Machine Learning (ML) is a subset of AI that deals with giving computers the ability to learn without being explicitly programmed. In other words, the machine learns what to do, either supervised or unsupervised.
Deep Learning (DL) is a subset of Machine Learning that uses multiple layers of neural networks to mimic the workings of the human brain.
All these technologies have the ability to revolutionize how businesses operate and can be used in trading to identify patterns and trends.
AI is not a new term and has been around for decades, but it’s only recently that it’s started to grow and become a bigger part of more industries.
Due to advances in machine learning and data processing, AI is now capable of performing complex tasks that used to be the domain of human workers only.
It also presents challenges for certain parts of the labor force who will see more of their tasks automated, as companies look to reduce their people costs in the ways that they can and become more efficient.
As always, labor markets will be forced to evolve.
5G and the Internet of Things (IoT)
5th Generation or 5G wireless technology is the next generation of mobile telecommunications standards beyond 4G/LTE.
It promises much improved bandwidth, higher data speeds, lower latency, and support for a massive number of devices.
This can make it perfect for applications like augmented and virtual reality.
The IoT is a network of interconnected devices, which can communicate with each other and share data.
Together, 5G and the IoT will create a new level of connectivity and interactivity that will improve communications and data sharing.
The most common example of the IoT is the smart home, where devices like lights, thermostats, and security cameras are connected to the internet and can be controlled remotely.
It allows us to connect and control devices remotely, which can save time and energy.
No computing is truly serverless, so it’s a bit of a misnomer. But the concept of serverless computing is a new model of computing where the user doesn’t have to worry about managing or provisioning servers.
It’s a model where the provider, such as a cloud computing company like Amazon Web Services, manages all the infrastructure for you and you only pay for the time your code is actually running.
This can be a great solution for small applications that don’t require their own server and want to avoid the cost and complexity of setting one up.
It also presents new opportunities for startups who can get up and running fast without having to worry about setting up their own infrastructure.
Biometrics is the process of identifying or verifying a person’s identity by measuring their physical or behavioral characteristics.
Some common biometric measures are fingerprints, facial recognition, and iris scanning.
The use of biometrics is growing in both the commercial and government sectors as more organizations look for new ways to secure their data and facilities.
Biometrics can be used to identify unauthorized access and protect user identities.
Augmented Reality (AR)
Augmented Reality (AR) is a technology that works to blend digital content with the real world.
AR is different from Virtual Reality (VR) in that AR does not completely replace the user’s view of the real world, as it’s merely “augmented”.
AR has many potential applications, such as in retail, where it can be used to show customers what a product would look like in their home, or in manufacturing, where it can be used to help workers assemble products.
Virtual Reality (VR)
Virtual Reality (VR) is a technology that allows users to experience a simulated environment.
VR can be used for gaming, training, and education.
One of the most common applications for VR is in entertainment, where users can experience new worlds and adventures.
VR is also being used more and more in business, where it can be used to train employees or simulate difficult tasks.
The Metaverse trend among certain tech companies also involves virtual reality. The market (mostly equities) will sort through the winners and losers in the Metaverse space.
6D Printing is a new type of 3D printing that adds an extra dimension to the printing process.
6D Printing is able to print objects with moving parts, which is not possible with traditional 3D printing.
This opens up new possibilities for manufacturing and design.
6D Printing is still in its early stages, but it has the potential to change the way products are made.
The blockchain is a distributed database that allows secure storage and transmission of data and payments.
Its most well-known application is Bitcoin, but it has many other potential uses.
The blockchain is a distributed ledger, meaning that it is stored on multiple computers around the world.
This makes it tamper-proof and secure, as any changes would be immediately visible to all those who have access to the blockchain.
The blockchain has many potential applications beyond just cryptocurrencies and digital currencies and can be used for secure storage and transmission of data in a variety of industries.
Robotics is the use of robots to automate tasks.
Robots are used in a variety of industries, including manufacturing, logistics, and healthcare.
They can be used to perform dangerous or repetitive tasks, which can improve the safety and efficiency of human workers.
Robots are also becoming more affordable and accessible, which is likely to lead to wider adoption.
Natural Language Processing (NLP)
Natural Language Processing (NLP) is the ability of computers to understand human language.
NLP can be used for tasks such as speech recognition, machine translation, and text analysis.
NLP is becoming increasingly important as more and more data is being generated in the form of text.
Machine learning algorithms can be used to improve NLP performance, making it possible to extract insights from large amounts of data.
Quantum computing is the use of quantum-mechanical phenomena such as superposition and entanglement to perform calculations.
This makes it different from classical computing, which relies on bits that are either one or zero.
Quantum computers have the potential to solve certain problems much faster than classical computers.
However, they are still in their early stages. Commercialization of these technologies is still emerging.
The future of business will be shaped by many emerging technologies, which offer new and exciting possibilities for not just how we live and work but how we trade and invest in the markets.
Many of these technologies are in the experimental stages, working their way through the idea stage to being developed in startups and the venture arms of large companies.