The year is 2066. Your granddaughter, fresh back from uni for the holidays, has just popped round for a visit. You make tea, try to ignore that new “hairstyle”, and settle in for a chat.
So, you ask, what’s your favourite subject this year, Rebecca?
Well granddad, I guess it would be economic history, she says. We have been picking apart what happened in the 2020s. Amazing stuff! Weren’t you around then, granddad?
Well, yes, I was Rebecca. Your nana and I were in our 40s. Trying to hold down a job, raise your mum and get ourselves ahead.
Gee, granddad, you and nan must have made a heap of money back in those days. The very start of AI, blockchain, and really just the beginning of decent battery storage, genomics and medical devices. That must have been a wonderful time to be an investor.
You stop and think: the 2020s – can I remember what was going on then? Some trouble in Poland, was it? Or maybe it was Ukraine? And China – weren’t they starting to get a bit aggressive about Taiwan around then. Perhaps that guy Trump was President of the US. And wasn’t Putin strutting around the place at the time – Nana and I were a bit worried about him. And, yes, of course – they were the years when you could get a decent return on a term deposit, maybe 5 or even 6 per cent sometimes.
But, granddad, our lecturer said that Nvidia, Microsoft and Apple were only tiny companies then…worth a pathetic amount, about $3 trillion or something. MoonHols, SuperStud and SolarBeam had not even started. Look at them now…you all must have done well out of them.
Well, you see, Rebecca, in those days we could roll over TDs and get 5 per cent – sometimes nearly 6 per cent. Nana and I thought that was a pretty good deal. Anyway, have you kept up the piano lessons?
Yes, I would change the subject too! Had I invested only in TDs and a few other scraps during this time I would be loath to own up to it 40 years later.
Okay, I know it’s all easy in hindsight. Rebecca’s lecturer is a right pain in the neck, making the easy hits and skewering us all with his 20/20 vision as he looks in the rear vision mirror. It’s never so easy at the time.
And yet, as an exercise, pretending that you are far off in the future and looking back to see what you could do is useful; it puts things in perspective and gets us to focus on the big, important things that are going on and, in some cases, changing the world.
When we live in the real world we are bombarded by all sorts of stuff, all asking us to give them our money: there’s that property developer on Facebook offering 10 per cent, maybe you should have a look at that? And rental property seems to have a bit more value these days – perhaps it’s enough to make it worth buying?
The big trends
The real world is full of offers and opportunities and amongst all that time spent down in the weeds it’s hard to see the big trends, to look outside our own little sphere and see what is going on in the world.
Of course, the big story of our time is technology, and that has been the case for decades. Fortunes are being made: technology in all its different forms advances apace.
No-one should think AI is the only game in town: areas like battery storage, clean tech, genomics, blockchain, medical devices, 3D printing, biotech, automation and robotics etc. All of these are expanding quickly … and there is money to be made.
So, how do you play this explosion of technologies from an investment point if view? The thing is to take ownership (to take an equity stake) of companies that are at the forefront of this technological revolution.
You probably will not do this by yourself – it’s hard to pick winners in a fast-moving tech boom. It’s near impossible for you to pick the winners in any one of these complicated areas with cutthroat competition without giving up your day job. To be honest, I wouldn’t even try.
Managed funds
Instead, I would play the theme and own mostly managed funds giving overall exposure to the most important, likely-looking areas. Yes, I might have a few individual companies, but most of my exposure would be managed funds giving me a good overall spread in the technologies of choice.
Get out of the weeds and have a good think about some of the big things that are happening in the world and think about how you can profitably invest in them. That might take you out of New Zealand (and your comfort zone) but in a decade or two I am sure you will be very glad you did.