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Investing in Technology Themes - AI / Blockchain / IOT by TrendFollower

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Part 1:

Some of you will be familiar with the term 'Megatrends' when it comes to investment themes. I personally think within the Technology sector Artificial Intelligence, Blockchain and IOT are going to be high up in any list if they are not already. These technology themes have the potential to be what could be classed as 'Disruptors' in their field of use.  They could also end up disrupting other trends.

AI is a form of 'Machine Learning'. IBM and other large corporations have been and are currently doing a lot of work in this area. They are beginning to invest a lot of capital in the development phase. Here 'Big Data' plays an integral part. One company I invested in a while back which made a lovely return for me was 'WANDisco'. It is listed on the AIM market. AI is basically built on algorithms that learn by analysing lots of data. I think that is the simplest way I can explain it for those who may not be too familiar with this emerging and exciting theme from an investment perspective. 

Rather than repeat myself on Blockchain, those who are interested may want to read my Blockchain threads - Blockchain Trilogy by TrendFollower

IOT is happening now. To put is as simply as I possibly can it is where connected devices talk to each other. This will produce big data. This is where in my view AI comes in. AI will be able to analyse this data, identify trends, model / predict potential outcomes from patterns that us mere humans would not be possible to do, especially in the speed required. 

So IOT would be the way to supply the data and AI would be the way to mine the data. IOT = 'Data Supplier' and AI = 'Data Miner'

Blockchain is basically a 'Distributed Ledger'. Blockchain will keep a ledger of how devices which connect with each other communicate and when. There will be an audit trail which will be tamper proof (or least likely to be tampered with). It will keep a record of how devices interact with each other. It will be like a form of glue which can bring AI and IOT together and bind it with the ability to record and date stamp important events. Blockchain will be vital where there are any interactions and transactions. It is when tokens / digital payments / cryptocurrencies may possibly be used. 'Smart Contracts' could be used where there is an exchange of goods and services. Here is will be able to improve the compliance, improve the cost efficiency and I think will be crucial in the management, tracking and auditing of supply chains across the globe. From the reading and research I have carried out, IBM, is doing a lot of work in this area. They are one of the largest technology companies in the world. They will have hired some of the finest minds in the world for this area. 

To be continued... (Part II - Coming Soon)

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Part 2:

So to recap the three main technology themes from an investment perspective I was discussing in my previous post in this thread were:

  • Artificial Intelligence (AI)
  • Blockchain
  • Internet of Things (IOT)

Now one of the reasons why these technology themes are really gaining traction and momentum at the moment is due to the massive increase in computing power. 5G is coming very soon which will really allow these three to collaborate and achieve great things. They all have standalone benefits but together their interactions with each other will open up new possibilities to deal with greater challenges in a digital world and a digital future as that is the direction of travel. IBM are doing some really exciting things in this area.

AI needs vast amounts of data. What the Blockchain can do is store this data securely. Data security has been in the media a lot recently and we are living in the world of 'Big Data'. This data needs to be secured and there needs to be trust. Blockchain will play a vital role in this. Data stored on the Blockchain is 'Cryptographically Secured'. This means tampering with this is extremely difficult. I am not saying it is impossible but it is far more difficult. So for example if a company had sensitive data then securing it on the Blockchain begins to make a lot of sense. 

AI and Cyber Security are also combining to make Cyber Security more robust and fit for purpose. This should lead to cost reductions too. You only have to look at job vacancies nowadays to notice that real companies are looking to recruit real Blockchain experts. There is a real demand here for individuals with Blockchain skills. 

If you now add to the mix 'Robotics, Automation and Cognitive Computing' one can begin to see how this digital universe begins to take shape. I appreciate that a lot of what I am writing will not make much sense to some of you who either do not believe or accept my writings or simply do not understand it.  I have not even mentioned 3D printing, Augmented Reality and Smart Sensors yet!

I think with more powerful computing power and machine learning the world is going to be a very different place in the future to what it is now. Investors will talk about or use the word 'Disruptive'. I personally believe these technologies are and will continue to be disruptive going forwards as significant developments and improvements are made. 

What I see in the future is individuals having 'Data Vaults' powered by Blockchain where they can securely store their digital identity.

I mentioned 5G earlier in this post. I think 5G will enable these things to happen. It will be the 'Enabler'.  

I think from a Cryptocurrency perspective the digital token, IOTA, becomes very interesting. 

To be continued...(Part III - Coming Soon)

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@cryptotrader,

It is nice that you are curious.

The title of investing in technology themes kind of gives away the goal of the post.

The message I want to share is what I have posted.

Investors can make an informed decision on whether they think this is an area within the technology sector that they would consider investing in or not.

I am an investor first and trader second. I use a small part of my profits from my investments for my trading capital. Investing is the path I believe in for long term wealth creation. Investing in such opportunities as these at the earliest opportunity allows the best chance of maximising returns and profits. 

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Part 3:

It is being reported that the 4th revolution will be the 'Digital Revolution'.

So the 1st revolution used steam power whilst the 2nd revolution used electricity. The 3rd revolution used automated production with electronics and IT. I believe we are now witnessing the 4th revolution and this is where the technological themes of AI, Blockchain and IOT come into play.

Cloud Computing has been increasing rapidly.  We are reading about self driving cars, home appliances that talk to each other and even digital wearable devices. I mean I can control my home lighting (LightwaveRF) and heating (Nest) via my mobile phone. You can order milk from a smart fridge and control your washing machine via an app on your smartphone. I think we will begin to see an increase in 'Biometric' technology. 

As I have mentioned before, IBM, are doing a lot of work in this area and seem to me to be leading the way. They have adapted their business model over the years and I recall many years ago when in University that business case studies involved IBM. They currently employ some of the brightest minds and their recruitment of the best talent still stands even today. 

Investing Idea - IBM:

Speaking of IBM, it becomes an interesting long term investment proposition. It is a large cap US share. If you look at the 'Monthly', 'Weekly' and 'Daily' charts then you will see that it is currently in a downtrend. Once this is complete then it may offer a long term investment opportunity to get indirect exposure to these technology themes without taking the risk of directly investing in the start ups, nano and micro caps involved in this space. 

Others may wish to apply a 'Pound Cost Averaging' strategy and start drip feeding money into acquiring IBM shares say on a monthly basis and the more the price drops the more shares one accumulates in IBM. One would only invest any lump sum payments should the price crash or offer a very deep and sharp correction. This will assist to amplify returns on any bull run for IBM going forwards. Of course there is no guarantee that IBM shares will go up or recover from current levels so one may prefer just monitoring the price action of IBM shares and then take it from there. 

To be continued...(Part 4 - Coming Soon)

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I wanted to take this opportunity to share an article about the title of this thread from the well known and established technology company, Oracle. 

How IoT, AI, and blockchain will revolutionise business.

http://www.oracle.com/us/solutions/cloud/tt-technologies-white-paper-4498079.pdf

I will try where possible to share material from 'Credible' sources as I think this is important. I accept that at times such called credible sources will contain both 'Positive and Negative Biases' so one must be aware of this. 

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Part 4:

BlockClaim is both an interesting and very exciting company in the field of insurance and technology. I think it is exciting because it had the foresight to combine AI, Machine Learning and Blockchain into their business. 

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What companies are beginning to do is to combine these technology themes as they have began to realise that it is by combining them that they are get the most 'Return on Investment' ROI out of them. 

'Data' is the new 'Natural Resource'. This is how Sandip Patel who is the global managing director for insurance across IBM described it. I think this is especially true when you look at data from an insurance companies perspective. 

What is interesting about BlockClaim is that it is a data aggregator and it enriches this data too. Now this basically allows BlockClaim to make informed decisions in an automated way. This is the future for insurance companies embracing and utilising technology going forwards. What BlockClaim wants to do is to help insurers settle claims in 24 hours. Now on average in the UK it is reported that it takes around 25 days for insurers to settle claims. If this company can successfully meet its aim then this could be a truly 'disruptive' business in the industry.

For those of you who are not familiar with BlockClaim then it started at Imperial College around two years ago out of a 'Proof of Concept' POC that was about Blockchain telematics and insurance. The company then began working with motor insurance and I believe it has moved into health claims. Insurance is a huge market not just in the UK but worldwide. 

Disclaimer: I hold an equity stake in a start up business called 'Wrisk' which operates in a similar area. 

To be continued...(Part 5 - Coming Soon) 

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If one was unsure about investing in specific funds and trusts then they could consider constructing an ETF portfolio based on these technology themes. The potential is there for higher returns on specialist funds and trusts due to stock picking and capital allocation strategies. However, an ETF, will be a lower cost option but not necessarily a better performing one.

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