The Biggest Investment Trend of the Century

In 1913 Henry Ford had the ingenious idea to use the assembly line in his factory. Instead of a team working around the clock to build one car, workers only focused on a single aspect in the production process. This one change cut the time to produce a car from 12 hours to less than 2.5 hours.

Fast forward to 2016. Robots are taking the reins in the production process. These days Ford Motor Company [NYSE:F] produces 16 vehicles every 60 second in factories around the world.

And now automation is being put into the cars themselves.

You’ve probably heard of driverless cars. They’re no longer some science fiction concept of the distant future. We already have semi-driverless cars on our roads. Just like an airline pilot turning on autopilot, some cars allow drivers to do the same.

And within the next few years around 30 companies plan to bring autonomous vehicles to public roads, according to CB Insights. Google might be the biggest name among the bunch. But other names you might not have heard of are quickly gaining traction in the driverless car race. One company that you might not know is the Chinese search engine provider, Baidu Inc. [NASDAQ:BIDU].

Within the next five years, Baidu plans to bring electric driverless cars to the market. Baidu is already an industry titan in its own right. They’ve captured 80% of the internet-search market in China, and now they’ve set their sights on autonomous vehicles. They’re currently carrying out tests of their driverless technology with a fleet of BMW 3-Series GTs.

Tests started in December last year. Their driverless vehicles for public roads should launch in 2021.

But don’t think of these cars as mere driverless taxis. Autonomous cars have the potential to change the way we think about transport.

Instead of a car, imagine hopping into a futuristic looking pod. You say where you’d like to go and then sit back and relax. This has the obvious benefit of taking the hassle out of driving. But it could also act as a work station or relaxation pod on long trips, and greatly reduce deaths on the road.

Fully automated vehicles could also change the way we think about owning cars. Instead of paying for a brand new car, I expect self-driving cars to open up a vast new rental market. Just like you can order an Uber today, you’ll be able to drop a signal to be picked up from any location.

All transactions could be handled via your smartphone. And it could create a whole new investment wave as savvy investors buy into fleets of autonomous cars for the new rental market.

But what’s really exciting is that this change is not limited to vehicles.

The construction industry is also undergoing a labour saving revolution. Some construction jobs have essentially been performed the same way since the time of the Roman Empire. But these professions, like others, are not immune to automation.

Companies across the globe are experimenting with automated construction. Removing the human element has the possibility of radically reducing construction costs, while increasing speed and safety.

Private Swiss firm, Gramzio & Kohler, collaborated on a Flight Assembled Architecture project back in 2014. As part of the project, 50 flying robots were used to build a structurally stable six-foot tower. Drones moved at speeds of 370 feet per second while building the tower out of 1,500 Styrofoam blocks, showing how much faster automated construction can be.

Gramzio & Kohler also helped create R-O-B Technologies, which developed an enormous robotic arm to perform tasks like autonomous bricklaying.

Automation is even making its way into banks. While friendly faces will likely still greet you in branches, the back offices are experiencing major overhauls. Last year ANZ Banking Group [ASX:ANZ] led the way in adopting robot software systems.

These robots manage back office roles, ranging from payroll administration to helpdesk support. ANZ spent most of 2015 refining their well-developed program.

And research company, McKinsey & Co., believe more banks will start to heavily invest in this field of Robotic Process Automation (RPA).

Often, back offices have thousands of people processing customer requests. This high degree of manual processing is costly and slow, and it can lead to inconsistent results and a high error rate. IT offers solutions that can rescue these back-office procedures from needless expense and errors,’ a McKinsey & Co. article states.

Our research indicates that a significant opportunity exists to increase the levels of automation in back offices. By reworking their IT architecture, banks can have much smaller operational units run value-adding tasks, including complex processes, such as deal origination, and activities that require human intervention, such as financial reviews.

Now you’re probably wondering, if all these jobs are being automated, what’s going to happen to unemployment?

This is a common concern. And it’s nothing new either. Going back to the industrial revolution, there were outcries when water and steam powered machines took over many industrial jobs.

Yet in the past technology has always ended up creating more jobs than it destroys. This is because of the way automation works in practice. Economist, David Autor, explains, ‘automating a particular task increases the demand for human workers to do the other tasks around it that have not been automated.

A perfect example of this is in the weaving industry. During the Industrial Revolution more and more tasks in the weaving process became automated. Yet this prompted workers to focus on other non-automated tasks, such as operating the machines.

The same is true in 2016. With automation only set to keep growing, we need to focus on the non-automated tasks. And this has given rise to the ‘automation paradox’. The idea says that the more efficient the automated system, the more crucial human contribution becomes.

For example, if an automated system has an error, it will multiply that error until it’s fixed or shuts down. So while humans might be less involved in the process, their involvement becomes more crucial.

The age of automation is sweeping across almost every industry. And it’s not happening in the next decade either. It’s right here, right now. This offers huge potential for investors — provided, of course, they jump into the right stocks.

And really that is the hardest part of investing in automation. Many investors don’t know where to look.

That’s where Port Phillip Publishing’s technology guru, Sam Volkering, comes in. Sam lives and breathes emerging technologies.

A few months ago I was asked to assist Sam with his advisory service, Revolutionary Tech Investor. And in those few months I’ve learned more about which upcoming tech stocks to invest in — and, importantly, which ones to avoid — than I ever thought possible.

Sam has already recommended multiple stocks that stand to profit from the rise of automation. Just this year some of his top automation related stocks have climbed up 5%, 27.3% and 55.97%. Of course, not all his tips have been winners. The worst performing automation stock is down 7.5%. But compare those numbers. The best performing automation stocks are covering the loss makers many times over.

And Sam’s not done yet. After all this is ‘the biggest investment trend of the century’. Some companies won’t survive the coming changes. Others will thrive.

If you want to make the most from huge potential in automation, you can check out Sam’s service here.


Härje Ronngard,
Junior Analyst, Australian Small-Cap Investigator

From the Port Phillip Publishing Library

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