FNArena’s Weekly Insights – June 17 2024
GenAi, The Super-Megatrend, Part One
“In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists.”
[Reid Hoffman, co-founder of LinkedIn]
By Rudi Filapek-Vandyck, Editor
Every experienced investor knows it pays dividends to be sceptical when all around us are getting excited.
We only have to look back in history to find plenty of examples of temporary share market excitements that had investors scrambling to get on board, only to find themselves on top of a sinking barge not long after. Remember 3-D printing? BNPL? Cannabis?
The commodities sector offers multiple examples just about every single year; from rare earths, to nickel, graphite, lithium, and coal companies… the swing from Zero to Hero to Zero status is usually swift and brutal, and it won’t be any different in the future.
None of these experiences negate the fact today’s world is changing on a regular basis and some of the changes occurring leave a significant imprint on businesses and society at large.
For investors, the importance comes through separating Winners from Losers, as the distinction will ultimately become irrefutable, either inside the investment portfolio or on the ASX, for all to see.
For some, investing will always revolve around picking up the pieces after disaster strikes. The share market has a habit of pushing excitement too far ahead of fundamentals, and disappointment too low into the abyss. So, there’s always a fresh investment case assuming things don’t get a lot worse.
For others, long-term investing is about tapping into growth, and enjoying the rewards of a multi-year uptrend. These investors know success is closely linked with ‘growth’. Growth pulls oxygen into the business and its share price. Without growth there are no long-lasting, sustainable rewards.
Over the past decade, investors looking for growth in the share market have gradually converged around the theme of Megatrends; societal changes that play out over extended periods of a decade or longer, creating Winners and Losers throughout the process.
For investors in growth, the importance seems obvious: better to own the Winners.
This doesn’t mean others can afford the luxury of ignoring what is happening at the macro-level.
