Elon Musk, CEO of Tesla Inc. (and of a half dozen other companies) made headlines this week with a prediction that the company will soon be worth as much as Apple. For those not familiar, Apple is the world’s most valuable corporation at roughly $750 billion (yes that’s with a ‘b’). And given the reality that Apple was considered on life support just fifteen years ago, it’s not at all outside of the realm of possibility that it could hit a trillion by 2020.
If we take a closer look under the hood of Musk’s statement, we can easily see the mechanics of why both of these predictions could become inevitable. In my previous reports I’ve projected that the Dow may likely blow past 20,000 and onto 30,000 by the end of the decade. And Musk’s comments reveal a few of the reasons why.
By any measure the so-called Information Revolution fundamentally changed the world in ways the Agricultural and Industrial Revolutions centuries before never could. It didn’t simply change the way we did things making them more efficient. It changed the speed, mode and manner of communication, and it did so on a global scale.
But all of that will be paled in comparison to the coming revolution, whatever we’ll end up calling it. This revolution will make the Information Revolution look like the Industrial Revolution before it in terms of the sheer number and breadth of things that will change. This revolution won’t simply change the way we do things; it will change the way we think and live.
Case in point is Musk’s explanation of what drives Tesla’s revolutionary auto manufacturing process. At first glance, Tesla is merely at the tip of the spear in terms of the green revolution by leading all other automakers in the successful building and marketing of fully electric cars (not to be confused with ‘hybrids’ which still partially run on gasoline).
But lying deep inside Tesla’s operations is a much more profound revolution. This operation does not simply rely on robots that build finely-tuned cars with precision beyond the capability of the human hand. This army of robots also requires sophisticated software that rivals the U.S. Defense Department, all of which is proprietary.
Now let’s move down the road a bit to any one of the top-tier software companies in Silicon Valley and ask them what’s next on the cutting edge of software development. What they’ll tell you is that in ten years, programmers won’t be writing software any longer. Artificial intelligence will be writing our software for us.
To put a finer point on it, imagine this: you work in a professional environment a decade from now and you need to create a new process to help you do your job. Today you’d open up some Microsoft Office application like Excel and start pecking away, itemizing a list of things to be done and so forth. But in ten years you’ll speak to your computer and tell it what you need to accomplish and how often you need it. The computer will build custom software specific to your request and then will ask you questions based on how you want it customized. So in a sense, everyone will be a computer programmer because virtually nothing in the developed world will be done without the aid of artificial intelligence.
If we let our minds run wild for just a minute or two, it’s easy to foresee how quickly and how profoundly our world will change. Now consider that the Internet wave gave way to some of largest economic booms (and busts) in our nation’s history. Imagine how big that boom will be when virtually everything we do changes and new companies are spawned to respond to the needs that are created by those changes.
And that’s just one of the many reasons I’ve been going out on a limb to predict the boom from 20,000 to 30,000. Entire economic sectors will explode or implode. And, as I’ve said before, rapid change yields lucrative investment opportunities. As this revolution unfolds, we’re going to see stocks and options become the surf boards on which investors ride huge waves. The key, however, will be in picking the right board.
Here’s a great example: Tesla stock is probably a safe bet, but betting on an auto-manufacturing ETF for example, would almost surely not be. Why? Because as transportation fundamentally changes with the growth of self-driving cars, Uber and a dozen other innovations, there will be some big losers who don’t respond to the changes quickly enough. Some will relentlessly cling to the old way of doing things, rebelling against the inevitable change in hopes that they can persist the status quo. Fighting this particular current will prove fruitless though as the money to be made in embracing the change is much greater than persisting the “same old, same old.”
The buggy makers talked down the “horseless carriage.” The candle & lantern makers put down the incandescent bulb. Slower forms of transportation tried to beat down newer faster forms of transportation. Traditional ovens vs. microwave ovens. Radio vs. television. Wired phones vs. cell phones vs. smart phones. Tape vs. discs vs. solid state vs. cloud. All of the well-established status quo eventually falls to the newer, faster, cheaper and/or better. It is inevitable. It is fundamental to how we evolve as a people and planet. Even our economic system depends on regular disruption to create new opportunities, new industries & new jobs.
This particular wave will be a monster. It’s effects will be far-reaching… devastating for some industries and amazing for others. But fundamentally, it will be comparable in it’s broad impacts similar to the internet, computers, electricity, fire or the wheel. It will empower many people to be able to do incredible things, leveraging human imagination & ingenuity in new, exciting, far-reaching ways. When I think biggest picture, I believe this will be akin to pushing a collective innovation accelerator… like being handed advanced technology from 50-100 years from now.
An innovation revolution of our own making is coming on fast. Taking advantage of that revolution as investors will require a laser focus to ride the best waves. I already see the early catalysts for such waves. Some companies, sectors & industries are going to roar higher and others are going to be supplanted. Big money is going to be made by taking advantage of both bull & bear opportunities as this plays out. It won’t be very long at all until I’m proclaiming “surf’s up!” Come surf with me.
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