How 5G and automated vehicles may shape investing trends in 2019
Jan 08, 2019 11:14AM
By Kathleen Maris
By Jeff Herman
Do you ever feel like the world is moving too fast? It’s not your imagination: smartphones, Facebook, Uber, and Amazon or any kind of delivery service are all designed and created to make our lives more convenient. With all this innovation comes the constant need to adapt; will this need for adaptation slow or continue the current pace?
If the past 10 years are any indication, our world may actually speed up, meaning the rate of change may increase. Let’s look at a couple of macro events and how we may be able to profit from them. Specifically, where can we look for opportunities in 2019 both globally and locally?
5G: Short for fifth generation, 5G will be coming to your neighborhood in the near future. If you have not heard of this, you soon will, as we are about to get a major upgrade in our mobile technology.
This technology, which is currently being tested in a few cities, will start to roll out in late 2019, with full implementation by 2025. In short, 5G will provide much higher download speeds for almost anything connected to the internet.
How much faster? It’s being reported we will have roughly 20 times faster download speed than what is currently available. This will impact your life in multiple ways: think connected homes and how all home appliances will be controlled through your phone and work together seamlessly; downloading a movie in seconds; sending or accessing information in a stadium, concert, or even downtown festival. Everything we utilize will move faster. Instead of a smartphone, think smart life.
Some potential ways to profit from this rollout include blue chip telecom stocks, such as Verizon or AT&T. Other options include stocks of cell towers, such as American Tower Corporation or Crown Castle International. Of course, all this enhanced technology will require us to constantly upgrade our cell phones; think Apple and Samsung.
This technology will also allow additional industries to flourish: augmented reality, virtual reality, and artificial intelligence to name a few, but that’s for another article.
Automated vehicles: This technology has been talked about for years, but we are closer than ever. In fact, driverless vehicles are being tested in several markets nationwide. It's no secret that a lot of money is being put into developing systems capable of safely operating vehicles on public roads, with no human intervention required.
Self-driving vehicles have the potential to transform how humans and goods get moved from place to place. For example, instead of driving your car to work and having it sit there all day, what if you loaned it out to Uber? Your car could then be used to transport people or food (Uber Eats) throughout the day, then return at a designated time to take you home. What would we do with all the parking decks? Your children need a safe ride home? Send the car and have your Ring doorbell or security system notify you when they arrive.
If autonomous vehicles become the norm, our thinking around transportation and private car ownership could change dramatically. While investing in the companies building such vehicles is one thing, it might be a better long-term investment to look at stocks and companies that are building around the industry. Think of the California Gold Rush. What was the better long-term investment? The companies doing the mining or the suppliers such as Levi’s jeans?
Possible investments include the brains of the cars, such as the chips imbedded in the vehicle that allow it to “talk” with other cars or locations. Nvidia or Texas Instruments are just two of the many that are options for investors.
However you choose to invest, the main point to remember is that there is no one magic plan for investors. Your portfolio and your needs differ from the person down the block or across the country. Knowing your goals and risk tolerance for the market will ultimately drive your investment choices for 2019.