Computers and super-smart software are now preparing to take over many jobs handled by humans. Does this mean human workers are out of luck? NO, not by a long shot. It is estimated by the World Economic Forum (WEF) that 133 million new jobs or roles will be created by 2022 due to artificial intelligence applications– jobs that as of now do not exist. Further, automation and robotics will eliminate 75 million jobs as well. So, on balance 58 million net new jobs should be created globally by this innovation. What does this mean to companies? Adapt or die. Those that invest in new technologies will reap the rewards of lower costs. Those that do not may lose market share and may end up being a casualty of innovation.
The pace of digital innovation will accelerate in the coming months as computers now are entering the era of Deep Learning. Deep Learning is the process of computers taking data and learning how to make decisions and improve outcomes. It is an artificial intelligence function that imitates the workings of the human brain in processing data and creating patterns for use in decision making. Deep Learning (also known as deep neural learning or deep neural network) is a subset of machine learning in artificial intelligence (AI) that has networks capable of learning autonomously from data that is unstructured or unlabeled. It has been estimated by Ark Investment Management that in the 20-year period from 2018-2038 markets could add wealth of more than $30 trillion due to the application of this new technology. To put this in perspective, the Internet and computers added about $10 trillion over the period form 1998 – 2018. This would, in effect, be three times more than the wealth created by the introduction of the Internet and computers. Can we be certain of this forecast? Of course not, these are just rough estimates. However, in the last 35 years I have seen the creation of whole new sectors of our economy through these new computer and Internet capabilities. I fully expect this pace of innovation will accelerate in the coming 20 years.
As investors we will be open to investing in new sectors of our economy. Here are just a few that we enthuse about: Robotics, Energy Storage, Artificial Intelligence, Genome Sequencing and Blockchain Technology. Just as these new sectors create new opportunities for growth there are large segments of our economy that will be challenged by these new technologies and will in fact destroy value. It will be equally important to avoid these value‑destroying sectors. A good example is the decline of Blockbuster Video Rental Chain and the rise of Netflix, all made possible by the power of the distributed network of the Internet. The swift elimination of a whole business and the creation of a whole new business in just a few years, this is what innovation on steroids (Deep Learning) will do to many sectors of our economy.
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