How to Get Rich From the Robot Revolution
Nebraska Senator Ben Sasse wrote a recent opinion piece in The Wall Street Journal, declaring that we are living through “the largest economic disruption in recorded history.”
He was referring to a topic I’ve written about here before: the robot revolution.
Millions of good-paying jobs are rapidly being eliminated, thanks to increasing automation.
Not just field laborers and factory workers. Machines are threatening financial advisors, bankers, accountants and other white-collar professionals, including doctors and lawyers.
To hear some folks describe it, this is the beginning of the end. Technology – particularly robotics and artificial intelligence – will destroy not just employment opportunities, but also the very fabric of society.
This is nonsense.
If you’re a person whose livelihood is threatened by machines, the economic dislocation and personal anguish can be intense and unpleasant.
- We could not stop this trend if we wanted to. And…
- We shouldn’t want to, anyway.
So seize the moment. Gushes of cash will spring from this sector. And there is a simple and easy way to capitalize on it.
Before we go there, however, let’s take a closer look at the history (and future) of technological disruption.
Just 150 years ago, 86% of Americans worked on farms, doing arduous (back-breaking) work, raising crops and husbanding animals, and battling weeds, pests, floods and droughts with nothing but the most basic tools.
Today, farm and ranch families comprise just 2% of the U.S. population. And these men and women don’t feed just us. In 2015, we exported $133.1 billion worth of agricultural products.
Developments in science and technology have freed up the other 98% of us to teach, heal, entertain and service billions of people around the world.
Technology raises our standard of living. Our homes and offices are filled with labor-saving devices. We communicate instantly, travel safely, work and play easily.
Technology gives us new drugs that alleviate pain and cure disease, lasers that fix our eyesight, and medical devices that help us walk or breathe. As a result, we live longer, healthier, richer lives.
Most of us now work with our brains instead of our hands, with the sum of human knowledge on our desktops or on small devices in our pockets.
No one gets to pick and choose where technology goes. It moves forward in unpredictable ways.
Yet look at the many benefits to society. We have many more products that last longer and cost less. That’s because technology reduces the cost of manufacturing, distributing, selling and servicing.
We are all beneficiaries of this trend, although we seldom take the time to recognize or appreciate it.
The downside, of course, is the creative destruction that is an inevitable part of the free-market system. When something new and better comes along, it upends the employees, managers and investors who based their lives on the old way of doing things.
(Many of these folks will have to change industries or retrain for our knowledge-based economy.)
As Garry Kasparov – the former world chess champion and first to be beaten by a machine – points out, “The transfer of labor from humans to our inventions is nothing less than the story of civilization… Waxing nostalgic about jobs lost to technology is little better than complaining that antibiotics put too many grave diggers out of work.”
In short, automation is revolutionary… and here to stay. As an investor, how do you capitalize on it?
One way is with ROBO Global Robotics & Automation ETF (Nasdaq: ROBO).
This $445 million exchange-traded fund tracks an index comprised of more than 80 stocks focused on the global robotics and automation industry in over 15 countries.
It holds companies both large and small, including well-known names like Autodesk (Nasdaq: ADSK), Cognex (Nasdaq: CGNX), FLIR Systems (Nasdaq: FLIR), Intuitive Surgical (Nasdaq: ISRG), Northrop Grumman (NYSE: NOC) and 3D Systems (NYSE: DDD).
This sector will be a driving force in world economic growth for many years to come. This is the real McCoy, a genuine megatrend.
Why? Because industrial robots are far cheaper and more efficient than human workers. Declining automation costs and technological advancements continually expand applications and improve productivity.
That means many industries around the globe – but especially manufacturers – face a stark choice: automate or fail.
According to Myria Research, the robotics and automation markets will grow from a current $64 billion to at least $1.2 trillion over the next 10 years.
And while you may have the scientific background and technical expertise to pick and choose among the various investment candidates, let’s face it – you probably don’t.
It would be a shame to get the big picture right and the security selection wrong.
That’s why a broadly diversified fund like ROBO Global Robotics is a fine first step.
And don’t feel the slightest bit of guilt.
We should celebrate scientific progress and the future of automation. After all, these technologies don’t just make our lives more comfortable and less costly.
They maximize what makes us human: our minds.
About Alexander Green
An expert on momentum investing, value investing and investing based on insider activity, Alex worked as an investment advisor, research analyst and portfolio manager on Wall Street for 16 years. He now runs the wildly successful Oxford Communiqué, ranked as one of the top investment newsletters by Hulbert Digest for more than a decade. He is also the author of four national best-sellers: The Gone Fishin’ Portfolio, The Secret of Shelter Island, Beyond Wealth and An Embarrassment of Riches. He shares his wisdom in his free daily e-letter, Liberty Through Wealth.