21 -001 About the Digital Investor
The Digital Investor is about everything to do with Digital Investments. It will cover some of the investments you should be making in the digital economy where it is wall to wall digital. There will be a focus upon these particular exclusively digital sectors moving up through a hierarchy from digital products to digital delivery mechanisms. We will then extended out to the unusually but very relevantly named atom based sectors. These atom sectors include hardware, which is always required to support digital software, which is made of atoms distinguishing them from the pure digital sectors which are not made of atoms. But if you are scientifically pedantic, which the Digital Investor is, digital is made of atoms as well although you cannot handle them. But don’t go there just think by atoms we mean the hold in your hand physical things. (eg smartphones) .So the atom sectors trade in real things. Whilst the digital sector depends up on abstract or virtual things. (eg social media app).
So one of the atom sectors is hardware being what supports
the digital software (eg microprocessors). Another atom sector we will call digitally
integrated devices (eg vehicles). It is where digital capabilities are being
incorporated into atom devices that there is going to be huge growth potential.
The sector has been called the Internet of Things (IoT) since it is not only
the integration of a microprocessor into the atom device but the networking of
that device to the internet for data storage and artificial intelligence
capabilities. Think of the smart doorbell as a good example. But there are even
more significant trends in progress.
The Digital Investor will have a leaning towards nanotechnology
but significantly towards the biological nanotechnology sometimes called the
soft machines economy which will be next industrial revolution. The move
towards miniaturisation is endless with this whole subject sometimes called
nano-convergence. The new products created are definitely now on the move from
the scientific research laboratories to the production lines. New businesses
are going to grow on the back of this industrial shift. From the Digital
Investor’s perspective spotting these products early is going to be one of our critical
success factors.
The concept is if you want to make a fortune by investing you
have to have a focus on something and importantly be ahead of the investing community.
Ideally some years ahead of the investing market so you buy in at the right
price to see your investment multiply ten to a hundred fold. Look at the
current prices (2021) of stock in Google, Apple, Facebook, Amazon, Microsoft
and Tesla. If you had invested when these businesses started out you could be a
millionaire now or if you choose the wrong one’s lost your entire investment. So
by becoming an “insider” in a new technological sector you can make investments
at the right price. But these will be at high risk. Investments not for those
looking for stability and safety. Be prepared to loose what you invest. Treat
these investments like gambling similar to the purchase of lottery tickets.
But what we are looking to avoid is anything non digital. What
I mean is what is finally invoiced as product should be non digital. If that
makes sense. This is difficult since every business now incorporates a digital
element normally supporting the marketing, selling, manufacturing, production,
servicing and logistics activities of the business. In many cases these digital
processes are defining the business more than the actual business itself. Take
for example a skip hiring business. The invoiced service is non digital but the
support of this service is very digital. In fact success will be based upon how
effective the skip business is at providing the service to the customer and
these will require the use of digital products. Now because of the focus of
this Digital Investor you are never going to see the investment in a skip
company recommended. Nor a car hire company, bakery company or supermarket
these are outside the Digital Investor remit. Success in investments depends
upon what we will call having a laser focus on a particular market segment. But
because the investment process itself is digital it will be no surprise to
learn this is an important area covered by the Digital Investor.
Let us look briefly at the investment process. The consumer,
you and me, are going in future to make these investments directly. We may use
investment companies or fund management companies but increasingly we are
likely to make the investments directly with this direct investment based upon
trusted advisors. We are going to look to avoid anyone filtering off our
profits. We want to be paid all the gains. But unfortunately we are at the same
time going to directly experience all the losses. Be we are going to become the
risk takers. But we are going to ring fence our own funds so we know how much
we are putting at risk. Where we don’t want the risk exposure then this is
where investment companies and fund managers come into the equation. Or if
totally risk averse the fixed (or zero) interest players like the government,
banks and building societies. Or our own personal investments in objects, land
and property.
But remembering this blog is about being a digital investor
so at the same time the broader digital investment landscape will be analysed.
So the Digital Investor will at the same time look at the whole subject of
digital investment. In particular looking at direct “consumer to asset”
investing avoiding all the layers that exist between you as the investment
consumer and the final asset in which you are investing. The financial industry
tends to call having the public on their platforms as their retailer sector.
Whereas they group themselves as the financial institution sector. Although all
of these naming conventions are about to undergo radical change as consumer financial
investing will be developed along the strategies of gaming and gambling. The
smartphone has made financial services and financial investments appear
ubiquitous alongside booking a pizza delivery and watching a video.
This revolution that is taking place will cover both the old
and new underlying asset types. Along with things where no underlying asset
type exists. Essentially virtual digital assets. Some of these underlying
assets will be what I term non-trading assets. The old categories of precious
metals (eg gold) and the newer assets (eg cyptocurrencies) being examples of
these non-trading assets. The asset itself does not trade. Then we have the
numerous types of what I term trading assets. These are businesses in all their
various types. Then you have the official dealers in these assets. Stockbrokers
and Commodity Brokers and their types of business.
Moving up the hierarchy we have all the Fund Managers and
Hedge Fund Managers creating a variety financial concoctions that can be
purchased by other institutions, businesses and individual. Then specialised
funds like Pension Funds and Mortgage Providers. The more complex Off Shore
Funds focussed upon protecting assets by negotiating with and around tax
regimes.
Then we have all the methods of financing new ventures
ranging from the Stockbroker IPO’s to Crowd Funding to the Sovereign Funds to
Special Purpose Acquisition Companies (Spacs). Leading to all the Liquidation
providers lead by the main Accountancy Firms.
Finally we have the Banking Industry. Both the private,
commercial and merchant banks. Now undergoing a major revolution and looking to
find their own niches. Alongside this a new focus on the Wealth Management
providers often linked to the more exclusive specialist banks.
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