The future is full of unknowns and problems to be solved—and full of investing opportunities as a result.
Last week, as I tore through Charlie Jane Anders’ excellent novel, All the Birds in the Sky, a question occurred to me: Star Trek aside, has any major work of fiction (sci-fi or otherwise) during the last 70 or so years conceived of a bright future? Dystopian novels and films abound from Brave New World to Blade Runner, not to mention The Hunger Games, 1984, Soylent Green, Ready Player One and many others. For all its cheerful energy, the new incarnation of Doctor Who has dwelled on nightmare future scenarios for Earth. Even Star Trek required humanity to survive World War III and a nuclear holocaust to achieve Gene Roddenberry’s utopic vision. Real-life think pieces are scarcely more optimistic. Last week, a New York Times piece warned engineers don’t have adequate data to ensure San Francisco’s skyscrapers will withstand the next big earthquake. Another lamented how the potentially toxic unknowns surrounding the proliferation of big data could upend real progress. Talking these over with my colleague Todd Bliman, he observed that human progress has always involved venturing into the unknown and solving big problems along the way—that we never have perfect knowledge of the world around us—so why should investors worry it will be different this time? Being a dutiful Trekker, I drew the thread all the way to the 24th century.
Unknowns are scary—in life and investing alike—and they abound today. It is probably true that without real-life evidence, we have no way to know how skyscrapers built on downtown San Francisco’s shaky, silty ground will withstand the big one. Seismic models say they will be fine—otherwise the towers wouldn’t be built—but models don’t always work in the real world. Cataloguing the buildings that could be vulnerable in the next temblor is a good first step, but success will depend on retrofitting. And even then we don’t entirely know it will work. The Cypress Structure memorial on Mandela Parkway in Oakland, which honors the collapsed freeway’s victims in the very place they lost their lives during 1989’s earthquake, is a testament to that.
You can take all of this one of two ways: the pessimistic way, fearing the entire city will be leveled at some indeterminate point, and relocate to a harmless tent—who cares if it collapses?—in the open prairie. Or the optimistic way, seeing it as another opportunity for humans to solve problems and create some cool things (and investing opportunities) in the process. One of the great ironies about stock investing is that it drives so much fear and pessimism—people worry endlessly about whatever scare stories are on TV or in headlines—yet it is truly an optimist’s game. To own stocks is not only to believe in a bright future where companies grow and profit, allowing your shares—your ownership in their future earnings—to appreciate, but also to believe society will continue overcoming whatever challenges we encounter. So I choose to see San Francisco’s earthquake unknowns as an opportunity. Think of all the innovation it could spur in the structural engineering world! That could have far-reaching applications, fueling startups and existing companies alike. Pretty cool, huh.
The same goes for big data, in my view. As the Times notes, there is something of a creep-factor there. Even before the Cambridge Analytica bugaboo, people were convinced Facebook was listening to them. The superb podcast Reply All ran an episode last year called “Is Facebook Spying on You?” in which the hosts tried and failed miserably to convince listeners Facebook was not eavesdropping on their conversations through their smartphone’s mic in order to target ads at them. Even with plausible explanations for all coincidences of conversation and ensuing ad placement, people couldn’t buy in. The creep-factor is real. Combine that with Cold War-style alarmism over Russian interference, which mostly seems like evidence The Americans has permeated the national consciousness, and of course there is a broad desire to deem big data “Evil” and worthy of a regulatory clampdown.
Yet, as the Times also explores, that would probably be throwing the baby out with the bathwater. Yes, big data has all manner of nefarious potential uses, including mass manipulation, virtual redlining and price discrimination. But what about all the problems it could solve? Self-driving cars’ problems have been well-documented in recent months, but when and if the kinks are ironed out, they could reduce auto accidents and render DUIs antiquated relics. Big data is key to that—so in that way, it could save lives. It could also improve medical research, public safety and so much of what influences our quality of life. More opportunities! I personally dislike social media and the divisions it creates, and the only reason I haven’t deleted my Facebook profile is that I can’t remember my password. But that is my bias, and it doesn’t mean big data has no place in the world. This is your second investing lesson: Separate the personal from the big picture.
Similar optimistic logic applies to so many other realms. Poverty in the developing world? Ethiopia, once marred by famine and strife, now has one of the world’s fastest-growing economies. Disease? As a Wall Street Journal op-ed reported this week, malaria deaths fell 60% between 2000 and 2015. Fatalities are also down across other major diseases, from cancer to AIDS. Clearly the world isn’t problem-free, but aren’t these remaining problems just opportunities for human creativity and progress to thrive? Look at how major American cities cleaned up pollution in the late-20th century—no reason the same can’t happen in China and elsewhere in Emerging Markets. Dirty coal has given way to cleaner-burning natural gas. Yes, that still involves smokestacks, but that just creates room for emission-free power sources to gain more market share as they become more economical—and in turn, that creates opportunities for smart people to figure out clean ways to deal with toxic waste stemming from solar panels and lithium-ion batteries.
Which brings me back to Star Trek. People aware of his tendencies like to think of Roddenberry as some sort of hippie communist since money was obsolete by the time James Tiberius Kirk took the captain’s chair on the USS Enterprise, NCC-1701. But that is the wrong conclusion to draw. As the saga eventually made clear, the reason they abolished money by the 23rd century was because, thanks to continued technological development, humans had ended scarcity. No scarcity, no need for money! Simple! Instead of working to earn, people pursued their own self-interest. Not in the greedy sense, but in the “do what you love” sense. As Jean-Luc Picard repeatedly explained in Star Trek: The Next Generation, people worked to better themselves. They sought the thrill of knowledge, the wonder of exploration, the joy of art, even the therapeutic toil of viticulture. They traded among themselves. Earth, in turn, traded with other worlds. When you get right down to it, it is pure Adam Smith.
In a way, even if we never achieve warp drive that enables a trek through the stars, the Star Trek vision is really the logical long-term outcome of humanity’s problems. Maybe we don’t fix scarcity with food replicators. Maybe advanced farming does it instead. But a society where technology has solved humanity’s major problems, bringing the end of poverty and amazing quality of life for all? As long as freedom and capitalism last, that future is in play, and we all get to live during the long march toward it. Along the way, we get to invest in and reap rewards from the companies and entrepreneurs who drive that progress. Perhaps you’ll start your own business and become wealthy while bettering society in the process.
So in the words of Bobby McFerrin, when you read about great unknowns threatening society, don’t worry—be happy. Remember society has always overcome stuff like this, generating big rewards for risk-takers along the way.
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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.