technological progress

Self-Driving Skeptics

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We’ve been studying the evolution of the automobile for several years. One of the major trends is toward autonomous vehicles, or self-driving cars. While the future is unknowable, some interesting observations can be made.

Folks around beautiful downtown Louisville, out in the heartland, tend to have a tough time picturing the use of self-driving vehicles. Meanwhile, residents of Boston or Los Angeles seem to have a different take.

Autopilot for navigating a few minutes in Nebraska between Louisville and Weeping Water, or Cedar Creek and Plattsmouth, especially if gravel roads are involved, is not exactly a big deal. Not much time is involved, and the complexity of the driving may be beyond self-driving capabilities for many years.

But if you spend an hour commuting on I-93 in Boston or on the 405 in metro LA, being able to go hands-free from onramp to offramp is a game-changer. This kind of capability is available now in certain Tesla models, and we’ve been able to speak with people who have experienced it.

One basically may recover an hour or more for replying to correspondence, making calls, texting, reading, or working on documents. To be able to do this during a commute instead of during the first hour in the office or at home in the evening enhances work and life.

Small town friends who get to the big city and have a chance to drive in hands-free mode admit that it is disconcerting at first when you remove hands and feet from the controls. But within a short time they begin to feel that the car is a safe driver.

Other automakers may be close to introducing similar systems. We won’t pretend to know what the pace of adoption will be, nor the growth in capabilities over the years ahead. But it is clear that self-driving technology has changed the way some people live and work already.

Clients, if you would like to talk about this or anything else, please email us or call.

Pioneer Mortality and The Osborne 1

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In April 1981, Adam Oborne debuted the very first portable computer. His company was the fastest growing in Silicon Valley. You can see how popular the idea of portable computing got by visiting any coffee shop any day of the week. Laptops, tablets and smart phones are all descendants of the Osborne 1.

Yet Osborne Computer declared bankruptcy thirty months later, and disappeared completely by 1986. This is fairly common in the history of commerce, the story of the pioneer that did not survive.

Portable computing as a concept was separate and distinct from its first manifestation, the Osborne 1 computer. This is a key to understanding subsequent manias based on pioneering technologies or concepts.

We humans are a creative, inventive species. There always seems to be an exciting concept or something new that will really change things. Steamships, railroads, petroleum, airplanes, automobiles, telephones, radio, television, cell phones…something new is always on the horizon. These things have created new ways of doing things and reshaped our lives and society.

But with each of these revolutionary ideas, there was a difference between the successful path of the idea, and what happened to the first manifestations or demonstrations of that idea.

The Osborne 1 computer was a twenty-four pound beast with no battery, a three inch screen, and now-laughable technical specifications. The concept of portable computing was worthwhile, revolutionary, and eventually changed the way we live and work. But the first manifestation did not even turn out to be sustainable or successful.

Just as the key uses of the internet took time to emerge and evolve, the most important uses of any new idea probably do not exist yet. In the internet boom of the late 1990’s and early 2000, some investors made the mistake of confusing the powerful concept with its initial manifestations. It did not end well for them.

There are powerful ideas circulating today based on revolutionary concepts. They may eventually reshape our lives, institutions, and society. When you come across one of these intriguing situations, please remember the lesson of the Osborne 1. Clients, if you would like to discuss this or anything else in more detail, please email us or call.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

 

Progress Beyond Our Dreams

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In the spring of 1902, Brooklyn printers by the name of Sackett & Wilhelms had a problem. It is doubtful whether anyone realized the vast ramifications the solution would bring.

When the humidity changed, the printers found that the paper expanded and contracted, causing their four color printing process to come out misaligned. Wasted days, wasted paper–it was a pretty big problem. Fortunately, a young engineer at the Buffalo Forge had an idea.

The engineer drew plans for a device to control the humidity of the print shop, and the crew from Buffalo Forge installed it. It was the first of its kind. By the end of the summer, the device had been a success.

It took four years for someone else to come up with the name “air conditioning.” Systems spread to other commercial enterprises, and eventually to other businesses, homes, and even to automobiles. As we approach the summer months here in the 21st century, it is hard to imagine life without air conditioning!

The engineer, who was just a year out of college when he drew the plans, later founded and ran his own company. You might have heard of Willis Carrier’s air conditioning company.

Every day, somewhere people are working on solutions to problems the cost us money, time, health, or some other resource. Others are working on things that may improve our lives, or entertain us, or provide some other advantage. Our everyday lives contain scores of things that did not even exist twenty or forty years ago.

For most of history, this is not how things worked. Life was nasty, brutish, and short. Generations came and went, but little changed. Then modernity unleashed human creativity and potential like never before.

This may be the key factor behind the seemingly perpetual upward tendency of the equity markets, all the way back to their origins.

We have mentioned this before, but it bears repeating: stock markets are volatile. They go up and down. There are no guarantees. But they may represent a way to invest in human potential. Clients, please call or write if you would like to talk about this.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Investing in the Path of Progress

© Can Stock Photo / irynarasko

The economic history of the past 2,000 years begins with little change for many centuries. Then, in the 17th century, things began to change—a lot.

Energy progressed from waterwheels and windmills to steam engines, electrification, and the fossil fuel economy. Each revolution brought lower prices, wider adoption, and increases in human productivity, incomes and wealth.

Energy powered the factory system, in which standardized parts enabled output to skyrocket compared to the age of one-at-a-time production by artisans making custom articles. One may have romantic notions about the age of the artisan, but far more people could afford shoes when they came out of a factory.

And that was just the beginning of the modern world, with its incredible increase in living standards and lifespans.

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Country by country, the pattern is rising urbanization and the decline of subsistence agriculture as economies modernize. It happened first in Europe and America. China is well along this path. The effect on incomes and economic growth is nothing short of astonishing, as you can see on the chart.

As investors, we see what may be a compelling opportunity from two current trends coming together. The next energy revolution, built on solar technology and battery storage, will enable vast parts of the developing world to modernize more quickly. Just as some places skipped the copper-wire age of telephones and built cell towers, in the years ahead some areas will skip the age of fossil fuels for electricity as solar power gains the economies of scale.

The most populous democracy in the world, India, is at an early stage of the trend to urbanization and modernity. Two thirds of the people live in rural areas; many are still engaged in subsistence farming. With a culture that values literacy and education, India is poised for growth and progress. Some believe that India is where China was twenty or thirty years ago—before decades of rapid economic growth. Add the next energy revolution to the mix, and you can see that exciting times may lie ahead.

The economy of India already includes some global companies, and many more publicly owned companies producing goods for the local market and nearby neighbors. By our standards, it is investable: money can be effectively invested with a reasonable expectation of gains. The India exposures we are putting in place are traded on the New York Stock Exchange, and priced in US dollars.

Of course, the future is uncertain, and there are no guarantees. As with all long-term investments, prices may be volatile. Clients, if you would like to discuss how a small India allocation might affect your portfolio, please call us or send email.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Investing involves risk, including possible loss of principal.