In the midst of all the market chaos, I’m busy doing one thing: looking for generational investment opportunities.
Why? Because history shows that the best time to invest in emerging tech megatrends is when markets are crashing. This is exactly what they are doing in 2022!
The best time to invest in IT stocks? After the flash crash of 1987. This left promising computer stocks like Microsoft (MSFT) trading at less than 20 cents per share (adjusted for the split).
The best time to invest in internet stocks? After the dot-com crash of 2000. This left promising internet stocks like Amazon (AMZN) trading at around 30 cents (adjusted spreads).
Smartphone stocks? After the 2008 financial crisis. This left smartphone stocks as Apple (AAPL) trading below $3 (adjusted for allocation).
Stocks of electric vehicles? After 2020 Covid-19. That left stocks of electric vehicles like You’re here (TSLA) trading for around $25 (adjusted spreads).
You get the point. The pattern is quite clear. Every time the market crashes, emerging tech stocks trade at massive discounts. Investors who buy these sell-off stocks end up making a fortune over the next three, five, and over 10 years.
So… which emerging tech stocks are the best buys during the 2022 market rout? I would like to plead the case automation stocks.
The urgent need for automation
I sincerely believe that automation technologies will represent one of the biggest technological paradigm shifts of our lifetime. Also, I think this change will happen mostly in the 2020s.
Over the next decade, we will move from a world run by humans to a world run by robots. And as a result, our global economy will be changed forever.
This megatrend – like many before it – will be driven by a convergence of global automation technology needs and the ability of engineers to build high-performance versions of it.
Let’s talk about the “need” part first.
In short, the world must regulate inflation. And Pervasive adoption of automation technologies is the only way to permanently suppress inflation.
The problem of inflation has two parts. The demand for goods and services is too high and their supply is too low.
The Fed can solve the first part. Rise in interest rates. Stifle consumer spending. Remove economic demand – quite easy.
But rate hikes don’t solve the supply side of the inflation problem. The only way to solve this problem is for companies to find a way to make more products and services. But to make more products and services in a human-centric world, you need more people. This means businesses need to hire more workers, which means more wages, consumer income, expenses, and economic demand.
In other words, the current “solution” to fixing the supply side of the inflation equation will exacerbate the demand dilemma. And therefore, it will not permanently solve the inflation situation.
We need a different solution – not a human-centric, inflationary solution. We need a disinflationary solution focused on automation.
Automation against inflation
Let’s play the same scenario as above, but in a world focused on automation.
A company must produce more products. It deploys a series of automation technologies – both software and hardware – to make it.
These technologies have significant initial setup costs, but very low ongoing costs thereafter. Net impact on annual operating expenses? Tiny.
Yet these technologies don’t sleep, clock in, or take vacations. They are always working to make more products. Net impact on production? Huge boost.
The overall result – the firm can produce many more products at a slightly higher marginal cost. Supply increases without producing more economic demand.
Automation is the panacea to our current inflation problem.
Businesses are starting to realize this. That’s why they start turning to automation technologies in 2022. And so the multi-trillion dollar automation economy emerges.
These technologies have arrived
Automation technologies have advanced rapidly over the past few years. They are now at a point where they are able to create significant value in the real world – and at the perfect time too!
For instance, walmart (WMT) is automating all of its warehouses with an end-to-end robotic system. It will unpack, sort, store and repack incoming and outgoing packages with a combination of robotic arms and mini self-driving vehicles.
This is after Amazon has already automated all of its warehouses with its own robotic system. And in fact, the company also just acquired both iRobot (robotic vacuum cleaner) and Cloostermans (warehouse robotics company). That was just months after the unveiling of its very first home robot.
Clearly, Amazon is taking a big leap towards home robotics — the deployment of robots to automate household tasks like lawn mowing, pool cleaning, and more.
In the restaurant world, fast food chains like Chipotle (GCM), wing areaand white castle use robots to make food. Other strings like Chilli’s use robots to serve tables. The takeover of automation in the restaurant world is here!
And it has also arrived in retail. Robots and autonomous vehicles are used to stock shelves, clean store aisles and deliver food orders for chains like Dominos Pizza (DPZ).
The automation revolution has also affected the world of media and entertainment. Have you seen those ads that say “this ad was probably written by a robot”? What about those drawings created by Dall-E, the AI that generates images from queries? Have you heard of Jasper, the AI typewriter?
This is just the tip of the iceberg. Experts predict that by 2026, 90% of all online content will be produced by AI.
Alas, I remain my case. The world doesn’t just need automation technologies today. It also has automation technologies that it can easily deploy. It’s a powerful combination.
The last word
Every stock market crash is an opportunity to buy the “next big thing” on the cheap while everyone worries about short-term issues that will pass. (Indeed, they still do).
In the 1980s, that “next big thing” was the computer. In the 1990s, it was the Internet. Then in the 2000s, it was the smartphone. And in the 2010s, it was electric vehicles.
Now, in the 2020s, it’s automating.
Today is the time to bet big on automation actions. They are very cheap…negotiating for just a few dollars. Take advantage of them before they absolutely take off in the next decade, and robots and software devour the world.
Check out one of my favorite AI stocks to buy now with $500. It is a cloud-based AI lending platform that tries to revolutionize the entire credit world by replacing the human-driven manual process with an AI-driven automated process.
As of the date of publication, Luke Lango had (neither directly nor indirectly) any position in the securities mentioned in this article.