BYRON LOTTER: New decade will be the same same, but different
Although mainstream media will try to tell you otherwise, 2010 to 2020 was the most prosperous decade in our history
What will the roaring twenties of the 2000s look like? Based on the achievements of the previous decade, there are certainly high hopes. Although mainstream media will try to tell you otherwise, 2010 to 2020 was the most prosperous decade in our history. And so it should have been: humans as a species instinctively seek progress.
Big Tech dominated a decade of stellar market returns — in fact, the Financial Times calls it "the decade of the Fangs" (Facebook, Amazon, Netflix and Google) — and I believe these companies will continue to do so in the next 10 years.
Through innovation and scale, they’ve amassed unprecedented amounts of cash: Microsoft has $137bn on hand, Alphabet has $121bn, Apple $100bn, Facebook $52bn and Amazon $44bn.
That’s more buying power than most countries. In my opinion, this is a good thing because it allows these companies to take risks many others can’t afford to. These firms will strive to fix humanity’s problems, with very little financial limitation.
I would not be surprised to see Big Tech branch out into health care aggressively in the next few years.
More specifically, preventative health care, like wearables that can detect and treat heart attacks and diabetes, as an example. In fact, I expect massive progress in the health-care sector over the next decade.
Healthy living is an uncompromisable priority for anyone who can afford it. As middle classes grow, the demand for quality health care will attract more money into the sector, pulling in large resources for innovation.
Health care is a highly regulated sector — and so it should be — but that does slow progress, which is why preventative health care is likely to be a huge theme. Expect to see a lot of progress in genetic sequencing, rewards and incentives for healthy living.
I would not be surprised to see Big Tech branch out into health care aggressively in the next few years
It’s been 12 years since the 2008 financial crisis, and developed markets have learnt a lot. That’s seen increased regulation of financial institutions, and very accommodative central banks.
I think that theme will continue, with historically low interest rates for decades to come. Technology has made us more efficient, which has resulted in cheaper goods from commodities to TVs, keeping inflation low, and I have no reason to believe the trend will change.
Longer bull runs
With low interest rates and friendly central banks, business cycles will be longer and steadier. Bull runs could span decades without large recessions or the financial collapses we have experienced in the past. That does not mean there won’t be short-term turmoil: nasty shocks will always occur, but in general we will have the experience and the means to deal with them.
The "rent" economy will become more prolific. Uber and Airbnb are just scratching the surface of how we can be more efficient with what we already have. We’ll also have more time on our hands. Four-day work weeks and remote working will become the norm and not the exception, giving humans more time for leisure. Experiences will be valued more than materials. Travel will thrive and so will online streaming, gaming and networking.
I have mostly spoken about trends in developed nodes. What will happen in the developing world? I think political misbehaviour will still be a common theme throughout the decade, but I also believe we will see good progress. The big advantage developing markets have is a lack of old legacy technologies. So instead of building fossil fuel power stations, energy sources can go straight to renewables.
The same applies to wireless internet, branchless banks and shopless retail. These new technologies are cheaper and far more efficient than the old ones. Smart investment here can help kick-start many struggling economies.
And because of low interest rates, there’ll be plenty of money looking for opportunities in developing markets. Access to funding will be easier than ever before — especially from an increasingly influential China.
I expect to see big moves from its multinational powerhouses, like Tencent and Alibaba. These businesses will entrench themselves more into the Western world with a net positive impact. They go about things slightly differently to Western companies, and this will give them an advantage.
I wouldn’t be surprised to see them pushing harder into untapped markets in Africa and the rest of Asia.
Watch out for India too: it will become the next big growth driver of the global economy this decade.
Progress happens slowly and sometimes goes unnoticed, while disasters are quick, loud and sell headlines.
The next decade will be the same: we’ll progress faster than ever, while probably complaining that things are getting worse.
But that is how we stay motivated.
• Lotter is a portfolio manager at Vestact