Investing in robotics
There are two ways to grow the economy and improve our living standards. Population growth and productivity growth. Demographics are going nowhere fast. Robotics are our biggest opportunity to improve our productivity.
This isn’t about R2-D2 from Star Wars or Data from Star Trek appearing in your kitchen to flip your pancakes. And it’s not about the machines taking over our world like in Terminator or The Matrix.
Robots are simple. They solve problems for you so you don’t have to. Appliances make your more efficient. But robots are automated, meaning you have to do little or nothing – they complete the task themselves.
Of course sometimes robots complete part of a task together with you. But the point of a robot is that they are autonomous in the sense that you don’t have to actively control them.
There’s a robot sweeping my living room floor while I write this, for example. It worked quite well until it vacuumed up Ziggy’s tail and discovered the meaning of “grabbing a cattle dog by the tail” the hard way.
I think the biggest way robots will change your life is at home. You won’t have to do as many monotonous everyday tasks, or those tasks will become dramatically easier. Appliances already did that for us over the last 100 years. In the next 100, robots will. In many cases your appliances will become robots.
But some people want more than just the everyday benefits. They want to invest in robotics to share in the profits of this technological revolution.
The easiest way to invest in robotics changing our future is the Robo-Stox Global Robotics and Automation Index ETF (ROBO:NASDAQ). This is a fund which invests in both pure robotics companies and those who will benefit from a robotic revolution.
If that’s a little too broad for you and you’d like to dig into specific trends and companies, there are some great robotics stocks out there. And more specific robotics exchange-traded funds (ETFs) too. Let’s take a look…
The Internet of Things
It’s the latest buzzword in the world of robotics. Cisco’s former CEO values the market at $19 trillion. But what is the Internet of Things (IoT)?
IoT is what you get when you combine the power of the internet with everyday appliances. Think of it as “home automation”, although the appliances can be anywhere.
For example, Google Maps on your phone knows the traffic conditions of your daily commute in real time. If there’s a crash and it’s going to take you 34 minutes longer than usual to get to the office, your phone might tell your alarm clock to wake you up 34 minutes early, your coffee machine to have your coffee ready 34 minutes early and, if it’s winter, your seat warmers in your car to turn on 34 minutes early. All of this happened while you were asleep.
The point is that these technologies already exist. You have Google Maps on your phone. You have an alarm clock. And you have a coffee machine, many of which can be pre-set to spurn out an espresso every morning, just as car seat warmers can be programmed to turn on ten minutes before you get into your car each morning.
What’s changed is their potential to communicate with each other to do a better job of giving you what you want without you having to make that happen. This is the Internet of Things.
Domotics refers to the unique combination of robots and IoT in a domestic environment. Like that vacuuming robot I mentioned. It’s a huge consumer industry already.
So how do you invest in IoT? It’s hard. Everyday appliance companies are transforming their products rather than having new companies break ground. But some examples are out there.
Sierra Wireless (SWIR:NASDAQ) produces the little wireless connections that IoT gadgets need to communicate. So any companies wanting to transform their products are likely to use Sierra products.
Bosch Group (RBOS:GR) has the home appliance market figured and the robotics capability to revolutionise it. It’s already on the move with smart fridges, for example. Competitor Samsung has developed a fridge that can order your groceries for you as they get low.
Then there’s the obvious way – an ETF which focuses on IoT technology. It’s called the Global X Internet of Things ETF (SNSR:NASDAQ).
Military robotics investing
We’re still quite far from the droid armies of Star Wars. But robotics are already a major power on the battlefield. And in preventing the battlefield from becoming one too. Surveillance robots are booming.
Defence robotics is a great way to profit from the advancements we make in robotics. Governments are big spenders and war can drive technology. Many of the firms pioneering robotics for military uses are listed here in the UK.
QinetiQ (QQ:LON) and Cobham (COB:LON) produce those little robots you see on the news when there’s a bomb scare, along with a list of similar robots for search and rescue and surveillance.
Would you rather have a robot or a person performing surgery on you? The correct answer is of course “both”. Some things are suited to robots and some to the human touch. Together you can get the best results.
In the medical world, robots are already used in partnership with humans. They’re like a far more reliable nurse which stands by with the right equipment and ensures mistakes aren’t made. The biggest improvement is in accuracy.
Mazor Robotics (MZOR:NASDAQ) has the robotic side covered when it comes to spinal, brain and other surgery guidance systems. These team up with the surgeon to make the surgery accurate, fast and confirm it’s successful.
Combining the world of robotics with the microscopic abilities of nanotechnology and you get the most exciting possibilities yet. What if surgery could be performed inside your body by thousands of robots so small you could simply “expunge” them out when they’re done? The same goes for mining precious ores and fixing infrastructure. It could all be done by tiny robots.
For now, nanotechnology is focusing on microchips and manufacturing. But companies like Nanophase Technologies Corp (NANX:NASDAQ) and Nanometrics Inc. (NANO:NASDAQ) will boom as the uses widen.
Return of the Luddites and Captain Swing
But don’t robotics come with a cost? What about all the jobs which robots will destroy?
This is an age-old worry. It has an illustrious history in Britain with two famous outbreaks of riots thanks to the Luddites and Captain Swing in the 1800s.
What people miss in how they see this issue is that we all benefit enormously on the other side of the equation – as consumers. Robotics make things cheaper, allow us to have more and can improve quality too.
The consumer is the beneficiary and we are all consumers.
But the simple truth is also that automation does hurt some people by making their profession redundant. But preventing automation across the board would leave us stuck in the Stone Age – a far worse outcome. The key lies in preventing unemployment by creating such economic growth that companies clamour for workers. Robotics can help us do this by creating jobs. For example, deep-sea drilling for oil uses robotics heavily. And that industry could create a vast amount of jobs.
A word of caution
All robotics investors need to take a history lesson from the year 2000. The tech bubble was a unique combination of technological promise and economic mismanagement. It ruined many tech companies and investors alike when it crashed.
Even with those companies that made it through now creating history, it’s worth keeping an eye on what sort of environment investing in robotics is in. Is it a bubble?