The best tech investments for 2018

We have seen some crazy things happen this year in tech.

  • Bitcoin is up over 1,400%, and the crypto market as a whole has gone from $17.7bn to $411bn.
  • Tesla has created the world’s first electric big-rig, and already has a backlog of orders.
  • California’s legalisation of cannabis came into effect.
  • Google has started testing its driverless car on real streets.
  • And we’ve even seen world’s first “successful” human head transplant. The jury is still out on just how “successful” it was though.

But now it’s time to look to the future.

So today, I have a bit of a special issue for you. I’ve enlisted the help of Frontier Tech Investor’s Eoin Treacy to show us what will be the biggest tech stories and investment areas of 2018.

This is all taken from his December issue of Frontier Tech Investor, which was released on Tuesday. If you’d like to see his stock recommendations, you can subscribe to Frontier Tech Investor here.

Bitcoin’s year of truth

By Eoin Treacy

On 1 December the Chicago Mercantile Exchange and the Chicago Board of Trade both received permission to list bitcoin futures. This is a huge move towards the asset going mainstream. There has been speculation that this decision was forthcoming since the summer and that has been at least part of the reason behind the explosive rally in prices since then.

Introducing leverage to a cash market like bitcoin represents a pivotal event where the only recent analogue we have is the introduction of options to the Chinese stockmarket in 2015. Until then the majority of trades were dominated by retail investors and were cash settled, so there are some very clear parallels with bitcoin.

Let’s take a look at what happened:

Chart showing the impact of the introduction of options to the Chinese stockmarket in 2015

The stockmarket index almost doubled in a few months of wild speculation and individual shares did even better. That is until the crash when the government waded into combat some of largest abuses that were running the risk of damaging investor confidence irreparably.

Bitcoin has been surging higher on the expectation that a wall of fresh investment capital is about to hit the market when futures begin trading. That is probably going to be true and could contribute to significant additional upside where some of the most fantastic predictions are realised.

However, it is also worth considering that the cryptocurrency market is completely unregulated and no circuit breakers exist. There is no “fail-safe” for cryptos. The potential for profound volatility as a result of the introduction of hedging and shorting to the market is a very real prospect particularly following an accelerated move.

The higher bitcoin rises and the more people that are drawn into owning cryptocurrencies, the greater the call for regulation will be when we get the next big “correction”. After all, we have seen bitcoin fall by more than 50% in the last couple of years alone and it could do so again.

The three broad consistency characteristics of the market are:

  1. Bitcoin is prone to outsized upside surges.
  2. These are usually followed by short, sharp reactions.
  3. The pullbacks have tended to find support in the region of the upper side of the most recent significant trading range. The most recent important prior peak at the time of writing is at $8,000.

As long as bitcoin is following this rhythm of breakout, pullback and consolidation with ranges one above another there will be nothing to worry about. When it diverges from that pattern it will be time to watch out for signs of deterioration.

Exploring the micro-universe

The human body is home to trillions of bacteria, fungi and viruses and without them we would be unable to function. In fact, each of us carries around 2.5lbs of them. That’s a lot of bacteria when you consider they are microorganisms. The human race is expected to hit peak population of around 12 billion people sometime this century but our bodies are home to trillions of microorganisms. A handy way to think about the role they play in our lives is they have much the same effect on their environment that we do on ours.

The human microbiota consists of 10-100 trillion of symbiotic microorganisms (including bacteria, fungi and viruses) that reside in every person and mostly hang out in our guts. Here’s where it really gets to be fun. We share about 8% of our microorganisms with other people. The other 92% are individual to us in one regard or another which means our individual microbiomes are as unique as we are.

If you want to think about overpopulation the number of bacterial cells alone are thought to outnumber the body’s own cells by a ratio of ~3 to 1.

The number of neurons in the gut is greater than in the spinal column at about 100,000,000 so it is often referred to as the second brain. The 1,000 different species of microbe in the gut, lung and other areas, (including skin and hair), with close to 7,000 different strains, or subtypes, found in the gut alone means that the second brain is dealing with a political balancing act that makes Theresa May’s negotiations at home and abroad look like child’s play. The colonies of inhabitants that call our gut home have an inordinate effect on our everyday health.

Many of those colonies are responsible for key biological processes, most notably digestion and immune function. The gut microbiome is especially important in efficiently digesting complex carbohydrates in the diet. Many polysaccharides and oligosaccharides are broken down by enzymes produced by the microbiome rather than those produced in gut tissues.

I’ve got a couple of different microbiome investments lined up that are ripening but not yet ready. When they are I will be writing to you in more detail about the microbiome and how understanding and harnessing its potential will be vital for all of us.

The automation revolution sets sail

A year from now Norwegian firm Yara in conjunction with Kongsberg are due to launch the first fully electric and autonomous container ship on its maiden voyage. The news is regularly filled with stories about how soon we are likely to see the fully autonomous electric vehicles on our roads, but the reality is land-based travel is complicated.

There are a lot of moving bodies that a vehicle could bump into and they are all travelling at different speeds. It makes the job of trying to figure out how to negotiate a path around them quite challenging.

Sailing and flying are infinitely easier to develop autonomous vehicles for because quite simply there are fewer things to bump into. Once a ship is out at sea there are potential obstacles such as other ships, icebergs and islands but they are few and far between while ships tend to move considerably slower than cars or trucks. For planes, once sufficient altitude has been reached, and airspace apportioned there isn’t much to bump into other than other aircraft and mountains. The smaller number of potential obstacles and the relatively predictable trajectory of the known issues makes it simply easier to develop autonomous systems for ships and planes.

Autonomous ships are likely to be the first sector we see true autonomy delivered and it will give us an immediate perspective on what will happen to the workforces, primarily Filipino sailors, who will be impacted. We read constantly about the conundrum of what all the truckers and drivers are going to do when their jobs are automated away, but in 2018 we will get a real-world view of how that might play out in the shipping sector.

The dawn of the holo-lens

In 2018 camera-maker Red will be entering the market with a phone of its own and the pre-purchase price cost is around $1,600.

What’s so special about the new Red Hydrogen? Well, it’s been pretty hush hush with the details. It will be available in titanium. It will have the same modular design so expect to see a snap-on lens etc. It will have a 5.7-inch screen, front and back cameras, run Android, have a micro SD slot, headphone jack and will be able to serve as a touchscreen control for its other cameras. However, the big claim to fame is not what it has in common with other phones but that the Hydrogen phone will have holographic capabilities which it is naming 4-View.

That name comes from the fact the halographic effect the phone is capable of rendering is derived by using four different cameras which aim light at different eyes like we have with 3-D today. With four cameras you will be able to look around the images and they will be able to move. You won’t even need glasses.

2018 is going to be the year of holographic displays and the programming world will never be the same again. The modern era is all about user engagement. Emoticons, emojis and animojis are all designed to grab our attention and add novelty to the texting experience. Holograms will take that to another level but the technology has real potential to scale so the future of a computer screen will be a lot closer to what Tom Cruise used in Minority Report than we might imagine.

Holograms on your phone have the potential to capture the public’s imagination in a way that has not yet successfully been achieved with virtual reality so this is going to be a space to watch closely.

The Gene Genie

Half of all people diagnosed with heart failure die within five years. A lot of the reason for that is because of a lack of suitable donor hearts. Traditionally only hearts from braindead donors were used for heart transplants. However now hearts that would have been declared unusable by the Donation after Cardiac Death (DCD) system are being revitalised by a new system called the Organ Care System, produced by privately held TransMedics.

The NHS has adopted the machine and has had such success that other countries are now looking at following course. Waiting times for heart transplants are expected to reduce by 40% as a result.

However, while this is certainly encouraging, transplants are not an ideal solution. The process will always be reliant on tragedy for an organ and the drugs required to ensure it is not rejected come with significant side-effects. That is why gene therapy is promising.

Roger J Hajjar and his team at Mount Sinai hospital in New York treated 13 pigs with severe heart failure with a gene therapy that saw improvements of between 20% and 25% in heart function. The size of the hearts also shrank by 10%. The treatment focuses on reducing phosphatase-1 in the heart (when present in abundance it restricts the ability of the muscle to contract).

The good news is that these results are positive enough for human trials to begin in 2018. The ultimate aim of the research, is to significantly improve heart function with a single shot. That means no need for donors, surgeons or transplant drugs. Of course, that shot will be expensive to begin with but the cost should decrease over time.

As investors, we’re always anticipating. We’re always looking ahead. I think you can see that the next 12 months promises to very exciting time to be on the tech frontier. And I’m looking forward to sharing these opportunities as we go along.

2018 looks set to be another monumental year for tech. And Eoin will continue to uncover the best investment opportunities as they arise. Leave us a comment below with your forecast.

If you’d like to know more about these areas and find out the companies Eoin is tipping in them, you can join Frontier Tech Investor here. You’ll get access to his whole portfolio of stock tips, and all of his in-depth issues. 

Until next time,

Harry Hamburg

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