With 2020 just 13 months away, now is a great time to take a step back and think about the long-term. 10 years ago, the top 10 companies in the world were dominated by energy and Chinese companies. Today, seven of the top 10 companies are technology companies. In this exclusive wire with Livewire, I discuss how you might start planning for some of the biggest opportunities over the coming decade.
How do you go about finding the best opportunities for 2028?
It's a really interesting question, because the '20s, and your strategy for the '20s, needs to be in place, because it's only about 13 months away. We spend a lot of time thinking about the longer term dynamics and where we want to put our money to work. The one thing I can say for sure is that I agree with you completely is that if you look at 2007 for example, the top 10 companies in the world were either energy companies or Chinese companies, and that was because the bull market was in China, and was in oil, and was in everything to do with commodities.
The last 10 years have really been about technology. If you look at the top 10 companies now, there's only Berkshire, Johnson & Johnson, and Exxon that aren’t in technology. The rest is in technology, whether you take Alibaba, whether you take Tencent from China, or whether you take Facebook, Apple, Google, Amazon, Microsoft. These are all technology companies.
10 years back it was only Microsoft which was represented in the top 10, so all I can say for certain is that the top 10 in the next 10 years will look very, very different. The area I’m focused on is the pharmaceutical sector. I think with demographics, with ageing, there'll be companies which do something special on personalised medicine. It could be one of the incumbents which buys smartly, or it could be a new start-up, but something along the lines of personalised medicine is an area which I'm focused on and looking for companies which will do something positive in that area.
“10 years back it was only Microsoft which was represented in the top 10, so all I can say for certain is that the top 10 in the next 10 years will look very, very different.”
Another area which is of interest is new energy. I think in 10 years' time, we will be thinking about new battery technology, maybe new raw materials which supply into that battery technology chain. We'll be looking for new energy sources and companies which are playing in that arena. Maybe on the renewable side, could be interesting. That's an area that we should be focused on.
Existing tech companies
I think a lot of the technology companies will still be around, but in a very different form than they are in now. With the size that they're getting to, I think you will see Amazon broken up into two or three companies, maybe AWS listed separately, which is their cloud services business. I think Google's Waymo project, their driverless car is very interesting. In 10 years' time, I would expect it not to be part of Google, but be a separate company.
I'd say Apple in its current form, may not be around, unless it buys very smartly, or innovates very, very smartly. There may be new ways that we're accessing the internet, accessing information, accessing data, which currently we're doing with the smartphones, or it could be different in 10 years' time. While you're thinking about the companies which could make their way into the index, of the top 10, you have to also think about companies which may exit the index, and Apple will be a case in point.
I think Facebook's an interesting one. I think they're very smart acquirers, which they've done with Instagram and WhatsApp, but the Facebook core property, when I look at my millennial friends, they don't seem to be using that. In 10 years' time, I'd say that's something which is at risk. When you're thinking 10 years out, there's a lot going on in the world, which is fascinating, which is interesting. You've got to keep your eyes to the ground, you've got to meet companies in the ecosystem, be on top of the value chain, to understand where that change is happening from, where that disruption is coming from, so you can be on top of all of this.
“When you're thinking 10 years out, there's a lot going on in the world, which is fascinating, which is interesting. You've got to keep your eyes to the ground, you've got to meet companies in the ecosystem, be on top of the value chain, to understand where that change is happening from, where that disruption is coming from, so you can be on top of all of this”
I'm interesting to know why you think Google would split Waymo out to a different business and how you think that would work? Are you suggesting a separate listing or separate private holding, or still part of the Alphabet group? I would have thought a lot of Waymo's value (particularly to Google) would have been synergies in information collection and that they would be stronger as a parcel rather than as separate companies?
James M, forget about asking questions on this site. they never reply. very disappointing....
Hi James, we passed your comment through to Fidelity, however, it will be up to the manager to respond.
Hi Carlos, you're comment is incorrect. We actively encourage the contributors to respond and many of them do acknowledge and respond to reader comments. However, they are not using Livewire like a chat forum and that is not our intention for the platform. We can certainly do a better job to encourage further discussion, however, it is a fine balance between comments that add value and descending into a chat forum.
- I think you make an excellent point regarding the synergies between Google and Waymo reference the technology. - however I think this is also a very different business from core google search and advertising. - the reasons to separate this would be A) focussed management and incentivization structure B) it could be potentially possible that Waymo would require a significant amount of capex - for autonomous taxi services for example - it would be better funded (for both shareholders) of Alphabets balance sheet C) data sharing between all of alphabets properties has to follow very strict regulations. For eg there are strict regulations on how YouTube data is shared with google search for advertising and re-targeting I would have also said value unlocking for Alphabet shareholders but knowing the management team I don’t think this would be a driving factor for them. Obviously all the above is really in the realm of conjecture so it would be an interesting journey to observe but in my opinion you have asked a question on the most interesting aspect of the Waymo path so thank you for that.