Continuing with one of last week’s four investment themes, a number of our investment managers are looking at the way work is changing in the United States and finding opportunities. I thought I’d share with you a summary of some of their thoughts. Part of the value we bring to you, I hope, is that we’re thinking about things you haven’t thought of before (so you don’t have to)!
Some Clear Winners
Covid-19 made a huge impact on the way work is done in the US. Some corporations made the change faster and better than others. What happens next will be determined, in large part, by the companies’ information technology teams.
Technology companies are the clear and present winners of this transformation. Soon, we’ll say “all companies are technology companies.” Companies who can adapt will win. Furthermore, companies who are resilient in the face of these changes will become future winners. There are so many types of new work environments that we are developing a new language. Remote-working is different than distance-working, the latter of which could take place in a coffee shop or on a plane.
Technology, when it works, increases productivity immensely. At least that is what we tell ourselves: it’s an improvement. We have fast, reliable internet and we can Zoom and text and correspond faster than ever. We can work in our basements and work more hours too.
On the flip side, working remotely, or distance-working, does not show a measurable increase in productivity by traditional standards. Measures of productivity have been declining for a long time. Economists are perplexed by the conundrum—and need to find new ways to measure the output of software and service economy. So the backlash against the new work situation is real.
Not for everyone
Importantly, not everyone can work at home. And even if you can, you might prefer to work at the office. Large companies are re-thinking workspaces, home-spaces and mobile technology. The implications for our investments are both promising and challenging.
As the following illustration shows, some work just cannot be done at home. The Covid-19 crisis is hitting employment hardest in the places where the work must be done on-site. It is also hitting the bottom line for these industries.
A bot for everyone
Could these work changes present an investment opportunity?
It depends on who you talk to. Each investment manager we choose follows a certain set of criteria. We chose them not because they are opportunistic but because they are consistent. So, a “value” manager may look at a financial services or healthcare company whose share price has declined during Covid-19 and think, “that’s a buy!” But a “future growth” manager might look at the same company and come to a completely different reason to buy. She may see incredible upside because their technology platform positions the company for great growth.
A “bot for every body” is a theme that will gain steam in the future years. Some companies ask, “how can I supplement my services with technology?” Others ask, “do I need a body, or can I do it with a robot? Software? An app?” Consumers will decide who wins, and investment managers will place their bets before we know. Thus, we approach this complicated problem as we always do: with humility and with diversification.
We know that no bot can replace the human part of financial advice. We also know that the value of a real-life person who puts your interests ahead of their own is immeasurable. No one, outside of your immediate family, has a greater interest in your family’s success than we do. This, plus great advancements in technology we can use, and will be rolling out in the future, gives me great confidence.
The changes in 2020 are tough; and things are getting better.