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Investors must adapt to survive in the “new normal”

Video Game ControllerI recently read a couple of articles on how Fortnite — a “free” game on your local gaming console, PC, or phone — was not only the new billion-dollar business but also creating significant income for streamers. If you don’t understand what I just said, please grab your local Millennial or Gen-Y to interpret, but I’ll try my best to explain. (This is just one of many “new normal” experiences.)

Basically, people are subscribing to watch others play video games and it’s allowing for revenue generation. When I was young and crushing it on Donkey Kong or GoldenEye 007, it was the absolute worst watching someone else play while waiting my turn. The level of patience required was immense.  When we were done (i.e., kicked out of the house by my parents) we would go outside and pretend to be the great football or baseball athletes of the day. Now, some are saying the great athletes of the future could be virtual… and many people are tuning in. ­

I believe that there’s a time in everyone’s life where they feel the convergence of the past and future hitting them at once. To put it in simple terms: you see the things you understand fade away and the strange new normal take its place. This can be overwhelming. At times, I feel this is happening to me as well — as if I am actively refusing the natural change from the familiar to the unknown. Just like someone telling me that people pay to watch video games be played by someone else! But the world won’t wait for you, or me, to catch up to these changing norms.

Using a SmartphoneWhat was once strange for companies is now the norm

A benefit of my work as a financial advisor is to be a student of companies as they produce new content and experiences for consumers, such as games like Fortnite and streaming platforms like Twitch. Things that once sounded strange are becoming the norm at an incredible rate. The first company with a billion-dollar market cap was United States Steel Corporation in the early 1900’s. Now, in 2018 the first trillion-dollar company – Apple — introduced a device in 2007 that connects with almost every aspect of our life. How much has the world changed in 100 years?  Moreover, how much has it changed in just 11 years since the invention of the iPhone?

Exploring future possibilities involves both risks and rewards

As an investor, this is the root of risk and reward; the ability to explore the possibilities of the future without seeing the complete picture today. You can’t do that if you don’t adapt!

The driving force of technology is going to keep moving forward at a spectacular rate for the foreseeable future. This brings with it, as you may have guessed, both risks to be taken and rewards to be reaped, as the world evolves.

What happens if we are so rigid that we only invest in what we know or understand, because “that’s the way it’s always been done?” It could cost you more now than ever before. You could be Blockbuster who passed on Netflix!

NetflixA perfect example of today’s rapid change in markets and technology: Netflix

Netflix is a striking example of this evolution. They not only changed how we rent movies (by mail) but completely reinvented the way we watch TV (streaming). They’ll soon introduce a “choose your own ending” feature on some of their programming, which puts the viewer in charge. I have no idea if this feature will catch on or be the next bust. But the key is to think about the possibilities for the future – how could this change the landscape of children’s programming, movies, or even sports? And if it does, how can investors capitalize on this trend?

Adapt and survive.

In this rapidly changing world of the new normal, we must be adaptable as investors and even business owners.  The world will not wait for us to catch up, it will not wait for us to understand, and it certainly will not wait for your portfolio to allocate!

October 2018

 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Investing involves risk including loss of principal.

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