Original post:
Remember nanotechnology? It was all the rage just 15 years ago.
Here's the Google Trends chart for the frequency of searches for "nanotechnology":
This was forseeable.
From a December 2010 post:
"Top Investment Trends For Futurists" (PXN; TINY)
...The reason for highlighting nano is two-fold.When it becomes ubiquitous, the distinctions blur, the drive for creativity recedes, stasis, then death.
1) Since Feynman coined the word there has been a misconception among investors that there would be a nano-technology "industry". This has proven not to be the case and won't be in the future. Rather nano is a tool, an approach toward problem solving.
There will be some breakthroughs that make their discoverers instantly (after 10 years of research) wealthy but the real beneficiaries will be companies like Kyocera and 3M and Siemens. They will use the technology to do what they are already doing, just better, faster, cheaper, more.
2) In spite of the fact that there will be few pure plays we are convinced that nano combined with advances in materials science and manufacturing technology is what will spur the next secular bull market....
Wait what? Entropy! I meant to co-opt the physically precise concept of entropy to metaphorically describe the trend. Not death.
No, death bad, Sand Hill Road good.
And it is happening to tech. Here's FT Alphaville:
The tech sector is over
When Apple shares plunged 10 per cent last Thursday, it wasn't just about Chinese consumption worries, or global growth worries, or iPhone sales worries. It was also about something much more structural: no real tech left in the tech sector. And on a technical level, the tech sector not really existing anymore. (At least not in the way it used to.)...MUCH MORE
In September, indexing behemoths S&P Global and MSCI gave the Global Industry Classification Standard (GICS) -- the industry taxonomy that classifies stocks into sectors, which then form indexes tracked by billions of dollars' worth of ETFs -- its biggest ever shake-up. In the S&P 500, 13 stocks from the "Consumer Discretionary" sector, six from "Information Technology", and three from "Telecommunication Services" (which is now extinct) were moved into the new "Communication Services" sector.
Though Apple remains within Information Technology -- or simply the "tech" sector, to use the shorthand -- that sector has been dramatically cut down, with about 23 per cent off its market value wiped off.
Silcon Valley giants Facebook, Twitter, Alphabet, as well as China's Tencent and Baidu, were all moved out of Information Technology to join Netflix (which was moved out of Consumer Discretionary) alongside the less "techy" Verizon and AT&T in the new Communications Services sector. Amazon, meanwhile, remained in Consumer Discretionary, now taking up a very large chunk of basket that also includes McDonald’s and Ford Motors.
And while there has been much talk of fund flows being affected by this reclassification, largely because of quant fund portfolios adjustments -- and even some theories that those adjuments were to blame for the FANG stocks' falls at the end of last year -- there has been less focus on something more fundamental: now that tech is everywhere, the idea of "tech stocks" as a distinct group, just because they were born in the internet era, is outdated.
As Vincent Deluard, macro strategist at INTL FCStone, writes in his recent 2019 outlook (emphasis his):
The technological age ended ... on September 28, 2018. The Global Industry Classification Standard (GICS) split the Information Technology sector between Consumer Discretionary (eBay, Netflix) and a greatly revamped Telecommunication Services sector, including Facebook and Google. Because the Nasdaq 100 index reached its intraday peak the day following the change, reclassification-induced portfolio changes have been blamed for the spectacular fall of tech stocks in the past three months. Portfolio re-balancing may have destabilized markets, but I think the more important consequence of the GICS change was the public admission that Technology is no longer special.Deluard added, over the phone to us:
The reclassification was important from a collective realisation perspective.... 2018 was the year when the notion that technology would solve all these problems -- and that there were these visionaries who would make the world a better place -- crumbled.The kind of tech-utopian stories that abounded in 2017 about Facebook founder Mark Zuckerberg one day running for president seem, in the wake of a damaging and scandal-plagued year almost farcical.
And as old-world companies like Walmart -- which now, according to Deluard, sells almost as much online as Apple -- move into the territory of its rivals, new-world firms are moving in the opposite direction: Netflix, for example, said it would be spending $13 billion on producing its own content in 2019 (about 90 per cent of its turnover).
The same trend of convergence can be seen in the fintech sector: as traditional financial firms like Fidelity branch out into robo-advice, robo-advisor Nutmeg has introduced human financial advice. And while banks have been acquiring financial start-ups so as to avoid extinction, challenger fintechs like Zopa and Monzo are setting themselves up with traditional banking licenses....
So in both definitional and awareness terms, it's over.
The one area of debate that is left is whether things like AI and 5G/IoT and biology/life sciences will step up to fill the void.
For that discussion you have to check-out the articles' comments.
