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Tech Will Rule These ’20s, Too

Posted by hkarner - 7. Januar 2020

Date: 06‑01‑2020

Source: The Wall Street Journal By Andy Kessler

Breakthroughs in health and data could match the consumer boom of 100 years ago.

Does history rhyme? A century ago, the ’20s boomed, driven by consumer spending on homes, cars, radios and newfangled appliances like refrigerators, sewing machines and vacuum cleaners. Most Americans couldn’t afford the upfront cost of a lot of these goods, so manufacturers and retailers invented installment plans. Debt ruled as 75% of cars, furniture and washing machines were bought on credit.

The supply‑side policies of Treasury Secretary Andrew Mellon, who pushed for tax cuts in 1921, 1924 and 1926, increased the capital available for new consumer businesses. The consumption boom also sparked a giant service industry: My grandfather ran Kessler’s Refrigeration Service in Brooklyn, N.Y. Lifestyle advertising was perfected on billboards and in tabloids, which, like today, led to complaints about ads’ ubiquity and influence.

And stocks were hot, hot, hot. Radio Corp. of America shares were worth $11 in 1924, $20 in January 1928 and $114 in 1929, with a peak price/earnings ratio of 72. Turns out equities could be bought on installment too—sometimes a margin loan with a measly 10% down payment.

Like the movie “Titanic,” you know how this ends. Speculation. Tariffs. And finally, the crash of Oct. 28‑29, where the market dropped 13% on Black Monday and 12% on Black Tuesday, triggering widespread margin calls for debt repayment. That risk is why the Federal Reserve now caps stock margins at 50%. According to legend, it’s also why windows in New York skyscrapers don’t open. By 1932, RCA stock was worth $3.

So what’s next? My fundamental rule for finding growth trends is that you need to see viable technologies today, and then predict which ones will get cheaper and better over time. Microprocessors, storage, bandwidth—all still going strong after half a century.

The fundamental building block of the 2020s will be artificial intelligence, particularly machine learning. Better to ask what it won’t change this decade. The artificial neural networks that made face and voice recognition viable were the low‑hanging fruit. Now chips tailor‑made for machine learning are increasing speed and cutting costs. A recent Stanford report suggests that the power behind the most advanced AI computations is doubling nearly every three months, outpacing Moore’s Law by a factor of six.

Growth often appears in discarded markets. I thought Theranos would set back cheap blood testing for a long time. But the Israeli company Sight Diagnostics samples two drops of blood and takes 1,000 digital images at varying illumination, then uses machine learning to identify levels of blood cells, platelets, hemoglobin. Sight CEO Yossi Pollak says they can identify malaria and perhaps “features relevant to diagnosing certain cancers.”

Digital means cheaper, quickly. I got an allergy test recently; a technician wrote the numbers 1 through 60 on my back and pricked me with different grasses and dust mites to see what flared up. Barbaric—was he planning to apply leeches next? AI and digital imaging might soon spare us such indignities.

 Last decade brought us Crispr gene‑editing technology using Cas9 proteins. That may soon enable immunotherapy and wipe out inherited diseases like sickle‑cell anemia. But this decade may be about using the same technology with another type of protein, Cas13, to detect and inhibit RNA viruses. That would be a huge step toward fighting everything from the common flu to epidemic outbreaks. A digital blood test might spot a virus, and Cas13 might kill it.

 Everyone knows 5G for wireless smartphones will be a bandwidth bonanza. But what 5G technology might also roll out on premises, meaning corporate and even home networks—you roll your own. And 5G makes much better use of spectrum, so it’s maybe five times cheaper than wasteful Wi‑Fi, which may eventually be put to bed.

There’s a saying in Silicon Valley that “intelligence moves to the edge” of the network. Last decade was much about centralizing data in the hands of Google or Facebook or Amazon. But cheap networked devices will, for example, capture weather data and moisture in crop fields or traffic movement in cities. This coming network is sometimes called the Internet of Things but I hate that name. How about “World’s Edge,” or “Wedgie” for short? AI will crunch all that data and find useful patterns to enhance productivity, from factories to aircraft to irrigation.

Then there’s the huge financial migration. Baby boomers hold some $68 trillion, about $15 trillion of which will move to their heirs this decade—a big payday for those spendthrift millennials.

Other predictions? Maybe we’ll get real digital education, with online instruction and on‑hand tutors, though teachers unions are a roadblock. Construction materials made by 3‑D printers will be a hotter industry than fake meat. And I expect zero‑carbon nuclear reactors to make a political comeback. But long‑anticipated fusion energy is still 10 years away—as it was 10 years ago.

How will all this fun end? Same as always: debt. Stock margins may be 50%, but who knows what lurks inside leveraged loans, let alone the multitrillion‑dollar global shadow‑banking and repo markets? I hope hiccups wait until October 2029.

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