Why it’s time for investors to get excited by Industry 4.0
Innovation is all around and a part of life that’s easy to take for granted as we watch the latest movie on our smartphone.
“Tekkies” get excited by advancesments but so should investors, according to Hans Albrecht, VP, portfolio manager and options strategist at Horizons ETFs.
He believes Industry 4.0 can achieve a growth in dollars in line with the pace of change and backs his firm’s Horizons Industry 4.0 Index (FOUR) fund to do just that. Investing in this area, he said, is about big data, smart robotics and automation, artificial intelligence, augmented and virtual reality, and new devices. It’s also about protecting all this via cybersecurity, which can safeguard data and hardware.
He said: “Put simply, [Industry 4.0] is the current – and future – progression of technology. It’s a convergence of a sudden surge in the availability of data and more widely available advanced hardware, which together, create transformative technologies that we only dreamed about decades ago.
“Are robotics—which are just one of the categories involved in Industry 4.0—new? Not really, but many of today’s newer robots are smaller, more customized, less expensive and safer than ever. More importantly, many are benefitting from cognitive algorithms/automation that enable them to learn from their environments and use artificial intelligence to improve existing capabilities on an ongoing basis.”
How we got here
To understand the significance of where we are now, Albrecht believes investors have to understand how we got here. Industry 1.0 occurred in the early 1800s as the first Industrial Revolution took hold. Mass urbanization brought workers from agricultural areas into cities, where they worked in factories using modern technologies to produce goods.
Industry 2.0, meanwhile, took place between 1870 and 1914, and involved extensive railroad networks to transfer people and goods more quickly. Notably, this work spurred the emergence of electricity by electrifying manufacturing and processes to produce more products cheaply and quickly. The assembly line was born and the consumption era was just beginning.
Then came Industry 3.0, which set the foundation. With the advent of the personal computer around 1970, the digital revolution began to pick up momentum. The ability to digitize information and complete tasks more quickly using computers allowed valuable time and resources to be spent more efficiently. The use of industrial robots began to pick up, and then of course, the internet came along and changed everything. The internet connected people like never before with social media and e-mail, enabled online shopping and created a place for mass information sharing.
And so here we are.
Industry 4.0 builds on this and is ore transformative, as it touches on more aspects of our personal and professional lives than ever before, merging the physical with the digital world.
Albrecht said: “Desktop computing was one thing, but now we have smartphones in our pockets that are thousands of times more powerful than computers of 20 years ago. We are online and networked on an ongoing basis, creating data at an exponential rate via social media and online transactions.
“As a result, computers are beginning to know us perhaps better than we know ourselves, knowing what we like and dislike, where we’re going, what we’re buying and how we’re feeling. This is translating into opportunities for companies that are able to gather intelligence from this data and know what, when and how to sell to us.
“Data proliferation will only accelerate as the Internet of Things—the ever-expanding number of connected devices including your fridge, phone, watch, and car —becomes more mainstream.”
5G technology is set to add another tailwind by exponentially increasing the speed at which we transmit, process and create data.
Albrecht added: “Industry 4.0 innovations are all around us and it’s inherently exciting, so perhaps it’s time for investors to get excited about getting their investment dollars involved as well.”