The stock market is all wrong about technology stocks — but not in the way you may think.
It can be hard to follow investors' on-again, off-again love affair with technology stocks. In the short term, the market is parsing every detail about trade, inventory levels, and data security, sending tech stocks on a volatile ride.
However, when it comes to investing, incremental data is critical but often sheds light on only part of a much bigger picture. As long-term investors, we cannot overstate the importance of the structural changes happening in our world related to the use of technology.
We are in the beginning stages of the fourth industrial revolution, which is characterized by a range of new technologies that are fusing the physical, digital and biological worlds. More significantly, as we dissect in our firm's 2019 capital markets forecast, this revolution is embodied by horizontal digitization — that is, the expansion of technology into every discipline, business model, and supply chain, bringing flexibility and immediacy to the way consumers receive goods and services.
This is not to say we should ignore risks of supply-chain disruption or a premature end to the capital expenditure cycle, but we also must keep our sights on where we are going over the next decade: to a place where every device, process, and service will be connected and critically dependent on technology.