I’m all-in on the philosophy that we overestimate the short-term impact of technology but underestimate it in the long run
I outlined my financial intentions for 2021 but sitting down to define concrete steps was overwhelming. I have many interests, but only so much money to play with each month. It’s not practical, given the strategies I want to employ, to dive into multiple asset classes and industries at the same time. Instead, I’m taking a step back and only focusing on the next 3 months.
This year is about growth stocks, specifically finding the Amazons before they become Amazon. I have determined a few industries and business models that I believe will have a long term impact on our society, and I’m looking to capitalize on that. I’m all-in on the philosophy that we overestimate the short-term impact of technology but underestimate it in the long run. 2020 accelerated future growth and open my eyes to a lot of this given Communications and EdTech platforms, whose value wasn’t recognized until the moment arrived.
Given I’m focused on future disruptions, I wanted to begin in a sector that I know well and I’m personally invested in FinTech. I have spent the past few weeks identifying stocks or businesses in the public and private sector that I believe have the potential to succeed in the long run. I have looked at businesses that most serve the US and China, given that the best way to stock pick is really to focus on areas that you truly understand. My thesis is designed around a 5-year hold, and it’s difficult to have such conviction without in-depth knowledge of where I’m putting my money.
Apart from spending my short-lived career in FinTech, I added this sector to my future growth list due in part to my experiences abroad. The amount of leapfrogging happening globally for payments is baffling. I remember the first time I tried to use cash in China and the cashier looked at me funny. The QR code, a digital identifier for every facet of life, really was eye-opening and unbelievably convenient. I remember their introduction in middle school, but the American public seemed wholly against them. They’ve made a comeback this pandemic in restaurants, but that infrastructure is still behind what I’ve seen abroad.
I’m convinced that it won’t only be payments and investment platforms, but I expect wealth management for retail consumers to get better. At some point, the activists will converge and aim to reduce economic inequalities through technology and attempt to democratize wealth transfer. That being said, I do think that’s a state far in the future, but today I am seeking the companies who could provide these services to the public as well as the service providers for those companies.
When considering these investments, I am taking a hard look at taxes. I believe that some of these speculations could pay off, and if I was to find the next Amazon, I am not keen to lose my gains at my current tax rate. Thus this quarter’s growth investments are mostly within my Roth IRA, while my 401k is divided up amongst target-date funds, indices, and ETFs. This keeps my long-term accounts separate in terms of risk profile and thesis.
Lastly, given I have a level of diversity in other accounts, I am concentrating my investments on a handful of opportunities, public and private. This ensures I have the time to put into my research, which in turn gives me full confidence in my decision making, without regard for public influences on the markets.