solar energy

Solar Energy

As the 2010s drew to a close, a report published by the World Meteorological Association (WMO) issued the following stark assessment of the current global climate situation: “The year 2019 concludes a decade of exceptional global heat, retreating ice and record sea levels driven by greenhouse gases from human activities. Average temperatures for the five-year (2015-2019) and ten-year (2010-2019) periods are almost certain to be the highest on record. 2019 is on course to be the second or third warmest year on record.” 

The report outlines the increasingly frightening consequences of global climate change, including warming ocean temperatures, deepening droughts, and sweltering heatwaves. 

WMO Secretary-General Petteri Taalas summed up the gravity of the situation: “If we do not take urgent climate action now, then we are heading for a temperature increase of more than 3°C by the end of the century, with ever more harmful impacts on human well-being.”

Urgent climate action involves moving away from fossil fuels and toward renewable energy. This transition has been underway for years, and though there are positive signs that things are perhaps beginning to move in the right direction (global carbon emissions are growing at a slower pace, for instance), it has not been enough to adequately address the overall increase in global energy demand. 

According to the Executive Summary of the UN’s recently published Emissions Gap Report 2019, “The summary findings are bleak. Countries collectively failed to stop the growth in global GHG emissions, meaning that deeper and faster cuts are now required.” 

In order to achieve these critical emission cuts, renewable energy will need to replace fossil fuels as humanity’s primary energy source in the coming decade. One sector that has already made remarkable progress on this front, and that is poised for even greater progress in the coming decade, is that of solar energy. 

Solar energy has become a serious global energy contender over the past decade as solar technology has become more efficient and affordable. According to the UN, global solar capacity increased from 25 gigawatts in 2009 to 663 gigawatts in 2019. This increase in installed capacity was greater than any other generation technology, fossil fuel or otherwise, yet solar energy still has tremendous room for growth. 

In the U.S., for instance, solar energy accounted for only 1.6% of the total electricity budget in 2018, and all renewable energy sources combined accounted for 17% of the total. As policymakers and the public come to terms with the fact that rapid and dramatic cuts to carbon emissions need to be made to lessen the blow of climate change’s fury, the solar energy sector is extremely well-positioned to play a critical role in meeting the energy demand as renewable energy replaces fossil fuels.

For those interested in the investment potential of this rapidly-growing sector, there are a few important points to understand.

What is Solar Energy?

Solar energy is energy that is generated from the sun and converted into thermal or electrical energy

There are three primary ways to generate solar energy: photovoltaics, solar thermal, and concentrated solar power. 

  • Photovoltaics directly convert sunlight into electricity by harnessing the electrical current produced when semiconducting materials are exposed to sunlight. Solar panels on the roof of a home or in an array on a satellite are examples of photovoltaics. 
  • Solar thermal technology works by absorbing heat from sunlight and using it to warm air, water, or other materials. A roof-mounted solar water heater is an example of solar thermal technology. 
  • Concentrated solar power works by using mirrors spread over a large area to concentrate the sun’s rays to one small point in which water is heated to steam to drive a turbine. If you fly from Las Vegas to Los Angeles and look out your window as you head southwest, you will likely spot the intense glow of the Ivanpah Solar Power Facility in the desert below you. The facility is one of the largest of its kind in the world, and according to the facility’s owner, BrightSource Energy, “the electricity generated by all three plants is enough to serve more than 140,000 homes in California during the peak hours of the day.”

Why Invest in Solar Energy?

The most compelling reason to invest in the solar energy sector comes down to the simple fact that renewable energy is actively replacing fossil fuels as the dominant global energy source. This replacement is likely to accelerate as energy demand increases and as the public demands a faster transition and a more significant commitment to clean energy. 

Solar is well-positioned to capitalize on the rapidly-changing energy landscape because the sector has undergone incredible innovation in recent years. 

One recent breakthrough in material science, for instance, boosted the maximum efficiency of a photovoltaic solar cell from 29% to 35%

Another breakthrough is the development of perovskite, a synthetically manufactured material that is more efficient and cheaper to produce than the silicon in traditional solar cells. Another key reason solar energy is well-positioned for the coming changes in the energy market is cost-competitiveness. 

According to a November 2019 piece in Bloomberg: “The levelized cost of any particular energy technology is the break-even price that companies investing in that technology need in order to see a competitive rate of return. In the case of both utility-scale solar and onshore wind power, this rate has dropped to about $40 per megawatt hour — which is lower than the cost of building new power plants that burn natural gas or coal. It’s even close to being competitive with the marginal costs of running the coal and nuclear plants we already have.”

According to market analysis by the International Energy Agency, global renewable energy capacity is expected to grow by 50% between 2019 and 2024, with solar photovoltaics accounting for almost 60% of the total expected growth. Private and public investments in solar energy are rapidly increasing, and the sector’s cost-competitiveness, combined with increased efficiency and the urgency of combating climate change, make solar energy a smart investment for the future.

How to Invest in Solar Energy

Given the volatility of the energy sector, however, investing directly in solar energy-related companies can be risky. A search on Magnifi suggests that there are a number of different ways for investors to get involved in solar without opening up their portfolios to undo concentrated risk in this new and growing sector.


 

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]  


cannabis

Cannabis

On New Year’s Day 2014, history was made in Colorado. Hundreds of people lined up in the cold outside dozens of shops across the state, each eagerly waiting to be among the first to legally purchase cannabis for recreational use in the United States. 

Voters in Colorado and Washington State approved the sale and use of recreational cannabis during the November 2012 election, and the first legal cannabis sales in Colorado in January 2014 represented the opening of a new, legal market for a product that had historically been exchanged only on the black market. 

The creation and subsequent growth of this legal market have been driven by the public’s rapidly evolving views on cannabis. In the U.S., public opinion on the sale and consumption of cannabis have changed dramatically over the past decade. According to the Pew Research Center, only 32% of Americans oppose legalizing cannabis in 2019, while 52% of Americans opposed legalization in 2010. This dramatic shift occurred as the American public became more aware of cannabis’s medical uses, and 91% of Americans now support the legalization of medicinal cannabis.

As of November 2019, medicinal cannabis is legal in 33 states and Washington D.C., and recreational cannabis is legal in 11 states and Washington D.C. Cannabis remains illegal under U.S. federal law, a fact that makes the nascent cannabis industry a unique experiment in U.S. law and capitalism. 

As more states legalize cannabis and as more businesses enter the market, the contradictions between state and federal law grow more profound. A cannabis producer, for instance, cannot legally ship their product to a neighboring state, even if it is legal in that state, because of federal interstate commerce law. 

Cannabis producers are also largely excluded from utilizing formal banking services, which sets up a dilemma as described thus by the American Bankers Association: “The rift between federal and state law has left banks trapped between their mission to serve the financial needs of their local communities and the threat of federal enforcement action.” 

There are signs, however, that the distance between state and federal law on cannabis’ legal status may be shrinking. Several bills are currently being debated in the U.S. House of Representatives that aim to combat the federal vs. state contradictions surrounding cannabis law, and there is growing bipartisanship (a word rarely used to describe the state of Washington these days) on expanding access to medicinal cannabis for veterans. There is still a ways to go before cannabis is fully legalized, but at this point, most people seem to agree it is a question of when instead of if. 

For those interested in the investment potential of this rapidly-growing sector, there are a few important points to understand.

What is Cannabis?

The word “cannabis” comes from the plant genus Cannabis in the family Cannabaceae, and it generally refers to the medicinal substance produced from plants in the Cannabis genus containing psychoactive chemicals. When ingested or smoked, cannabis can produce an altered mental and physical state, often referred to as feeling “high.” 

Though cultivated as a medicinal treatment for several thousand years, cannabis is now being recognized by modern medical professionals for its promise in treating chronic pain, nausea, and PTSD, among many other ailments. 

It is important to note that not all cannabis products contain the psychoactive chemicals that produce a high. CBD (which stands for cannabidiol) is one such product, and it has shown tremendous promise in treating a number of ailments – perhaps most significantly, childhood seizure disorders. Furthermore, recent research has found that in states that legalized medicinal cannabis, the number and rate of opioid prescriptions in the state decreased substantially.

The Market Opportunity in Cannabis

According to projections from The Nielsen Company, cannabis sales in the U.S. are forecast to increase from $8 billion in 2018 to $41 billion by 2025. While these projections are remarkable in their own right, they focus only on projected sales of legal cannabis from licensed sellers. 

Despite the wave of legalization sweeping the U.S., there is still a thriving black market for cannabis. In the case of California, the value of cannabis sold on the black market in 2019 is projected to be worth about $8.7 billion, while the state’s legal cannabis sales are expected to reach $3.1 billion. 

As more states move to legalize cannabis, and as public opinion continues to move in favor of broader access for medicinal purposes, there is likely to be increasing pressure on state and federal lawmakers to address the economic realities that drive black market cannabis sales. For instance, giving producers the freedom to move their products as dictated by supply and demand would decrease pressure to offload products on the black market, as well as increase overall efficiency, lowering prices and making products more competitive with those on the black market. Several states are already setting the legal groundwork for interstate cannabis imports and exports

As with any economic experiment, the rise of the legal cannabis industry is going to adjust and correct itself as it matures. In that space, however, there are tremendous opportunities for the savvy investor.

Consider, for a moment, that the legal cannabis industry does not need to invent a new product or market that product to a new group of customers in order to realize enormous growth. With the right economic incentives and regulatory framework, the cannabis industry can harness the existing economic activity of the black market and legally supply customers with a product that is already quite popular and increasingly seen as an effective treatment for various ailments. 

It is also worth noting that four out of the five top Democratic candidates for U.S. president in 2020 support full legalization of cannabis. 

How to Invest in Cannabis

Despite the legality questions surrounding cannabis as of 2019, there is still a growing market of public companies in the cannabis space that are becoming popular with investors. However, as new companies (in an effectively new industry), investing directly in these companies can be quite risky. Rather, there are a number of funds and ETFs that give investors access to this asset class with more diversification. A search on Magnifi suggests that there are a number of other ways to profit from the growing cannabis industry as a whole.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]  


Logistics

Have you ever stopped to consider the complex, interconnected systems at work that bring packages to your door? Consider this: while packing for a trip you realize that your destination will be cold this time of year, and after frantically searching through your closet, you cannot seem to find your scarf and decide to order a new one online knowing that it will be delivered the next day. With a few taps on your smartphone, a new scarf is delivered right to your door within 24 hours, and you never even had to get in the car or leave home to make it happen. We often take for granted what an incredible feat this truly is. 

The scarf’s rapid delivery is made possible through advanced logistics, which inform the movement of the scarf from a warehouse shelf to a delivery truck via conveyer belt, and delivery truck to your front door. After you place your order and until it is in your hands, logistics is the process that determines the timing, quality, and cost of your order. 

What is Logistics?

The rise of e-commerce over the past 20 years has radically altered consumer purchasing behavior and expectations. Consumers have become more informed shoppers, expertly consulting product reviews and comparing prices from multiple sellers. Sellers, in turn, have aggressively competed with each other to offer increasingly enticing incentives. 

One of the most valuable incentives is the seller’s ability to get a product to a customer’s door quickly. According to a 2019 AlixPartners study, the length of time a U.S. consumer was willing to wait for any item ordered online to be delivered to their home in 2014 was a maximum of 5.5 days. By 2019, the maximum wait time decreased to 4.3 days. Furthermore, 72% of U.S. consumers surveyed for the study said that the option of free shipping “greatly impacted” their purchasing decisions. 

As a backdrop to increasing customer expectations, the e-commerce sector is expected to see its 10th consecutive year of double-digit growth in 2019, with online sales expected to reach about $587 billion. 

In order to tap the explosive growth of e-commerce and other booming sectors, companies must utilize innovative logistics. Companies that implement logistics technology throughout their supply chain gain valuable information on exactly how their products are transported to customers. This information can then be used to streamline processes and save time and money, both of which can then be passed on to customers in the form of faster delivery times and cheaper prices.

For those interested in investing in this rapidly-growing sector, however, there are a few important points to understand.

According to the Michigan State University Department of Supply Chain Management, logistics refers to the “movement, storage, and flow of goods, services and information within the overall supply chain.” 

A related but distinct concept is that of supply chain management, which the University further defines as “a way to link major business processes within and across companies into a high-performance business model that drives competitive advantage.”

Alan Amling, Vice President of Corporate Strategy at UPS, explained the nuance of these terms by way of metaphor: “Logistics is the blood, and the supply chain is the body. So if the logistics doesn't flow--or one part of logistics, whether it's the transportation, or distribution, or brokerage--if that doesn't flow, then the supply chain is damaged.”

The Market Opportunity in Logistics

In 2018, U.S. businesses spent $1.6 trillion on logistics. This figure represents the cost to U.S. businesses of storing, shipping, and managing the movement of goods. As a point of reference, $1.6 trillion represents 8% of the U.S.’s 2018 GDP. 

Of course, storing and transporting goods efficiently is an important, costly endeavor, and the best companies look for ways to maximize those costs. One of the most important ways companies can do this is by investing in new technology that improves the performance of logistics and supply chains. Digitization and automation, for instance, have the potential to radically modernize how goods are moved from one place to another. The savings produced by technologies like these are tremendous, as are the potential earnings for investors aligned with the company selling or implementing the technology.

According to a November 2018 study by American Global Logistics and Logistics Trends & Insights, U.S. companies are projected to make $87.8 billion in new logistics and supply chain investments by 2022. 

The scale of these projected investments are already becoming apparent. In June 2018, Home Depot announced it would be investing $1.2 billion over the next five years to build new distribution facilities across the U.S. in order to speed up deliveries. In July 2019, Walmart announced it would be investing $1.2 billion over the next 10-20 years to build and upgrade grocery distribution centers in China. 

Large, well-managed companies already recognize that investing big in logistics is essential for maintaining a long-term competitive advantage. Furthermore, it is not enough for existing processes merely to evolve with the times; outright disruption is going to be an essential component for recognizing and capturing savings. 

Venture capitalists understand the potential value of disruptive energy in logistics and transportation, and they are correspondingly making big investments in these areas. According to CB Insights, trucking and freight startups raised $3.6 billion in venture capital funds in 2018, double the amount collected in 2017. 

And 2019 is projected to be another huge year for logistics funding, led by deals like SoftBank Vision Fund’s $1 billion investment in Flexport, a startup specializing in freight forwarding and customs brokerage. In a company blog post announcing the investment, the CEO of Flexport, Ryan Peterson, noted that: “The human brain has a strong unconscious bias against tackling really difficult problems. It’s probably one of the big reasons no one before us has succeeded in modernizing our centuries-old industry; it’s a massive, hairy, complex system that’s held back by the inexorable power of inertia … Flexport is dedicated to disrupting this idleness and seeking to make global trade easier and more accessible for everyone.” 

Innovative companies like Flexport are going to continue to challenge the status quo as they seek to modernize logistics, and savvy investors would be wise to pay attention.

How to Invest in Logistics

A search on Magnifi suggests that there are a number of ways to profit from the rise of logistics as a business.

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Mobile Payments

When is the last time you wrote a check to pay for something or left the house with a set amount of cash in your wallet for errands? For a growing number of people worldwide, it is entirely possible that they may not be able to recall. In the U.S., the use of credit and debit cards have largely replaced the use of checks, and carrying cash is increasingly seen as unnecessary and inconvenient. This dramatic transformation of our payment practices can be explained in part by the emergence of mobile payment technology for smartphones in recent years.

The rise of mobile payments has transformed the way we pay for everyday items and simplified how we share money with one another.

With smartphones in almost everyone’s pockets and apps that transfer money digitally in seconds, the days of frantically searching for an ATM or cursing yourself for leaving your wallet at home are coming to an end. Who needs a checkbook when you can quickly transfer your friend that $25 you owe them with a few taps on your smartphone? 

What are Mobile Payments?

According to Square, a leading mobile payment technology company, mobile payments are defined as “regulated transactions that take place digitally through your mobile device.” 

Most mobile payments are conducted through a mobile wallet or mobile money transfer. A mobile wallet is a smartphone app that securely stores credit or debit card information. This information can be digitally communicated to a business’s point-of-sale system by holding the smartphone near the business’s payment reader.

Popular mobile wallet apps include Apple Pay, Samsung Pay, and Android Pay, and companies that provide businesses with software and devices to accept mobile payments include Square, SumUp, and PayPal.

In the case of mobile money transfers (also sometimes referred to as “peer-to-peer” or “P2P” payments), funds are transferred between users on an app. Typically, a user creates an account on the app, links their bank account, debit card, and/or credit card information with the app, and “adds” accounts of other individuals who use the app. Money may then be requested from or sent to the accounts of these individuals.

Popular money transfer apps include Venmo, WorldRemit, and Azimo.

Mobile payment companies monetize the services they offer in a variety of ways. Square, for instance, charges businesses a fee ranging from 2.5% to 3.5% for each transaction (with a flat fee of 10 cents added to each transaction fee). Venmo, on the other hand, charges its users a 3% fee for sending money via credit card instead of debit card. Both companies offer expedited access to transferred funds for a fee. Since its November 2015 IPO, the stock price for Square has risen from about $8 per share to about $65 per share (as of November 2019). Since its July 2015 spinoff from eBay, the stock price for PayPal (Venmo’s parent company) has risen from about $40 per share to about $103 per share (as of November 2019).

A Fast Growing Market

According to a 2018 report by GSMA, 143 million new mobile payment accounts were opened worldwide in 2018, bringing the total number of accounts to 866 million. Approximately $1.30 billion was processed every day via mobile payment in 2018, and a typical active user moved an average of $206 per month.

The speed, efficiency, and security offered by mobile payments help explain why this technology has become so popular across the globe. The rise in this technology is also providing people who have traditionally been excluded from formal banking systems with access to life-changing financial services.

According to the World Bank, “Financial inclusion is a building block for both poverty reduction and opportunities for economic growth, with access to digital financial services critical for joining the new digital economy.”

Why Invest in Mobile Payments?

For those interested in investing in this rapidly-growing sector, however, there are a few important points to understand.

The mobile payment companies mentioned thus far are undeniably successful. Square’s total net revenue in the third quarter of 2019 was $1.27 billion, which is a 44% increase over 2018’s third quarter earnings. PayPal’s total net revenue for the same quarter was $4.38 billion, with Venmo accounting for $400 million (double the $200 million from the third quarter in 2018). With steady growth and a seemingly-unlimited appetite for disrupting the value of traditional financial institutions, there has never been a better time to consider investing in companies offering mobile payment solutions.

While Square and Venmo may be the first that come to mind with respect to mobile payments in the U.S., there are many other companies that have arisen in recent years in other parts of the world that are just as innovative and, in terms of active users, arguably more successful. Whether it’s WeChat Pay in China, Paytm in India, or M-PESA in Kenya, entrepreneurs across the globe have known about the transformative potential of mobile payments for years.

The acceptance of mobile payments as a trusted and valued financial tool has occurred at a faster rate and to greater effect in the developing world than in the U.S. For instance, an eMarketer report found that in 2019, approximately 80% of smartphone users in China regularly use mobile payments, while only about 30% of smartphone users in the U.S. regularly make mobile payments.

It may seem as if there would be no room for growth with 80% of users currently accounted for in China’s market, but it is important to note that the 20% of smartphone users not regularly making mobile payments represent about 135 million people.

Not to mention, the 70% of smartphone users in the U.S. not regularly making mobile payments represent about 138 million people. Smartphone users in the U.S. have been slow to adopt mobile payments en masse, due in part to a widespread perceived risk regarding the security of digitally-transferred funds. As the population in the U.S. ages and more accurate information about the security and convenience of mobile payments filters out, it is likely that a much higher percentage of the population will adopt the technology.

In the meantime, companies at the cutting edge of mobile payment innovation will continue to reimagine and redefine how we think about our finances.

How to Invest in Mobile Payments

A search on Magnifi suggests that there are a number of different ways for investors to get involved in the fast growing Mobile Payments sector.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]  


military

Military & Defense

How to Invest in the Future of Military Technology

It’s been said that the only guarantees in life are death and taxes, but there is another fact of life that has remained constant for much of human history: war. For millennia, people have fought with one another — over land, over titles and even over resources — and these conflicts eventually lead to the development of new weapons, military technologies and a worldwide industry dedicated to supporting these efforts.

We saw it around 400 BC, when Athens and Sparta, two of the most powerful city-states in ancient Greece, went to battle with each other in the Peloponnesian War.

We saw it again during the Roman conquest of Britain, which lasted until 400 AD.

And, of course, we saw it more recently during the American and French Revolutions in the 18th century.

In each of these instances, the outcome of these wars not only radically shifted the world’s power structure at the time, they also led to the development of new weapons and tactics. Battles that had once been fought with rocks and spears eventually moved on to bronze swords and arrows, then primitive cannons and firearms, to aircraft, today’s drones and more.

Over the last 3,000 years, the entire concept of war has evolved and today the military and defense industries are among the largest and most profitable on the planet. According to the Aerospace Industries Association (AIA), the U.S. aerospace and defense industry generated a total of $62.6 billion in federal and state tax receipts in 2015, the most recent year that data is available. That figure was up 2.9% from $60.9 billion in 2014 and $60.6 billion in 2013. 

Overall, the defense industry posted more than $604 billion in sales in 2015, with end-use buyers (such as militaries, defense contractors and others) accounting for 58% or $349 billion of that total, followed by the industry’s supply chain (parts suppliers going to larger manufacturers) with the remaining 42% or $256 billion. Direct sales brought in an additional $181 billion in the U.S. alone.

By 2018, defense spending totaled $622 billion, accounting for about 3.1% of U.S. GDP.

And military technology is a strong job creator as well. Per the AIA report: “The U.S. Aerospace and Defense (A&D) industry is the world’s leading innovator and producer of technologically advanced aircraft, space and defense systems and supports one of the largest high-skill and high-wage workforces in the nation. Indeed, in 2015, the U.S. A&D industry supported nearly 1.7 million jobs in companies producing products and services for the industry’s commercial aerospace and defense manufacturing sectors. Of the jobs supported, 697,000 or 42 percent, were attributable to firms producing end-use goods and services, such as aircraft, space systems, land vehicles, ships and armaments, while 965,000, or 58 percent were attributable to the industry’s extensive supply chain. Combined, these jobs accounted for approximately two percent of the nation’s total employment base and 13 percent of the nation’s manufacturing workforce.”

What is the Defense Industry?

At the highest level, Webster’s dictionary defines the term “military” as anything “relating to soldiers, arms, or war or relating to armed forces.” This can include both ground and air forces as well as naval forces as well as the work “performed or made by armed forces.” Simply put, military forces and the related defense industries are those dedicated to fighting wars and working toward national defense, regardless of country.

The industry that supplies the world’s militaries, as well as its defense contractors and private security forces, is broadly included in the defense industry, which manufactures and sells weapons and military technology. This includes everything from firearms, to military aircraft, vehicles, software, tactical clothing and more, as well as the servicing of military material, equipment and facilities and other logistical and operational support.

Defense and aerospace companies are involved in the development, production and marketing of “guns, artillery, ammunition, missiles, military aircraft, military vehicles, ships, electronic systems, night-vision devices, holographic weapon sights, laser rangefinders, laser sights, hand grenades, landmines and more.”

Notable companies in the military and defense sector include Boeing, EADS/Airbus, United Technologies, Raytheon, Northrop Grumman and General Atomics Aeronautical Systems. Symantec, McAfee, Trend Micro and EMC are among the industry’s key security software and technology providers.

Why Invest in Military and Defense?

To put it mildly, defense is one of the world’s largest, most stable industries. As long as there is conflict, as long as there is war, there will be demand for new weapons systems and technology.

That’s one reason why Deloitte, in its 2019 Global Aerospace and Defense Industry Outlook said: “In 2018, the global aerospace and defense (A&D) industry recuperated and experienced a solid year as passenger travel demand strengthened and global military expenditure continued to rise. The industry is expected to continue its growth trajectory in 2019, led by growing commercial aircraft production and strong defense spending.”

Among the growth catalysts cited by Deloitte are intensifying geopolitical tensions all over the world, changes to international trade agreements that have the potential to disrupt the global supply chain as well as M&A activity that’s sweeping across the industry as suppliers look to cut costs while also increasing production. All of these factors are expected to drive new demand for military equipment and defense spending in markets all over the world.

And that’s to say nothing about the new technologies that are redefining the space. Deloitte cites intelligence, surveillance, target acquisition and reconnaissance (ISTAR) technologies, as well as cybersecurity and new types of unmanned aircraft as key growth levers for military spending going forward.

How to Invest in the Military

Of course, it’s impossible for investors to participate in the military activities that are controlled by national budgets. But profits can still be found in the companies that are the direct recipients of that military spending, including weapons manufacturers, technology providers and more.

A search on Magnifi suggests that there are a number of different ways for investors to get involved in Military & Defense.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.


Water

How Water Became an Investment Opportunity

In July 2010, the United Nations declared that access to safe and affordable water is a basic human right. Since that declaration, the world has made improvements towards broader access, but there is still a very long way to go.

According to a June 2019 study by UNICEF and the World Health Organization, roughly one-third of the global population does not have access to safe drinking water today. Access to safe drinking water means “drinking water from sources located on-premises, free from contamination and available when needed.” More troubling still, the study also found that roughly 785 million people worldwide lack basic water services entirely, and some 144 million are reliant on untreated surface water.

The World Economic Forum’s 2019 Global Risks Report, which annually identifies the most pressing global challenges, placed water crises among the top four risks, just behind extreme weather events, failing to prepare for climate change, and weapons of mass destruction. As the effects of climate change spread and become more pronounced, problems surrounding access to clean water are only expected to increase. According to the World Health Organization, roughly half of the world’s population will be living in water-stressed areas by 2025.

So, what are we to do with this troubling information? Throw up our hands and wait for someone else to sort it out? Innovators across the globe think not. They are looking to the future, and to technology, to develop the systems that will provide access to clean water across the globe. As they work to address one of the most pressing problems of our time, they will need capital, and lots of it.  For those interested in investing in this rapidly-growing sector, however, there are a few important points to understand.

The Trouble with Water Access

At the heart of the global water crisis is the fact that water is too scarce in some places, too abundant in others, and the water that we do have access to is often expensive to treat. It is often not feasible to move large amounts of water great distances, and techniques for capturing and cleaning water in one place will not necessarily work in another.  As such, innovators are coming up with local solutions to this global problem.

Water is often in short supply in the arid Atlas Mountains of Morocco, and climate change is driving the region into deeper and more persistent drought. After learning about fog harvesting used in other parts of the world, a Moroccan nonprofit teamed up with a German company, Aqualonis, to design and install a massive array of nets high in the mountains to harvest fog rolling in from the Atlantic Ocean. The project doubled the amount of water available to people in surrounding communities. Following the success of the Moroccan project, Aqualonis is planning several other fog catching projects across the globe.

Another striking innovation comes from Cody Friesen, founder of Zero Mass Water. He discovered a way to “pull” water from the air using solar panels, even in places where the air is quite dry. The panels have been installed in 33 countries across the globe, and they are providing clean drinking water to communities, refugee camps, and businesses. Zero Mass Water is now backed by a $1 billion fund led by Jeff Bezos and Bill Gates.

The Market Opportunity in Water

According to investment firm RobecoSAM, “Market opportunities related to the water sector are expected to reach USD 1 trillion by 2025. Companies that are early to respond and take steps to exploit the market opportunities associated with these water-related challenges are more likely to gain a competitive advantage and achieve commercial success.”

The global water crisis is not going away on its own, and climate change is only going to make the situation more dire in coming years. Investing in companies addressing the global water crisis makes financial sense because there is a growing demand for an increasingly finite resource.

The case can also be made that investing in water innovation is also a socially responsible investment. We are going to need many more innovations in the coming years to fully tackle the global water crisis, and investing now in companies already at the forefront of the fight will encourage further innovation.

 How to Invest in the Future of Water

You cannot invest in water itself, of course, but you can invest in companies creating solutions to the global water crisis. For instance, the AllianzGI Global Water Fund specializes in “investing in companies offering solutions to help solve the global water challenge.”  This fund returned an annual average of 9.83 percent over the past 10 years, compared with 5.37 percent for its average Morningstar peer.  A search on Magnifi suggests that there are a number of other ways to profit from water innovation as a whole.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.


Driverless Cars

Uncovering New Opportunities in Autonomous Vehicle Technology

It still might sound like science fiction, but driverless cars are already on the road around the world. While the leader of the pack, Google’s Waymo, has logged over 10 million autonomous miles, it’s not the only car driving itself around as of 2019.  Russia’s Yandex just announced that its self-driving cars have driven 1 million miles. And Tesla’s autopilot miles top 1.2 billion.

That’s a lot of ground covered.

And, it’s not just single-driver cars. Beep, an autonomous mobility solutions service, piloted a public self-driving shuttle earlier this year in Florida. And Beep, while unique because it’s public, isn’t alone.  Waymo officially joined California’s Autonomous Vehicle Passenger Service pilot program this past summer, allowing it to offer Waymo employees and their guests shuttle rides. Waymo is one of four companies in California, including AutoX, Pony.ai, and Zoox, that operates driverless vehicles. In addition to California, Pony.ai also operates out of a headquarters in Shanghai.

In other words, driverless car technology is in use from coast to coast and around the world.

What is a Driverless Car?

Although most of us are likely still driving our cars to work rather than reading a book or catching up on emails, it won’t be long until that’s no longer the case.  For instance, if you’ve recently purchased a car, you likely opted for the latest safety features— the automatic braking, the blind spot detection, parking assistance, and so on. And, if you did so, you aren’t alone. The increasing consumer adoption of advanced driver-assistance systems (ADAS) is paving the road toward more full-featured autonomous technology.

Consumer buy-in of ADAS technologies also incentivizes car companies to invest their further development.  Hyundai, for example, recently announced plans to invest $35 billion in self-driving and electric vehicles. No company wants to be left behind in the race for fully autonomous vehicles, especially given the present consumer demand for ADAS features.

Beyond increased buy-in, the technology is also becoming less expensive for manufacturers, with the cost of light detection and ranging sensors dropping by a factor of ten over the last five years.

Why Invest in Driverless Cars?

All that said, the applications of driverless technologies are nearly endless, and they will be increasingly in-demand as traffic continues to plague growing metro areas and logistics costs rise.

One possibility for how the technology might show up in our day-to-day lives is the concept of robo-taxis. People have already adopted ride-sharing, priming consumers for easy adoption into this new driverless transport option. Uber is already working on this, securing $1 billion in funding earlier this year to work on its own self-driving cars.

A second possibility is platooning— using one vehicle that transports goods as the leader of one or more trucks doing the same. The lead truck, potentially with a driver, will provide the driverless trucks following it with predictability.

Even more, if driverless cars are mixed with infrastructure adaptations, it could lead to radically effective traffic solutions. According to a recent study published in Science Daily, driverless vehicles have the potential to improve overall traffic flow by at least 35%. One possibility is for congested cities to create a driverless car lane— like an HOV lane—that allows speeds higher than previously thought possible. Driverless technology can also be used to streamline public transportation.

How close is all of this today? Closer than many might think.

Researchers are continuing to help driverless cars improve their decision-making in edge cases, or situations that are not black and white. This might mean recognizing a pedestrian that’s carrying something large across the road or adjusting course when a pedestrian forgets something and quickly changes direction in the road.

But still, even though driverless vehicle technology faces challenges, the research dollars are hard at work and the technology is imminent. When it comes to society going driverless, it’s a matter of when, not if.

How to Invest in Driverless Car Technology

So what’s the best way for investors to get involved as autonomous technology starts to hit the mainstream? A search on Magnifi suggests that there are a number of different ways to profit from the driverless trend as a whole.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.


Big Data

Big Opportunities in Big Data

We create an astonishing amount of data every day. From the photos we upload to social media, to the swipe of a card when we hop on the bus, the average person produces tremendous amounts of data at every turn. Delving into this collective ocean of data to find discrete patterns and trends may seem impossible, but innovative analytics are making it a reality thanks to Big Data.

Organizations across the globe are beginning to recognize the value in unlocking information imbedded in large, complex data sets.

Whether it’s hospitals using algorithms to catch infections early, researchers developing cutting-edge tools to map the furthest reaches of our universe, or the NHL deploying “smart pucks” to capture live data and enhance fan experience, our world is increasingly shaped by our relationship to data. Innovators at the leading edge of big data analytics stand to gain tremendously as technology improves and novel applications are discovered in the coming years.

For those interested in investing in this rapidly-growing sector, however, there are a few important points to understand.

What is Big Data?

Big Data refers to large, complex data sets that are difficult to process using traditional analytics. Included in this definition is the process of storing and analyzing the large, complex data sets.

According to IBM, a leader in big data analytics: “Analysis of big data allows analysts, researchers and business users to make better and faster decisions using data that was previously inaccessible or unusable. Businesses can use advanced analytics techniques such as text analytics, machine learning, predictive analytics, data mining, statistics and natural language processing to gain new insights from previously untapped data sources independently or together with existing enterprise data.”

Why Invest in Big Data?

According to the International Data Corporation (IDC), global revenues for Big Data analytics are forecast to reach $189.1 billion in 2019, a 12.0% increase over 2018 revenues. IDC also predicts the annual growth rate increasing to 13.2% throughout the next five years, with 2022 revenue reaching $274.3 billion.

Focusing in on specific sectors, the trend becomes even more pronounced. The value of big data analytics in the healthcare sector is projected to grow at an annual rate of 19.1% between 2018 to 2025, and the value of big data analytics in law enforcement is projected to grow at an annual rate of 17.5% between 2015 and 2022.

Organizations of all sizes are investing in big data solutions to address challenges and increase competitive advantage.

In a recent survey of executives at industry-leading firms, 92% responded that they are accelerating the pace of investment in big data and AI. Analytics are also becoming more affordable, bringing the technology within the range of small and midsize businesses. According to the IDC, roughly one quarter of global revenues for big data analytics in 2019 will come from businesses with less than 500 employees.

And 2019 has already been marked by a number of notable acquisitions in the data analytics market. Salesforce acquired Tableau for $15.7 billion on August 1, and Google is in the process of acquiring Looker for $2.6 billion.

As noted by Amir Orad, CEO of Sisense, a business analytics software company: “The value of the data analytics market can’t be ignored. The Looker and Tableau acquisitions demonstrate that even the biggest tech players are snapping up data analytics companies with big price tags, clearly demonstrating the value these companies have in the larger cloud ecosystem.”

In 2015, it was estimated that the possible value of intangible assets, including data, in the United States alone was roughly $8 trillion. As organizations increasingly come to view their data as capital, it will become more and more of a strategic imperative to put that capital to work.

This presents a unique opportunity for investment. As enterprises invest in big data analytics, so too should savvy investors consider the companies supplying the analytics.

How to Invest in Big Data

What’s the best way for investors to get involved in this growing tech sector? Big Data crosses over a number of different specialty areas, including cloud storage, data science and analytics, but a search on Magnifi suggests that there are a number of different ways to profit from the big data trend as a whole.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.


Robotics

Investing in the Future of Robotics

For many people, the term “robot” brings up a lot of preconceived notions, ranging from the stereotypical humanoid robots of 1950s science fiction films, Luke Skywalker’s android companions from “Star Wars,” or even the friendly and loveable Wall-E. But the Hollywood version of robotics has always leaned heavily on the fiction side and light on the science.

In the popular imagination, they remain the types of machines that only exist in some far-off future timeline.
But today’s robots are, in fact, more capable than ever. They’re being used in everything from automotive manufacturing, to heavy machinery, to logistics and supply chain handling, order picking, meat processing and much more. Anywhere there is a repetitive, isolated task, you’ll likely find industrial robots picking up at least some of the workload in order to free up their human coworkers for more complex, higher value tasks and protecting them for dangerous work.

According to the Robotic Industries Association, there were more than 250,000 robots in use in the United States as of 2017, mostly in the form of heavyweight “automated arms” that can be used to perform industrial tasks such as welding, painting or assembly. And their ranks are growing rapidly. The association also found that the North American robotics market grew 7.2% in the first half of 2019, with U.S. and Canadian companies ordering nearly 16,500 robots in that time, worth nearly $870 million.

Automotive manufacturers accounted for most of this growth, followed by the semiconductor and electronics industries, the life sciences, and food and consumer goods.  And this is the continuation of a trend that industry watchers have noticed since at least 2010. The ongoing trend toward automation, paired with new innovations in robot technology, have ushered in a golden age for robotics, driving record-setting sales across the industry and helping it grow at a compound annual growth rate (CAGR) of 19% between 2012 and 2017, according to the International Federation of Robotics.
Demand for robots is rising, and it isn’t slowing down anytime soon.

What is Robotics?

In terms of specifics, the Oxford English Dictionary defines a robot as: “A machine capable of carrying out a complex series of actions automatically, especially one programmable by a computer.”  It is, in effect, a machine that can carry out physical tasks in the real world. Just as R2D2 and C3P0 in “Star Wars,” they can be programmed to function both alongside and in place of human labor.

But none of this is particularly new.  Industrial robots have been commonplace in workplaces around the world for decades. In fact, the industry traces its roots back to an industrial robot named Unimate, which was installed on a General Motors assembly line in New Jersey in 1961, tasked with moving die castings from an adjacent assembly line and welding them onto automotive body panels. Its work helped save its human counterparts from a dangerous and labor-intensive job.

Since then, robots have only become more capable.

The robotics industry today is considered an interdisciplinary branch of both engineering and science that brings together a wide range of different specialties and skills in the production, development and maintenance of robot machines. This typically includes the work of mechanical engineers, electronic engineers, computer scientists, artificial intelligence experts and more, to “oversee the design, construction, operation, and use of robots, as well as computer systems for their control, sensory feedback, and information processing.”

Why Invest in Robotics?

In short, we’re still just scratching the surface of what is possible in robotics.
Advancements in Artificial Intelligence are leading to smarter, more capable robots; miniaturization is shrinking the size of these machines dramatically, opening them up to vast new markets and applications; and of course the continuing trend of falling prices across all hardware segments due to modern efficiencies means robots are becoming available to far more buyers than ever before.

According to Mordor Intelligence, a market research firm: “The robotics market was valued at USD 31.78 billion in 2018 and is expected to register a CAGR of 25% over the forecast period of 2019-2024. In the past decade, industrial robots used to be high priced, due to which, the ROI is expected to be achieved after a decade. However, presently, smaller collaborative robots are priced for companies to receive ROI in months, instead of decades, often costing around USD 20,000. Declining sensor prices and increasing adoption have further aided lower costs.”

How to Invest in Robotics

But how can investors get involved in this growth opportunity for modern robotics? A search on Magnifi suggests that there are a number of different ways to profit in robotics, including ETFs, thematic funds and more.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.


Fintech

Uncovering New Opportunities in Fintech

The banking and finance industries don’t have great reputations when it comes to innovation. And why should they? Their products and services – including both personal and commercial banking, lending, advising and investment services – are tried and true businesses, having stood the test of time and returned profits for generations.

Frankly, for many years there was no good reason for finance to try new things.  But that’s changing, and the age of technology-driven financial services has officially arrived. It’s changing how and where we bank, how consumers borrow and even how assets are transferred internationally.  Legacy institutions like JPMorgan are on board, investors are pumping billions into the space and, as of 2018, there were 39 VC-backed unicorns in fintech worth a total of $147 billion.  For those interested in investing in this fast-growing sector, however, there are a few details to understand first.

What is Fintech?

At the highest level, financial technology – aka fintech – refers to the application of digital and online technologies to the banking and financial services industries.  But that means far more than just mobile access to your checking account.

According to the World Bank, the industry is: “creating new opportunities and challenges for the financial sector – from consumers, to financial institutions, to regulators. Fintech offers many opportunities for governments, from making their financial systems more efficient and competitive to broadening access to financial services for the under-served populations.”

Why Invest in Fintech?

As mentioned, the industry is growing very rapidly.  According to a 2018 report from Deloitte, a total of 668 fintech companies were founded in 2014, the high watermark to date, encompassing those working on technologies for Banking & Capital Markets, Investment Management, Insurance and Real Estate. And, although that growth has slowed in recent years, an increasing amount of venture capital investment is finding its way to larger, more established companies than in the early days, indicative of a mature market coming into its own.  And there’s room for this trend to continue.  After all, the total market cap of the fintech sector as of today is less than $300 billion, and PayPal accounts for $123 billion of that total. That might sound like a lot, but when you consider the fact that the traditional finance industry has a market cap in the range of $68 trillion USD worldwide, according to The World Bank, it becomes clear that fintech still has a lot of room to grow.

And it makes sense. To date, we’ve just begun to scratch the surface of the many ways that technology can and will disrupt traditional financial services. We’re now living in a world of digital payments, mobile services and even virtual currencies, but we’re about to enter an era of real, personalized automation that has to-date been impossible.

How to Invest in Fintech

Given all of this opportunity for growth, let’s look at a few ways to invest directly in the fintech sector. After all, the majority of the fintech companies out there today are still private and closed off to most investors. But a search on Magnifi suggests that there are other ways to profit off of the growth of this red-hot new industry.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.