In my current Product Management job with a Privacy software company, my team is in the process of building something that’s pretty freakin’ cool. The only thing holding us back is a bit of ambiguity on what we are actually building.
Sounds crazy, right? When it’s time to innovate, this isn’t what you want to hear. Simply put, we’re trying to get ahead of a trend by introducing a product that not all of our customers know they need. But we’re still scratching our heads on exactly what to build and how best to build it.
We know the basic problem we’re solving from a high level. The question is how far we want to take it with each component. AKA what is a waste of time and what will stick? What are people actually going to care about in 2–3 years?
As a product of this, I’ve been thinking quite a lot about innovation. What it means, who stands to benefit, at what level is it too much, how to compare, the works.
What I’ve boiled it down to is that 95% of the magic happens before pen ever even hits paper.
Thinking of the big picture first
So many people miss this because they dive head first too quickly into the detail. What is the point of what we’re building, and does that point differ with where we’re trying to go? Because the truth is there are different flavors of innovation. Those that create new revenue streams, those that better the common good, and some that just make a process smoother.
How are your engineers and designers viewing the initiative in the grand scheme of things? Oftentimes I realize that this is a point that’s missed. I find myself backtracking on a design call to align our understanding of where we fit in the market and where we’re planning to be.
The building blocks are there. Your team just has to be in the loop on the direction you need to go. Without the big picture you’re building blindly.
Thoughtful preparation is a derivative of innovative design
Try going into design with your architect, a blank slate, and no plan of action as to what you need to solution. On the contrary, go into it with too structured of a plan that you conjured up yourself. You’re going to come out with rubbish 2/2 times.
Designers, engineers, and architects possess a creative brilliance. One of the most critical things I’ve learned is to step aside and let them do what they do best.
But to actually innovate and create a game-changing product, we have to think ahead to what tomorrow’s problems are going to be. To help guide our design in the right path and make sure we are designing for tomorrow, I make a list of as many of these problems (and some of tomorrow’s hypothetical problems) as I can think of.
Enough to get wheels turning while hopefully considering the right constraints and assumptions to account for some of those what-ifs. Then, I get out of the way.
The clueless mindset
A mentor and respected colleague of mine had good advice for how he tackles problem solving with a team. “Sometimes I go into a meeting and ask dumb questions like I don’t know how the hell anything works.”
We pride ourselves on being in the weeds with the technical details and understanding the intricacies, but sometimes the exact opposite approach is what can drive change. A simple “why” or “why not” goes quite a long way when you’re rethinking a solution.
When you’re laser-focused on the big picture and show up with an anything-can-happen mindset, you’d be amazed at what people will come up with.
You started a business to build a path to freedom. Why does it feel like the exact opposite is the case?
Every single business owner on the planet agrees; scaling and managing a business is a ton of work. That does not mean all of it is necessary.
Truly successful business owners, those that have built sustainable businesses that can operate without their presence, are particularly adept on just two things: maximizing net income, and reducing the amount of personal time required.
There are four things you can do right away to make your build sustainable businesses.
Take control of the books
It starts with organization of your business expenses. It can certainly feel difficult to balance this with competing priorities, but it is important to manage your business expenses completely separate from your personal finances. This helps you get a picture of the true cash inflows and outflows of a business, but it also helps put more money in your pocket at the end of the year.
Tax deductions can be the difference between taking money home at the end of the day. One powerful example? The IRS Standard Mileage Rate for personal car use is 57.5 cents per mile for business use, meaning that every 1,000 business miles you expense is $575 in direct deductions. But you have to be able to provide a mileage log showing the trips in the event of an IRS audit.
Deductions can apply for tons of other business expenses, and you can likely audit your expenses to understand where the business isn’t seeing the proper ROI. But you are likely to miss out on these efficiencies without the proper organization and expense tracking system in place.
Luckily for business owners, we live in the internet era. Many of the arduous tasks like maintaining mileage logs or tracking expenses are now managed by applications. Cloud tools like Quickbooks help easily manage all expenses, and apps like Everlance record your trips for automatic logging.
Grow revenue and save time by focusing on your strengths
No one is the best at everything, and Marshall Goldsmith’s book “What Got You Here Won’t Get You There” is the perfect reminder of that. Even if your venture has seen success, you may be seeking growth, more free time, or both.
Getting to the next level may require honing in to focus on what you’re best at. Whether it’s sales, building a product, or simply networking with clients, focus on it. It doesn’t have to be all at once, and when you step into a more focused role you’re taking a step to increase the overall autonomy of the business.
Know when to outsource
Then comes the question of whether to outsource part of the day-to-day activities. Start with the task you spend the most time on. Ask yourself “could someone else do this just as effectively?”, and if so, consider your options for outsourcing. There are numerous opportunities for automation and outsourcing like freelance platforms, virtual assistants, and intuitive tools that may eliminate the need altogether. It just takes a quick Google Search.
By doing this, you’re increasing your potential on the business, while reducing the amount of time you have to spend.
Remember the reason you started
Lastly, take care of yourself. Running a business or solo venture can be taxing on your personal well-being. When you weigh the benefits of it vs. just being employed, you have to take everything into account and make sure that you’re fairly compensating yourself and preparing for your future.
Don’t let your business run your life. Start from step one and take control by leveraging the tools and resources that are available today to build sustainable businesses.
If you’ve done so much as opened your smartphone today, you have indirectly come in contact with a number of APIs. Opened the Twitter app, shopped online, or checked prices for a flight? By now likely hundreds of unique APIs.
APIs have changed the way we conduct business, and they are here to stay. Over the next few years we’ll start to see them shift even more from the technical talks to the business conversation. Here we are explaining APIs and how they work.
What is an API?
API stands for Application Programming Interface. Helpful, right?
In concrete terms, an API is an exposed function, or piece of code, that allows access to data for the consumers of a product or service. Some may describe it as a messaging tool for sharing data, which is an accurate way to depict it. APIs allow lightweight, fast sharing of data for B2B or to consumers.
Think of an API as a pre-built query for important information you may want to know. When you request the information for your specific data requirements, it returns a response with what you need. Let’s take a look at a few examples used in business today.
Examples of APIs that exist today
Think of a product or a service that contains information you need. Maybe it’s an online store, your banking app, or a restaurant reservation system. When you enter a specific search parameter (Women’s shoes, Size 6, Sandals), it displays the shoes they have in stock.
Now let’s take it a step further for some of the business uses. To offer a service or product, businesses may have to rely on the data of other businesses. Take for example Mint, the budgeting application. It’s imperative for Mint to have integration and API access to credit card companies, banks, and lenders. Without it, the budgeting process would be much more arduous for the end-user.
Back in college, I developed a simple program for an IT services company. This program would calculate and display a coverage map. The objective was to find, given a list of addresses for service operators and a list of addresses for the retail locations, what percentage of retail locations of the 14,000 in the list would fall within a 90-mile serviceable range from the operators. But for the application to work, I had to be able to calculate driving distance for each of these. Enter the Google Maps Drive Distance API.
By passing the two addresses from my program as parameters, this specific Google Maps API would return drive distance between the two. Because of the data from the Google Maps API, I was able to provide value with my program to determine how many locations would fit within the 90-mile range of the operators.
APIs exist for more than just retrieving data. Let’s use a reservation system for example. When you check availability for a hotel online you may be using the “Check Availability” API to query for the selected dates and location. And when you book a reservation you’re using the “Reserve Room” API to insert a new reservation record in the system.
Now we’ve seen some examples. Let’s dive into more of the details.
How APIs actually work
Most APIs today are actually built on the exact same HTTP protocol. An API is hosted on a server endpoint, similar to a website, which will be a specific URL. For security, APIs leverage “API Keys”, also referred to as “auth tokens” included in a request payload. These are used validate that a request is coming from a trusted user.
An API call to an endpoint includes information in the request, including the parameters, auth token, request method, and more. The server logic processes this combination of information to determine which logic to invoke. An example is below.
Good APIs are specific, well-documented, and don’t change often
APIs should be very specific in the technical and business functions they perform. This makes the process more efficient for the server that the API is hosted on, leading to faster response times that benefit both the producer and consumer of the data. APIs should also be well-documented in order for the end-user to understand what function is actually being performed.
Businesses write API calls to other services into their code. For this to work, is crucial for the producer of the API maintain the same “contracts”, or messaging payloads. One small change in the text required could cause an error and render an entire application useless if it relies on data from the API.
APIs will only become more important over the next few years
As we process more and more data, the need for flexibility in how we process and manage this data will increase. We have already begun to see some companies emerge that are “API-first”, meaning they prioritize their API development over a user interface and do most of their business through this.
5G is here, and it’s set to bring a number of changes to the way we transmit information, conduct business, and even interact with one another. With changes of this caliber, we are likely to see some industries disrupted and brand new ones formed. We are going to cover four ways to invest in the 5G wave.
Investment #1: 5G Hardware and Infrastructure
Although 5G simply means the “fifth generation” technology standard for mobile networking, there are a number of new technologies and infrastructure changes that correspond to this. 5G is bringing enhanced speeds and bandwidth, as well as ultra low latency. This decrease in signal processing time is what will allow real-time communication of information.
5G signals will travel at higher wavelengths than the predecessor generations. Due to this, the signals do not travel as far and cannot penetrate through walls as easily. Therefore, 5G will employ new hardware called “small cells”. Instead of one large tower servicing thousands of devices, small cells will be placed throughout cities on power poles and rooftops.
Small cells are one example, but there are numerous other new hardware technologies that are being deployed with 5G. This is a lucrative opportunity for internet hardware and infrastructure companies, as the rollout of 5G is spanning over the next ten years and will have a global footprint.
Investment #2: Internet of Things (IoT)
The cross-section of Internet of Things (IoT) with 5G could have an entire encyclopedia of content within itself. 5G is going to bring the total emergence of IoT, because the technology enables the perfect domain for IoT to thrive. 5G’s coverage will be further-reaching than previous generations, meaning more devices can be connected than ever before. It also brings the increased bandwidth and ultra low latency that we discussed, meaning an entire new realm of possibilities for information that can be transmitted.
We are used to IoT in the sense of smart appliances, cameras, thermostats etc. But 5G will open the floor for micro-devices, mainly referring to sensors. These are going to be used in numerous capacities from agriculture, utilities, power generation, and autonomous vehicles, just to name a few. These IoT devices will lead to a connected world like we could not have fathomed twenty years ago.
With this will come countless areas for investment. Quite literally, pick an industry and search “[chosen industry] + IoT”, and see what is already in progress. We covered some of the agriculture use-cases here.
Investment #3: Cloud and Edge Computing
All of these additional devices transmitting more information than ever before means one thing. There will be an even greater need for cloud infrastructure to process and contain information. Cloud providers will see significant demand increase as there will simply be more applications that capture more data.
We will also start to see a new trend of cloud computing emerge. The focus of this is on placing the data centers even closer to the collection points. When considering autonomous vehicles, for example, the information transmitted from a sensor on a car in motion needs to be processed extremely quickly. Even though these signals travel at the speed of light, a data center 1000 miles away may not be as efficient when information is needed in a matter of milliseconds.
This new trend of cloud is called Edge Computing. The primary difference is that the data processing happens physically close to the collection point, or on the “edge” of the cloud. As 5G technology will allow this [almost] real-time communication, the infrastructure will be changed to accommodate it. You will likely see existing cloud providers shifting into this. New providers will also emerge that focus specifically on edge computing infrastructure.
Investment #4: Security
With all of the new technology and communication touchpoints that 5G brings, one thing is certain. Security is not only going to be of utmost importance, it also has to be intertwined throughout a growing network.
It starts with the 5G infrastructure. As software routing methods are replacing some of the older hardware mechanisms, new security standards and methods will have to be introduced. In addition, an entirely new industry of IoT device security will emerge.
This also comes during an era where consumers have more attention than ever before on privacy. Companies that handle sensitive customer data will have to ensure that secure methods are used for storing, anonymizing and protecting this data across a wide variety of devices and applications.
We have only scratched the service on 5G, cloud, edge, and IoT security. A connected world will undoubtedly be subject to cyber attacks and attempts from countless angles. The cybersecurity industry will begin to look completely different over the next ten years.
5G is the most transformational new technology the world will experience in the foreseeable future. With this will come new ventures, companies, and plenty of avenues for investment.
Since humans began practicing agriculture thousands of years ago, technology has consistently changed the way society has farmed. From rough hand tools in the BC era, to the cotton gin in 1793 and McCormick’s reaper in 1831, technological advances have made it possible for humans to grow and produce crops much more effectively.
It can be difficult to discern at times, but technological improvements are still advancing agriculture across the world today. The next ten years are promising to bring incredible advancements to farmers, and we are going to cover some of the most significant ways technology will change the way we farm.
What does it mean to advance?
Farming may sound straightforward. You plant a seed, water it, harvest, and sell. There are air-conditioned combines with Sirius-XM radio and irrigation systems that make rainfall largely irrelevant. What else could be needed?
Let’s take a moment to break agriculture down into some of it’s moving parts. As it turns out, when we peel the onion back a couple of layers (had to do it), it’s actually incredibly complicated.
The average farm size in the US in 2019 was 444 acres, per the US Department of Agriculture, and over 70% of the total farms had less than $100,000 in sales. This likely means that most of the farms in the US have the bulk of operations managed by one person. For one person or even a small team, the list of roles and responsibilities can be quite exhaustive.
Peeling the onion back
Let’s start with planting. The most common nutrients needed for plant growth are nitrogen, phosphorus, oxygen and potassium. Before a farmer plants, the soil must be sampled and properly fertilized. Farmers must have a working knowledge of these elements and what a specific plant species may require.
After planting, the crops must be monitored. Depending on the crop, location, and climate they can be subject to diseases caused by various insects or pathogens such as fungi or bacteria. Lack of a specific nutrient in the soil can cause growth to stall. Animals can also destroy crops and reduce yield. Farmers have to constantly monitor the crops and know what symptoms to watch for in order to prescribe a solution. This can be both time consuming and costly.
What about equipment? While the specific equipment varies depending on what is planted, one thing remains true. Modern farm equipment is incredibly expensive. Farmers have to be able to gauge the equipment need based on the size of the operation they have. In addition to already being chemists and botanists, knowledge of accounting and finance is required here as well.
Farmers have to be able to map out future cash flow projections when considering equipment options. For new equipment, depreciation is tracked heavily in the financial statement to help ease tax burdens. For many farmers, used equipment may be the only viable option, so they must also be able to resolve any mechanical issues that may arise.
All of this, and the plants are still not even out of the ground. In most places, farmers at least have a couple of different options in what crops to grow. Therefore, when choosing where to invest an entire growing season, it’s important to have an understanding of the market. Farmers have to stay connected with international trade, tariffs, and global supply and demand to understand what prices may do.
In addition, it’s often essential for farm owners to be fluent in the more complex financial products, such as insurance and derivatives. In some cases, farmers will insure part or all of their crop or livestock to manage risk and protect against disaster. Larger operations may even engage in futures contracts on commodities to help hedge the risk of drastic price changes.
There is a point for explaining all of this. In order to truly understand all of the avenues that technology can have an impact, it helps to first break down the art itself. Agriculture has a ton of moving parts, and over the next ten years technology is set to bring sweeping changes.
Autonomous driving? Ag had it first
We hear all the buzz about autonomous vehicles on the roadways. As 5G is rolled out across the globe over the next few years we will begin to see this. But, what many may not know is that this has already been introduced for agriculture.
Autonomous tractors use much of the same technology that autonomous cars use. It begins with GPS to assess location, and leverages built-in sensors to avoid objects. Without the added complexity of other drivers on the road, this technology is already fairly stable and is largely available today in agriculture.
However, as 5G continues to be rolled out we will see this technology improve. With the ability to collect and transmit more information to the cloud, vehicles will become smarter and have the ability to report additional insights and metrics on the ground it’s covering. We’ve barely scratched the surface on what will be available here.
Agriculture and the Internet of Things
There are so many use-cases and opportunities here, so let’s first break down the meaning of the Internet of Things (IoT). IoT refers to the new wave of connected devices that we are starting to see throughout our homes. Smart refrigerators that can order new groceries or send tweets, cameras that allow you to view your pets from your smartphone, and thermostats that can sync to your calendar. Most people are familiar with at least one example by now.
But with IoT thus far, there’s been one limitation that has effectively confined the uses for this tech. That holdup is the internet, or more precisely, the lack thereof. To truly get the connectivity and reap the benefits of these tools, they have to be connected to some form of internet or cellular service. This has largely confined the devices (and the market for the devices) to be tethered to a structure or area with a WiFi connection.
Over the next ten years, we will see a drastic increase in the number and variety of devices that enter the market. The primary driver for this? Enhanced cellular and internet technology such as 5G. With the emergence of 5G, for the first time ever we will have high-bandwidth connection abilities, even in rural areas. This will bring connectivity without the need for a WiFi connection, which will enable low-power devices to transmit data even without a power cord. Companies have already begun on this tech and are rolling out new devices as we speak, so let’s take a look at what is coming.
Monitoring made simple with IoT
Enhanced IoT is coming for agriculture in all shapes and sizes. One of the technologies making the largest impact happens to be one of the smallest physical devices: sensors. These are small devices built to gauge and transmit a specific level or indicator for tracking.
Sensors are already being implemented across farms to help monitor various parts. Moisture sensitivity sensors are being placed in the soil to provide a more accurate reading of moisture level. This then opens the door for efficient, automated irrigation. Fuel tank and equipment sensors are helping to determine when preventative maintenance is needed or a fuel shipment is required. There are also livestock monitoring systems that track temperature on the animal as well as water levels and GPS positioning.
These sensors then are linked to other IoT devices that can act on the information provided. For example, smart irrigation systems can determine which range of sensors reported a lower moisture level. Once the area is determined, it can send a stream of water to that specific region of the field. This can serve to save water while also increasing plant cultivation.
And this is just some of what is already available. As these technologies improve, we will have better tracking on specific chemical imbalances in the soil or plants, oxygen flow, vital functions for animals, and pest control.
All of this is made available today via technologies such as Bluetooth, LoRaWAN and existing cellular service. As 5G is rolled out, we will see increased connection and deployment abilities as there will be a reduced need for these to be located near a central “hub”. Rather, all communication can be transmitted directly to an application for processing and analytical analysis.
Aerial imaging improvements
Drones are here, and they are proving to be quite useful for a variety of applications. One of these is through aerial photography. Farmers, real estate agents, surveyors and plenty of other disciplines are using drones to capture shots of land from the sky. One constraint with this, however, is the need for a human operator.
Autonomous drones are already being introduced and implemented today. These drones are able to deploy on scheduled missions to capture and transmit data before returning to the dock. Without the need for human intervention, these drones can begin to help immensely by capturing enough shots for an effective time lapse progression.
Now, farmers will be able to view the aerial footage of their crops on a daily (or even intra-day) basis. This means better monitoring of pests and diseases, as well as the ability to pool these pictures and use for AI-based modeling. For example, a cloud service that gathers thousands of daily photos of soybean fields will be able to leverage machine learning / AI to identify diseases and signs of nutrient deficiencies. This will lead to much earlier indicators that a crop may be in trouble. In addition, it will save time and fuel costs as it will reduce the need for a farmer to continuously drive around and monitor crops.
Over the next ten years we will see this technology become cheaper and more effective as it matures. With the continuous enhancement of solar power we will also see this become almost fully automated, as a drone will be able to operate solely off of the power from a solar panel, deploy on scheduled tasks set up through an application, and automatically transmit findings. This will all be able to be monitored through a smartphone.
You can’t write about the cross-section of tech and agriculture without mentioning solar power. There are a couple of applications that, combined with some of the other advancements covered, could prove to be extremely useful.
We now are aware of the sensors, autonomous vehicles, and new cellular technology that makes some of this possible. With the addition of maneuverable solar paneling that essentially allows power anywhere the sun shines, we will now be able to see even further enhancements.
Solar power will enable some of the tech that does require a power connection to be automated. Take feeding troughs or irrigation spigots for example. When a sensor sends a signal indicating that levels are low, or a scheduled job is set to run, a solar panel in an otherwise hard-to-reach area could enable motorized gadgets to run and help maintain appropriate levels.
These are simple use-cases, but farmers are a creative bunch. The concept of remote power mixed with cloud-based computing is important, and we will likely see a variety of applications introduced for this in the next few years.
Precision agriculture takes an entirely new meaning when greenhousing is introduced. Think of the same technology we’ve mentioned. Smart irrigation systems connected to soil sensors that can accurately assess when to water. Cameras that can watch plant growth and analyze image data to understand what cycles are normal. The added benefit of greenhousing? You can control even more variables.
With greenhousing we will start to see the most autonomous version of agriculture we have seen thus far. With the ability to monitor plants in a controlled environment as well as controlling for temperature, humidity and UV light, smart greenhouses allow incredibly precise cultivation.
These greenhouses are already in implementation. But, as the technology matures we will likely see rapid expansion of these. This is primarily due to the fact the overall start-up costs will be lower. Smart greenhouses will likely even begin to appear on rooftops and in backyards.
There are so many moving parts in agriculture. Until recently, the lack of connectivity and efficient power placement have made the industry suffer in the realm of technical innovation.
However, a new era of agriculture is beginning to emerge. Advanced technologies like autonomous driving/flying, artificial intelligence and IoT sensors, paired with enhanced connectivity and power generation, are going to completely change the way we farm.
Agriculture will be an extremely exciting industry to watch and invest in over the next ten years.
Investing during a volatile market can be intimidating. Large, daily price swings often lead to emotional decision-making and flawed judgment. Erratic market behavior can make even the most seasoned investors nervous about their portfolio holdings. When investing during a volatile market, invest wisely by keeping yourself rooted to these rules.
Before doing anything, secure your emergency fund
The first step has nothing to do with investing. Yet, this is the most important part, especially during volatile markets. It is crucial to have a six-month fund of necessary expenses (housing, bills, food, etc) stashed away. You’ve heard this before, but let’s talk about how it relates to investing.
Many have painstakingly learned in 2020 that anything can happen. Millions have lost jobs and entire industries have been turned upside down. This led to extremely volatile markets in which we have some seen market caps cut in half. This has had extreme negative effects on people that were not prepared.
Those that may have lost a job and had to liquidate investments to cover expenses may have only received a mere 60% or 70% of what they would’ve been able to draw one month prior. By selling and realizing a loss they’ve locked in their losses instead of having the flexibility to wait for stocks to rise again.
Situations like this magnify the importance of the emergency fund. Not simply from a personal finance perspective, but from investing as well. Before committing funds to your investment account you should be prepared to live without that cash for the foreseeable future.
Opportunities come along. Cash is king.
Don’t confuse this with the preceding text. From the standpoint of your investment portfolio, the cash in your emergency fund can not be touched. Nothing. Does not exist. What I am talking about here is the cash in your investment portfolio.
Volatile markets bring quite an array of challenges, but with the right positioning challenges become opportunities. Cash is an extremely important tool that gives you the ability to act on opportunities. As the old saying goes, cash is king, and investing during a volatile market is the perfect time to test this theory.
Having cash on hand gives you the ability to execute on an opportunity by purchasing shares of a company while it is “on sale”. Even if you currently maintain a portfolio and some of your positions declined in the short-term, you are able to buy in for a lower price and enter a position at a lower cost basis. This is what allows prepared investors to take advantage of downturns and come out with a better-positioned portfolio.
Opinions will differ, but it’s usually suggested to keep 5-20% of your portfolio in cash. (Obviously there are many factors here, so take this with a grain of salt and consult with a financial advisor.)
Don’t try to time the market
It is impossible to know exactly when something is going to bottom out or hit an absolute high. Technical analysts will produce charts and figures on moving averages, relative strength indices, etc, but no one can predict the future. Rather than attempting to time a market low, stick to a routine.
A common method is dollar-cost averaging. This is simply the practice of dividing your allocable funds for a position over time and entering at defined intervals. For investors that set aside a certain amount each month to invest, this concept is particularly effective. Rather than attempting to time the market and possibly succumbing to emotional pressures, using a simple formula like this usually is much more effective over time. This eliminates the common problem of “waiting until the right time” (which usually results in missed gains).
Stick with what you know
Investing in a volatile market is not a time to be adventurous. You may be surprised, but this can be more difficult than you’d think. Volatile markets always include increased news attention and overall “jitter”. There are more micro influences during these times and everyone seems to become professional investors or economists overnight. Stock market talk will creep into conversation more and more among friends and at the dinner table.
With increased attention to the markets and large swings, you’re bound to see extraordinary returns, and collapses. Take Eastman Kodak Company (aka Kodak, the analogue photography company). After a potential $765 million contract was introduced for the company to produce an ingredient used for COVID-19-related pharmaceuticals, the company immediately pushed a press release that sent the stock flying. KODK closed at $2.13 per share July 23rd before jumping to $33.20 six days later on July 29 (a 1458% gain). By closing Friday, Aug 21, it had fallen down to $6.88 per share.
Similar situations arise during volatile markets and can be easy to fall for, but this is where it’s important to stick to what you know. Yes, it may be hard to sit out on some of these as they’re rising, but you’ll be satisfied when you see your portfolio continuing to outshine in the long-term by not being susceptible to these influences.
Another point on this topic is the move to alternative financial instruments and markets, such as options, futures or foreign exchange. Similar to above, there will likely be increased influences that may drive you to consider pursuing enhanced returns. This is absolutely not the time to devote any attention or funds to a new venture in complex instruments. These are complex and take months, if not years, of research to learn and practice.
Remember the basics: Shop for deals
The best thing about declining stock prices? Deals, deals, deals. Benjamin Graham and Warren Buffet, two wildly successful and enduring investors, heavily reinforce this concept of value investing. As a value investor, you should be searching for quality companies that are poised to have future growth and positive cash flow. In addition, it’s best to find these companies on sale, AKA when the stock price and accompanying market cap may be under the intrinsic value.
Volatile markets may be characterized by large swings, but sometimes they do provide opportunities to invest in quality companies at a lower price. For investors that have a bit of cash on hand, this can be the right time to buy ownership in those companies.
Investing isn’t easy, especially in volatile markets. That’s why it’s important to have a plan and stick to it. Investors that follow their blueprint and aren’t swayed too much by external influences will often come out better than ever.
By now, you are likely at least vaguely aware of cloud computing. Everything is in the cloud. Want to store your pictures from your iPhone so you’ll have them forever? Sync to the cloud. The ability to share a trip itinerary with five of your friends and all edit the document at once? Edit on the cloud.
Cloud computing has come to play an integral part in our daily lives, whether we realize it or not. Much like how the internet changed the way we communicate and share information, cloud has taken that to the next level of connectivity. The ability to collect and process aggregate information from millions of devices and rapidly deploy software changes only scratch the surface.
As 5G is introduced, it’s promising to bring changes across seemingly every industry. We’ve heard the basics: transportation, healthcare, video conferencing, etc. but how will it serve as a catalyst for other technology changes? 5G will affect and maybe transform cloud computing, not only from the perspective of use-cases and applications for the technology, but the architecture and data flows of cloud as we know it.
Brief explanation of cloud today
Cloud computing, in the simplest form, is an infrastructure that gives the ability to store data on remote servers and transmit that data across the internet. The concept for cloud computing actually dates back to the ARPANET days in the 1960s, but the first application hosted in the cloud wasn’t live until 1999.
Cloud computing is what enables “Software as a Service” (SaaS), and other “as a service” models, which have become the most widely used methods for businesses to connect to consumers and other businesses. Cloud computing allows companies that want to host a website or application to move away from “on-prem” hosting. This means they’re able to forego the need to invest in data center equipment and provides much more flexibility in the amount of data that can be collected and stored.
A cloud provider such as Microsoft, Google, Amazon, etc. typically has data center “farms” in a few locations around the world. Traffic from customer applications and websites are routed there, sometimes thousands of miles from the laptop or smartphone of an end-user.
This is a mile-high-level overview of cloud computing that skips the intricacies of the protocols, hardware, scaling and other details (we’ll cover more on that in another post). The pertinent information here is the scalability and flexibility of cloud in that it enables companies to rapidly expand the amount of data they are processing without the needed hardware infrastructure.
Cloud meets 5G
5G is bringing sweeping changes to how we connect, interact, and live our daily lives. Thanks to increased bandwidth and low latency, 5G will provide the infrastructure to share more data than ever before, at almost real-time speeds. With this will come transformational changes to cloud use and infrastructure.
In today’s world, we have smartphones. We may interact with, say, twenty five applications on our smartphones on a weekly basis, and those apps transmit data to the cloud (as well as sharing to other apps). In addition, we use tools for work, speak with a voice-assistant at home, and perhaps use a smart-watch or fitness tracker. Needless to say, we are connected in numerous ways and are directly responsible for quite a lot of data transmitted.
You haven’t seen anything yet. The first change resulting from 5G will be the sheer amount of data processed by the cloud. Thanks to the increased bandwidth and reliability of 5G, more devices will be connected to the cloud than ever before. This is the IoT revolution that you’ve likely heard about.
More devices on the cloud leads to a different world
When you think IoT today, you likely think of household items. Thermostats, refrigerators and cameras are some of the common ones. With 5G, the realm for these connected devices will no longer be constrained to a WiFi connection. This means that we’ll begin to see new devices emerging, quite literally, everywhere.
Sensors will account for a large portion of the new technology. Small devices that detect and record basic information. But as these sensors will be able to be housed essentially anywhere and connected to the cloud, the possibilities will be endless.
This is where it can be fun to think creatively. Farmers and agriculture companies are already rolling out sensors for measuring soil moisture levels. Robotic automation in manufacturing and logistics will be much more enabled. Navigation apps can become much more effective by utilizing sensors in street parking spots to provide real-time visibility of the best place to park your vehicle. (Or simply directs your vehicle autonomously.)
In order to interact and serve their purpose, these devices will have to connect to some form of the cloud. 5G makes this widespread connectivity possible. This means that billions of new devices will be connected to the cloud across the globe, transmitting more data than the world has ever seen. But it doesn’t end here.
The real-time revolution
One of the primary cornerstones of 5G is ultra low latency. Thanks to new technology allowing this enhanced processing time, 5G will be able to support what is essentially real-time communication. This is what paves the way for the technologies like autonomous vehicles, AR/VR, and enhanced gaming.
In the simplest sense, faster processing will mean more data transmitted to the cloud. The need for cloud computing will expand, not only from an increase in data, but an increase in applications leveraging real-time processing.
Let’s back up and shift our focus back over to the fundamentals of cloud computing. We know that it involves connecting to data centers and that these data centers may be all over the world. Typically CDNs route web traffic from an application to data centers as close as possible to the client (end user). However, sometimes this server may still be thousands of miles away.
Radio frequency travels at the speed of light (almost.. slight delay due to atmospheric interference). This means that an autonomous vehicle sensing an object in the road and sending a signal to a server 900 miles away will have it there within a few milliseconds. But when dealing with real-time processing such as an autonomous vehicle, for example, these milliseconds can make a difference.
Cloud computing, but closer to the user?
Remember all the times you’ve heard how 5G was going to bring disruptive changes? Surprise!
Cloud technology will undoubtedly be critical in a 5G future, but it may look a bit different. This is what most are now referring to as “fog computing”, or more commonly, edge computing. The fundamental concept of edge computing is that it lies at “the edge of the cloud”. In another words – closer to the user. With a vastly higher number of devices connected and the increased need for real-time data processing, proximity will make all of the difference.
Edge computing: the new cloud or simply an extension?
The concepts to cloud computing are extremely similar. However, the jury is still out on exactly what this technology will look like. Currently, the cloud computing market is mostly dominated by a few large players. With the need for smaller “data centers” that are scattered around, will control remain with the current providers?
Many speculate that edge computing will not necessarily replace the need for cloud. After all, not every transaction has to be real-time. Therefore, a mechanism will likely arise that defines data movement priorities and what’s transferred where. Edge computing will handle the transactions that need to be processed quickly, while larger or lower priority transactions can be processed by a larger [more scalable] data center.
This brings an entire realm of new possibilities and changes. From security, to information tracking (enter blockchain?) and even real estate (where do all of the micro data centers go?). With cloud, and the newer “edge” computing, we’ll see data transfer completely differently.
Cloud technology has been the backbone for the majority of the information sharing we have today. With the introduction of 5G, this infrastructure will evolve. The cloud, as we know it today, will no longer exist.
5G is coming, and it’s promising to affect industries from gaming to agriculture and from retail to public safety. One sector that is often mentioned but generally understated is real estate. There are numerous effects, both direct and indirect, that 5G will have on both commercial and residential real estate. We will first cover the technological changes that make 5G different from cellular previous generations and then outline the effects on real estate.
What makes 5G different from previous generations?
5G simply means “fifth generation” of cellular technology, and with that comes not one, but multiple technological advancements. These advancements and changes provide lower latency (learn more here), increased bandwidth and better connectivity. Some of these changes, however, lead to an increased need for hardware to support the signals.
5G leverages radio frequency signals on a much higher spectrum than previous generations. While the latest LTE frequency range ranges from 600 MHz to 6 GHz, telecom companies implementing 5G will have signals still within the previous range, as well as higher frequency signals in the 24 GHz to 60 GHz range.
Get to the point
What makes this different is that higher frequency signals have a shorter range. Where 4G and past generations could suffice with a few large cellular towers that covered thousands of people, 5G will require a much more densely packed network of hardware.
Enter “small cells”. Small cells are miniature cellular “towers” that transmit and triangulate the signal. With a range of only 500-5000 ft. (depending on the frequency and amount of interference), 5G will require hundreds of small cells in densely packed urban areas. Thankfully, small cells live up to the name and are not like the gargantuan cell towers we know today. In fact, these are the size and shape of a pizza box, and can be deployed on light poles and existing structures.
Now let’s talk about real estate
One of the most obvious effects of 5G on real estate is the amount of places these small cells will need to be deployed. At least in cities, most people will spend the majority of their time indoors. As signals have a hard time penetrating walls, it will be necessary for almost every commercial building to deploy a small cell. This will typically come in the form of a lease, where telecom companies work with building owners to lease space on the roof for a small cell.
The real estate effects are not only limited to small cells. 5G will bring increased connectivity through the form of a massive Internet of Things. This will bring efficiency for developers who act and upgrade the technology for buildings. This should lead to improved margins and profitability.
What about residential real estate?
Small cells won’t only be used in densely populated cities, but in suburban areas as well. However, the current trend across small cell deployments has been to leverage existing infrastructure such as power poles. There may not be a significant opportunity for homeowners to lease space on their own homes for 5G cells.
Residential real estate may be affected by more indirect effects of 5G. The first of these effects? Autonomous vehicles. As 5G brings the connectivity and ultra low latency that enables autonomous driving, some speculate that the increase in use of autonomous vehicles will result in a shift away from large cities to suburbs and less densely packed areas. This is due to the perceived notion that autonomous vehicles will cause less accidents on the road and vehicles will operate in sync, reducing traffic.
Workers will also have enhanced connectivity while on the road, leading to the ability to begin/end their workdays from their vehicles. This makes a longer commute more manageable. In addition, the recent shift to increased remote work, along with improved connection speeds, may mean less time in the office altogether.
Other effects of 5G and autonomous vehicles on real estate
Jeremy Rifkin’s “The Zero Marginal Cost Society” (link) describes a futuristic world in which the costs of producing some goods and services becomes negligible. With this, ownership in some assets, such as a vehicle, becomes obsolete. This idea, mixed with the well-known “sharing economy” concept, paves a plausible path to a world where less vehicles are owned in densely populated urban areas. Instead, autonomous vehicles are utilized via automatic scheduling and simple ride-hailing to transport passengers.
What this could mean for real estate is a reduced need for parking. With more people using autonomous ride-hailing services, there will be a higher utilization rate of vehicles. After all, how many hours a week does your car sit in the parking lot? But this will translate to a reduced overall need. Some existing parking lots may be replaced by structures, and space in parking garages may be repurposed.
Last but not least, Virtual Reality
5G’s bandwidth and latency enhancements will make augmented/virtual reality more widely used across multiple industries. Real estate will certainly not be missed. VR will give the ability to view and tour homes, virtually, from brokerages or even a consumer’s home. This may translate to increased volume of viewing numbers of homes, which could have varying effects on purchase decisions. Perhaps with more consumers viewing homes they will go under contract more quickly. However, consumers may also feel that they can be more selective and under less pressure to commit from viewing virtually.
Virtual reality may also have effects on the short-term rental market for vacation homes. As users are able to take virtual tours, they will be able to select exactly what they want. This may also translate to a short-term spike in home renovations when this technology is rolled out as property owners will increase the marketability of their rental.
While some of the points above may be more speculative, there is no question about it. Real estate will be affected by the 5G revolution. As the world becomes more connected than ever before, there will certainly be even unforeseen effects to the way we live, where we live, and how we congregate.
Everyone wants to see their portfolio increase in value. It’s the reason for investing. Investors in today’s time are consistently barraged by news, solicitations for financial products and competitive micro influences that make you question if you are doing enough in your portfolio. So, there is no surprise that investing eventually leads to the question of how to get even better returns in less time. Starting in 2006, some Wall Street firms have tried to capitalize on this emotion with leveraged ETFs.
What are Leveraged ETFs
Leveraged ETFs are simply ETFs (Definition of ETF) that have additional amplification of returns by utilizing derivatives and debt. The firms selling these generally use borrowed money for the acquisition of options contracts, to track the daily return at a specific multiplier. You will typically see a leveraged ETF in the form of “2X” or “3X” of the index it tracks (3X S&P 500 ETF for example), meaning that the ETF tracks the daily price movement with a 2X or 3X multiplier.
At first sight, this may seem like a wonderful idea. After all, if you are bullish on a particular index or industry, why not capitalize on the gains? Unfortunately there are some considerable drawbacks, and we have outlined four primary reasons to avoid leveraged ETFs below.
Reason #1: Compounding Losses Outweigh Gains
This is the most significant reason to watch out for leveraged ETFs. Just as a leveraged ETF can produce magnified gains, the exact same thing can happen with losses. What is important to consider here is the compound effects of losses on the overall asset.
Let’s take the scenario below, in which an index we are tracking falls four trading days in a row, by 1.5% each day. Then, on the last day, it recovers by 6.23%, bringing the original investment of $100 back to even. Notice the returns of the 3X leveraged ETF. Even with the momentous gain of 18.69% (6.23% multiplied by 3), it does not return to the initial investment value.
This is because losses are magnified even further with compounding. Over time, a leveraged ETF will perform poorly relative to a normal index ETF.
Reason #2: Fees
Leveraged ETFs, unlike passively managed index ETFs, are actively managed. They typically have fees that can go unnoticed if you do not take the time to do your research. These fees are called expense ratios. While essentially all Mutual Funds and ETFs have a non-zero expense ratio, they typically are considerably higher than the standard index ETFs. This can add up over time and really reduce overall performance. Make sure you take the time to evaluate the fees before making any decision to invest.
Reason #3: Liquidity
If you must dabble with leveraged ETFs, be sure to check the average volumes to ensure there will be enough liquidity. This ensures that when you decide to sell you are able to execute the trade close to the market price. Low volume can seriously harm investors, especially on a down day, if you are attempting to exit a position and can’t get the order filled. Some leveraged ETFs trade with significantly lower volumes than their normal index counterparts, so you will want to check this before entering. In fact, as a rule you should be sure to check this for any position you enter.
Reason #4: Built for Traders, not Long-Term Investors
Leveraged ETFs consistently draw criticism from Wall Street. This is because of the widespread opinion that a leveraged ETF is a tool for traders, and not long-term investors. Because of the heightened volatility and effects of compounding losses, this can drag down your portfolio over the long-term.
You can never time the market, and we believe that you can set yourself up for serious risk by attempting to enter a position in a leveraged ETF. Even with the intent of only holding for the short-term.
There can certainly be some positive upside to a leveraged ETF in the form of amplified gains for short-term trading. However, we believe they do not suffice as a worthwhile long-term investment.
The world is becoming increasingly aware of 5G as it is rolled out across the globe in 2020. As the fifth generation of cellular technology, 5G touts increased speed and connectivity, promising to connect people and devices to each other more than ever before. One of the key components that is consistently quoted regarding the availability of 5G is “low latency”. But what does that actually mean? We’re going to cover the meaning of latency, technologies responsible for improved latency in 5G, and what industries actually rely on low latency.
What is latency?
Latency is a measurement of time between an action and a response. In computing, latency is usually described as the amount of time between making a request (clicking something on a website) and receiving a response (seeing the page fully loaded). You usually see latency mentioned regarding gaming, websites, and business applications.
Companies invest considerable sums of money to achieve lower latency. High latency can negatively affect their bottom line if a website loads too slowly or a streaming application isn’t smooth. This usually comes in the form of CDNs, caching, or other various methods that physically route the request to a server closer to the requestor (client) or make copies of the data available that reduce the querying time.
Latency and 5G
Regarding 5G, latency is the amount of time it takes for information to travel from the cell tower to a receiver, such as a cell phone or vehicle. This is not to be confused with bandwidth. Bandwidth is the maximum amount of data that can be transferred over a network at a given time. Latency is a function of only time.
Earlier cellular technologies, such as 4G, are physically constrained at how fast they can transfer data. One of the primary reasons 5G is an enhancement from the previous generations is the ability to support lower latency. This comes via technological improvements in how fast the data is physically transferred. This singular piece is what ultimately allows many of the improvements to industry that 5G promises, such as mission critical services and autonomous vehicles. More on that below.
Technological improvements that support lower latency
Cellular communication, like WiFi, FM radio, and other technologies, are carried over radio frequency waves. Waves are measured by their frequency and length, with frequency measured in hertz (cycles per second) and wavelength measured in meters. Radio waves travel at the speed of light in a vacuum, and close to that on Earth after considering interference. But since radio waves all travel at [almost] the speed of light, how can 5G claim to support 1 millisecond latency while existing technologies such as 4G LTE average 40ms?
The difference is in the scheduling unit of the waves while waves are not traveling. Consider a subway that is on a one-minute schedule. Every minute, a train with ten cars arrives, picks up passengers, and carries them to the next destination. But, what if you’re ready after only three seconds, and could hop in just one freestanding subway car on an adjacent track? Same speed, but more flexible scheduling.
With radio waves, a frame has a 10ms length and is divided into 10 subframes, all with 1ms length. 4G LTE is limited to communication via one subframe. This means that a duration of 1ms is consumed solely for transmitting the block via air interface. This is also excluding device processing time. 5G leverages a new technology, referred to as “mini-slotting” which allows signals to be sent in six separate slot configurations within the standard 1ms subframe. This means that the size of a transport block could be as small as 0.03125ms. Like taking a single subway car rather than waiting for the entire train, 5G leverages these smaller slot configurations.
What this means for industry
Now that we understand latency, let’s take a look at the real world application. While lower latency may mean a faster rendering of a YouTube video, that only scratches the surface of what becomes available with 1ms latency.
For the first time ever, the world will be connected at almost real-time. This means that technologies that could not physically exist before will now become the new norm. Response times will be fast enough for autonomous vehicles to be functional. Mission critical services such as energy grids and first responder aid as well as VR and remote surgeries will become practical.
Lower latency is one of the key contributors to the speed and availability of 5G. With a new framework that supports more flexible scheduling, latency will be reduced significantly. This opens the world to an entirely new level of connectivity.