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Brave new world?

12 July 2017

Mark Twain said: “History doesn’t repeat, but it often rhymes.” As sweeping technological advancements bring exciting opportunities for the younger generation, Andrew Priestley, investment manager at the Harrogate branch of Redmayne-Bentley, considers what history can also teach us.

“As a relative dinosaur in financial markets increasingly driven by computers and robots, I am surprisingly excited by the wave of technological advances and innovation that is driving change across global society.

“I’m invested accordingly, but am I a turkey voting for Christmas? Developments in artificial intelligence suggest that, before long, computers will be telling humans how to act by learning from data without being programmed explicitly. Neural networks will mimic the human brain. Investors will simply feed in defined investment parameters and receive an instant bespoke solution that is deemed both suitable and compliant. Dream or nightmare?

“Just as I started my stockbroking career, the UK joined the EU. At the 1974 general election, after a ‘winter of discontent’, a Conservative government, ahead in all polls, failed to win a majority. A 42 per cent ‘youth vote’ for Labour was crucial. A Labour-led hung Parliament ensued for seven months until a further election returned it with a majority of just three. That government struggled on for five years.

“Mark Twain is attributed with the quote “History doesn’t repeat, but it often rhymes”. The industrial revolution during Mark Twain’s lifetime drove an explosion of wealth creation and saw the birth of telecommunications that would prime globalisation. Within a generation, new elites became established as power became concentrated in a relatively small segment of the population, business models were destroyed or disrupted, and the poor became disaffected, disenchanted and disenfranchised as the social divide widened. Sound familiar? Hopefully, history will not repeat itself, because the ensuing financial meltdown that led to the Great Depression spawned a wave of global populism and nationalism that climaxed in the Second World War.

“Today’s younger generation face many challenges in a world of dynamic and rapid change. Their enthusiastic embrace of technological innovation places them well to grasp the opportunities it presents and to fulfil aspirations, fuelled by a fathomless stream of real-time information and interactive media.

“Greater understanding can capture the imagination. They see now that their vote can count. Strange, however, to be seduced by the policies of yesteryear.

“A technological revolution promises a brave new world for them with the pace of change more tsunamic than glacial. Possibly, it is the perception of these irresistible changes that is supporting long-term optimism over short-term anxiety.

“Eight years of asset growth driven by accommodative monetary policy has bred complacency. Among my many concerns is the burgeoning growth of passive investment. The three dominant passive investing institutions control almost 20 per cent of the largest US companies. Is this an excessive concentration of power? In a world of transformation and disruption, one has to take care not to own yesterday’s winners, yet the common benchmark for passive investors, the MSCI World Index, is more than 75 per cent composed of very large-cap (over US$20bn) stocks. Who buys when the computers say “sell”? As exciting as the future may be, is it reasonable to expect history to rhyme? Learn from past mistakes. It is disappointing to fail, but more so not to learn from that failure.”

Notes to the Editor

Established in 1875, Redmayne-Bentley is one the UK’s largest independently owned investment management and private client stockbroking firms, with 37 regional offices throughout the UK and in the Republic of Ireland.

Redmayne-Bentley has experienced commentators available for comment on personal finance and stock market issues. 

Author: Ruth Peterson

Contact Us: For all press and media enquiries, the first point of contact is media@redmayne.co.uk or by calling 0800 195 2579. Alternatively request call back.

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