1 Chart Sums up the New Digital Economy
Editor, Automatic Fortunes
Dear Wall Street Daily Reader,
Ian King here, former hedge fund manager and editor for Automatic Fortunes.
On New Year’s Eve, floor traders on the New York Stock Exchange continued the long-standing tradition of singing “Wait Till the Sun Shines, Nellie” at the close.
Floor traders started singing this song in 1934, the worst year of the Great Depression.
That year, the stock market was still down 74% from its 1929 highs. The economy had crashed, and unemployment reached a record high of 21.7%.
It’s only fitting that the song is about waiting for the rain to end:
“Bye and bye.”
Of course, the ranks of floor traders have dwindled in the past few decades.
When I visited the floor for a TV interview a few years back, there were no traders running from post to post.
The screaming and shouting of the old trading floor were replaced with the whirring, beeping and buzzing of high-speed computers running trading algorithms.
Not only has technology transformed Wall Street’s trading floors, but it’s changing businesses all across America.
And one chart perfectly sums up what’s happening…
Our World Will Be Forever Changed
As we start another year, investors are looking toward a parting in the clouds when the pandemic ends and the sun shines again.
However, even when the pandemic lifts, our world will be forever changed.
It will be out with the old era and in with the new era, because 2020 was a year where the extraordinary became the ordinary.
It was a year that saw a once-in-a-decade 40% market crash and a rip-roaring snapback rally.
A year that saw tipping points in some of the biggest trends of the 2020s: 5G, machine learning, electric vehicles and cryptocurrencies.
And a year that brought forth unprecedented fiscal and monetary stimulus as governments at home and abroad opened their coffers to fight the coronavirus-induced slump.
2020 was also a pivotal year for corporate America.
Faced with shutdowns, businesses had to adapt or fold. Retailers such as Walmart and Target reported a rapid adoption of online ordering and curbside pickup.
Restaurants across the country adopted mobile ordering and delivery, boosting shares of Uber and Grubhub.
Working from home became the new normal. Conference room meetings became Zoom calls, and water cooler talk became Slack conversations.
The New Trend of Working From Home Is Here to Stay
A Gartner survey of company leaders found that 80% plan to allow employees to work remotely at least part of the time after the pandemic.
Moreover, 47% will allow employees to work from home full time.
This will have massive implications for the way we live, shop and commute.
The need for larger home office spaces has already tipped off a mass migration out of cities to the suburbs.
City dwellers are ditching their small, expensive apartments for bigger suburban houses to work from home. That’s benefited new-era stocks such as Zillow, Generac and SunPower.
Underpinning all of this innovation is a massive shift from the physical world to the digital world.
We can see this shift in the acceleration of business spending, which crossed over in 2020.
This chart clearly shows that businesses are now fully embracing digital spending. It’s no longer a luxury — it’s a necessity.
The windfall of new investment will mean that gains in the new-era companies we focus on in the Automatic Fortunes portfolio are here to stay.
Editor, Automatic Fortunes