An old Wall Street saying goes, “You can’t go forward looking in the rearview mirror.” The same can be said about your investment strategy.  Successful investing should include looking ahead to tomorrow’s breakthroughs and not holding on to yesterday’s technologies. 

Investment success is built on your outlook for the future, not the past. Yesterday’s success is already reflected in the prices of securities. Smart investing starts by recognizing that the future may not be like the past. In fact, that is a basic disclaimer used by the financial service industry. 

To take it one step further, you may want to consider investing in the disruptive technologies that are transforming industries and reshaping how we think, live, and work. 

These technologies, from nanotechnology and robotics to self-driving vehicles, blockchain, and artificial intelligence, represent the future of our economy. Allocating a portion of your portfolio to these innovations may reap substantial long-term rewards.

In today’s blog, we’ll look at why you should consider embracing disruptive technologies and how you can approach this strategy with the help of a trusted fiduciary financial advisor in Tennessee.

What Are Disruptive Technologies?

Disruptive technologies can significantly alter or replace existing processes, products, or services. They often render traditional methods obsolete and create new markets or drastically change existing ones. Think about the impact cell phones had on telephone booths. One made the other obsolete in a very short period of time.  

Investing in these technologies isn’t about chasing fads; it’s about identifying products and services that transform industries and change how people live.

Examples include:

• Nanotechnology: Revolutionizing materials science and medicine.
• Robotics: Automating industries, from manufacturing to healthcare.
• Self-Driving Vehicles: Transforming transportation and logistics.
• Blockchain: Enhancing security and transparency in finance and beyond.
• Artificial Intelligence (AI): Driving innovation in nearly every industry.

Why Invest in the Future?

There are many reasons to take a forward-looking approach to your investment strategy, especially for larger sums of money that must last a lifetime.

1. Investing in industries or companies displaced by new technology is akin to pouring resources into a sinking ship. History is filled with examples of businesses that failed to adapt to technological shifts—think Blockbuster vs. Netflix, Xerox’s paper-based business model, or Kodak’s missed opportunity in the digital camera revolution.
2. If you cling to legacy systems based on what worked in the past (the rearview mirror), you risk watching your portfolios decline in value with limited hope for recovery. By focusing on disruptive technologies, you can align your investments with industries poised for explosive, long-term growth.
3. The shift toward automation, digital currency, and sustainable solutions is accelerating. For instance, AI is predicted to contribute $15.7 trillion to the global economy by 2030. Similarly, blockchain has far-reaching implications beyond cryptocurrency, such as supply chain management and digital identity verification.
4. Historically, companies and sectors leading disruptive changes have outperformed the broader market. For example, by capitalizing on innovation, tech giants like Amazon, Tesla, and Alphabet (Google’s parent company) have delivered exceptional returns over the past two decades. The same principles apply to emerging technologies like robotics and nanotechnology.

How to Incorporate Disruptive Technologies into Your Portfolio

1. While investing in disruptive technologies offers high growth potential, it also comes with risks. The key is to allocate a comfortable portion of your portfolio to these investments based on your goals, risk tolerance, and time horizon. A Greenville financial advisor can help you determine the right allocations to these types of investments.

For instance, if you are younger, you may have a longer time horizon to dedicate more of your assets to companies that are sources of disruptive technologies.  However, if you are nearing retirement, you may want to opt for a more conservative approach.

2. It’s important not to put all your proverbial eggs in one basket. This can lead to unacceptably large losses. Diversification across various industries, such as AI, blockchain, and robotics, can reduce risk while still positioning your portfolio for significant growth.

Also, consider exchange-traded funds (ETFs) or mutual funds focused on innovative investments. These investment alternatives provide broad exposure to various companies in their respective industries.

3. Because technology is evolving rapidly, it is imperative that you stay informed about what is happening, why it is happening, and how it can benefit you. Partnering with a financial advisor in Tennessee can help you monitor trends, evaluate potential opportunities, and make informed decisions about when to buy or sell in your portfolios. 
4. When investing in disruptive technologies, make sure you have a well-thought-out risk management strategy in place, such as setting stop-loss orders, rebalancing your portfolio at least annually, and maintaining a diversified mix of investments. These risk management strategies are essential for effectively navigating this space.

Common Misconceptions About Investing in Disruptive Technologies

Now for the other side of the coin. There are some common misperceptions about investing in newer, more disruptive technologies: 

• “It’s Too Risky”: While investing in innovation carries risks, diversification, and strategic allocation can minimize these concerns. Conversely, avoiding disruptive technologies may carry an even greater risk of being left behind in a rapidly evolving marketplace.
• “I Need to Be a Tech Expert”: You don’t have to be an expert to invest in disruptive technologies. A knowledgeable financial advisor in Tennessee can help you understand the landscape and identify opportunities that suit your investment strategy.
• “It’s Too Late to Get Started”: It’s never too late to invest in the future. Technologies like AI, blockchain, and nanotechnology are still in the early stages of adoption, meaning there are still ample opportunities for forward-thinking investors.

Working with a Tennessee Financial Advisor that Embraces Innovation

Investing in disruptive technologies requires specialized expertise and a forward-looking mindset. At Sapiat Asset Management, we help our clients participate in emerging trends, build customized portfolios, and stay on track with pursuing their financial goals.

Key benefits of working with Sapiat include:

• We ensure that a portion of your portfolio is invested in innovative companies
• We ensure your portfolio is properly balanced to address both growth and risk
• We provide ongoing, hands-on monitoring of your portfolio so you can make appropriate adjustments as needed

Investing in the future isn’t just a strategy—it’s a mindset. Decide to look forward, allocate wisely, and watch your investments grow alongside the technologies changing the world.

We’re ready to assist.  Contact us today.