Flying cars, fax machines and a small reminder for investors.

Reading a recent article by Ben Carlson reminded me of one of my favourite childhood movies: Back to the Future Part II.

Released in 1989, the film transported Marty McFly into 2015. There were flying cars, hoverboards and clothing that adjusted itself to fit. Yet the filmmakers missed the smartphone. The device that would eventually put much of our lives into our pockets. Instead, the McFly household had fax machines scattered around the house.

To be fair, the filmmakers were making a comedy, not submitting an investment forecast. But the contrast offers a useful reminder: even extraordinary imagination struggles to escape the familiar.

We picture tomorrow by upgrading today.

Even the creators get surprised

Carlson makes a similar observation about technology. Before ChatGPT captured public attention, much of the excitement centred on the metaverse, crypto and virtual property. The next big thing was already being confidently described. Then something else took centre stage.

Even the people building ChatGPT underestimated its reception. Carlson reports that most guesses in an internal poll put first-week users between 10,000 and 50,000. Actual adoption reached one million.

He also highlights two New York Times stories published just twelve days apart: one suggesting higher interest rates were not restraining the AI boom, the other suggesting they were.

They contradicted their own original confident story within 12 days. Nobody knows.

Where does that leave investors?

With good reason to be humble. Understanding a technology does not automatically reveal how people will use it, which businesses will profit, or what investors should pay for those profits. A development can change the world while still disappointing investors who paid too much for the promise. Don’t arrange your portfolios as though the script has already been written. It hasn’t.

Diversification allows us to participate in progress while leaving room for events to unfold differently. Valuation discipline helps us question how much optimism we are paying for. Patience gives our investment process time to work through the surprises.

We can remain curious, optimistic and invested without needing to know exactly what comes next.

After all, if Hollywood could imagine a flying DeLorean but miss the phone in your pocket, perhaps your portfolio should leave a little room for the unexpected.

 

Written by Marius Kilian

 

Source

* “Tech people don’t know what’s going to happen either”, Ben Carlson, awealthofcommonsense.com