As I have written so many times, this is a brave new a world of changing technologies, changing so quickly that the markets hardly can keep up. In fact, they can’t, which suggests investors need to get ahead of the market, to find out what is the next big thing to get your money into.
Okay, so there are many new “big” things to get you money into, but when you break it down fundamentally, one has to ask “What is the surest of the sure” for market plays?
Well as we all know, there are no true sure bets, but there are bets one can make that have plenty of potential to be as close to sure as possible.
- In developed economies, money has been digitizing for decades. Few Westerners touch a paycheck anymore. Through direct deposit, digital money is transferred electronically from our employer to our bank account every pay period. A similar process moves contributions into our 401(k) accounts or zaps money over to pay the rent, the utility bill, a student loan, or any other expense.
Yup! How many of you still write checks? The number of checks I have written in the last five years can be counted on one hand. I, like many others, have eschewed checks and cash for the card, whether it be a credit or debit card.
- As technology drives a shift in how we buy things, the revenue that the payments industry extracts could grow to more than $2 trillion a year by 2023, double the 2013 figure.
So where will the money flow as the movement toward “digital” currency continues unabated and with momentum?
- As technology-driven payment ideas give cash a run for its money, the big winners could be established banks and credit card companies.
Yes, big banks will not lose control of the money flow. You can bet on that. What’s that? What about Google Wallet and PayPal? Both attempts to carve a niche outside of the big-bank money flow have not failed, but they have not taken off either.
- Established players, especially the banks and credit card companies that handle most noncash payments today, have, if anything, seen their positions strengthened by recent developments. A good example is the high-profile launch of Apple Pay.
So what will take off? Apple Pay is making an attempt, and that attempt is likely to go further along the conversion trail because Apple did one smart thing the others did not. It recognized the rule of the big banks.
- Unlike earlier technologies like Google Wallet and PayPal, Apple Pay makes no attempt to supplant the Visas and Bank of Americas of the world.
And there you have it. As the big banks are gradually forced out of the trading business, forced to act more like banks, then they will have to increase revenue streams to replace the loss from trading capital. Yes, loans will be a big part of that when interest rates rise, but so will fees earned from non-cash transactions.
Think about how you buy stuff and then ask yourself, “Where do I want position my money for the future?
Oh, one more thing. It becomes even more important to think about positioning money in the market for the longer term, as the future is getting brighter economically.
- The National Association for Business Economics’ (NABE) latest quarterly business conditions survey found 51 percent of the 93 economists who participated said their firms expected to increase wages in the first quarter.
Yup, things are getting brighter and brighter as the transformation unfolds.
Trade in the day; invest in your life …
