Trends Watch: October 13, 2016
October 13, 2016
October 13, 2016
By Elana Margulies Snyderman
EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies Snyderman.
This week, Elana talks to Dan Burstein, Managing Partner, Millennium Technology Value Partners
What is your outlook on the alternative investment industry?
In the current extremely low interest rate environment, it has become very difficult for even some of the world’s best managers (“best” from a historic point of view) to generate significant returns. Indeed, one of the challenges with interesting experiments that are going on with Artificial Intelligence (AI)/Big Data/ Robo-Advisor systems (which I think will have a big place in the future) is that they have not performed well enough to excite a lot of new entrants into the market to get behind them—because there is so little alpha to be had for so many managers, whether human or robotic.
I continue to believe in venture capital and private company technology investing as one of the few paths to the potential of significant alpha (if done right). New technologies, particularly those involving AI and various kinds of sophisticated software sensors and robotized automation technologies, are going to turn the world upside down and create hundreds of billions of dollars of new enterprise value. The same is true for various directions in bio-medicine/life sciences, etc. and other sectors where leading venture capitalists are investing today. Traditional industries and companies (and even governments) are going to become more digitized and software-ized than ever. And all of this is going global—to Europe, China, India, and other emerging markets at a rapid pace. There are huge investment opportunities in these trends, although it is very difficult to pick exactly the right company from the many that are going after each gold vein in the new value chain. I would also say that if you can really figure out where interest rates, oil and other commodities, and currencies are going over the next several years, you will generate very significant returns. So there are some exciting macro managers out there—and perhaps some new ones who will appear in the future using “big short” type strategies to bet where others aren’t at just the right time.
What are the next steps for the EU post-Brexit?
We are living in an era when governments can’t make important decisions, citizens are polarized, and institutions are failing. The fact that Brexit has gone from being perceived as catastrophic to everyone wondering if anything will really happen in the space of a couple of months is quite telling. I personally think Brexit was a poor choice and that a common Europe with the UK within it (on some reformed basis) is the most advisable course for Europe, the UK, and the United States. From a practical perspective, it seems that the new British Prime Minister Theresa May is not pushing the issue of how to unwind the arrangements as hard as she might, nor are her European counterparts. They are not, as of now, even planning to begin the specific, formal discussions about devolving out of the EU under Article 50 until March. Everyone is on unknown territory here and the pound has begun to sag again even after weeks of post-apocalypse euphoria that London’s world was not coming to an end. Personally, I’d like to see them find a way to hold a new vote or suspend the divorce proceedings and reconsider, since I think a very large number of people woke up in the UK the next day with voter’s remorse. If the Brexit vote were held today, I would bet the exit choice would lose.
What keeps you up at night?
Terrorism, rogue states, rogue individuals, cybercrime, the future of work in an ever-more automated world, the meaning of what it will be to be human in an increasingly robotic future; the failure of governments and intellectuals concerned with public policy to even come up with innovative ideas about the new social contracts that need to be written in all the advanced democracies to incorporate not only the new challenges of our extremely complex societies, but the new technological challenges coming at us fast and furiously.