“It includes autonomous vehicles, artificial intelligence, quantum computing, 3D manufacturing, aircraft, spacecraft and, fascinatingly, deep sea space stations. I did not know there was such a thing.”
Flip of a coin
Douglass says there are doubts about whether Trump wants to reset the relationship with China or is just doing it for political purposes.
“We could get into a severe cold war environment or we could actually have it settled,” he says. “It’s very difficult to know which way this coin is going to flip.
‘‘The markets are pricing that Trump is going to do a deal. Our best assessment is that is the most likely outcome, but there are political overlays.
‘‘What is the best thing going into the presidential election in 2020? Maybe a dispute with China and immigration should be big topics and fighting with a socialist country is a third thing.”
Later, during a 30-minute discussion with Chanticleer, Douglass said we were entering a world with two technology silos – one backed by the United States and one closed off from the world in China.
At the heart of this battle was the race by both countries to achieve leadership in quantum computing and artificial intelligence.
“Whoever wins the race for quantum computing can effectively decode any cryptography in the world,” he said.
“That means if you had a nation who actually got a true quantum computer developed before another nation, they could effectively break in and control the whole nuclear arsenal of another nation. That would actually be quite an advancement into who’s more dominant.
“If you think about the next phases of artificial intelligence, we’ve already got something known as narrow artificial, which is like when you are on Netflix and you get films being recommended to you.
”The next phase of artificial intelligence is called artificial general intelligence. That is some way in the future but whichever nation or enterprise gets there first has such a significant strategic advantage. It’s astronomical the advantage that would cause.”
Douglass says the US is falling behind China in terms of the capital it is investing in quantum computing and AI.
“I think the United States is putting only $US1 billion into quantum computing at the moment,” he said.
“I cannot believe that they are not doing [more]. I think the Chinese have realised in order to get there and have the advancements, they are sending all their students to American universities and literally sucking out the intellectual capital.
“I think that is what America has woken up to and there is a very big game going on here.”
‘Money makes money’
Douglass has shown extraordinary stock-picking skills since he established Magellan Financial Group in 2006. He said he doesn’t get excited about short-term gains even though Starbucks is up 57 per cent since Magellan bought it last year.
He says investment is like a journey. When you pick the right stock you can hold it for years, as he has done with Visa which he first bought at $US30 in 2012 and is now trading at $US164 a share.
Magellan bought Microsoft at $US28 a share in 2014 and it is now trading around $US128 a share.
“So I would hope, looking out five years, some of these investments – and some of the seeds we have in the ground – are on their way to what I call the magic of compound interest,” he said.
“Benjamin Franklin had a incredible quote: “Money makes money and the money that money makes makes more money.’ That’s what investment is all about.”
Douglass says he sees enormous opportunities for investment in companies with exposure to China which is forecast to have a middle class of 600 million people within five years.
He is concerned about the regulatory threat to Facebook, which is one of his largest holdings, but believes it has numerous growth opportunities in ancillary businesses.
Those attending the forum heard from Douglass and eight other fund managers who have donated their services to the two Future Generation investment companies.
A total of 19 fund managers have foregone management fees while managing money on behalf of Future Generation. The fundies have facilitated the donation of $20 million to 14 charities to help children who are at risk. Another $10 million will be donated this year.
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