By Thomas Kostigen
The Internet of Things. It’s a broad term, innocuous even, but it’s the new, new thing of technology and investments are soaring in it.
So what is the IoT all about?
ZDNet defines IoT as “the billions of physical devices around the world that are now connected to the internet, all collecting and sharing data. Thanks to the arrival of super-cheap computer chips and the ubiquity of wireless networks, it’s possible to turn anything, from something as small as a pill to something as big as an airplane, into a part of the IoT. Connecting up all these different objects and adding sensors to them adds a level of digital intelligence to devices that would be otherwise dumb, enabling them to communicate real-time data without involving a human being.
The Internet of Things is making the fabric of the world around us smarter and more responsive, merging the digital and physical universes.” It says, “Pretty much any physical object can be transformed into an IoT device if it can be connected to the internet to be controlled or communicate information.”
Nearly every major financial media outlet reports that IoT is experiencing major growth and that now is the time to buy shares in IoT stocks. Still, it isn’t easy to figure how to invest in IoT. That’s because it’s so nonspecific to one technology or platform. IoT could be, as ZDNet points out, anything that is connected to the internet. To be sure, there are investment products built to capture a smorgasbord of companies that are representative of the IoT sector.
The Global X IoT Thematic Exchange traded fund, for example, “seeks to invest in companies that stand to potentially benefit from the broader adoption of the Internet of Things (IoT), as enabled by technologies such as WiFi, 5G telecommunications infrastructure, and fiber optics. This includes the development and manufacturing of semiconductors and sensors, integrated products and solutions, and applications serving smart grids, smart homes, connected cars, and the industrial internet,” the ETF says.
And there are other contenders for IoT concentrated investments. Cisco Systems is highly focused on IoT as a growth driver for its businesses. And many of the connected functions of IoT can be linked to Amazon, whose Web Services division feeds the IoT and is one of Amazon’s strongest revenue generators.
At a recent investment conference, there was a presentation about Amazon’s microwave oven and how it showcases IoT’s future. The microwave is really a Trojan horse that feeds data back to Amazon about what and when you cook. Combined with artificial intelligence, it can even guess that if, say, you are making popcorn, you are likely watching a movie. The advertising and sponsorship opportunities bode well for Amazon sales, as well as its share price.
Apple, too, is in the IoT game with its wearable devices. The simplest is the Apple Watch. Future applications may be able to diagnose health problems and give pharmaceutical companies and healthcare providers user data. That’s big money and Wall Street could bet on those profits.
Still, IoT is more of a catchall and prism through which to view new technologies. A good financial advisor can assemble a smart portfolio using IoT as a theme. Individual investors might have a go at tracing back data to its sources. Whatever provides the data is feeding the IoT. That’s the place to look for investment ideas.
Thomas Kostigen is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Thomas is a best-selling author and longtime journalist who writes about environmental, social, and governance issues.