Brave New World: The App Economy Is The Future

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Imagine this: A rich entrepreneur in his vacation rental (AirBnb), running his business with Shopify’s (SHOP) online store platform and Zoom (ZM) meetings, being chauffeured around in UBERs, eating Chipotle (CMG) burritos delivered to him by Third World immigrants via DoorDash (DASH), watching Netflix (NFLX), scrolling Twitter and Instagram (META), and gambling on sports with Draft Kings (DKNG).

Sadly this dystopian vision is not too far off from the world that is evolving. Digitization and “there’s an app for that” is creating a wealthy class of educated and technology savvy “haves” who are being served by uneducated, third world immigrant “have nots”. If this were a blog about political philosophy, I could criticize this Brave New World from the standpoint of justice. But my focus in this context is how to profit from it.

The leaders of the future are not the current leaders. Apple, Google, Facebook and Amazon are great companies. But they are past their prime. They are mature “stalwarts” – to use a term from Peter Lynch – at this point. They are now steady 10% growers that will do fine but won’t make you rich. The next generation of leaders will be the cloud software companies, the data analytics companies, the consumer apps and all the rest pushing forward the digitization of the economy.

Behind all the macro headlines about inflation and recession, these companies are continuing to build out their businesses and they will lead the way when the macro clouds clear. In addition to the ones already mentioned, I’m talking about Snapchat (SNAP), DocuSign (DOCU), Palantir (PLTR), Snowflake (SNOW) and so many others. If you can latch on to just one or two of these supernovas, it could make all the difference for your portfolio.

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