Collection: Li Lu - #12 'Value Investing In The Digital Age'



[Transcript]

BRUCE GREENWALD 00:00

Okay, so why don’t we talk more broadly about new trends in value investing? So among them many popular and rising technological fields such as 5G, Bitcoin, AI, has any of that attracted your interest as a value investor and why?


LI LU 00:20

Well, as I said, if you’re an investor, you really want to find out what really influenced the change of your companies. If there's one big forces that are really quite prominent is the fast acceleration of technological changes. And of course, you need to be well aware of those mega technological trend.


This current wave that started 40-50 years since the invention of the semiconductor, particularly the integrated circuit, that really ultimately led to personal computer and computational proliferation, the computation power to ordinary citizens.


And from there, there’s also the evolution of communication technologies and then the invention of the internet somewhere 25-30 years ago. From there, the mobile internet. So the intersections of computing as well as the omnipresent and instantaneous communication really led to this new phenomena of artificial intelligence and the data economy as a result of it.


And so this wave of technological change over the last 40 years has fundamentally altered the business landscape of all kinds, basically. And so whatever kind of investor you are, we do need to be aware of that huge changes.


And how do you deal with that in a sense?


Well you’re investing in businesses that are either well insulated from those technological change or in companies whose management team are quite capable of adapting to those technological changes better than their competitors. Or in companies that are leading those changes or enabling changes so that those changes are really on your side, basically.


And so, now do you have to be a true expert on that to the point of an engineer? I don’t think you do. But you do need to be broadly aware of all those big technology changes.


Now, if you happen to be a venture capitalist in those fields then of course you do, but if you’re a generalist and study all the businesses, you need to be aware of those trends. How does it really impact in the industry and the companies that you’re invested in? So we are still really in the middle of that gigantic wave that started with the invention of the semiconductor.


BRUCE GREENWALD 03:30

By the way, do you know when the transistor was invented?


LI LU 03:34

Well, that’s a longer I know...


BRUCE GREENWALD 03:36

That was 1942.


LI LU 03:39

Yes, yes, yes.


BRUCE GREENWALD 03:40

And the first (integrated circuit) was 1961.


LI LU 03:44

Yes, yes. You’re referring to the time (technology) really gets integrated into industry. So that really started this whole revolution that we’re actually still in the middle of it. And the current wave of neural network based artificial intelligence is just kind of the recent iteration.


And the data economy that – as a result of it – is the newest adaptation by industries in response to that new technology. And we’re going to see more of it as time begins to evolve from here.


BRUCE GREENWALD 04:27

Do you see opportunities to invest in new technologies? Do you have an example, maybe in your past where you did invest successfully in a new technology?


LI LU 04:37

We have, in a sense, back in the days I was trying to learn about businesses, I invested in a number of startups. And so I am fascinated about the technologies. And today we have somewhat smaller exposure to that. But it is fascinating.


It’s not really that (I’m) not interested in technology. It’s just that it’s not that easy to predict their impact because of the pace of a change. It does require a different aptitude, different domain expertise, etc.


And the other things is we chose to have other set of easier opportunities. We just happened to be lucky. (Laughter)


(Source: https://youtu.be/FiHrWy2jGbA)

 

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