It’s easy to overlook the many advantages that technology has brought to individual investors. It was only back in 1971 that the first electronic stock exchange — the Nasdaq — was launched. Then a few years later brokerage firms were allowed to charge different rates on commissions.
Scrappy entrepreneurs like Charles Schwab understood the opportunities and created online platforms focused on convenience, wide access to information and lower fees.
But of course, technology continues to move at a rapid pace, bringing more and more benefits to investors. As seen with booms in Artificial Intelligence or AI stocks like NVIDIA Corporation (NASDAQ:NVDA), there have been many recent technological breakthroughs. And these breakthroughs have been widespread, even affecting alternative investments and how investors can access them.
So what can investors now to do leverage some of these technologies? Well, let’s take a look at 3 high-tech alternative investments:
High-Tech Alternative Investments #1: Robo Advisors
It’s tough to define “robo advisor” since there are many variations available on the market. Rather, it is easier to look at the general features. For example, a robo advisor is an automated system that asks you questions and process your financial information to develop an investment strategy, which is often based on sophisticated theories. Usually this involves putting money into ETFs (exchange-traded funds).
But some robo advisors will provide access to a financial advisor, which can certainly be a big help when dealing with complicated issues. And hey, for now, computers have not replaced humans!
There are also robo advisors from some of the top financial services firms. Examples include Fidelity, Vanguard, TD Ameritrade Holding Corp. (NASDAQ:AMTD), T. Rowe Price Group Inc (NASDAQ:TROW) and Charles Schwab Corporation (NYSE:SCHW).
Then which is the best for you? It’s actually tough to provide a good answer. Rather, the best approach is to check out the websites of the services and then do some trials for those that look like a good fit for your investment needs.
High-Tech Alternative Investments #2: Artificial Intelligence (AI)
Yes, playing AI stocks can good be a way for investors to benefit from emerging trends. But then again, AI can also make investment decisions on your behalf.
Consider BlackRock, Inc. (NYSE:BLK). The firm recently launched a group of ETFs called “iShares Evolved brand” and they cover key segments like technology, financials, healthcare and consumer staples.
These are passively managed portfolios — with twist. That is, BlackRock uses sophisticated AI and machine learning to select companies for the portfolio. This is done be scouring SEC filings and other content across the web.
According to BlackRock: “Anticipating change and challenging the status quo have always been at the heart of iShares’ mission. That’s why we’ve implemented a new way to classify companies – one that looks where they’re going rather than where they’ve been.”
High-Tech Alternative Investments #3: Machine Learning & Information Services
If you make your own investment decisions, then AI and machine can help with the process. After all, success is often about getting a sense of the patterns and trends. And this is perfect for computers.
Now there are various services that make claims about their capacity for machine learning. Yet there should be some skepticism. The fact is that the underlying technologies are usually not disclosed.
Because of this, it is a good idea to focus on companies that have strong track records. And one to consider is Morningstar, Inc. (NASDAQ:MORN), which has been around since 1984.
Note that the company has recently launched the Morningstar Quantitative Rating, which is based on sophisticated machine learning algorithms. According to the company, the goal is to provide “a forward-looking assessment of a fund’s ability to outperform its peer group or a relevant benchmark on a risk-adjusted basis over a full market cycle.”
The key is that this metric is for those funds that Morningstar does not have analysts to provide coverage. Essentially, machine learning is replicating human decision-making!
The service is available at the following link, which includes a free trial.
Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.