The rapid evolution of new technology has disrupted many industrial sectors, and it should come as no surprise to learn that it has had a significant effect on the investment world. Though the industry remained relatively unchanged until 2000, the story since then has been of rapid development that has affected many traditional investment functions.
Of course, some of the fundamentals remain in place. It can still be useful to access good share tips from a reliable site, and the old virtues of patience, discipline and long-term planning will still prove to be useful, but there’s no doubt that the last 20 years has seen some significant changes to the investment industry.
The first and most obvious change is the increase in the quality and quantity of information that traders and investors are able to access. The internet makes it possible to view all kinds of charts and market data, and much of it is available in real time, and the traditional role of the stockbroker is being undermined as traders find quicker, easier and cheaper ways to make their trades and investment moves.
A number of factors have coincided to help lower the cost of trading and investing. The financial crisis of 2008 and the generally poor performance of stocks since 2000 have made it harder for brokers and asset managers to charge excessive fees. However, much of the change has been driven by technology. Automation is one of the major factors. As many of the functions involved in handling trades become automated, the cost of trading is inevitably reduced. Brokers who are used to charging high fees are also being squeezed, and there is an ongoing trend towards automatically managed passive investment funds, away from the traditional actively managed funds with their high-charging managers.
Private versus public
Technology has also made possible another shift in investment, and that is towards start-ups and private companies and away from publicly listed corporations. The financial upheavals of the last few years may have helped to drive this trend, but the ease with which individuals can now invest in a new company thanks to fund-sourcing technology is encouraging increasing numbers of people to opt for this investment option. Another advantage of private investment is that it makes ethical investment more feasible, something that is not possible with traditional investment funds that are spread across several market sectors.
The development of new technology has had a significant effect on how investors and traders operate, and has given the investment industry new challenges to meet. The old model in which those who wanted to trade had to go through stockbrokers and asset managers and pay high fees for the privilege is being replaced by a more dynamic environment. Disruptive technology is making it quicker and easier for individual traders to get the information they need to make investment decisions and to execute their plans. There has never been a more exciting time for the individual or independent stock trader!