Getting out ahead of stock market trends can have profitable consequences, but knowing which trends will be the strongest in any given year is something of a guessing game. To help make some sense of what 2015 might have in store for investors, we asked three of our Motley Fool contributors to share with us what they believe will be the defining trends this year. Read on to learn what they think.
A top tech trend to watch this year will be smart watches. Last year, companies like Samsung (NASDAQOTH:SSNLF), Sony (NYSE:SNE), and former Google (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Motorola Mobility flooded the market with wrist-worn computers to diversify away from the saturated market for smartphones.
Analyst projections are high. Research company ON World, for example, expects global smart watch shipments to soar from 4 million units in 2013 to 330 million in 2018. However, a recent UBS survey of 4,000 consumers found that only 10% of respondents wanted a smart watch. Common complaints regarding current-gen devices include a short battery life (about a day), poor biometric tracking, and a lack of aesthetic appeal.
This year, Apple (NASDAQ:AAPL) will launch the Apple Watch, which could turn the smart watch from a niche product into a mainstream, fashion-forward accessory. Moreover, Apple Watch will offer more accurate biometric tracking, which will sync to HealthKit -- its unifying platform for fitness apps and electronic health records -- and possibly stream a direct connection from your wrist to a doctor's screen.
UBS analysts expect Apple to sell 24 million watches this year. To understand what a jump that would be, consider this: Samsung claimed 71% of the smart watch market in the first quarter of 2014 by shipping just 500,000 units, according to Strategy Analytics. If Apple Watch sales meet expectations, bullish forecasts for the smart watch market could be realized. But if it flops, it could wreck the fledgling wearables market.
Interest rates are again front and center in the minds of U.S. investors, with the Federal Reserve having warned that short-term interest rates could start heading up at some point this year. Yet even as the U.S. economy has continued to recover and grow, many national economies around the world are faring far worse. In Europe, the European Central Bank is considering dramatic efforts similar to the quantitative easing programs that the Fed just ended. Meanwhile, Japan is suffering from the impact of a new sales tax that has hurt economic activity at exactly the wrong time. Falling oil prices have also raised fears of deflationary pressures throughout the world, even as both Japan and Europe were already dealing with potential fallout from price instability.
If recessionary conditions persist in many major economies around the world, then interest rates in the U.S. could well stay low for longer than anyone currently thinks. Already, many investors who believed rates would rise in 2014 were confounded when rates actually fell dramatically. There's only so much further interest rates can fall, but the key is not to assume that rates have to rise substantially in 2015 -- especially if global economic forces keep encouraging freer monetary policies from central banks.
One trend that may define 2015 is the increasing prevalence of robots. They're not exactly new, but their growing popularity has turned iRobot (NASDAQ:IRBT) into a company worth nearly a billion dollars and has seen robots spread into more areas than ever. iRobot alone makes a wide range of household machines, such as the Roomba vacuum, the Looj gutter cleaner, and the Mirra pool cleaner. It also offers teleconferencing robots for businesses and robots for military use, such as surveillance and bomb disposal.
Amazon.com (NASDAQ:AMZN) used some 15,000 robots at its warehouses to collect items in your holiday orders, thanks to its $775 million purchase of Kiva Systems. At the Dusseldorf Airport in Germany, robotic parking valets have helped travelers park, while Lowe's (NYSE:LOW) has experimented with robotic sales associates. Kiosks are, arguably, a kind of robot, and we've grown used to them at airports, where they help us check in for flights. They're also gaining traction in some fast-food eateries, where they can take orders. Panera (NASDAQ:PNRA.DL), for example, is aiming to replace cashiers with kiosks. In France, McDonald's (NYSE:MCD) already has kiosks in place. At the University of Texas in Austin, a robotic kiosk prepares coffees to order.
What does all this mean for investors? Well, it certainly looks like robots and automation in general may make many jobs obsolete, which, though worrisome for society, will spell lower labor costs for many companies. According to a 2012 report from the McKinsey Group, the price of automated labor compared to human labor has fallen by up to 50% since 1990, and experts expect those cost savings to increase with time. When you evaluate a potential investment, it’s worth considering how it's using advances in robotics to its advantage.