Back in December 2016, inflation and interest rates were likely on the rise. Most commodity prices had recovered from their lows at the start of the year, especially Oil. With rising petroleum costs, I postulated that perhaps Agriculture commodities would finally find a bottom. So as a speculative hedge, I purchased DBA, an agriculture ETF.
But the trade hasn’t worked. In spite of recent bad weather and inflationary fears, DBA can’t seem to break above long term resistance at $19.50. Even if it does, the overhead pressure at $20 will be harder to breach. DBA has been dead money, so today I sold it and took roughly a 3.5% loss.
With the proceeds from DBA, I purchased BOTZ, a global robotic and artificial intelligence ETF. BOTZ owns about 30 stocks, half of which are located in Japan- the epicenter of automation innovation. While geographically concentrated in Japan and the US (US companies make up 27%), the ETF diversifies its application of automation across several sectors encompassing Industrials, Technology and Healthcare.
BOTZ holdings include: NVIDIA, Intuitive Surgical, Keyence, Yaskawa Electric, Fanuc, Mitsubishi Electric, and Swiss company ABB.
Automation has been a high flying sector and I’ve been watching for an entry point. I think the time has come. BOTZ has been pulled down due to a trifecta of market weakness- S&P500 correction, pullback in Technology stocks, and weakness in International equities.
BOTZ has fallen to its 200dma for the first time since its September 2016 inception. ROBO, its senior competitor which has been around since 2013, has also dropped to its 200dma.
I have no idea how far they’ll fall, but I see this as an entry point for a LONG term hold. Robotics, automation and artificial intelligence will dominate the economy for at least the next generation.
I think it’s safe to say, the robots are coming…or as my friends in Brazil proclaim: A Chegada Dos Robos !
The Robots are Coming: A Human’s Survival Guide to Profiting in the Age of Automation available at AMAZON and all fine bookstores.
Listen to the Wealthsteading Podcast to receive updated market commentary:
The 10 Wealth Building Principles can be heard at:
Subscribe to the Wealthsteading Podcast: