The Future is Shaped Like a Hockey Stick

The hockey stick analogy is a graph of how technology grows. Growth is slowly improving over years or decades, then explodes upward.

Look at so many bad predictions: 

"There is no reason anyone would want a computer in their home." - Ken Olsen, founder Digital Equipment Corporation. 

“This administration has no intention of participating in the construction of any more Cadillac-commuter systems that have very little chance of providing adequate benefits…. As for starting new freeways, I just do not see that happening.” - Donald E. Burns, Secretary of Business and Transportation, State of California, 1975

The reasons we underestimate the future is we tend to look with a bias towards recent events. Most predictions on the economy or stock prices are based on the last few weeks or quarters. Last week the stock market was up 2%. That followed weeks of falling stock prices, but prices were up the first 3 quarters this year. No one knows what the market will do on Monday morning, despite all the businesses focused on investing money.

Truthfully did anyone see the convergence of technologies that are smart phones other than Steve Jobs? Developing apps for smart phones was not part of the original iPhone, that came later and was key to the success of smart phones.

Computers were first developed in the mid 1930’s & 1940’s. Personal computers were introduced in 1971, but it wasn’t until 1981 IBM PC started the revolution.

Composites were also developed in the mid 1930’s & 1940’s for aerospace & military applications. Although we could say mud and straw buildings 6,000 years ago were the first composites. Composites are now widely spread since the 2000’s into commercial airplanes, automotive and consumer products.

These technologies made steady improvements over decades before their usage spiked upward. This is a common hockey stick pattern.

We can see patterns that may happen. Recessions happen regularly, so there will be one sooner or later. Stock prices to earnings ratio is among the three highest in history. Over the next decade the earnings ratio will likely return to mean. Expect lower returns on stock price growth in your investments. 

So the development of technology is going to give us some ideas about the future. Battery development, lighter materials and solar panels are driving the switch to electric cars. Electric cars with a range of 200 miles are eliminating the fear of running out of juice. The per mile cost of operating an electric car is one-third the cost of gasoline vehicles. Manufacturers are predicting mid 2020’s for the switch.

Longevity improvements have grown steadily or exceeded predictions for decades. Partly because no one anticipated how quickly the world economy would develop. Brooking reports for the first time 50% of the population are middle class or higher. 

Stem cells medicines and new treatments are producing improvements. Technology has made great strides in the past decades. The likelihood of a jump in healthy life expectancy could start in the next 5 to 20 years. 

What changes will we see with a lifespan increase of 10 to 50 healthy years? People can’t afford to retire for 60 years. What societal changes will happen? Longer lifespans have already reduced birth rates. What do you think? What other changes will happen?