Quick Thought: Future of Search

Nobody knows what will happen in the future, but I’m sure the future will look different than the past. Let’s take a stroll down memory lane.

If you were an investor in 2001, and you wanted to make a safe investment, then you would’ve put your money in any of the top five S&P 500 companies. Those companies were:

1. General Electric

2. Microsoft

3. Exxon Mobil

4. Pfizer

5. Citigroup

Any of those companies were considered safe investments. They were companies that hedge funds, pension funds, and safe investors all turned to for long-term investing.

What a difference twenty years make. In 2021, the same list has different names holding four of the top five spots:

1. Apple

2. Microsoft

3. Google

4. Amazon

5. Facebook

The first thing that jumps out is only one company is on both lists, Microsoft. The other four companies are all different. In 2001, Google, Amazon, and Facebook were not even in the S&P 500, they were added years later.

This brings me to my first point of the article, and it’s the simplest, most investors should be index investors. If you simply purchase an index fund that follows the S&P 500, then you get to take advantage of all the shifts without doing anything. When you buy individual stocks, you run the risk of buying a shining start today that may lose its light in the future.

This brings me to my second point. In twenty years, the top five companies of the S&P 500 will be different. There will be companies added that we have not heard of today, and there will be companies that we consider household names that will drop down or off the list completely.

One of the companies I believe is in danger is Google. I know that sounds like blasphemy, but hear me out.

Google is a search engine. When you search for something on Google, you get pages of links that take you to different sites where you have to search for your answer. And let’s be honest, nobody goes past the first two pages. You click on one of the first few links and begin reading an article hoping it has the answer you’re searching for. That’s how it’s been for over a decade, and for the most part, we haven’t questioned our search habits. Until now.

Today, there is Artificial Intelligence (AI) that is changing everything. No longer will you use a search engine to search for your answers, you will use an AI-powered answer engine that will give you the answer you’re looking for, without sending you a link to a different site.

Here’s an example: If you Google, “Why is index investing better than buying individual stocks?”, you will get about 64 million results. You then click on any one of those links and read the article hoping to find the information you are searching for.

On the other hand, I asked an AI-powered answer engine the same question, and within seconds here is what I got back:

Index investing is a type of passive investing that seeks to track the performance of a specific market index. Index investing provides investors with broad exposure to many different stocks and sectors in one simple investment, making it easier and more cost-efficient than buying individual stocks. Additionally, index funds are typically managed passively, meaning they have lower fees associated with them since there is no active management involved. Furthermore, because the fund tracks an entire index rather than just individual stocks, it can help reduce risk by providing diversification across multiple companies within an industry or sector.

Artificial Intelligence worked to give me the answer I am looking for, in plain English, without visiting another site. The future of search engines is changing, and the future is an answer engine powered by Artificial Intelligence.

Will this happen in the next year or two? I don’t know, but I doubt it. However, can it happen in the next ten years, or twenty years? Absolutely. We are still early with AI, but the change is happening, and it’s coming.

The top five companies of the S&P 500 will look much different in 2040 than they do today, and I would not be surprised if Google is no longer in the top five. If you love technology and innovation, then this is an exciting time for you. If you’re a long-term investor who is picking individual stocks, then you may want to consider index funding.

For those interested in learning more about index funding, I highly recommend reading The Simple Path to Wealth by J L. Collins. You can purchase it through Amazon, another company in the top five list.

Photo by Markus Winkler on Unsplash