TAKING STOCK: Robotics investment


Dear Mr. Berko:

I've lost money buying several stocks in the robotics industry. It seems that they go up when I don't buy them and go down when I do. I bought Intuitive Surgical shares at $398, and a month later, the stock price fell by 30 points, so I took a huge loss. I bought Zebra Technologies shares at $111 and sold them at $80 three months later. There were two others that I lost almost as much on. Still, I'm convinced that this type of disruptive technology is where a lot of future money lies. I've got about $75,000 to speculate with. Could you recommend several lower-priced stocks in the robotics industry? I'm looking to buy 500 shares of five or six different conservative stocks so I can get a little more safety with diversification.

-PA, Ann Arbor, Mich.

Dear PA:

I don't like the term "disruptive technology," because it sounds too negative. I prefer the term "creative destruction," which was coined by Joseph Schumpeter in 1942. An Austrian economist who was as bald as an egg, Schumpeter came to the U.S. in 1932, became a professor at Harvard and remained there until the end of his career. He told us that capitalism is a series of long waves of technological revolutions, each lasting 50 years or so. And these waves of new technology cause gales of "creative destruction," in which old industries are swept away and replaced by new industries. In the process, economic activity is ramped up. More people are employed, and they demand more goods and services. Think of the railroad's replacing the wagon train and stage coach. The steam engine allowed factories to locate anywhere; they no longer needed to be near rivers. Electricity gave us inexpensive and easy access to energy. Meanwhile, worldwide spending on robotics and related services in 2016 was $71 billion. In 2017, spending increased to $97 billion. And by 2020, that amount is expected to top $190 billion.

Both Intuitive Surgical and Zebra Technologies are attractive long-term speculations, but I wouldn't own either of these volatile stocks because I don't like stocks that trade at 70 or 200 times their companies' earnings. You are either too skittish or too high-strung to own issues of that ilk. If you'd had the mettle to hold those issues, both would be much higher today than your purchase cost.

Frankly, I know as much about stocks in the robotics sector as Mickey Mouse knows about particle physics. So I called my friend Knobby Walsh, a brilliant self-taught techie. He said, "There's no such animal as a conservative robotic stock." He suggested that you consider owning the Robo Global Robotics & Automation Index ETF (ROBO-$41), which came to the market in late 2013. ROBO is an exchange-traded fund that seeks to emulate the performance of the Robo Global Robotics & Automation index. ROBO has a $2.4 billion portfolio of assets with names that are unfamiliar to me, such as Keyence, Mazor Robotics, HollySys Automation Technologies and IPG Photonics. During its first two years, this ETF was off 4.1 percent and 5.4 percent, respectively. In 2016, ROBO was plus 17.8 percent, and last year, ROBO was plus 44.7 percent. This year, ROBO is plus 1.2 percent and trades just 4 points below its 52-week high price. And though ROBO's expense ratio is high, at 0.95 percent, I'm impressed that the manager's holding turnover was only 31 percent. The two other robotics ETFs are the Global X Robotics & Artificial Intelligence ETF (BOTZ-$23.60) and the First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT-$28.75). Both of these ETFs emulate the Nasdaq CTA Artificial Intelligence and Robotics index.

Each of these newer funds is more geared toward artificial intelligence than ROBO. Because I'm quite familiar with the First Trust organization and record, I'd recommend that you also consider owning ROBT, along with ROBO. If you would prefer to own some representative issues, consider ServiceNow (NOW-$159.30), Dassault Systemes (DSY.PA-$108.70) and Ansys (ANSS-$160.33).

If you buy any of the above three, I suggest that you ask your family physician to write a prescription for lorazepam. Consider taking 0.5 milligram thrice daily until you no longer own the them. They can be volatile.


Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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Published: Tue, May 01, 2018