Gastropods—the scientific name for slugs—are slow. In fact, they are even slower than “messages in a bottle” which have been documented to meander adrift ocean currents at speeds of just 0.75mph. The Usain Bolts of slugs cover 150 feet per hour, while the slowest slugs cover only about 30 feet per hour. Believe it or not, when contemplating “slowness”, slugs were not the first thing to come to mind.
Although nowhere near as slow as slugs, turboprop aircraft first entered the brain. Coincidentally, both slugs and turboprop aircraft can serve as useful analogies for modern day computing. But, surely no one in their right mind would associate modern day supercomputers with objects that are slow, right?
The Douglas DC-3 was the workhorse of the commercial aviation industry between 1940-1960. The aircraft could carry 32 passengers up to 1,500 miles at speeds just over 200mph, helping passengers easily reach distant destinations. When the Boeing 727 rolled around in 1963 it further expanded horizons carrying 190 passengers up to 2,600 miles at speeds up to 600 mph. When considering the increase in capacity, range, and speed the Boeing 727 boosted aviation’s productive capacity by about 17x versus the DC-3. The jet engine was a major transformational technology.
There are many examples of productive boosts in history, but in 2024 we are on the cusp of an even more groundbreaking leap in productive capacity. And, yes, we will revisit the slugs shortly.
Quantum supremacy is the idea that a quantum computer system can do just one single task or solve one single problem that may not be solved by the world’s most powerful classical supercomputers and algorithms. Google claimed quantum supremacy back in 2019 when its superconducting quantum computing processor, called Sycamore, performed a task that would have taken then state-of-the-art classical supercomputers approximately 10,000 years to complete.
This was accomplished using Sycamore’s 53-qubit processor. A qubit, simply put, represents the computational capacity of a quantum computer. A single qubit computes in 2 dimensions, a two qubit system computes in 4 dimensions, a three qubit system computes in 8 dimensions and so forth.
A 53 qubit system computes in over 9,000,000,000,000,000 or 9 quadrillion dimensions. IBM, one of Google’s main competitors in the quantum computing race, currently showcases a 1,121-qubit system called Condor on its 2024 product roadmap. It is virtually impossible to comprehend the productive potential of a 1,121-qubit system.
If a ping pong ball represented one computational dimension, and you were able to hollow out planet Earth and then fill Earth full of these ping pong balls, then you would find that a 53-qubit system alone would yield enough ping pong balls to fill what would amount to humans as an infinite number of Earths. The numbers get silly, honestly. The number of Earths we could fill would be even more than a million times more Earths than the largest number of Earths you could ever conceive. Even so, at some point everyone is encouraged to leap down the quantum computing rabbit hole and learn more about the technology and its potential benefits, but that lengthy discussion is hardly conducive to our purposes here. It suffices to say that as large as our huge universe is, our tiny quantum universe is even smaller.
The leap from turboprop to jet engine is a useful analogy for the leap from classical to quantum computing. Quantum computers, much like jet engines in aviation, won’t replace their classical counterparts but will instead define a new echelon of computing. Just as turboprops remain vital for light aviation, classical computers will continue to be ubiquitous in everyday life and even essential to the operation of quantum systems. No one will be stopping by curbside pick-up at Best Buy to get their personal quantum computers anytime soon.
However, quantum computing, akin to jet-powered flight, will soon become a staple for experts like researchers, technologists, and cryptographers, leveraging its unparalleled speed and capacity. This evolution in computing, driven by quantum technology, promises to unlock unprecedented opportunities and advancements, reshaping our technological landscape in ways yet unseen.
Moving Toward a Quantum Regime
This brings us back to our slugs. The shift from classical to quantum computing mirrors the transformative leap in aviation efficiency exemplified by the Boeing 727 over the Douglas DC-3. This comparison, however, only skims the surface of quantum computing’s monumental potential.
The performance of Google’s 53-qubit system marks an improvement over classical supercomputing that is more than 26,000,000x faster. By comparison, the computational leap from classical supercomputers of today to the quantum computers of tomorrow is closer to the leap from gastropod to jet engine than from turboprop to jet engine. If you do the math, the Boeing 727 is roughly 20,000,000x more efficient than our slowest slug pals.
Quantum computing regimes beyond 1,000-qubits, well, are paradigm shifting and virtually incomprehensible to the human mind. Such technological advancements, like the evolution of the jet engine from its inception in the 1930s to commercial use in the 1960s, signify long-term trends with profound implications.
When it comes to investing, we must take both short-term and long-term views. As the world evolves around us, we frequently survey the landscape and take stock of what risks and opportunities exist. Over the past 12 months, we laid the foundation for a new perspective we intend to add to our core arsenal of proven, time-tested, investment management principles and beliefs.
In June, we talked about smart concrete and the potential acceleration of scientific and technological discovery. In August, we touched on hype and enchantment and the differences between market hysteria and market leadership. In September, we discussed life as a continuous journey comprised of unique moments and the discrete effects time has on investment risk and return opportunities. And, finally, in October we talked about dancing gorillas and the importance of focus and discipline in investing. All these topics contribute to a concept that we at American Trust Wealth are simply calling Thematic Growth. The current economic and financial landscape in the United States reflects imminent shifts in long-term demographic and wealth trends that are too important to ignore. As your partner, it is our mission to ensure we are constantly evaluating and enhancing our investment solutions to help all clients achieve successful financial outcomes—including future clients.
Introducing Thematic Growth Portfolios
Thematic Growth is the innovative extension of our core investment principles which have traditionally focused on high-quality, value-based investing and highly personalized planning, all at reasonable costs. Drawing from our analysis of the dynamic relationships between time and risk and considering the dancing gorilla that is quantum computing in a world of flying AI basketballs, our conviction for growth asset classes among those investors whose time horizons justify higher risk capacities remains strong. Below is a breakdown of the concept.
- Asset Allocation – Our approach involves sophisticated asset allocation, enhancing traditional models with greater access to Growth assets across Large and Mid-Cap asset classes, as well as growth opportunities across Small Value and Foreign asset classes. By increasing the risk budget within the equity portion of the portfolio, this approach broadens our nuanced analysis and selection of growth-oriented asset managers as part of the portfolio. Thematic growth allocations will be available in portfolios with target allocations of 70% equities or higher.
- Manager Selection – We blend active and passive strategies, focusing on cost-effective, low-turnover options that align with the long-term nature of growth investing. This includes innovative methods like revenue-weighted indexes and factor-based strategies that prioritize financially robust growth stocks over momentum stocks.
- Client Suitability – These growth portfolios cater to a new generation of investors suited to higher risk and return opportunities. Tailored not only according to age but by risk tolerance and financial capacity, these portfolios are ideal for those who score higher on our risk tolerance scale, embodying our commitment to align investment solutions with evolving client needs in an ever-changing economic landscape.
Under the Hood of Thematic Growth
Over the next decade, we are poised to witness an unprecedented surge in scientific and technological innovation, fueled by advances in computing. This era, marked by the rapid evolution of quantum computing, promises to redefine our technological capabilities.
AI’s impressive strides in 2023 are just the beginning, with quantum computing set to amplify its potential and that of other advanced technologies. Our Thematic Growth portfolios offer investors a unique opportunity to tap into this burgeoning field, focusing on companies at the forefront of the quantum leap in computing. Examples of these companies, among many others, include:
|Integrating quantum computing into Google Cloud, using quantum algorithms to optimize Google’s search and advertising, and advancing AI research with quantum machine learning at DeepMind.
|Developing quantum-resistant encryption for secure transactions, employing quantum computing for enhanced fraud detection and prevention, and optimizing the efficiency of global payment network operations.
|Eli Lilly and Co.
|Expediting drug discovery by using quantum simulations for molecular modeling and enhancing precision medicine through advanced data analysis.
|Employing quantum algorithms for image and video processing, augmenting creative software with AI driven by quantum computing, and enhancing cloud services for efficient content delivery
|Arista Networks Inc.
|Leveraging quantum computing for advanced network optimization, creating quantum-secure networking hardware, and improving the efficiency of data center operations and cloud networking services
|Using quantum-enhanced modeling for drug discovery in biological systems, optimizing medication production processes, and analyzing clinical trial data more efficiently.
|Optimizing chemical process engineering with quantum simulations, utilizing quantum computing for industrial gas logistics and distribution, and improving energy management systems.
These are just a handful of the many high-quality companies to which the Thematic Growth portfolios will provide investors access in a prudent and disciplined manner. When looking across all the various fund managers and their individual security selections, nearly 75% of the top 50 equity holdings have “wide moat” designations from Morningstar and about 20% have “narrow moat” designations. These are financially sound growth companies with strong competitive advantages.
The Thematic Growth portfolios, launching this quarter, are not just investments in technology but in the future of innovation itself. We invite you to speak with your Fiduciary Investment Advisor to determine if these concepts are relevant to your investment and financial planning. Either way, we are excited to join you in this exciting journey and remain committed to guiding you through these transformative times. Happy New Year, and here’s to a future brimming with possibilities!