Hopefully our businessman (or woman) overcomes the concern about the lack of human direction taking place in the vehicle. Because, in a year or two, when they get in that Uber, there will likely be nobody at all behind the steering wheel. Yes, the age of the robot is upon us and one had better be prepared for it as it portends a lot of change, along with a (mechanical) armful of investment opportunities.

Robots are dependable. They are accurate. They are fast. And, as the chart above shows, their use is accelerating in numerous industries. It resembles a hockey stick, in terms of growth. And, that chart is based on information that is two years old…during that time, things have only gotten better. A report put out on Sept. 2nd by Research and Markets says the following, “The global robotics industry will expand from $34.1 billion in 2016 to $226.2 billion by 2021, representing a compound annual growth rate (CAGR) of 46%.” The hockey stick is just getting steeper.

While we know that industrial manufacturing is automating over time (it’s a strict cost benefit analysis) what is really driving the current growth is adoption of robotics in new markets. This adoption is possible due to the incredible computing power, and ample supply of raw data, that is available to programmers. Basically, machines are developing the power to learn and adapt. Throw in the accuracy of the GPS system, and you start to open all kinds of windows for new opportunities.

Dallas police used a robot to kill. What does that mean for the future of police robots? ~ The Washington Post, July 21, 2016

Farm Show Visitors Marvel, Scoff at Self-Driving Tractor ~ The Wall Street Journal, Sept. 1, 2016

The recent headlines cited demonstrate this growth into new markets. Soon enough, food may very well be delivered to the grocery store without ever touching a human hand. Soldiers already fly drone planes, the next step is mechanical warriors that patrol dangerous lands without risking human lives. The bottom line, the robotics industry is going to grow rapidly and for the foreseeable future.

As investors, we at Sylva International find the coming wave of robots very compelling. When an industry hits a tipping point, there is opportunity galore. The question is, do the valuations of robotics stocks fully reflect this opportunity, or do they have substantial upside left in them as the business accelerates? To answer this question, we looked at ROBO (the above slide is from their presentation), an ETF focused on the robotics industry.

What we found was good news for investors. As the chart shows, since its inception in 2014, the ROBO exchange traded fund has been pretty much flat. Thus, we believe that expectations haven’t run too far ahead of the market. This is further confirmed by the following stats that show the valuation of the portfolio companies in ROBO; they are quite reasonable.

Now, we would always encourage investors to perform their own due diligence. However, we feel very comfortable in saying that the Age of Robotics is upon us and investors would be well advised to seek out opportunities in this space. At Sylva we are certainly doing so, and hope to bring you coverage of some exciting opportunities in this industry in the near future.

Random Musings From Our Travels

Labor Day weekend is when the Hal Wagner Tennis Tournament takes place, which is our tennis club's annual shindig. Typically, here in NorCal, Labor Day weekend is also a very hot weekend. The thermometer can often go over 100f degrees and the tournament can start to resemble the Australian Open; in terms of temperature if not exactly level of play.

This year, however, the courts are running a cool 65 in the morning matches and just tipping 80 degrees in the afternoon. It's been rather pleasant out there...at least as long as we don't discuss results, which, like the temperature, are running below expectations.

The cooler weather at the Hal Wagner follows a cooler than normal summer on the East Coast, where, at our summer vacation in Rockport, MA, the temperature of the air was nothing but enjoyable and the ocean water bordered on frigid for the early part of July.

Now, we're not going to argue the veracity of climate change, nor to say that global warming isn't happening. It's taking place as far as we can tell with this year having the smallest polar ice cap recorded and 2016 being already declared the hottest year on record by NASA. No, this is really happening and only people with blinders on fight the glaringly obvious facts around climate change.

Instead, however, we think it makes more sense to discuss the benefits of climate change and how this impacts us everyday. For example, besides not sweating our a** off in the tennis tournament, we have had the AC on a grand total of 1 day this year. And, that was to test the system.

Looking beyond our personal comfort, and taking a more scientific approach to climate change, one can see that the benefits are numerous and have greatly exceeded the negative impact of climate change for years. (For a good read on "Why Climate Change is Good For the World", just click on the link.)

As individuals, we are free to do what we feel is best. Protest Exxon, buy power from Green Producers, don't purchase GMO food. This all feels good, and don't we all want to save the polar bear? Of course we do!

However, as investors, need to focus on the facts and the numbers. While we can fight climate change on a personal level (and we do recycle, try to consume less, etc.), on a portfolio level we need to examine the impact of climate change and try to predict the winners and losers.

And, there will be many winners and losers as a result of climate change. For example, the power usage of cooling is lower than that of heating. How will this affect power companies? Or, the impact of global warming is opening up parts of the north for greater farming usage, while simultaneously causing shifts in the weather (and rainfall) patterns in other parts of the world. Not to mention that a 33% increase in CO2 has dramatically boosted crop yields at a time when population growth has created greatly increased demands on our food supply.

We could go on for a while citing more benefits of global warming. Or, we could rail on about the costs of climate change. Both are to some degree correct and, while the benefits do appear to have exceeded the costs over the last 50 years, there is a lot of political and social disagreement to all conversations surrounding this area.

Instead, we would suggest that investors accept that the world isn't static. Climate change is happening. Fight it personally, but invest with an understanding of its implications.