Here at ARK, the number one question we hear is: has innovation bottomed? Steven Vannelli is seeing signs that innovation may have hit the bottom and that there might be a significant turning point ahead. Steven is Founder and CEO of Knowledge Leaders Capital and Chief Investment Officer of the Knowledge Leaders Funds. There, he oversees investment strategy, asset allocation, and security selection, and leads development on the firm’s analysis of intangible capital, studying how it affects corporate profitability and wealth creation. According to Steven’s most recent Quarterly Strategy Report, global innovation appears to have bottomed, and in this episode, he breaks down what he means. We take a deep dive into the stats that suggest that innovation could be relatively undervalued from a historical perspective.
Key Points From This Episode:
- The motivation behind Knowledge Leaders and their unique focus on intangible assets.
- Indications that innovation as a factor bottomed earlier in 2022, according to Steven.
- Defining intangible assets and some examples that illustrate their value.
- Understanding the relationship between present intellectual property and future earnings.
- A look at the first quintile of the S&P 500 and what it means for innovation.
- Where research and development spenders in the S&P 500 are concentrated.
- Steven shares his view on how companies can benefit from capitalizing on R&D.
- Indices that Steven uses as proxies for innovation.
- The Bloomberg R&D Leaders Index versus the Goldman Sachs Non-profitable Tech Index.
- A look at financial leverage based on reported data.
- The potential merits of comparing the 2000s boom and bust cycle with innovation today.
- Potential ramifications of the tech race between the U.S. and China.
- How geopolitical risk can slow innovation.
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