Transcript
Paul Winkler: All right. I’m back here on The Investor Coaching Show.
Optimism
Paul Winkler talking about the world of money and investing. I thought this was interesting: FAA approves fully automated control commercial drone flights. Okay. So this is interesting because I’m always fascinated by technology. And it’s interesting to me, just because, you know, I look at technological advances, you know, we often talk about how we often get real pessimistic about the future. And, you know, the real optimism is the realistic viewpoint.
You know, there was a book that was by that title is optimism and the whole idea behind it was optimism is more realistic because if you look through history, it’s a constant move forward. It’s just constantly, there’s just new stuff coming out all the time and fascinating what we’ll be doing in the future. But they had this thing in the journal that was talking about the US aviation regulators having approved the first fully automated commercial drone flights granting a small Massachusetts-based company permission to operate drones without hands-on piloting or direct observation by human controllers or observers.
Why Does This Matter?
Now think about why is this important to me? Think about how this can impact industries going forward. You know, when you have a company and the company sells something, you’ve got sales. So you’ve got the revenue coming in from sales. You have to take away from that operating expenses. You have to take away from that cost of goods sold. You know, maybe you make cars and you got parts that go in the cars and you have to pay for that. Then you’ve got to interest expenses. Then you have taxes and then that’s where you get to earnings. When you buy a stock in a company, you’re buying the rights to the earnings. So if earnings go down because sales go down, then you know, you’re going to have to, as a company, you’re going to have to reduce expenses somewhere, to get the earnings, go back up or move your sales number back up.
And it may not be so easy to move the sales number back up, but you can find ways to reduce expenses, maybe lay off people. You might have to go in and stop buying parts because you’re not selling the cars anymore. So you stop buying the parts or maybe you go and refinance your debt at a lower interest rate. And that’s because that’s typically when the economy gets soft, you’ll have interest rates go down. And the reason they go down is because people want and pull money out of stocks. Then you have the Fed action regarding interest rates and between the combination of people buying more bonds and putting more cash on the sidelines that drives interest rates down between all of those different things. Whenever you’re driving interest rates down, that’s reducing a cost of doing business.
If a company has to come up with, you know, a million dollars to pay interest payments, but then all of a sudden interest rates are lower and you drop your interest cost to a half a million, let’s say, well, there’s half a million dollars of found money, right? So that’s a pretty big deal. Well, so you can do that. Well, if you have lower taxes, you know, there’s a lot of times governments will come in and go, you know, it’s a kind of, it’s not doing so well. We got to reduce taxes. So reduce tax rates and reduce tax rates, you’ve reduced the cost of doing business. So all of these things can affect the earnings of a car. Well, what else can affect it? Productivity? Yeah, no. If you have this new way of getting information and doing business, which is commercial drone flights, you know, then now you can have your operating expenses go way down.
You’ve got productivity going up, accuracy can go up, waste can go down. You know why? Because, you know, if you had to have people out there reporting on what’s going on, but now you have a drone operated by somebody, a long, long ways away. Now you don’t have to go on, send a person out there to, to monitor the drone either. You know? So you have reduced the need for people doing things that you could be putting them to work, doing something a little bit better with their time. The decision by the federal aviation administration limits, operation of automated drones to rural areas and altitudes below 400 feet, but it is potentially significant step in expanding commercial applications that drones for farmers, utilities, mining companies, and other customers, agriculture, mining, transportation, these are all areas that are going to be using this kind of stuff.
Would you like personal help with your financial plan? Schedule a call with us to explore what this can look like for you here.
Or schedule a more in-depth, virtual or in-person meeting here.
Something Like This Will Affect Businesses
You know, the FAA previously, they were using these drones to inspect railroad tracks and pipelines and industrial sites. But only if there was an individual relatively close by seeing it, you got to make sure that everything is working okay. The railroad tracks look okay, the pipelines look okay. And you got, you have to be monitoring these things and he can’t do it, but now you, you have the ability to do that. What else are they going to be able to do with this? I mean, basically going to be able to use it for commercial purposes, you know, so they have these scout drones and they have these predetermined flight programs and they can use acoustic. And this was the big holdup. What was stopping them from doing it before? Well, they were afraid that these things were going to run into each other and they were going to run into obstacles.
They were going to hit birds. They were going to hit other obstacles out there, you know, because you didn’t have a person operating them. Well, guess what? They have figured that out. They’re using acoustic technology. I guess the things that are like bats and they’re using this to help make sure that they don’t run into stuff and they have propellers and they’re landing vertically like helicopters and, and they have all these systems and basically they have self safeguards against malfunctions. And if the craft is in trouble, you know, let’s say that there’s a problem with it. They can literally land this thing safely and not cause any problems. And what’s happening is something I’ve talked about here on the show before, because I’ve talked about, well, wouldn’t it be cool if we could actually be in one of these things one day?
I mean, there was this one lady was talking about package delivery on CNBC one day and they said, “Well, what’s next?” You know, you get the ability to take a drone and, and deliver packages. It wasn’t next. She said people, I mean, you literally are able to pick up people and bring them to various places that you need to have. And it’s like, the Jetsons, you know, are right there in our very world. You know, being able to do that. And my son, I got talking about it. He goes, I wouldn’t do that. I said, I would. The reality of it is they have so many safety features on these things. And then you go, well, maybe I would. I said, I think it would be pretty cool. And basically what’s the big hold up is the policies and regulations have been lagging.
And, you know, over the past four years, they’ve actually been testing across eight different States on ways to actually operate on larger scales with these types of commercial craft, these drones. And then, you know, they’re going to be looking at this and out in agricultural operations and Kansas and Massachusetts and Nevada, and this is something they’re going to be doing little by little, but I think this is coming sooner than we think in reality. And I think it’s going to be exciting, I think is going to be exciting, how it affects businesses and how it affects the world in ways that right now, we’re probably not even thinking about not even on the radar screen.
I’m Paul Winkler. You know, the technology is exciting. I mean just where it can take us and what we can do with it and how it will change business going forward. Because if you can increase profitability by increasing productivity and decreasing expenses, it helps with the stock market. That’s what we’re buying when we buy stocks. If you think about it, pretty cool stuff.
Want to talk with us directly?
Schedule a call here.
Ready to meet with us virtually or in person? Schedule a meeting here.
*Advisory services offered through Paul Winkler, Inc. (‘PWI’), an investment advisor registered with the State of Tennessee. PWI does not provide tax or legal advice: please consult your tax or legal advisor regarding your particular situation. This information is provided for informational purposes only and should not be construed to be a solicitation for the purchase of sale of any securities. Information we provide on our website, and in our publications and social media, does not constitute a solicitation or offer to sell securities or investment advisory services, or a solicitation to buy or an offer to sell a security to any person in any jurisdiction where such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction.
