Technology and Economics

Technology and Economics

It seems the hardest lessons are the most compelling. The worse the consequences we suffer, the more determined we are to not let those circumstances affect us again.

So it is in the field of economics, which now leans heavily on technology to help evaluate and anticipate risk. Since the last recession, industry regulators have gained access to more granular data in order to help monitor and anticipate pending risks to our financial system, says Kimmo Soramäki, founder and CEO of London-based Financial Network Analytics (FNA) and editor of the Journal of Network Theory in Finance, a forum for central banks and others in financial services.1

These technology-based tools have yielded new terminology, such as:2

  • FinTech – Using technology to better track the financial system. While it started nearly a half dozen years ago, these days it has evolved into consumer-friendly systems designed to help retail customers better understand financial services.
  • RegTech – Emerged a couple of years ago as a reference to technology used by regulators. Now, banks and other financial institutions use RegTech to comply with regulations.
  • SupTech – The newest technology term, which references the supervisory entities that track data to become more timely and accurate at overseeing and supervising the nation’s financial system. This technology is used by central banks, capital markets authorities and banking supervisors.

By identifying factors that contributed to the past downturns, scientists are better able to collect and track that data. They’ve built hundreds of algorithms to report whenever similar scenarios arise and can run simulations for “what if” scenarios that have yet to happen. While recessions are an inevitable part of the economic lifecycle, technology is helping make us better at predicting when they might happen and how we might prepare for them.3

1 Knowledge@Wharton. Sept. 20, 2018. “Can Using Software to Map Financial Risks Predict the Next Downturn?” Accessed Nov. 1, 2018.

2 Ibid.

3 Ibid.


Money Saving Tips


S&P 500 Renames ‘Communication Services’ Sector                       

At the end of September, a group of 18 technology and consumer discretionary sector stocks in the S&P 500 were transferred into the communication and media sector. In the largest change-up in the Global Industry Classification Standard (GICS), the telecommunication services sector was renamed “communication services.”1 The new classification is designed to reflect how technology, media and consumer industries have evolved over the past two decades.

Some of the companies in the newly named category are:2

  • AT&T
  • Alphabet (owned by Google)
  • CenturyLink
  • Comcast
  • Facebook
  • Netflix
  • Twitter
  • Verizon
  • Walt Disney

The transfer impacted about 8 percent of the S&P 500, with the technology sector shrinking as a result to 20 percent from a 26 percent weighting. The biggest players remaining in the tech sector are Apple, Microsoft, Visa and Intel. However, analysts expect the shuffle to give smaller chipmakers, cloud-computing sellers and other tech innovators more investor exposure.3

The following shows how the new S&P 500 weights related to the shift measure up:4

  • Communication Services, 11%
  • Consumer Discretionary, 11%
  • Information Technology, 20%
  • All others, 58%

While Amazon remains in the consumer discretionary category, it now represents a higher percentage of the sector, increasing to 34 percent from 27 percent.5

1 Noel Randewich. Reuters. Sept. 12, 2018. “Tech, media shares find new home in sector overhaul.” Accessed Nov. 1, 2018.






Planning Tip

How to Make Your Own App

Do you have an idea that would make for a great smartphone app? There are now apps designed to help you make an app. You don’t need programming skills, just use the simple drag-and-drop interface.

These platforms let you try out your skills and use the app free of charge, with ongoing pricing plans available if you want to publish and distribute your app through places like Apple iTunes and Google Play.

The following websites provide tools to help you build an iPhone or Android app:

  • Appmakr (
  • Appy Pie (

Content prepared by Kara Stefan Communications.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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