Friday, February 03, 2006

Profiting from long term trends

One of the things I often think about, as an investor are how can I make any money from long term social, economic and global trends. A few of my thoughts on the trends we see and how could we enrich ourselves from these.

  • China rising, on its way to become the largest economy - Buy the China Exchange traded fund a cheap way to get into the China market. The ETF is (NYSE:FXI) (See blog post below on investing in Emerging Markets)
  • We are living in an uncertain world (think 9/11, London, Madrid) and no doubt more unfortunate attacks will follow - We will be using a lot more biometrics made by companies like Identix (Nasdaq : IDNX) and Viisage (Nasdaq : VISG) (soon merging).
  • The populations of developed nations are getting older, the industry that will do well here is the assisted living companies , companies like Manor Care Inc. (NYSE:HCR), Sunrise Senior Living (NYSE:SRZ), Beverly Enterprises Inc. (NYSE:BEV) and quite a few smaller players.
  • The developing markets are hogging commodities, they need to if they are to achieve the western standards of living - the best way to play these is own one or both of the largest mining companies in the world BHP BillIton (NYSE;BHP) or Rio Tinto (NYSE;RTP), another way to own this piece of action is to buy the Canada (NYSE: EWC) or Australia (NYSE : EWA) Exchange Traded fund, both these countries economies are significantly weighted by commodity and energy companies.
  • Oil & Energy politics will roil world markets, alternative and clean fuels will be in vogue. Some plays on this theme are the PowerShares Clean Energy ETF (NYSE:PBW) , some pure plays here are Cameo (NYSE:CCJ), the world's largest uranium producer, Iberdrola (OTC : IBDRF), the world's largest owner of wind farms, or SunPower Corporation (Nasdaq:SPWR), a recent spinof from Cypress Semi.
  • Water will become the next precious commodity. The only diversified play that I know of here is the PowerShares Water ETF (NYSE:PHO)
  • Cell phones or similar handheld devices will become the norm for talk, information access, photos, music, videos, payments. There will be many winners here but the key is wavelength spectrum ownership. I would bet on Vodafone (NYSE:VOD) internationally and Verizon (NYSE : VZ) and Cingular (owned by BellSouth (NYSE:BLS) and AT&T(NYSE:T)) in the US.
  • globalization is here to stay, the US and other nations are actively pursuing bi-lateral and multi-lateral free trade agreements, regardless of the opposition - one way to play this trend is investing in companies that deal in movements of goods, prime examples are Fedex (NYSE:FDX) and United Parcel Service (NYSE:UPS). Also included are freight forwarders, logistics providers and shippers like Expeditors Intl (Nasdaq:EXPD), EGL Inc. (Nasdaq:EAGL).
  • The possibility of SARS, Avian flu like diseases that can mutate rapidly and devastate large populations is high. Some of the best companies working on vaccines and cures in this space are Novartis (NYSE:NVS), which recently bought Chiron, one of the world's largest vaccine maker and Glaxo Smith Klein (NYSE:GSK)
send me your comments and any new ideas. Disclaimer (I own FXI, BHP, IDNX and VZ)


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