Ten big-picture trends and ideas that will shape the markets (and the world) in the years to come
What’s the outlook for the market? Or the economy? Or inflation? Or interest rates? How will my portfolio do next year? What about that stock I just bought – how much will it go up next quarter, next year or next decade?
As an investor, it’s almost impossible not to think about these questions from time to time. But here’s the thing: investing isn’t really about predicting the future – rather, it’s about understanding it. We can’t predict what will happen to a given stock or asset with 100% accuracy. But what we can do is identify long-term, big-picture trends that stand to shape the market, the economy and the larger world over many years, or even decades. Indeed, this process of noticing some theme, some development, some progression or some idea that’s taking hold and then aligning one’s portfolio to profit from it is how many of the world’s most successful investors became so successful.
With that in mind, here’s a quick overview of several long-term trends, themes and ideas that will likely create intriguing investment opportunities in the years to come. Armed with this knowledge, you should be able to start targeting particular sectors of the economy and specific businesses that are worthy of further study, investigation and investment research.
Artificial intelligence
The development of artificial intelligence – computers that can think, learn and solve problems for themselves – has captured the imagination of a lot of people over the past couple of years, and has made a lot of money for investors who were fortunate and insightful enough to jump into the trend early. Sure, there’s a lot of hype here – but there’s also a lot of opportunity, particularly in the following areas:
AI software – you’ve likely heard about ChatGPT, the best-known example of AI software that can write, edit, create images and video and produce creative output with minimal human direction. Companies working on similar software are some of the most obvious investment opportunities within the broader trend.
Chip makers – some of the most explosive stock market gains of the past year have been realized by the makers of the computer chips and hardware which power AI-enabled software. Will gains be as good in the future? Hard to say. But there’s little doubt that such companies have a bright future ahead of them.
De-carbonization
News flash: the planet is warming… and more quickly than many anticipated. As a result, there is a push to adapt renewable energy sources that will help to mitigate (and in time, reverse) the negative effects of burning fossil fuels. This transformation will be a multi-decade effort and will create a variety of opportunities along the way.
Green power – companies building solar, wind, hydro, geothermal and other sources of clean energy to replace gas and coal-fired power plants will likely have order books that stretch far into the future.
Energy storage – windmills and solar panels only generate power when the weather co-operates. To balance that generation against the times when we need energy most, we’ll need to develop batteries that are capable of storing much more energy, on a much larger scale, at a much cheaper cost. Companies which can do that successfully could stand to make a lot of money.
Energy infrastructure – all of this clean electricity is going to need an upgraded transmission system – good news for anyone mining copper, making cable and wire, building electrical meters, putting up electrical poles and manufacturing the various technologies that are the ‘backbone’ of a souped-up energy grid.
Electric vehicles – replacing gas and diesel-powered transportation with cleaner, greener vehicles will be a big part of de-carbonization. That means opportunities for new and existing electric vehicle manufacturers, as well as for the companies which will build charging stations, battery-recycling depots and other infrastructure.
Preparing for climate change
It’s going to take a number of years to transition our carbon-based economy to one that’s healthier for the planet. During that time, we’ll have to build protections against some of the more negative impacts of climate change.
Infrastructure upgrades – in the future, our infrastructure will need to be built to withstand increasingly extreme weather. Companies involved in beefing up our buildings, roads and living spaces to help them survive floods, hurricanes, wildfires and other natural disasters will become increasingly important.
Water management – companies that are developing, improving and building new technologies and systems such as smart irrigation systems, water recycling and desalination are likely to see increased business in a world that’s getting warmer and increasingly thirsty.
Ag tech – traditional farming makes a big impact on climate –particularly livestock farming. Interest in new farming and food technologies such as plant-based protein, sustainable agriculture, food security and other innovations is rising in response to these concerns.
Personalized medicine
Medicine used to be a “one pill fits all” kind of profession. With the rapid development of genetic testing and related technologies, we now know that different people react to different medicines in different ways. That’s going to open up new lines of business for companies developing therapies and treatments tailor-made for individual patients.
Sequencing and diagnostics – before you develop personalized medicine, you need to map and sequence an individual’s genetic information. Companies in the business of making sequencing quick, accurate and affordable will be at the forefront of this trend.
Personalized drugs – many pharmaceutical companies are developing drugs that work with a patient’s personal metabolism or genetic makeup. You can just imagine how lucrative such businesses could end up being one day.
Immunotherapy – one sub-category of personalized drugs is harnessing or activating a patient’s individual immune system to fight diseases. Such therapy is already being used in cancer treatment, for example, where an analysis of individual tumour profiles can be used to create tailor-made treatments. If such treatment becomes commonplace, it will likely be immensely profitable.
An aging population
As advancements in medicine and medical treatments help us live longer, healthier lives, the health-care companies which create the products and services that an elderly population needs could enjoy a lot more business.
“Age-related” drugs – demand for drugs that help with some of the chronic conditions associated with age (think obesity, diabetes, high blood pressure, arthritis, heart disease and the like) is almost certainly going to grow over the next several years.
Wellness and prevention – as the saying goes, an ounce of prevention is worth a pound of cure. Good news for anyone in the business of making nutritional supplements, offering wellness therapy such as massage, chiro and acupuncture, or creating fitness programs for health-conscious retirees.
Medical devices – our bodies are like any other machine: as time goes on, we need to replace some of the ‘parts’ that wear out. Companies in the business of making artificial knees and hips, hearing aids, dental implants and other devices likely have a very bright future ahead of them.
Long-term care – many of us look forward to aging in our homes. Some of us, however, will need to hire home-care nurses to do so, or will enter dedicated, long-term care facilities as we become more frail. Companies offering such care might be an intriguing investment in the years to come.
Cybersecurity
As we spend more of our lives online, we’re going to need to keep our digital lives secure. Companies that develop technologies which keep computer systems and critical data out of the hands of hackers have been tremendous investments over the past several years; they’ll probably continue to thrive in the future.
Security software – companies that produce antivirus software to protect our computers and smartphones from malware will likely continue to see high demand for their products. Best of all, that demand is likely to always be there. This makes for a very attractive business model.
Identity and access management – you’ve likely encountered apps which require multi-factor authentication to access your online accounts (to do your banking, for example). The companies that develop such systems to control identity and user permissions will likely continue to do a brisk business in the years to come.
Threat intelligence services – consulting firms that help businesses, governments and other organizations understand, identify and protect against cyberthreats will likely have no shortage of customers in the coming years.
Digital money
This is another trend that’s gained a lot of attention over the past several years. At this point, direct investment in digital money is highly volatile and highly speculative. That said, it may become a commonplace medium of exchange in the future.
Cryptocurrencies – some have questioned whether digital money such as Bitcoin, Ethereum or others has any value whatsoever. Others have made millions from it. Which side will be proven correct? Hard to say for sure. But for investors with a strong stomach for risk, there might be an intriguing investment opportunity here.
Blockchain tech – cryptocurrencies are built on blockchain technology – a decentralized ledger of tamper-proof digital data that’s exceptionally useful in a number of industries beyond finance. Whatever you think about the investment merits of cryptocurrency itself, you can bet your bottom dollar that companies developing blockchain-related applications have a bright future ahead of them.
Robots
Let’s be clear: it will be some time before we see the kinds of human-like robots that are common in our favourite sci-fi movies. But with the rapid development of computing power, data processing and sensor technology, it seems as if there’s a long-term investment opportunity for any company that builds or develops automated technology.
Industrial automation – developments in artificial intelligence (see above) and advances in robotics are converging to make humans obsolete in factory assembly lines and warehouses.
Service by machine – industries such as hospitality and retail are using robots more and more to enhance efficiency, while household robots (vacuums, lawn mowers, window cleaners, etc.) handle repetitive and mundane tasks.
Dr. Robot – you might not know it, but robots are already assisting in the operating room, where they’re capable of incredibly precise, controlled surgical cuts and movements. Other robots can help with targeted radiation therapy, UV therapy and other procedures.
The “anti-global” economy
Covid-19 demonstrated the limits of far-flung supply chains. In the future, many economists expect companies to work hard to bring the global economy a little closer to home. That realignment will likely create opportunities in the following areas:
Local manufacturing – war, pandemic, natural disasters or other unforeseen circumstances can cause massive disruptions to how companies make and sell their products and services. As companies strive to make manufacturing more of a local (or at least, regional) affair, that could mean increased business for companies manufacturing automation, working on logistics technology and building localized production capabilities.
Warehousing and logistics – increased domestic manufacturing will likely drive up regional demand for warehouses, logistics centres, transportation hubs and industrial real estate.
Food security – food production is vulnerable to many of the same supply chain issues as is manufacturing. This could open up new opportunities for farmers and larger concerns involved in local agriculture and food production, such as indoor farming, vertical farming and food infrastructure.
Everything online all at once
One of the great changes that we’ve seen over the past decade is the increasing “digitization” of commerce. As the years go by, it seems as if more buying and selling can be done online – and so can a lot of other experiences. This could mean opportunity for savvy investors.
E-commerce – online shopping is well-established in North America, Western Europe and developed Asia. But in other parts of the world, it remains in its infancy. For investors looking for international opportunities, that could be exceptionally intriguing.
Streaming and subscriptions – chances are that you already subscribe to one of the many streaming services for video and audio content. Such services are becoming the standard distribution method for entertainment and software subscriptions.
The “Internet of Things” – have you noticed that your car, your television, your front-door lock and even your fridge may now be connected to the internet? The rapid proliferation of internet-connected devices will open up some important investment opportunities for any company in the business of making connectivity solutions, sensors and data management systems.
Keep in mind that the above ideas and trends are simply “snapshots” of how they’re looking right now – the ideas will almost certainly continue to evolve, change and intersect with other trends and emerging ideas over time. That evolution can have a dramatic effect on the market dynamics, regulatory environment and investment rationale behind any given trend.
And this brings up an important point: identifying the above trends is only the first step in a journey that takes time, effort and careful consideration. Before you put your money into any broad-based idea, make sure to really understand the business case behind it. Understand how companies will make money from the idea. Get a feel for the risks involved and be aware of your own risk tolerance. Above all, consult with a qualified investment professional – it’s the best way to make sure that a trend is an actionable investment idea, rather than simply an interesting news item.