Think longer term and avoid the market noise
The world’s five biggest companies used to be the US giants of oil & gas, soft drinks and pharmaceuticals.
Now, all five of the world’s biggest companies are tech-related companies and have become household names and part of everyday life.
The relentless rise in technology related companies over the last two decades is a perfect example of the type of long-term growth megatrend investors should be looking to identify.
The lesson for investors is… a long-term focus is essential
The cliché is that we are living in a ‘low growth’ world. Maybe – but that’s very different from a ‘no growth’ world.
The question for investors is where to look and how to focus your research. We are currently focusing on companies that will benefit from three megatrends:
- Demographic change,
- Resource scarcity and,
- The future of technology.
We’ve also identified a fascinating selection of sub-trends and drivers of growth for companies like luxury goods manufacturers, electric vehicles, healthcare and robotisation.
Developments in mobile technology, machine learning & artificial intelligence (AI), and the development of self-driving cars are growth areas to look out for.
The skill, or should that be hard work and analysis, is identifying who the winners and losers will be in each sector.
Conclusion – more volume, less noise
The conclusion is short and simple – and it’s a lesson for all investors – professional and personal: beware of the headlines, the fads, the booms and busts and short-term results and analyses.
Beware economists’ estimates, beware politics and sensationalism that may burn bright in headlines but soon be forgotten and leave no trace.
Instead, focus on identifying the long-term growth trends – or megatrends – that drive markets and companies over many years.
In fact, I believe it’s a good time to be a long-term investor, particularly an active stockpicker with a whole world of opportunity to choose from.
Source: MSCI ACWI as at 31 January 2019
Past performance is not a guide to future performance.
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