Profiting from World Events in 2014
While the market is supposed to have such themes and information baked into its pricing, in reality it is too complex, manipulated, and interrelated to pick up on all these indicators perfectly. Many world changing events and ideas create virtuous cycles that reinforce themselves in ways that experts can’t predict. As a result, investing in overarching trends can be an effective way to find growth in a portfolio.
A fair criticism of such a strategy is that by pooling resources into a group of companies in a “trend” constitutes a common investment mistake. By buying a variety of companies in a sector, an investor gets the good companies and the bad companies. When Warren Buffett wants to invest in soft drinks, he doesn’t buy a pool of soft drink companies – he buys the best company in the mix: Coca-Cola.
However, that raises the question of whether or not retail investors have the resources, time, and experience to be picking the top companies in these trends. Buffett spends months doing due diligence, while retail investors have likely a few hours at best.
Regardless, we feel that there are certain trends that will come to fruition in 2015. The Internet of Things, Medical Marijuana, and 3D Printing are big ones in the near future, while Peak Population, Commodities, and Precious Metals are ones we expect to take off in the longer term.
Original graphic from: Motif Investing
