Secular trends play a major role in my longer-term investment themes. Aging demographics and a return to slower economic growth, as well as the rise of Asia, have their thumbprints on many of the recommendations I’m about to highlight.
The shifts accelerated by the pandemic such as increased digitalization, clean energy and sustainability, and a partial reversal of globalization reinforced by the supply-chain disruptions of COVID-19, are also key to watch.
Without further ado, here are my latest big-picture investment themes:
- For gaining international exposure with better relative valuations, look to emerging markets in Asia, as well as to Australia and Britain.
- Seek out clean energy plays for the greener economy that’s around the corner. For instance, wind turbines, battery storage and solar panels.
- As economies move away from peak growth and peak inflation, it will be important to gain exposure to U.S. Treasuries and high-quality long bonds. Within the equity market, look to growth stocks over value and defensive over pro-cyclical names.
- On the theme of the partial reversal of globalization, particularly in areas of national security, pay close attention to pharma and biotech stocks, semiconductor stocks, in addition to farmland and equipment that’s connected with the food supply.
- Gold. It’ll not only benefit from negative real rates, but it’ll also act as a hedge against heightened geopolitical uncertainty.
- We’ll be seeing a wave of baby boomer retirements over the next several years, as well as an aging in demographics more generally. Look to gain exposure in life sciences and health care services.
- Gravitate toward hard assets that provide stable cash flows. Electric utilities, pipelines and industrial real estate investment trusts are all good options.
- The pandemic has sparked lasting shifts in housing preferences. Look to single-family housing in rural areas.
- An increasingly flexible work force means companies with home office technologies should be looked upon favourably.
- Focus on online retailing, delivery services, and warehouse and storage space to play the growing share of consumer spending on e-commerce.
- Robotic technologies should do well thanks to their labour cost-saving strategies.
- Environmental, social and governance investing principles are here to stay. Screen for the best-in-class ESG companies.
- Public markets will offer only a low-return environment, so consider alternative investments.
- Apparel retailing will be a hot sector as employees return to the office.
- Take advantage of a higher postpandemic savings trend by investing in asset managers and banks.
David Rosenberg is founder of Rosenberg Research, and author of the daily economic report, Breakfast with Dave.
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