Wednesday, 11 September 2019 — Albert Park
‘Age is an issue of mind over matter. If you don’t mind, it doesn’t matter.’
I’m about to show you one of my favourite places to invest…
Especially during these turbulent political times we live in.
It’s a market that will go up in good times, it will go up in bad times…in fact it’ll probably keep going up until the day you die.
(Not to be too morbid!)
Actually, the good news is that this market is trying to make sure that grim day is as far out as possible.
Let’s take a look and I’ll explain why I’m so positive on it.
Then I’ll reveal what I see as the ‘equation for investing success’ right now…
The unstoppable passage of time
Forget Trump, forget trade wars, forget recessionary talk…
Because this is the kind of chart you want to have some money in, no matter what’s happening in the political circus:
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No, it’s not Netflix or Facebook or Google…or any of the usual ‘go-to’ tech unicorns people like to post up as examples of what could’ve been.
But like the poster boys of growth, tech is at the heart of it.
You see, this is the chart of the Medical Devices Index [IHI] from iShares. It’s an index of the top 50 listed medical device manufacturers and suppliers in the US.
As you can see, this group of companies have been on a tear over the last decade.
Here’s the thing…
Demand for the kinds of products these companies are selling is only going to keep growing. It’s all to do with demographics.
You see, 10,000 baby boomers in the USA are turning 65 each and every single day.
And as they get older, they’ll more than likely need to tap into the health system for repairs to hips, joints and other organs, as the process of ageing takes its toll.
This is a situation that is due to repeat across much of the Western world including here in Australia. Not just in the medical sector either.
And it’s a huge opportunity for you…
Technology + demographics = exponential
Memorise that equation…
Because in my opinion it’s the one key to hunting down the biggest opportunities coming your way over the next decade.
As the demographic makeup of the world shifts, the opportunities on where you should invest change too.
Now these demographic shifts are a bit more subtle than many people realise. It’s not just about investing in European cruise companies for retirees!
Sure, the ageing population is a big shift, and I think a very profitable one. But there’s also money to be made at the other end.
The burgeoning millennial demographic — those between 22 and 37 years old — are set to become the biggest spenders in the economy very soon.
Source: Pew Research
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They’re reaching their peak income generating years very soon. Just as their baby boomer parents are retiring and readjusting their spending to life as a retiree.
Work out where these youngsters spend their ‘hard-earned’ first, and you’ll have your money parked in the right spot early.
Already you’ve seen this play out in the exponential rise of companies like Uber, Airbnb, Netflix, Facebook and Apple.
Those opportunities are long gone now of course? What are the next ones though?
The common thread in all this — the key ingredient that supports the changing demands of every age group, both old and young — is technology.
Bill Gates knew
Whether it’s helping a 70-year-old get a new hip, or helping a 25-year-old get her first loan, it’s technology that will define the future.
You know this.
Because you’ve seen it play out in your lifetime. We’re probably the first group of humans in the entire history of humankind to experience change so rapidly.
I remember life before mobile phones, living with no internet, paying people by cheque, even writing letters to people!
My daily life is so different than it was two decades — even one decade — ago. Yours is too probably. It’s all due to technology.
And it’s why the most valuable companies in the world are now tech companies.
Which brings me to the banking industry…
It’s an area ripe for technological disruption. The big banks in Australia should be very scared.
As Microsoft founder Bill Gates said all the way back in 1994: ‘Banking is necessary, banks are not.’
It’s only now that this prescient remark is coming true. Fintech is not a fad, or a buzz word. It’s an idea whose time has finally come.
The tech is ready, the demographics are ripe for it and I think in 2020 this tidal wave hits Australian shores in earnest.
Will Australia’s Big Four banks survive? Or will they be picked apart like a decaying carcass? Who will the emerging winners be? (Hint: Tech companies probably.)
If you’re an Australian investor with bank shares in your portfolio (which let’s face it, is everyone through their super), you need to watch this carefully.
Moments of great change destroy — as well as create — huge chunks of personal wealth.
You’ll need a strategy to deal with it.
Editor, Money Morning