Why Are Warren Buffett, Amazon and JP Morgan All Investing Heavily Here?
It’s Melbourne Cup day today…
A day when someone, somewhere, will probably make a small fortune punting on some obscure result.
A weird trifecta, an outsider or an eight-race accumulator…
Because the law of probabilities dictates it has to happen to someone.
But I’m not a big punter. Despite the allure of the big payoff, I much prefer punting on small-cap stocks.
Especially when I think the odds could turn in my favour very soon.
Once every three years
Every three or four years, the stock market throws up an opportunity to make life-changing profits.
For those who know how to spot it, the gains can be tremendous.
It happens quietly at first…then all at once it’s a rush to get in!
A sector explodes into life…
And in turn, a bunch of small, unknown stocks burst onto the scene making early backers millions.
Getting in on a ‘hot sector’ before it rises has been a common path to riches throughout history.
The famous ‘robber barons’ of the 19th century made a motza by building railways.
Then in the 20th century, trains gave way to an energy rush that created dynastic wealth for several generations. Great oil magnates from John Paul Getty to T Boone Pickens made their oil fortunes here.
More recently we’ve seen extreme gains made in technology, the internet, smartphones, the iron ore boom, even milk(!) and many more industries that have had steep exponential rises in a short space of time.
Though of course, some have had painful bumps back to Earth, too.
The key is to find industries that are ripe for such moves before they happen.
Which brings me to a sector I think could soon be poised for glory…
A ‘new’ industry ready to go ballistic
Check out this chart…
Source: Vidual Capitalist
It shows how sectors have changed in relative importance over the years. You can see how transport dominated in the 1800s and how it created the robber barons I talked about earlier.
But eventually other industries came in as the economy grew past its early stages of growth and transport isn’t anywhere near as important as it used to be.
Now check out the two most recent trends — information tech and health care. They’ve both risen in importance over the years.
I think a collision between these two industries is going to create some huge wealth creation opportunities for you very soon.
The simple fact is that healthcare costs are rising faster than people can afford.
Source: Center for American Progress
This is a huge problem crying out for solutions. Something has to be done.
And technology is going to be a big part of the answer.
The big money is moving in already…
Is Haven going to fast track health tech?
In January 2018, Amazon, JP Morgan and the Buffett led Berkshire Hathaway announced a joint venture (JV) to tackle this big issue.
In March this year, they finally gave it a name — Haven.
Now if it takes 14 months to come up with a name, it’s no doubt going to take a while for the JV to deal with the actual problems it’s trying to solve.
But the company have a unique focus. Rather than trying to solve all the problems in health care themselves, they’re positioning themselves as a kind of facilitator of good ideas.
The website describes Haven’s role as ‘an advocate for the patient and an ally to anyone – clinicians, industry leaders, innovators, policymakers, and others – who makes patient care and costs better.’
Now, they don’t say how they’ll do that.
But when you remember that Amazon sit in on this JV, you can imagine a lot of this will lend itself to tech-led solutions.
The company CEO said as much in a statement:
‘We will create new solutions and work to change systems, technologies, contracts, policy, and whatever else is in the way of better health care.’
Haven stands ready to fast-track any aspiring small-cap tech play with an innovative solution to solve a problem in health care.
Haven is just one component of this super trend in the making, of course…
$150 billion by 2026
There are a lot of other investors that realise technology and healthcare will make a potent — and very profitable — mix.
For example, total public and private investment into artificial intelligence (AI) healthcare solutions is expected to reach US$6.6 billion by 2021.
Accenture estimate that the top AI healthcare applications may result in annual savings of a whopping US$150 billion by 2026.
Which comes back to what I said at the start.
This is an industry you need to start looking into seriously.
Whenever a trend like this emerges, there are always huge gains on offer if you can find the right companies to back, early on.
Now of course, that’s not an easy task.
But start your investigations by following the money trail first. This chart is a pretty useful place to begin from.
Look for companies innovating in new areas like ‘Robot Assisted surgery’ and ‘Virtual Nursing’ first, for example. A simple google search can often get you on your way.
Then it’s case of delving in and finding stocks you think could be worth investing in.
This is speculative investing, that’s for sure, but it’s a much better bet than a punt on the races!
Editor, Money Morning
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