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Perhaps the key to successful investing is predicting the future. Sadly, no-one can really foretell the future. But that's not to say there aren't major trends we can spot that influence our investment decisions. In this article, I have identified what I think are six of the most important trends that will take place in the coming years.
1. Emerging markets will continue to grow fast
Why manufacture a product in developed markets when that same product can be made in emerging markets for a fraction of the price? That is the ineluctable logic that has driven the emerging market success story over the past 20 years.
China and India have been growing at a rate of 8-10% a year, with countries like Brazil and Russia not far behind, far outstripping developed markets. What's more, it is thought that this rapid growth will continue for many more years. The World Bank has predicted that China can grow at a rate of 8% a year for the next two decades.
2. The commodities boom will roll on
As emerging markets continue to boom and the world population continues to rise, the demand for commodities such as oil, gas, minerals and food is only going to increase.
People have talked about 'commodity supercycles' and 'peak oil', but, in basic terms, it is all about supply and demand. Demand is rising, and supply simply can't keep up, leading to rocketing commodity prices. This process began in the mid-Noughties, and has a long way to run.
3. Developed markets will stagnate
As more and more of the world's money goes into emerging markets, less and less will go into developed markets. Regions such as the US and Western Europe face a future of stagnation, with low growth rates, poor demographics and high unemployment.
Developed world countries are currently up to their eyeballs in debt, and their slow growth will make it harder for them to deleverage. The eurozone debt crisis has made the situation all the worse.
4. Technological advances will drive change
Technological advances over the past 50 years have been spectacular, and there is no sign that they will relent. Computer processing power will continue to increase by leaps and bounds. Electronic devices from computers and tablets to smartphones and consoles will be ubiquitous, and the internet will become all-pervasive.
People will use the internet for everything, and technology will drive change in industries such as retail, travel and newspapers.
5. Biotechnology will keep on advancing
Bioscience has entered a golden age. Soon, stem cell technology will be so advanced that whole organs will be created in the lab. Scientists can already synthesise artificial life. A person's genes can be sequenced in an hour.
Current chemical drugs are being replaced by biological drugs (or 'biologics'), which use antibody technology to find their target. As the patents for the current generation of medicines expire, biotechnology is becoming the future for Big Pharma.
I, and many readers of this website, will already be preparing for this future by investing.
So, do you agree with my predictions, or do you have some of your own? Please share your thoughts in the comments.
Edited Article from fool.co.uk
1. Emerging markets will continue to grow fast
Why manufacture a product in developed markets when that same product can be made in emerging markets for a fraction of the price? That is the ineluctable logic that has driven the emerging market success story over the past 20 years.
China and India have been growing at a rate of 8-10% a year, with countries like Brazil and Russia not far behind, far outstripping developed markets. What's more, it is thought that this rapid growth will continue for many more years. The World Bank has predicted that China can grow at a rate of 8% a year for the next two decades.
2. The commodities boom will roll on
As emerging markets continue to boom and the world population continues to rise, the demand for commodities such as oil, gas, minerals and food is only going to increase.
People have talked about 'commodity supercycles' and 'peak oil', but, in basic terms, it is all about supply and demand. Demand is rising, and supply simply can't keep up, leading to rocketing commodity prices. This process began in the mid-Noughties, and has a long way to run.
3. Developed markets will stagnate
As more and more of the world's money goes into emerging markets, less and less will go into developed markets. Regions such as the US and Western Europe face a future of stagnation, with low growth rates, poor demographics and high unemployment.
Developed world countries are currently up to their eyeballs in debt, and their slow growth will make it harder for them to deleverage. The eurozone debt crisis has made the situation all the worse.
4. Technological advances will drive change
Technological advances over the past 50 years have been spectacular, and there is no sign that they will relent. Computer processing power will continue to increase by leaps and bounds. Electronic devices from computers and tablets to smartphones and consoles will be ubiquitous, and the internet will become all-pervasive.
People will use the internet for everything, and technology will drive change in industries such as retail, travel and newspapers.
5. Biotechnology will keep on advancing
Bioscience has entered a golden age. Soon, stem cell technology will be so advanced that whole organs will be created in the lab. Scientists can already synthesise artificial life. A person's genes can be sequenced in an hour.
Current chemical drugs are being replaced by biological drugs (or 'biologics'), which use antibody technology to find their target. As the patents for the current generation of medicines expire, biotechnology is becoming the future for Big Pharma.
I, and many readers of this website, will already be preparing for this future by investing.
So, do you agree with my predictions, or do you have some of your own? Please share your thoughts in the comments.
Edited Article from fool.co.uk
