Frank Holmes CEO and Chief Investment Officer of US global Investors explains how to identify the next investment opportunity.
Frank Holmes analyses macro trends to find the next investment opportunity
The veteran investor with 30 Years experience as a US global investor, defined macro trends as long-lasting, pervasive shifts that affect a large population. They usually fall into one of the following categories; demographics, economics, technology, environment, government, and society.
Macro trends help investors to find the next investment opportunity
Artificial Intelligence (AI) is set to dramatically increase productivity and GDP potential. In 2030, AI is expected to contribute up to $15.7 trillion to the global economy, according to PWC.
So which countries will be AI and offer the next investment opportunity?
The world’s two economic heavyweights North America and China are expected to see the largest gains from AI.
Moreover, sectors like healthcare, financial services, and energy are expected to benefit the most from AI.
But developing countries are expected to have much lower AI adoptions rates.
The aging population is also likely to have an impact on the next investment opportunity
Africa has the youngest population and is least likely affected. Sectors which are less reliant on labor such as AI are more likely to be insulated from the aging population.
Rising interest rates could have an impact on the next investment opportunity. Since January 2018 the Fed raised rates four times and so too has the bank of Canada.
Financial companies can charge higher lending rates when interest rates are rising.
However, sectors that require finance such as real estate and automobiles could see demand fall due to higher costs to finance the purchase.
Investors can also find the next investment opportunity by investing in growth linked funds
The advantage of investing in growth funds is diversification and capital appreciation.
Professional money managers spend a considerable amount of effort in identifying and picking out these stocks.
But an investor’s risk tolerance needs to be greater if they are seeking the next investment opportunity as these stocks tend to be more volatile.