SECULAR TRENDS IN THE MARKET
Secular trend describes an economy or market trend with a long-term time frame, normally at least 10 years, as well as long-term causes and effects. It is important to pinpoint such trends in the market if you want to succeed in investing. The following are the secular trends every investor needs to know.
Everyone is into smartphones, including the tech-savvy US President Barack Obama who uses Blackberry for over a decade. The usage of smartphone devices has increased dramatically in recent years. And this trend seems to continue as technology makes mobile devices smaller (and bigger), more powerful, and more affordable. Although Apple, Samsung, Nokia, and LG are the leading mobile phone companies today, the trend also extends to wireless carriers, as well as creators of the device "guts", including semiconductors, software applications, and touch screens.
Baby Boomer Generation
In world history, boomers represent the single most concentrated source of wealth. Most of them are retiring, meaning they will be tapping into their nest eggs. Many will either travel, pursue a hobby, or acquire a new house. In other words, they will be spenders as they can spend more on necessary healthcare than the previous generations. And they will look to senior living centers that can give a valuable social setting while getting nearer access to important healthcare.
The world’s population is on a permanent uptrend; hence, they consume more food everyday. Population and food are not the trend here, but the kind of food consumed by humans. In most developing countries, people desire for diversity in their diet, Since they have been eating grains and vegetables for the longest time, they want to incorporate protein in their daily food plan. To produce more of it, the world should produce more grains, rice, and corn on our farmland to feed cattle, pigs, and chickens. For example, one needs to have at least 16 pounds of grain to come up with one pound of beef.
Unfortunately, the world’s farmable land has been dwindling as the world population has been escalating. The United Nations expected the global population to reach 8 billion individuals in 2024 spring. Aside from that, the soil in several developing markets cannot produce rich crop yields due to lack of nutrients. It have resulted in commodity food prices slumping for decades, which might continue. But this is good news for firms that provide fertilizers, farming equipment, and stronger seeds for they can greatly benefit from this trend.
Globalization and Emerging Market Infrastructure
In 2001, former Goldman Sachs Chief Economist Jim O’Neill coined the acronym BRIC, which stands for the economies of Brazil, Russia, India, and China. Considered as emerging market powerhouse, they can be wealthier than most of G7 countries. But in 2014, only China and India stood out among their fellows, as their economies grew 7.4% and 7.5%, respectively.
The two countries have surpassed the impact of global financial crisis. China’s growth is attributed to its expansion of consumer base, while India surged for changes in leadership, as well as policies aiming to lower red tape, among others. Not to mention their middle classes with personal incomes have grown.
Gradual rollout of a broad infrastructure can take these economies to the next level. Why does America become the world’s largest and most powerful economy? Look at their infrastructure. They established a huge network of roads and bridges for their products to be delivered smoothly to anyone, anywhere. The United States also created an electrical grid to link every house, and also made freshwater, plumbing, and sewage a significant part of homebuilding.
Overall, this trend is very fluid, and will remain for a long term. The firms benefiting the most is likely to change over time. Take cues from American corporations constructing the biggest inroads to consumers and projects in these developed countries.
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