Investing in Shares For Dummies by David Stevenson

Author:David Stevenson
Language: eng
Format: epub
Publisher: Wiley
Published: 2012-02-02T05:00:00+00:00

Chapter 13

Emerging Sector Opportunities

In This Chapter

Checking out bullish opportunities

Understanding bearish opportunities

Getting investment pointers for your unique situation

Yes, you can do your own research (and you want to, don’t you?), but we may as well make you privy to what our research tells us are the unfolding megatrends that offer the greatest potential rewards for investors in shares.

Making just a handful of changes in your portfolio over the past four decades would have made you tremendously rich. Had you put your money into natural resources (such as gold, silver and oil) at the beginning of the 1970s and stayed put until the end of the decade, you would have made a fortune. Then had you cashed in and switched to Japanese shares in 1980 and held them for the rest of the decade, you would have made another fortune. Then had you switched in 1990 to US shares for the entire decade, you would have made yet another fortune. What if you’d cashed in your shares in 2000? You could have reinvested in energy stocks a little after 2001 and then sat back and watched them rise alongside the price of oil. And then, in 2007, sensing that everything was looking a bit fragile, you could yet again have cashed in.

Obviously with the benefit of hindsight any of us could be richer than we are today but the really important thing to know is what might happen in the next decade. If we had to make a guess, we’d suggest that the general realm of natural resources looks to be the primary bull market for this decade. Why? First, look at what the second decade of the new century has in common with the 1970s:

Problems with energy (rising costs, supply disruptions and so on)

International conflict (Iraq, Afghanistan, Iran and so on)

Rising prices for natural resources (grain, metals, timber and so on)

However, this decade has its fair share of what we might euphemistically call ‘challenges’. These include, in no particular order of importance:

Debt, debt and more debt. Even after the global financial crisis of 2007 to 2009 debts are still growing at an unaffordable level.

The UK is still a major importer (versus being an exporter in the 1970s).

China and India are the new economic superpowers.

There’s still a huge mountain of derivatives sitting out there, many of them highly leveraged, waiting to explode.

Pension and healthcare liabilities. We’re all getting older – lots and lots of us, all at the same time.

This list isn’t comprehensive (because of space limitations). The above points are enough to make you understand that the investing environment has changed dramatically and you need to re-focus your overall game plan to keep your money growing.

By the way, you see two types of opportunities in this chapter: bullish and bearish. (See Chapter 15 for more information on bullish and bearish markets.) If we can’t help you find the winning shares, at least we can show you the losers to stay away from.

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