A Fool takes a moment to scan the horizon.
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.
Clearly, if you want a slice of this action, it makes sense to invest a sizeable proportion of your portfolio in emerging markets, or in companies like Unilever (LSE: ULVR) that have substantial operations in these fast-growing markets.
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.
That means that resource companies such as BP (LSE: BP) and Rio Tinto (LSE: RIO) should prove to be sound investments.
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.
Thus, if you are investing in the UK or other developed countries, you need to look for companies that continue to grow despite the poor macroeconomic picture, for example, SuperGroup (LSE: SGP), or NCC (LSE: NCC).
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.
If even Warren Buffett is investing in technology, you can too. Companies like Apple (NASDAQ: AAPL.US) should make good long-term investments.
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.
Look to invest in leading biotechnology companies such as Amgen (NASDAQ: AMGN.US).
6. We will face a demographic time bomb
Advances in medicine and bioscience will lead to lengthening life spans. It may soon be commonplace for people to live to 100 or more. This will cause a pensions crisis far worse than anything we have experienced so far.
In the long term, the current model of people working until they are 65 and then retiring will have to be scrapped. Instead, we will have a more flexible model where people will need to either put far more money into their pension pot, or will need to work for far longer.
I, and many readers of this website, will already be preparing for this future by investing in our own DIY pensions.
So, do you agree with my predictions, or do you have some of your own? Please share your thoughts in the box below.
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More from Prabhat Sakya:
> Prabhat owns shares in BP and SuperGroup. The Motley Fool owns shares in Unilever.
