5 key trends you should invest in?

Here are five big-picture themes that you should consider when buying shares.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Too often in investing we pick a share, check its P/E ratio and its dividend yield, check if there’s any bad news that might put us off buying-in, and then if all is fine we take the plunge.

But I’ve consistently said that we need to take a step back, look beyond the numbers, and see the big picture. What are the key trends that you should consider when investing? What are the background themes that could make all the difference to the companies you buy into?

Well here are five trends that I think you should seriously consider when investing.

Emerging markets

We used to call them the developing world. Then we called them emerging markets. To a large extent, they’ve now emerged. China is the world’s second largest economy, and India isn’t far behind. Then there’s Brazil, Saudi Arabia, Malaysia and South Africa.

This is a world that, instead of being dominated by America and Europe, sees the wealth more evenly spread. But this has created new challenges.

Many of the West’s industries are facing fierce competition from the East. But these new companies present opportunities for investors to take up. Investors can no longer be insular, and must keep their eyes open to investments beyond Britain’s shores. I firmly believe that emerging markets should be a key part of your portfolio.

The global consumer boom

A knock-on effect on increasing global wealth are the burgeoning ranks of the world’s middle class. These people are consuming as never before.

That’s why investors should invest in companies that take advantage of the consumer boom that we’re just on the cusp of, whether you’re talking about fast moving consumer goods manufacturers, fashion retailers, global banks or fast-food retailers.

Technology

The technological revolution of the past 20 years has transformed the way we work and the way we play. It has changed the way we organise our finances, the way we do business and the way we communicate and socialise with each other.

That’s why investors should look to buy into tech companies, and also consider the huge impact on industries that range from banking and insurance and television, to postal services and the High Street.

Healthcare

The world’s population is rapidly growing, and ageing, and global wealth is also surging. That means that the demands on healthcare systems will increase, and the spend on pharmaceutical products will continue to push ahead.

Investment gurus such as Neil Woodford have said that there’s still great potential for healthcare companies to grow. I firmly agree with him. Invest in pharma firms with a stake in the latest biotechnologies, and in supplying blockbuster drugs to the world’s consumers.

Energy and mining

Alongside these high growth areas is a sector where a long-running boom is coming to an end. Since the turn of the century, commodities stocks have been on the rise, but profitability is now on the wain, and share prices are falling. This sector is now entering a bear market, and is to be avoided.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

 

More on Investing Articles

Young black man looking at phone while on the London Overground
Investing Articles

1 giant red flag for Diageo shares!

As an investor in Diageo shares, I'm increasingly worried about one unstoppable generational trend that could reduce sales in future.

Read more »

Bearded man writing on notepad in front of computer
Investing Articles

Billionaire David Tepper has doubled down on these incredibly cheap shares

This top Wall Street fund manager is known for targeting dirt cheap shares in the stock market. What was he…

Read more »

Investing Articles

Down 23%, are Greggs shares a long-term bargain?

Christopher Ruane slices into some possible pros and cons of buying Greggs shares for his portfolio after they slid by…

Read more »

Investing Articles

This boring FTSE 250 stock has an incredible earnings forecast!

This FTSE 250 stock has moved sideways for years. It certainly hasn’t rewarded shareholders. However, things could change in the…

Read more »

Investing Articles

Make or break: could US trade tariffs hurt the UK stock market?

Mark Hartley examines the knock-on effect that Trump tariffs could have on the UK stock market and considers a stock…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

I don’t care if my passive income stock Phoenix Group doesn’t rise this year – I’ve got the 10.1% yield!

A firm’s yield moves in the opposite direction to its share price, so with my core passive income holdings I…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

Vodafone’s share price is down 13% to 69p despite promising Q3 results, so it is an unmissable bargain for me?

Vodafone lost ground after its recent results, but they seemed promising to me, which leaves the share price looking significantly…

Read more »

Buffett at the BRK AGM
Investing Articles

Is Warren Buffett right about this 1 thing when it comes to Lloyds shares?

With the words of Warren Buffett ringing in his ears, our writer considers whether the Lloyds share price will do…

Read more »