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Moving Beyond COVID-19: How Megatrends Will Shape the Future of Successful Investing

Moving Beyond COVID-19: How Megatrends Will Shape the Future of Successful Investing

COVID-19 is the impetus for an update to this article I wrote pre-pandemic

As we explore the current decade (2020-2029) from the perspective of its first 10 months, it is handy to explore the themes that are likely to be the centerpiece moving forward. To me, there is only one theme certain to become reality – “change”, yes rapidly accelerating change will increasingly be the norm in every aspect of life on our Earth, from investing to entertainment, from education to the workplace.

The current pandemic illustrates my point: Who could have predicted what has happened in 2020? This COVID pandemic is indeed bringing massive change across the world. There is no doubt when it is finally over, life will not go back to pre-pandemic times. Instead many of the things we have learned in order to survive the pandemic will become the norm. Of course, this pandemic wasn’t the first and won’t be the last. We had many in the Middle Ages (we just called them plagues), and in more recent times humanity suffered through the pandemic of the 1918 H1N1 Flu, the 1957-58 H2N2 pandemic, the 1968 H3N2 pandemic and the 2009 H1N1 Swine Flu.

So how do you plan your life in a world where yesterday is rapidly forgotten, and tomorrow is but one step away. Well, to me the answer is clear. You look for “megatrends” and you put your bet on their growth. Megatrends can be defined as “global, sustained, and macro-economic forces of development that impact business, the economy, society, cultures, and personal lives thereby defining our future world and its increasing pace of change”.

As such, megatrends drive commerce and financial growth. They drive corporate, investors, and government monies into their world. In other words, they define the road from the present to the future and should be studied to understand the opportunities for possible investment of time, money, brainpower and other resources especially when the result is likely to be accelerated growth as a consequence of a highly beneficial discovery, or the development of processes that indeed further accelerate technological change. Some changes are very gradual but others are cataclysmic. Some changes bring with them beautiful spring weather and some of them result in hurricanes of the worst kind. We need to be able to deal with both types and make smart decisions.

One of my favorite ways to describe “megatrends” is to think of them as “the hurricanes of the global economic environment”. In the investment world, I want to be driving these hurricanes rather than being blown by them.

In the next few paragraphs, I will share with you my list of ten significant megatrends that will likely shape our road to growth in the next decade. This list is not in any particular order and of course, every one of us is likely to see the world thorough a different set of glasses, but as you will see, we are entering a period in our planet’s history where staying still is the only certain way to be a loser in the business world. A continued look at the direction of megatrends will likely produce the most significant growth-creating opportunities while also ensuring a surprise in every corner. I also want to emphasize that the half-life of a megatrend will continue to get shorter as the process of evolution and change accelerates.

Here are my ten megatrends in today’s environment as we fight a pandemic and oversize unemployment resulting from the slowdown of the various world economies:

1. The acceleration of change will continue to increase, disrupting life in its wake. As the speed of change increases, the emphasis will be less on owning assets and more on the use of these assets. Thus, providing and maintaining assets will likely become even more profitable than asset ownership. As we currently see during the present pandemic there has been an abundance of capital in the globe especially in the current low-yield environment and the wise use of this capital can both generate new successes and help our world become a better world. Of course, capital availability will continue to go through cycles and world conditions will continue to change ever more rapidly. Countries and enterprises that can “successfully put to use working capital” will be the true winners.

2. The world will greatly value businesses that focus on ensuring adverse climate changes are minimized and resources such as clean water, clean air, medicines made totally in democratic economies, and safe housing are available to all. This will ensure better human health and welfare, industrialization, leisure, and commerce while minimizing overuse of natural resources such as water and discharges of contamination in a manner deleterious to the health of our planet. Also, assets such as water will more rapidly increase in value than many other assets not affected by climate change. Water assets are still in many cases undervalued and effectively are taken for granted. Clean fuels and electricity infrastructure availability will also take center-stage. Through the coming decade we need to smartly focus on incorporating clean fuel options into the mix to reduce carbon emissions as much as possible. The world must also focus on ensuring that the transmission lines that deliver the power will be efficient and with significant safeguards to ensure uninterrupted power deliveries to users, including safeguards to guard from those wanting to destroy existing electric grids.

3. We need to harness the value of attaining as full employment of people as possible in “valued” professions nurturing creativity, growth of opportunities, and rapid job creation. To this end, this will only be possible if we radically implement creative educational reforms and implement those measures needed to bring as many people as possible up the economic ladder to be able to stabilize nations throughout the globe. Global eradication of poverty must be one of our ultimate objectives as global citizens.

4. We will increasingly focus as a society on Artificial Intelligence (AI), Cybersecurity, and communications to ensure improved human to human, human to machine, and machine to machine connectivity by having a robust 5G or faster network and by conducting our activities securely in cyberspace. The network of tomorrow must be robust, agile, and sufficiently fast to drive communications, industrialization, entertainment, and all forms of AI including items such as driverless vehicles, drug discovery, machine learning and basically all aspects of communication for the private, public, and defense sectors.

5. In coming years, business emphasis will continue to be to extend the useful life of products through recycle and reuse, with a drive to minimize waste in all production and use cycles.

6. We need to maximize healthy, clean living through the increased use of healthy food, exercise, and nutraceutical supplements to ensure a productive and longer human life expectancy. Healthy living will also include a choice of leisure activities focusing on wellness. Pandemics and various diseases will continue to adversely affect the world and will happen even more frequently in the future as the world becomes more connected. A balance of healthy living, the right medicines, medical treatment and vaccines represent the only way to be secure from ever increasing pandemics. We need to retool our approach to human medicine to emphasize disease prevention over medical intervention, although clearly intervention will continue to be done as needed. The use of genetic analysis, AI, and other methods to better focus on prevention and healthy living must become every nation’s and every human being’s priority. The combination of wearables/remote diagnostics and AI will be very powerful in the immediate future.

           7. There will be an increased use of technologies including artificial intelligence in all aspects of medicine, from the production of new drugs to the use of technology to improve all aspects of life. Such technologies will also help us be more productive while optimizing our leisure time. We will learn to use AI to cut back dramatically the time it takes to get new drugs and vaccines to market which when combined with healthier lifestyles will dramatically extend human life expectancy on this Earth.

           8. The world will see an increased use of technology to expand our ability to connect with each other using a diversity of options. As thoughts are transmitted through less personal ways of communication, we, will expand our communications yet become even more polarized. Our understanding of the world will become more difficult through an overwhelming amount of information that we have to assess for its credibility. This dichotomy will help balloon and consolidate investments in communication, although the disadvantage will be increased polarization until we as humans continue to value the input from all others and better weigh and accept diverse perspectives. Transportation for leisure and business will radically change in years to come. Virtual job execution may replace a great deal of business travel.

9. Changes in the educational systems, from kindergarten through university, are needed to improve the efficiency, relevance and flexibility of educational choices. The educational institutions need to insist on cost-effective, relevant learning through the use of live options, online learning, and machine learning. Educational institutions need to bring the cost of education to levels that do not create intergenerational debts that strangle the students for years, and financing costs that are not in line with the benefit the education itself brings. Opportunities for world class lifetime learning will become very relevant and may warrant significant future investment. The pandemic has forced more learning to move online, and this trend will continue. It could become a great tool to reduce the cost of higher education worldwide.

           10. As we become more polarized in a rapidly changing world, nations and international actors will continue to develop weapons of mass destruction. A great deal of wealth and public debt will be squandered on weapons creation, however as a world leader, we in the US, must continue to lead in the area of national defense technology or be squashed by external forces. Humanity needs to be smart so the actions of a few do not turn into the destruction of the many. This represents one of the biggest challenges to humanity in the coming decades. Defense will move from land into space. Further, an additional paradigm I can see is asymmetric/decentralized/automated warfare. Aircraft carriers for example, can become vulnerable to autonomous drone swarms. Bad actors can be disposed of with drones and rockets. Future challenges will define where nations spend/invest defense dollars on. Further, as time goes on the barriers to entry for WMDs might become lower and lower, opening the theater for groups that are way below nation-state level. Defense spending will become more and more necessary to maintain and protect the freedom of any civilized society.

The world will grow, hopefully with more people able to enjoy the fruits a few of us have been able to enjoy to this point. All nations need to gradually come together and not go back into their own cocoons, yet this is not likely to be achieved any time soon. As investors, it is more essential than ever to have a clear understanding of the social megatrends that will drive our world in order to make relevant and successful investments. Such investments in the private sector coupled with public sector investments, if properly harnessed, will also continue to improve humanity not just in our neighborhood or even in our nation but for everyone on Earth.

Every major event, pandemic, new discoveries, and major wars will generate reactions that will thunder throughout a very connected world. These changes always take the world to a new baseline, never to the prior ending point. Countries, companies, and investors that accept change as a universal standard will thrive while those lost in today’s ways will disappear.

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