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Investment Themes for 2009 and beyond.

May 5th, 2008 · Greg Atkinson · No Comments

The current downturn in the world markets presents us with an opportunity to review or develop our investment strategy for the next few years. For some people it may mean a major overhaul such as moving from stocks to real estate, while for other it may mean just a realignment of stocks in a portfolio. In any case, it is a worthwhile exercise to review your investment strategy from time to time even if just to confirm what you actually own.

Chasing trends or the next “big thing” can lead to losses and a lot of pain. Often by the time an investment idea is in the media the major players have already taken their positions and may even be getting ready to take profits. However for long term investors who are prepared to ride out the current market turmoil, now might be the time to buy into some sectors that have good long term growth potential.

Some of the areas that appear to have long term growth potential are:

Renewable or Green Energy

It does not matter if you believe the world is getting warmer or not, the fact is governments around the world are going “green” and there is a push to source more of our energy needs from renewable sources. Companies that own wind farms, solar farms etc or develop technology related to renewable energy are in an expanding market. This does not mean every company in this area will do well, but I would suggest it is worth doing some research into this area. Be aware that some stocks have already rallied on the “green” theme so you need to look for value.

Agriculture

If you believe that the mining boom will continue, then you might as well jump on the soft commodities bandwagon as well since the people that will live in new cities being built will want to eat, and as they get more wealthy they will want to eat better. In addition thanks to the spread of cities and over farming much of the existing farmland in the world has been lost so this means that good quality farmland will become more valuable. You can invest in this sector by getting into a soft commodities fund or via companies with direct exposure to this sector.

Healthcare/Aged care

I think we have only seen the tip of the iceberg as far as growth in the healthcare sector goes in Australia and probably in many other developed nations as well. Eventually people will start to realise that having private health insurance is going to be better for them than a flatscreen TV  especially as they get older. It always puzzles me how people will spend money quite willingly on an overseas holiday but think twice about having adequate health cover. Of course you can sit back and rely on the public health system…but when you find yourself in some over crowded public hospital ward waiting for your medication for a few hours then that holiday in Bali will look like a pretty bad investment.

The aged care sector is also a growth area in Australia and many other developed nations thanks to the fact we are living longer. In this area we have everything from gated estates aimed at the over 55 year olds to assisted living apartments etc. There is no doubt that there is a growing market for aged care services and so companies which can successfully tap into this area will do well in the years ahead.

As always, make sure you do your research and if needed seek good professional advice before making any investment decisions.


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