Sunday, February 16, 2014


Global megatrends should be taken into account in building a stocks portfolio for long term (next 10-20 years). I have already taken many such megatrends into account in my portfolio. These include rise of developing countries (and China in particular), resource scarcity, explosion of data (both in terms of network traffic and stored data), demographic shift, public debt explosion in western countries and climate change.

Megatrends are linked. For example, rise of developing countries combined with urbanization contribute both to coming resource scarcity. I recently finally completed reading an excellent book about this (Winner Take All by Dambisa Moyo).

On top of the ones I already mentioned here are a few more that I see important (check more via each link):
  • Rise of the individual: KPMG: "Advances in global education, health and technology have helped empower individuals like never before, leading to increased demands for transparency and participation in government and public decision- making."
  • Risk for serious instabilities as identified by Business Insider
    • The Crisis-Prone Global Economy
    • The Governance Gap
    • Potential For Increased Conflict
    • Wider Spread Of Regional Instability
If you browse through the links you will see yourself how linked the megatrends indeed are. As an investor with "ultralong" time horizon I certainly hope the projections about instabilities - not to talk about outright war - do not come true. However, as always, it's better to prepare for worst while hoping the best. In portfolio terms, I would say that means stable high quality dividend paying companies in addition to more volatile companies that are exposed resource and technology sectors.