The Top 10 Investments For the Next 10 Years

The Top 10 Investments For the Next 10 Years

By Jim Mellon & Al Chalabi

Big Idea #1 : Invest in something that almost all old people use at some point in their life – example nursing homes. Some of the affluent retirees are opting for a more up-market environment by choosing to live in retirement communities instead.

Invest in a basket of companies that are well-established in this field and offer considerable growth opportunities.

Big Idea #2 :Invest in companies that have the most to gain financially from serving or selling products and services to retirees and the older generation. Put yourself in a retiree’s shoes.

Big Idea #3 : To create a solid investment strategy that will withstand the test of time and provide you with some flexibility, we recommend that you structure your investments around your home, which should serve as your core asset. You can then allocate your investments around this based on the amount of funds you have available to invest.

1. Stocks and Mutual Funds – 30%
2. Commodities – 15%
3. Bonds – 10%
4. Real Estate – 15%
5. Cash/Currencies – 10%
6. Green Investments – 20%

Big Idea #4 : Invest in German residential property. Have a mix of 2/3 residential and 1/3 commencial. Other areas of investment opportunity in real estate can be summarized as
1. Macau
2. Brazil
3. Japan

Big Idea #5 : Invest in Japanese Yen. Japan has been through a long period of poor economic performance and deflation. But Japan remains a formidably strong economy; its savings pool, both at the individual and corporate level is vast, and the government has accumulated enourmous foreign exchange reserves.

We believe that Japanese yen will rise in value against other developed world currencies in response to :

1. Diversification away from the US dollar by central banks, leading to purchases of yen.

2. The beginning of rising interest rates in Japan – may be good for its economy – as people have such large personal deposits that an increase in interest income may spur consumption.

3. The continued accumulation of reserves by Japan as a result of current account surpluses.

Big Idea #6 : “Play” the growth of prepaid cards.
Watch out for companies in this dynamic and exciting area : ConisterTrust, C-SAM, MasterCard, Sony and TxtTrans Ltd.

Big Idea #7 : Attractive investment opportunities in BRIC (Brazil, Russia, India, China) economies. We do not believe that the breakdown of the BRIC investment should be evenly weighted across all 4 countries.

Our view is that Brazil still faces some reform problems that will hold it back somewhat; Russian politics threatens to hamper its future economic success ; and India suffers from a poor business infrastructure, escalating wages and a difficult business environment that is deterring the next wave of foreign investors. Furthermore, India’s trade deficit is not conducive to the country’s long term growth prospects, so this needs to be watched carefully.

Readers need to be careful when investing in China’s stock market because local retail investors have become seriously addicted to it. The Chinese gambling psyche has unfortunately mistaken the stock market for Macau. Another factor to consider before investing in China is its currency, the Renminbi (also called Yuen) is not tradable outside China yet. A Chinese person living in China wishing to invest in stock market only has access to the Shanghai and Shenzhen stock exchanges. These shares that are only accessible to domestic investors are referred to as A-shares, which are listed in Shanghai and Shenzhen.

For foreign investors wishing to invest in Chinese listed companies, they can access them through a different category of shares known as B shares. There is also a category of Chinese listed companies known as H-shares (red chips), listed in Hong Kong. For example, ICBC or Bank of China both list A-shares, H-shares in China nd Hong Kong. As illogical as this may sound, the price of a company’s H shares typically trades at a discount to its A-share price, even though they are on a par with each other.

Big Idea #8 : Our next big Idea is WATER. Without water, no forms of life can exist on earth. Climate change is accelerating the “drying” of large parts of the world, as is the relatively inefficient use of water in agriculture since the ‘green’ revolution started in the 1960s.

The key areas in water technology for us to research are :
1. Desalination
2. Water treatment plants and technology
3. Water leak prevention technology
4. Increased efficiencies in the use of water

Investors should look at the website of teh AWWA Research Foundation for a good deal of useful information on what is happening in the world of water technology.

Big Idea #9 : Commodity price usually cycle in 20-30 years intervals, the reason being that there is a long lead time involved in sourcing new supply to the market. Most commodities are only recently coming out of rock-bottom prices, there has been no incentive for the industry to invest in new technologies or to source new supplies. Invest in extractive metals such as copper and zinc.

Further industralization of commodity-poor China and to a lesser extent, the other emerging markets of India, South America and South East Asia will continue to drive demand for these metals for the next decade and their supply is very limited.

Big Idea #10 : Invest in solar power. This is because the factors that will drive its growth as an industry are those that we look for in the very best business opportunities, that is : lower prices = expanded demand = Money Fountain


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