The global stock markes are bound to to volatile in the current economic and financial scenario. The current 30% rally in the global markets is just an example of the same. So, while in the near term its difficult to say in which way the markets will move, the long term picture is bright for Asian markets.
So in my opinion if anyone is buying great businesses in Asia over the next 1-2 years not looking at short term volatility then the investor will make big money in the next 5-10 years. Also, when the economy recovers some sectors and stocks will do better then the others.
In this article I have tried to list some of the sectors which can give great returns to investors in long term. In the next article I would list down some of my stock picks from each of the sectors mentioned below.
Best Long Term Investment Themes
Commodities (Industrial)
The global commodity market (mainly industrial commodities) has been battered down in the recent stock market and economic carnage. The prices of some commodities are way below their fundamantals or demand in my opinion. But, when the global economy recovers, commodities would be the first ones to surge up.
Commodities would be the one which would lead the next major phase of inflation in the world. Moreover, when over 2.3 billion people is Asia again start expanding their business and growing then the demand curve for commodities will again shift to the right leading to higher prices. So Crude Oil, lead, copper,steel and many such industrial commodities would surge in prices in the next few years.
It is also worth noting that commodities had a bear phase for almost 20 years (1980 to 2000). So the bull phase for commodities has just started and should be there for the next 10-15 years. So in my opinion every investor should have exposure to industrial commodities. This will surely give excellent returns.
Agriculture
The agri sector is also going to be one of the biggest investment themes globally in the next 15-20 years or even more. The inventory for food globally is among the lowest historically. People have been selling farmland to find more lucrative professions globally. As a result there is immense shortage of food.
In India, the agri sector has been a laggard and if India has to propel its economy to a 10%+ growth trajectory then putting more stress on the agri sector is a big need.
As Jim Rogers points out that in the future it will not be analyst or investment bankers who will be driving the best cars in the world. In his opinion it would be farmers who would be doing so.
Food is a necessity and its shortage can make prices go through the roof. Even when India is staring at deflation, food prices are still firm. This is just due to the demand- supply mismatch. So the agri sector will be a big thing in the future and anyone invested in this sector will make big money in long term.
Water
It is often said that the next world war will be fought for water. It has also been predicted that water will be one of the most expensive commodity on earth in the next 25-30 years. These itself tell us about the scarcity of water in the world.
I must say pure water, as there is hell lot of water everywhere but less then 1% of the world's water is fit for drinking and other essential activities purpose. So if in anyway one is invested in water related companies then there is big money to be made there.
In India itself there are cities where water needs to be bought for every purpose, as there is big scarcity of this precious commodity. One needs to look for companies providing water related business like mineral water providers and water infrastructure companies. So this blue gold promises to give golden returns over long term to investors.
Banking
This might look somewhat surprising to the readers, but the banking system is the backbone of any economy and economic growth. For economies like India and Asia as a whole the banking sector has to do well as the economy recovers and more debt is taken leading to creation of more money in the system.
A lot of the Indian banks have been beaten down way below what their fundamentals are. So the near term gives great opportunity for investors to buy some of the good banking stocks and hold for long term. Decent to very good returns are assured over a 5-10 year time horizon.
Education Sector
One of the greatest strengths for India is its young population. However, one big problem for India now is the lack of education or rather proper education for a huge number of young people. So where there is a big challenge there is also a big hidden opportunity. The same holds true for the education sector.
The education sector will benefit in a big way from the increasing government stress on this sector. In the future there will be more deregulation in the industry to encourage greater private participation. One will also see a lot more companies in the education sector getting listed in the exchanges.
Already there are some good listed companies in the exchange in this sector and my opinion is that these companies will give good returns to investors over the long term.
Precious Metals (Gold and Silver)
Gold and Silver in my opinion will be much higher in the next 10 years from current levels. Right now the world is staring at deflation, but looking at the amount of money being printed globally, inflation will come back in a big way when the economy starts to recover.
Gold has been one of the best hedges against inflation and hence everyone should hold gold in their portfolio. With each extra paper money being printed the value of each note goes down. So paper money essentially depreciates against hard assets like gold, whose supply cannot be increased in the same pace as paper money.
I cant predict any levels for gold but I can assure every reader that massivle inflation will come back again. Thus gold and commodities would surge the most.
Conclusion
These are just a few long term investment themes. One can also venture in many others like alternative energy, media and entertainment and nanotechnology.
But what readers need to know is that if they believe that the world economy will recover one day then they should know that the next 1-2 years would be the greatest investment opportunity for long term in Asia. Taking positions accordingly would surely assure very high returns over a period of 5-10 years.
Readers are requested to share their views of more sectors which they feel will make it big in the next 5-10 years in India. This will help all of us know more and get exposure to the right areas and stocks.
So in my opinion if anyone is buying great businesses in Asia over the next 1-2 years not looking at short term volatility then the investor will make big money in the next 5-10 years. Also, when the economy recovers some sectors and stocks will do better then the others.
In this article I have tried to list some of the sectors which can give great returns to investors in long term. In the next article I would list down some of my stock picks from each of the sectors mentioned below.
Best Long Term Investment Themes
Commodities (Industrial)
The global commodity market (mainly industrial commodities) has been battered down in the recent stock market and economic carnage. The prices of some commodities are way below their fundamantals or demand in my opinion. But, when the global economy recovers, commodities would be the first ones to surge up.
Commodities would be the one which would lead the next major phase of inflation in the world. Moreover, when over 2.3 billion people is Asia again start expanding their business and growing then the demand curve for commodities will again shift to the right leading to higher prices. So Crude Oil, lead, copper,steel and many such industrial commodities would surge in prices in the next few years.
It is also worth noting that commodities had a bear phase for almost 20 years (1980 to 2000). So the bull phase for commodities has just started and should be there for the next 10-15 years. So in my opinion every investor should have exposure to industrial commodities. This will surely give excellent returns.
Agriculture
The agri sector is also going to be one of the biggest investment themes globally in the next 15-20 years or even more. The inventory for food globally is among the lowest historically. People have been selling farmland to find more lucrative professions globally. As a result there is immense shortage of food.
In India, the agri sector has been a laggard and if India has to propel its economy to a 10%+ growth trajectory then putting more stress on the agri sector is a big need.
As Jim Rogers points out that in the future it will not be analyst or investment bankers who will be driving the best cars in the world. In his opinion it would be farmers who would be doing so.
Food is a necessity and its shortage can make prices go through the roof. Even when India is staring at deflation, food prices are still firm. This is just due to the demand- supply mismatch. So the agri sector will be a big thing in the future and anyone invested in this sector will make big money in long term.
Water
It is often said that the next world war will be fought for water. It has also been predicted that water will be one of the most expensive commodity on earth in the next 25-30 years. These itself tell us about the scarcity of water in the world.
I must say pure water, as there is hell lot of water everywhere but less then 1% of the world's water is fit for drinking and other essential activities purpose. So if in anyway one is invested in water related companies then there is big money to be made there.
In India itself there are cities where water needs to be bought for every purpose, as there is big scarcity of this precious commodity. One needs to look for companies providing water related business like mineral water providers and water infrastructure companies. So this blue gold promises to give golden returns over long term to investors.
Banking
This might look somewhat surprising to the readers, but the banking system is the backbone of any economy and economic growth. For economies like India and Asia as a whole the banking sector has to do well as the economy recovers and more debt is taken leading to creation of more money in the system.
A lot of the Indian banks have been beaten down way below what their fundamentals are. So the near term gives great opportunity for investors to buy some of the good banking stocks and hold for long term. Decent to very good returns are assured over a 5-10 year time horizon.
Education Sector
One of the greatest strengths for India is its young population. However, one big problem for India now is the lack of education or rather proper education for a huge number of young people. So where there is a big challenge there is also a big hidden opportunity. The same holds true for the education sector.
The education sector will benefit in a big way from the increasing government stress on this sector. In the future there will be more deregulation in the industry to encourage greater private participation. One will also see a lot more companies in the education sector getting listed in the exchanges.
Already there are some good listed companies in the exchange in this sector and my opinion is that these companies will give good returns to investors over the long term.
Precious Metals (Gold and Silver)
Gold and Silver in my opinion will be much higher in the next 10 years from current levels. Right now the world is staring at deflation, but looking at the amount of money being printed globally, inflation will come back in a big way when the economy starts to recover.
Gold has been one of the best hedges against inflation and hence everyone should hold gold in their portfolio. With each extra paper money being printed the value of each note goes down. So paper money essentially depreciates against hard assets like gold, whose supply cannot be increased in the same pace as paper money.
I cant predict any levels for gold but I can assure every reader that massivle inflation will come back again. Thus gold and commodities would surge the most.
Conclusion
These are just a few long term investment themes. One can also venture in many others like alternative energy, media and entertainment and nanotechnology.
But what readers need to know is that if they believe that the world economy will recover one day then they should know that the next 1-2 years would be the greatest investment opportunity for long term in Asia. Taking positions accordingly would surely assure very high returns over a period of 5-10 years.
Readers are requested to share their views of more sectors which they feel will make it big in the next 5-10 years in India. This will help all of us know more and get exposure to the right areas and stocks.
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