5 popular investing trends right now
Seasoned investors often take a long-term view of the stock market, using short- and medium-term volatility to buy themes that they believe will unfold over many years. While it is difficult to identify these trends, ignoring the noise can reveal what’s to come, potentially leading to big gains.
Below, we highlight five of the most popular trends right now that have huge potential for growth.
1. Block chain
Outside of cryptocurrency trading, retail investors can participate in the expansion of blockchain, the technology that powers digital coins like Bitcoin and Ethereum.
Blockchain is essentially a chain of information or “blocks” saved on independent computers and shared over a distributed network. Each block of data is frozen in time on an open ledger that all participants can access. This feature makes blockchain technology particularly useful in sectors where security is paramount, such as banking.
By linking data and making it accessible to everyone, blockchain eliminates the risk of criminal act by one. It also simplifies and automates processes that might previously have been inefficient.
For example, Walmart (WMT) and Sam’s Club use blockchain to fight foodborne illnesses like E. coli. By requiring their suppliers to download real-time supply and logistics data, they can then improve traceability, ensuring food safety in the event of an outbreak at one of their suppliers.
Other notable companies using blockchain technology are Microsoft (MSFT), General Electric (GE), PayPal (PYPL), Starbucks (SBUX), Salesforce (CRM), and IBM (IBM).
2. Electric vehicles
The electric vehicle (EV) industry is undergoing a transformation that could bring billions of dollars to the global economy. To date, almost all of the major automakers have announced plans to increase the availability of electric vehicles, with some like Jaguar and Volvo planning to phase out gasoline vehicles altogether over the next decade.
By 2030, the International Energy Agency (IEA) predicts that 145 million electric vehicles could be in circulation, compared to just 10 million today, an increase of more than 1,300%.
To prepare for the increase in demand, most of the largest automakers have pledged to meet their electrification targets in the coming years, by reconfiguring their production lines to build more electric vehicles.
For example, Ford (F) has announced plans to invest $ 30 billion in electrification efforts by 2025, pledging that by mid-2026, 100% of its passenger vehicles in Europe will be zero-emission and go all-electric by 2030. By then, the company predicts that 40% of its global sales will be fully electric vehicles.
From electric vehicle manufacturers like Tesla (TSLA) and NIO (NIO), semiconductor producers like NVIDIA (NVDA) and Intel (INTC), to cloud providers like Microsoft (MSFT) and Amazon (AMZN), many of these names will be essential to ensure the safety, intelligence and efficiency of vehicles in the electric vehicle market.
3. Artificial intelligence
The technological revolution has brought artificial intelligence (AI) to the forefront of society, making what was previously only a reality a reality. With AI disrupting every aspect of our lives, new technology could become the most influential industry of the century.
Basically, AI attempts to replicate human intelligence in a computer or machine with faster speed and greater precision. So, as these systems get smarter, AI becomes more powerful, with its uses and applications impacting almost every industry.
Analysts from International Data Corporation (IDC), a market intelligence provider, predict that by 2024, global AI market revenue could exceed $ 500 billion, registering an annual growth rate compounded over five years of 17.5%.
AI is everywhere. Whether it’s Apple (AAPL) using facial recognition software to unlock iPhones, companies like Samsung that build smart devices like refrigerators and washing machines, or robot advisers using automated algorithms to optimize investments, the technology is here to stay.
For most retail investors, you may already have exposure to AI, as many large US public companies are already using it or are actively looking to invest in the technology. But for those looking for more direct exposure, some notable names include Intuitive Surgical (ISRG), Upstart Holdings (UPST), Intel (INTC), Trimble (TRMB), and Brooks Automation (BRKS).
4. Real estate
A recent Bankrate study found that physical real estate is Americans’ preferred long-term investment. And that’s for good reason. Investors have historically favored real estate for its diversification characteristics, as these investments have low correlations with stocks or bonds.
But for those who want to gain exposure to real estate without locking up their capital with a large down payment, there is an alternative: Real Estate Investment Trusts (REITs).
REITs primarily invest in a range of real estate such as residential apartments, office buildings, hospitals, data centers, hotels, retail stores, etc. In addition, companies that support these activities, such as financial lenders and management companies, are also part of the group.
To qualify as a REIT, companies must distribute at least 90% of their taxable income in dividends, which makes dividend yields essential for investing in these funds. REITs also serve as a diversification tool in investor portfolios, as they are less correlated with other asset classes such as equities.
Some examples of popular REITs include American Tower Corporation (AMT), Prologis (PLD), Crown Castle (CCI), Public Storage (PSA), and Simon Property Group (SPG).
5. ESG investment
The disruption and uncertainty caused by the global pandemic has sparked renewed interest from investors, consumers and employees in favoring companies that prioritize environmental, social and governance (ESG) causes. Beyond profits, these organizations have taken a long-term view of how they run their businesses.
And these choices pay off. According to Morningstar, global demand for sustainable investments hit a record high in 2021, surpassing nearly $ 2 trillion.
In addition to creating value through sustainable practices, the stocks of these companies tend to be more resilient than their peers.
For example, Bank of America research shows that stocks of companies with strong ESG practices tend to be less volatile, have higher three-year returns, and are less likely to file for bankruptcy.
One way to invest in socially responsible companies is to use exchange-traded funds like the iShares MSCI USA ESG Select ETF (SUSA), which tracks an index of highly rated ESG companies. Some of these names include American Express (AXP), Accenture (ACN), Disney (DIS), Home Depot (HD), and Hasbro (HAS).
Goal-driven organizations help set the tone for a better future. By focusing their efforts on reducing carbon emissions, reducing waste, promoting social issues, promoting equality, equity and inclusion, etc., these companies are redefining the role of business. in the society.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past performance of investment products is not a guarantee of future price appreciation.