Theme investing revolves around the idea that certain select industries will experience strong growth while the rest will remain subdued. The theme can be any idea or concept that has the potential to boost the companies’ long-term profits and there can be more than one theme at play at any one time.
Investors who hop on board a theme can see their stock prices soar. Examples of themes are the booming internet, the personal computer market, the I-phones and tablets. Yet other themes revolve around an aging society with the biotechnology and medical services companies continually increasing the populations’ average lifespan. This leads to another theme which is the provision of retirement accommodation whose demand continues to grow.
Thus it is prudent for the investor to at least consider the various themes when constructing or reorganizing their portfolios. One of the main points with theme investing is not to base the future on past events. That is to look at what would be required rather than what was used in the past.
A list of the current investing themes is discussed as follows:
The Aging Society
The number of senior citizens within our society continues to increase. This is a direct result of new medical procedures, medicines and breakthrough medical technologies which continues to increase the average life expectancy. To further add to this the average age of women giving birth continues to increase which has the effect of delaying the repopulation with younger people. This is a trend that has shown no signs of reversing as women delay child birth in favor of first pursuing a career.
Industries that benefit directly from this aging society theme are within the health care sector. These include pharmaceutical suppliers and healthcare providers.
The Aging Society
Stocks that benefit from an Aging Society include:
- UnitedHealth Group, Inc. offers health benefit services.
- Jazz Pharmaceuticals PLC develops and provides pharmaceutical products.
- Stryker Corp. provides implants and surgical equipment.
ETFs that benefit from an Aging Society include:
- iShares US Healthcare Providers ETF
- iShares US Medical Devices ETF
- SPDR S&P Health Care Equipment ETF.
Other industries that benefit from an aging population are retirement facility developers and the management of retirement accommodation.
Biotechnology is roughly defined as using biology to benefit mankind. The biotechnology industry continues to provide new developments and discoveries which revolutionizes healthcare around the world.
New research is giving scientists the ability to manipulate the genetic code with the potential to provide significant advances in the devolvement of new drugs and other medical products and procedures.
Stocks that are involved with Biotechnology include:
- Amgen, Inc. develops and manufactures products for human therapeutics.
- BioSpecifics Technologies Corp.
- Celgene Corp. offers an injectable collagenase.
ETFs that include Biotechnology stocks include:
- iShares Nasdaq Biotechnology ETF
- SPDR S&P Biotechnology ETF
- PowerShares Dynamic Biotechnology & Genome ETF
Biotechnology companies have the potential to generate huge profits from their new developments, but should a new devolvement fail then the company’s stock price can be hit hard. Thus while biotechnology stocks can generate huge gains they are a higher risk investment.
The continuing advance in technology stands out as one of the great enduring themes on the stock market. The technology sector is an enormous sector with the NASDAQ exchange being dominated with technology stocks.
Technology spreads across numerous sectors. The obvious sector is the Technology sector itself but technology is used in pretty much all of the other sectors.
Technology finds its way into industries such as Banking, Retailing, Medical and Telecommunications to name just a few.
The internet is a technological development that has in itself become a new technology and is used pretty much everywhere nowadays. This includes installing software (another technology) onto your new computer (yet another technology) as opposed to loading the software from a CD or DVD disc (yet another technology again).
Stocks that benefit from New Technology include:
- Apple, Inc. provides mobile communication and media devices.
- Netflix, Inc. provides Internet delivery of television shows and movies.
- Check Point Software Technologies Ltd. offers software and combined hardware products IT security.
ETFs that benefit from New Technology include:
- iShares PHLX Semiconductor ETF
- Powershares Dynamic Software ETF
- Global X Social Media ETF.
As you may have gathered by now, technology is everywhere and it’s a trend that’s going to be with has for the foreseeable future.
Socially aware Americans have for many years been concerned about environmental issues.
Whereas in the past there was little in the way of environmentally conscious companies, nowadays it’s a different story.
New environmentally conscious industries include recycling and alternative energy.
Solar power stations and wind power stations produce electricity with no impact on the environment. Residential rooftop solar power cells provide electricity and hot water.
Waste recycling has become big business and the cleanup spills causing environmental damage is far more efficient nowadays.
Stocks that benefit from an increase in environmentally conscious industries include:
- SunPower Corporation manufactures solar panels and also operates a solar power plant.
- Vestas Wind Systems manufactures wind turbines.
- American Water Works Company, Inc. designs, builds and operates water and wastewater facilities.
ETFs that benefit from an increase in environmentally conscious industries include:
- VanEck Vectors Environmental Services ETF
- iShares Global Clean Energy ETF
- EcoLogical Strategy ETF
Global warning and pollution are other issues and this has seen the emergence of companies that provide more energy efficient products (energy efficient light globes) or products that directly produce less pollution (exhaust emission reduction).
Globalization signifies the opening up of the world economies and this trend continues. Globalization refers not only to the export and import of goods to and from foreign countries, but also to the number of foreign companies listed on the NYSE and NASDAQ exchanges. Even the GICS classification system is a global system that is used by other stock exchanges around the globe.
The globalization of the world economies leads to another trend and that is the relative synchronization of recessions with that from other countries.
Stocks that benefit from Globalization include:
- Sony Corp. which is a Japanese electronics company providing electronic products.
- BHP Billiton Pty Ltd. which is an Australian mining company.
- Honda Motor Co. Ltd. which is a Japanese automobile manufacturer.
ETFs that benefit from Globalization include:
- Vanguard Total International Stock ETF
- iShares Global Technology ETF
- iShares Global HealthCare ETF
Having foreign stocks listed on the US stock markets makes it easy for Americans to buy foreign stocks and gain exposure to the themes that other economies might be experiencing.