There are all kinds of approaches to investing, arguably at least one for every investor at any given time, but many of them involve some degree of predicting the future. You can call it investing over the long term or picking trends, it essentially amounts to the same thing, thinking about where there is likely to be growth and where there are likely to be plateaux or even contractions. With that in mind, here is a look at a few stock groups and how they have performed over the last 10 years (since 2009) – and what lessons can be learned.
With the benefit of hindsight, it might be easy to say that anyone should have known that tech stocks were going to be big performers between 2009 and 2019, but in reality, it wasn’t necessarily that straightforward. Remember that the 1990s was the era of the dot com bubble and 2008 was the year of the global financial crisis. Putting those two facts together, it’s easy to see why people might have been somewhat cautious about putting their money into tech stocks, especially when some of them were so expensive. With the benefit of hindsight, appreciating the growth potential in the tech stocks would probably have meant recognizing the enormous growth potential in mobile devices and investors today might want to think not only about whether or not they believe that his growth will continue but also whether or not they think that the prospect of regulation/anti-competitive action/forced company break-ups could impact the value of some tech stocks into the future.
The world’s population has been both growing and ageing for several decades now, which has offered major opportunities for companies working in the field of health care. It’s therefore hardly a surprise that the sector, as a whole, has done well and demographic realities suggest that it has every possibility of continuing to do well into the future. Having said that, it hasn’t all been good news all the way. Once upon a time, Purdue was riding high on the success of OxyContin, it’s now filed for bankruptcy and to say its reputation is in tatters is putting it mildly. Admittedly the financial pain of this will probably be largely confined to the Sackler family, but the general lesson is clear, health-care companies do not always play nicely or even by the rules so investors need to be really careful about their due diligence. Admittedly you could point out that there are companies in many other industries who also do not play nicely, but it’s hard to think of many industries where the impact of such rule-breaking would have the same degree of impact as it can do in health care.
Admittedly this term could cover a lot of stocks, but two main groups stand out, energy and water. In spite of all the hype around renewable energy, stocks in that sector have not done particularly well. There could be many reasons for this, one of which being that the sector has had so much publicity that many investors could have gone into it with overly-optimistic expectations from which the only way was down, and that this has been reflected in the pricing. It is possible that the sector will start to pick up especially with the renewed focus on fighting climate change as seen by the UK’s commitment to a zero-emissions target, albeit by 2050. Water, however, has been another matter, possibly because we have no real alternative to it as we do with renewables, however, short-sighted the use of fossil fuels may be.