Secular trend is one phrase that makes monkeys on Wall Street salivate profusely. It is as if they see bananas coming to them in tsunami waves or something. Well actually, investors probably also imagine tsunamis of dividends pouring over them and that's why they scramble to ride these trends at all cost.
Our world is defined by huge trends or secular trends that last for some time, usually 5-10 years. In the 60s and 70s we have autocars, 80s we have Japan Inc, and the beginning of the 20yr US bull market. 90s was IT and Tech, Media, Telecoms (Ouch!), and now China and commodities.
Note: more often than not, the trend goes into bubble mode and the Greater Fool Game begins. It it important to know the difference and decide for yourself if participating in the Greater Fool Game is what you want.
Betting on these trends will reap you rewards far bigger than day-trading or any other money-making scheme you can ever think of, including building 2 x Integrated Resort to attract oil money, Chinaman yuan, high rollers' money and dunno what else.
Ok, perhaps the reward is not as big as being faithful and good to your spouse. Real life example: University Don flirting with China Gal. Umm, there are other ways to bet on China okay, and they don't need $7k per mth.
Anyways, identifying such trends require good grasp of global condition and some innovative thinking. This I would say 99.99% of the brokers and their analysts lack. For a good reason. If you identify a trend, you need not buy and sell all the time. Just ride with trend until the cows come home. And this is not good for the brokerage business.
So what are the trends going forward? By right, you should go think for yourself, but since I am writing this, and you are reading fervently, I guess I am obliged to share. Most of these are not new, so pls don't say I have no orginality or what.
1) Silver market: The world is aging rapidly as the baby boomers retire, cash in their pension money or CPF, they will need to find ways to spend it. In most other countries, they spend in on travel, buying houses, cars, buying LCD TVs etc. Hence the global boom in real estate, LCD TVs and autos. But sadly in Singapore, our baby boomers spend it on? *Drumrolls* China Gal! So Buy Prada.
The stock, not the bag.
2) China consumer market: Let's face it, The 21st century belongs to China. We have probably only been through 1/3 of the big China story. So far they simply built 10,000 factories and produced enough stuff to drown Mordor's army 2 times. The Chinese consumers haven't even started spending yet. When they do, it will be interesting.
Again buy Prada. Okay enough of Prada, buy Ferragamo.
If you think about it, in the past 5 yrs, every big secular trend was actually due to China. Why did commodities go up? Why did steel prices tripled? Why did oil price shoot through the roof? Why can Walmart conquer the world with its cheap stuff? China. China. China.
Why is Singapore building 2 x Integrated Resort? To create more jobs for China gals and get more University Dons to spend $7k on China Gals. In short, China again.
Although the whole world has been talking about China for the past 10 yrs, we are probably not finished yet. China is probably Singapore in the early 80s. We have more to go.
Of course, there will be other secular trends. They will be up to us to find out. It will probably be difficult. You need probably 10 mental workout per week, and talk to 20 think-tank people regularly. But when you do, pls update this blog.
See also Good stock but not a good buy
and Mr Market
Our world is defined by huge trends or secular trends that last for some time, usually 5-10 years. In the 60s and 70s we have autocars, 80s we have Japan Inc, and the beginning of the 20yr US bull market. 90s was IT and Tech, Media, Telecoms (Ouch!), and now China and commodities.
Note: more often than not, the trend goes into bubble mode and the Greater Fool Game begins. It it important to know the difference and decide for yourself if participating in the Greater Fool Game is what you want.
Betting on these trends will reap you rewards far bigger than day-trading or any other money-making scheme you can ever think of, including building 2 x Integrated Resort to attract oil money, Chinaman yuan, high rollers' money and dunno what else.
Ok, perhaps the reward is not as big as being faithful and good to your spouse. Real life example: University Don flirting with China Gal. Umm, there are other ways to bet on China okay, and they don't need $7k per mth.
Anyways, identifying such trends require good grasp of global condition and some innovative thinking. This I would say 99.99% of the brokers and their analysts lack. For a good reason. If you identify a trend, you need not buy and sell all the time. Just ride with trend until the cows come home. And this is not good for the brokerage business.
So what are the trends going forward? By right, you should go think for yourself, but since I am writing this, and you are reading fervently, I guess I am obliged to share. Most of these are not new, so pls don't say I have no orginality or what.
1) Silver market: The world is aging rapidly as the baby boomers retire, cash in their pension money or CPF, they will need to find ways to spend it. In most other countries, they spend in on travel, buying houses, cars, buying LCD TVs etc. Hence the global boom in real estate, LCD TVs and autos. But sadly in Singapore, our baby boomers spend it on? *Drumrolls* China Gal! So Buy Prada.
The stock, not the bag.
2) China consumer market: Let's face it, The 21st century belongs to China. We have probably only been through 1/3 of the big China story. So far they simply built 10,000 factories and produced enough stuff to drown Mordor's army 2 times. The Chinese consumers haven't even started spending yet. When they do, it will be interesting.
Again buy Prada. Okay enough of Prada, buy Ferragamo.
If you think about it, in the past 5 yrs, every big secular trend was actually due to China. Why did commodities go up? Why did steel prices tripled? Why did oil price shoot through the roof? Why can Walmart conquer the world with its cheap stuff? China. China. China.
Why is Singapore building 2 x Integrated Resort? To create more jobs for China gals and get more University Dons to spend $7k on China Gals. In short, China again.
Although the whole world has been talking about China for the past 10 yrs, we are probably not finished yet. China is probably Singapore in the early 80s. We have more to go.
Of course, there will be other secular trends. They will be up to us to find out. It will probably be difficult. You need probably 10 mental workout per week, and talk to 20 think-tank people regularly. But when you do, pls update this blog.
See also Good stock but not a good buy
and Mr Market
This is not somehting new also but with the recent developments of blogs, youtube and consumer-feedback related sites, we can safely assume that the world will integrate into a single political/cultural entity. Just imagine politicians reduced to facilitators;public opinions can be gathered and aggregated so efficiently that laws can be made and passed almost instantly.
ReplyDeleteBack to your question, one of the major future secular trends could be related to the provision of such an extensive infrastructure to "unite" the world. Lets start looking for it now^^
I have no crystal balls, only ding dong bells and they don't help predict secular trends (wow very hard to pronounce leh!).
ReplyDeleteAnyway I feel by time these sexy themes get publicised, its usually already stale and old news liao and time to sell.
But China I think is different as it would last longer than most other trends. But do be selective how you choose your China stock.
Bullshit! What rubbish are you talking about! What do you know? Nothing, ZERO!
ReplyDeleteWow so rude! No wonder you must remain as anonymous. With respect to 8%, I don't want to start an argument here in his blog with such crude people.
ReplyDeleteBut I would like to state that I I'm in the learning phase. In fact one fascinating thing about investment that makes it so enticing to me is that I'm always learning new things.
That's why I visit blogs like 8% to learn, and also started my own blog to collect my thoughts and lessons.
Grow up, Mr Anonymous!
Hi Fishmen, I agree with you totally. Investing is a lifelong learning process which compasses many facets of perspective from finance to accounting to business to psychology and many others. It is a process where you try to find a good fundamentals and keep on trying to improve a little bit on it every passing day when you feel like it.
ReplyDeleteLike I always like to say, it is never easy, it should not be, as in everything else in life.
ReplyDeleteDo you expect to beat Fandi in soccer if you simply watch and bet a lot of soccer matches?
The problem with secular trend investing is that it focuses only on the 'demand' side of the equation rather than the 'supply'. Value investors usually find that a more contrarian stance helps. So, while the Peter Lynch mob are buying stocks at 52 week highs, the value guys are buying stocks that are at 52 week lows, and the market has failed to differentiate between the long term value and the short term disappointment. At the moment, hot areas include the IRs (snore), construction, frozen Chinese dumplings on PEs of 20x, palm oil. biomass power. Everyone hates electronics, and they hate holding companies. You need to be discerning, of course, but when everyone disagrees with your ideas, you're already half way to making a good investment, as sentiment can only improve - in secular investing, usually sentiment is sky high positive, and so can only be disappointed.
ReplyDeleteSorry to be anonymous. I haven't worked out how to get a Google address.