In mid-October, I’m gong to be giving a roundtable talk with Jimmy Mengel and Nick Hodge of Outsider Club at the MoneyShow in Toronto. The topic will be “Diamonds in the Rough/Overlooked Trends of the 2010s.”
Yesterday, we had a meeting in our penthouse office overlooking the Inner Harbor of Baltimore. The food was from Potbelly, and the ideas flowed like the nectar of the gods.
Well, they were interesting anyway, and some will prove quite profitable.
Demographics
One of the most dominant trends that no one is talking about is that fact that millennials aren’t getting married and having babies.
Millennials are that generation that was born in the 1980s and 1990s. They are also called the echo-boomers and are, in fact, greater than the baby boomers in number.
Many of these young adults came of age during the two big stock market busts of our time. They had a hard time finding work, were sucked into the housing boom, and are in general thought to be heavy in debt, renters, and single.
The Zero Generation…
The United States has the lowest birth rate it has had in 100 years… and probably ever. We are below the replacement rate and following the lead of Japan in yet another unwelcome statistic.
Stocks that cater to children, like Mattel (NASDAQ: MAT) and McDonald’s (NYSE: MCD), have been getting killed over the past few years. Perhaps part of the reason for slowing sales is the fact that there just aren’t that many children anymore.
And in five years, there won’t be many tweens — at least not native-born. You may want to consider selling Disney (NYSE: DIS).
Death of Car Culture
It used to be that cars were a symbol of freedom and the open road. Today, you’d be hard-pressed to find an open road, and the main interaction with Big Brother will likely have something to do with an automobile.
Cars cost a tremendous amount of money and time. I’ve lived without cars at many points in my life, and if I didn’t have children, I’d do it again. No oil changes, insurance bills, talking to mechanics, emissions tests, fender benders… Who needs it?
As far as cool goes, one car looks like the other — a 2014 jellybean. They are all so heavily regulated for safety and gas mileage that they all end up looking the same. And that look is a boring, plastic bubble.
And given that a new Corolla will go twice the speed limit, what’s the point of a muscle car?
That said, there will be self-driving cars in the near future. Companies that make sensors and controls for these cars will benefit, as will ride-sharing companies like Zipcar, now owned by Avis (NASDAQ: CAR).
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Other trends are digital cameras on police cars and dashboards. Taser makes these (NASDAQ: TASR). Digital Ally (NASDAQ: DGLY) is another trade, but it is volatile.
We also have the rise of robots and automation, which pose threats to low-wage jobs. Robots don’t need Obamacare, Social Security, or a lunch break.
On the energy front, manufacturing continues to relocate to the southern U.S. from places like China and France. This is being driven by the low cost of natural gas, as well as a better legal framework and shorter travel distances to markets.
With the global economy slowing down yet again and the fracking boom pumping up supply in North America, the price of oil will continue to drop.
One way to play it is to buy the infrastructure companies, like companies that make railroad tankers, fracking sand, and export terminals. Chicago Bridge and Iron (NYSE: CBI) is a player in this space — though if WTI drops below $80, many of the producers will close.
Coal and uranium are the most undervalued energy commodities in the world right now. Both have clear global growth trends. Uranium is already up 30% this year.
Coal has yet to bounce, but the news out of India is that the nation will increase its imports by 25% next year.
That’s just an overview of what my cohorts and I will be talking about at the MoneyShow. I hope to see you there.
All the best,
Christian DeHaemer
The World MoneyShow Toronto — October 16-18, 2014
Join Christian DeHaemer at The World MoneyShow Toronto this October 16-18! Get the latest stock picks, current market outlooks, most profitable investing and trading strategies, and more when you attend the Show at the Metro Toronto Convention Centre.
Registration is free, so reserve your place today!
