COVID-19, the great accelerator of change, has helped to identify a few of the most influential and profitable long-term investing trends.
According to McKinsey, for instance, COVID-19 has widened the gap between leaders and laggards in the global profit curve.
Unsurprisingly to those watching the markets, 2020’s most profitable industries included:
Those lagging behind, however, included energy, utilities, diversified financial, and banks.
These same industries, McKinsey’s research demonstrated, had already been lagging before 2020 – the pandemic only accelerated their slowdowns.
One important takeaway from this research, as well as other indicators I’ll explore below, is that these trends are not temporary, they are permanent.
In the years ahead, we will continue to see major growth in trends such as these, making them ideal long-term investing trends.
3 Long-Term Investing Trends to Watch in the 2020s
Quantitative investors use probability to place bets on the economy, and in my analysis, there is a 99.99% probability that these trends will grow massively in the coming years:
1. Clean Energy and Climate Tech
Clean energy and climate-related tech have been seeing outsized gains in 2020, and there are a few reasons why this will continue indefinitely:
Climate change has become a major concern for everyone around the world, from government agencies to the individual consumer
Government policies are aggressively tackling climate change – China, India, France, Britain, and others, for instance, says promise to ban gas-powered vehicles in the near future
Corporations have made similar commitments globally, making the switch to more climate-friendly supply chains, products, and services
In 2020, oil, gas, kerosine, and other fossil fuels have plummeted along with the global transportation industry, while clean energy companies and equities have seen sharp upturns
For instance, here is a chart showing the performance of a clean energy ETF:
Now, here is a chart showing the performance of an oil ETF:
Both of these charts demonstrate the performance of both sectors overall.
And given the long-term commitment that governments are making to investment in clean energy, there is little doubt that this sector will continue to see strong growth, even if fossil fuels do rally a bit after the pandemic.
2. Health Tech
Like clean energy, health is another sector that will not return to the same “normal” that we knew before 2020.
While some people may prefer that the economy and our lives just “went back to the way things were,” it is becoming more and more apparent that this simply cannot happen.
This realization has resulted in the coinage of terms such as the new normal and the next normal, which posit that the post-COVID world will operate under a different social, economic, and political paradigm.
This new paradigm will not only permanently affect the trajectory of the global energy industry, it will also radically change the health sector.
There are, for instance, strong indications that daily life will not return to the same normal that we once knew:
Experts have recommended we maintain mask-wearing and social distancing even after a vaccine is introduced
New contact tracing apps and proof-of-vaccine apps have begun to emerge
Telehealth has exploded and will undoubtedly stay prominent in the years ahead
Emerging healthcare technologies, such as genome sequencing, promise to revolutionize medicine, open up new forms of treatments, and even cure previously incurable diseases
In short, many of the health-related trends we are witnessing in the midst of the pandemic are here to stay. As a result, investors can expect to see excellent performance from emerging health technology, both in the short- and the long-term.
3. Digital Technology
Digital technology has been around for a few decades, but the digital revolution is far from over.
In fact, many digital technologies have yet to really impact the market, such as:
The Internet of Things
Even industries that have been around for some time, such as SaaS and cloud computing, have only achieved a fraction of their potential and inevitable market penetration.
Like the other long-term investing trends covered here, the digital technology sector will continue to deliver excellent – if not parabolic – gains.