What should we look for in the next 25 years?
Congratulations to Worth magazine on 25 years of providing thoughtful content to readers interested in financial intelligence. Politics aside, it was interesting to find a picture of Robert Trump listening to the Beach Boys at the Worth launch party 25 years prior to his brother Donald’s ascension to the presidency of the United States of America. Much has changed in the last two-and-a-half decades.
It seems obvious to us that the internet, smartphones, connectivity and massive amounts of data now available have altered our lives and had an impact on our investments. As we celebrate this anniversary with Worth, we’re inspired to contemplate what we should be looking for over the next 25 years.
In the UBS House View: Year Ahead 2017 report dated November 21, 2016, our firm’s analysts highlighted some themes that may be important in the future.
Stephen Freedman, CIO Head of Thematic and Sustainable Investment Strategy, noted that, “Digital data has the power to profoundly transform the structure of an economy, disrupt existing business models and create growth opportunities for those well positioned to participate.”1 We tend to agree with him. Companies using data analytics and those involved in cyber security as well as digital marketing were highlighted in the report as areas that may well benefit from the trend in digital data.
We may have preconceived notions about growth in emerging-market economies, when the truth is that these regions have populations that are aging just like the rest of the world. In fact UBS House View reported that emerging-market governments are struggling to keep up with the costs associated with a population where, “The percentage of people 65 years or older… will likely reach 15 percent by 2030, according to the United Nations.”2 Increases in emerging-market medical spending may be an area of interest in the future.
The internet, smartphones, connectivity and massive amounts of data now available have had an impact on our investments.
Energy continues to be an important topic, as well, as “The International Energy Agency sees fuel consumption set to increase 50 percent by 2040.”3 The UBS analysis further indicated that while production is important, because we are faced with pollution issues and continuing regulations, we will see energy efficiency play a greater role: “Companies creating energy-saving products, especially those focused on up- grading buildings and infrastructure may be important.”
Also important is our need to consider how these changes may impact our investment thesis in the long run and influence how we express our ideas. Since 1992, the S&P 500 has increased from 417 to over 2,238, as the Dow has gone from 3,301 to almost 20,000, demonstrating the growth of wealth.4 We think that the next 25 years could see similar growth in wealth and prosperity and hopefully a wonderful 50th anniversary party for Worth.
Andrew Shantz and Thomas Mantione are financial advisors with UBS Financial Services Inc. in 750 Washington Blvd., Stamford, CT 06901. UBS Financial Services Inc. Financial Advisors engage Worth to feature this article. In providing wealth management services to clients, we offer both investment advisory and brokerage services which are separate and distinct and differ in material ways. For information, including the different laws and contracts that govern, visit ubs. com/workingwithus. The strategies and/or investments referenced may not be suitable for all investors. UBS Financial Services Inc., its affiliates and its employees are not in the business of providing tax or legal advice. Clients should seek advice based on their particular circumstances from an independent tax advisor. The views expressed herein are those of the authors and may not necessarily reflect the views of UBS Financial Services Inc. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC
1 UBS CIO Wealth Management Research House View:Year Ahead 2017, November 21, 2016.
This article was originally published in the February–April 2017 issue of Worth.