Economic MEGA Sectors

In the early 1980s, I read, Megatrends: Ten New Directions Transforming Our Lives by the late Mr. John Naisbitt. An amazing read. He foresaw many things that actually came to pass. I invested in companies that matched his vision. And did amazingly well over time.

He was prolific as a writer and many of his more recent works are on Amazon. Below is an homage from an admittedly far dimmer bulb than he was- I was sad to say we lost him last year.
This document is my view of the Economic Mega Sector trends emerging in the economy. Some are not yet Mega… so opportunities abound. While I did wish to publish a humble homage to Mr. Naisbitt, I chose to call this Mega sector rather than Trends to first respect his trademark and secondly acknowledge I’m not worthy to carry the books of that amazing futurist.

The goal here is not to pick specific winners or losers but to provide a “why” to my trend thesis and to then show some potential opportunities today. Not a detailed deep dive into the charts, just potential winners from the trend

In no particular order!

TREND: Electric Batteries and Vehicles

WHY: 1. Positive regulatory and tax incentive environment. 2) All the majors are entering. 3) Consumer demand. 4) President Biden promises to the international community.

POSITIVE MOMENTUM:

A conservative way to play is via the big automakers. The usual suspects- but GM, TM seem good candidates to consider. Amazing runs in Tesla stock and others may happen in the near term, but the majors entering the space end their appeal. TSLA is priced at nosebleed tech levels and if they cannot quickly ramp production that stock price remains in jeopardy

b.    Moderately aggressive is to buy GNRC, RUN and SPWR

The most aggressive way to play is to invest in Lithium mining companies. A key component of batteries. Not just for cars, but now energy providers are buying battery farms to store solar during the day to deliver that clean energy at night. Places like Texas and California have huge demand for house batteries due to aging and inadequate grids failing. Consider these: PLL, ERNPF (EMHLF) and Talos Metal

NEGATIVE MOMENTUM:

For over 100 years, it has been great advice to tell a young person with a mechanical aptitude to get into auto repair. Some people should never go to college & can easily get rich by being self-employed tradespersons. While the need for skilled labor is not going away, by 2030, the auto repair craft will probably be a dying industry. By 2045, a craft reserved for specialists that restore the rare gas-powered car. EVs are golf carts. Yes, they have mechanical service needs- but significantly less than gas- or diesel-powered cars. Servicing an electric vehicle will not be a trade… in 2045- it will require the level of training the average coffee Barista currently gets.

TREND:  Crypto Currencies

WHY: 1. Financial firms are rushing to enter a space that they once considered irrelevant. 2. The generation of effective means to link the data held in blockchains to the front end of Apps, websites and corporate proprietary systems via “Oracles” (LINK) has vastly increased the utility of many blockchain projects.   

POSITIVE MOMENTUM
a.    Short term- A conservative way : BTC, LINK, ETH, LTC
b.    Short term- Moderately aggressive is: MANA, AAVE, Civic, DistrictOx, GRP, LPR, ALGO, CELO, REN
c.     Short term- The most aggressive way to play: ENJ, TRON, VET
NEGATIVE MOMENTUM:

The most significant concern of any participant in this market has to be if/ when another ‘Crypto Winter’ will occur. These collapses in price generally last 1000 days. Perhaps, because of the increasing acceptance of blockchain within the financial community, we may no longer see ‘Winters’. The last two ‘Crypto Winter’ were epic. Very bad. Like Game of Thrones when the White Walkers attacked Winterfell bad. Until proven to be a moot historical anomaly, the pattern of 180 days of wildly increasing gains followed by 1000 days of pain must be recognized and considered.
Another consideration: These are largely unregulated projects. Like Carnival / Tent Ministers, psychics, and Snake Oil sales… fraudulent projects exist. ALSO: Well-meaning projects with integrity that are doomed to fail as a part of the natural Survival of the Fittest competition exit in this space. One must recognize that a large portion of the projects will fail- and thus spread the bet around and not focus on just one thing.

TREND:  Graphene and Rare Earth Metals

WHY: 1. All I know about this is that many governments and scientists feel this is game changing stuff. I don’t know why. But the Buzz is huge. I’ve gotten this contribution from a lifelong friend who is a genus who study’s stuff. He will remain nameless since he would deny knowing a bum like me. His academic credentials include attendance at the prestigious Derek Zoolander Center, so perhaps don’t blindly accept this trend as legit…

POSITIVE MOMENTUM:
a.    A conservative way: None identified
b.    Moderately aggressive same as (c.)  

The most aggressive way to play is to invest in Nouveau Monde and Talga Group.  And the best plays for rare earths are MP Materials and Lynas. 

NEGATIVE MOMENTUM:

Lynas is currently engaged in an environmental dispute with Indonesia, making its future viability uncertain.

TREND:  UAVs, USVs and UGVs. Semi-autonomous unmanned robotic vehicles (Air, Sea, Ground).

WHY: 1. By 2030, it’s entirely likely that delivery trucks arrive in a neighborhood just like today. But instead of a driver carrying packages to each door, the driver deploys a dozen UAVs to finish the final step of the delivery. 2. On the unmanned submersible side, its entirely possible that future fishermen never dip a hook or net into the water. They get to the fish and let AI-driven USVs do all the work. 3. iRobot has already shown the potential of unmanned ground vehicles with that silly home vacuum. The future is better- UAG lawnmowers is a pretty easy assumption of short-term evolution in this tech. Automatic garden weeding machines? There is likely far more value-added advancements that I lack the imagination to provide- please illuminate me! And pls let me know what companies are on the forefront since this is a new Trend for me!

POSITIVE MOMENTUM:
a.    A conservative way: iROBOT, BOTZ (ETF), BA, LMT
b.    Moderately aggressive is to buy  ISRG
c.     The most aggressive way to play is to invest in  HLX, HOLI, AVAV
NEGATIVE MOMENTUM:

Currently has uncertain regulatory risk.

TREND:  Experiencial Tourism

WHY: 1. Destination vacations and experience are a thing. That means that normal hotels are not in play. 2. Cruise lines are in play due to pent up demand. 3. Below is a partial list, your imagination and some Googling will give you many more potentials. 4. A direct, non- equity-based idea is included below as the most aggressive.
POSITIVE MOMENTUM
a.    A conservative way: DIS, CCL, NCLN, CWH
b.    Moderately aggressive is to buy  ABNB, PYPL (Owns Vernmo)
c.     The most aggressive way to play is to invest in yourself. A good friend bought unwanted acreage in North Georgia in 2010. He put up 5 identical cabins with mountain views. Each has a hot tub and a fireplace. Three years later he doubled in size. Now he is planning to double again. There is much labor associated with being an “AirBnB Czar.” He doesn’t do it! He lives in Virginia! And as of the last time we spoke, his net is over $200k/year. He provides a romantic retreat for young lovers, pays 5 people good wages and makes $200k profit for himself. A win/win/win. Consider this trend potentially a space you can enter if you have the resources and can garner up the requisite expert help.
NEGATIVE MOMENTUM:
Economic downturns always impact this industry. It’s inevitable cycle that has to be accounted for. As to COVID, clearly risk remains. But that simply means behavior changes and does not necessarily negate this trend.