If you want to generate higher returns in the market, stop trying to outguess the economy and the market. Instead, think about businesses, especially the great innovators, cutting-edge companies that dominate their fields. Look at businesses with double-digit sales growth, expanding market share, better-than-expected earnings, high returns on equity, new products and services, heavy institutional support, and strong technical indicators. These companies tend to be momentum stocks. And if you want to boost your investment returns, make sure to include them in your portfolio.
You find these type of companies operating in areas such biotechnology, cloud computing, networks, sensors, robotics, artificial intelligence, genetics, 3D printing, nanotechnology, blockchain, automated and virtual reality, and dozens of other fields. Innovations in science, technology and medicine are leading us into an era of unprecedented prosperity. These companies are usually also leading us to a healthier, greener, safer, and richer world.
Technological progress will happen at an exponential rate. It will accelerate in the years ahead, thanks to the “6 Ds”:
1. Digitization
Communications, news, knowledge, photos, videos, music and much more now travel the world instantly.
2. Deception
We don’t notice exponential growth in the digital realm because it is invisible to the naked eye.
3. Disruption
Digital technologies improve effectiveness and reduce costs, disrupting and transforming existing industries.
4. Demonetization
As technology becomes cheaper, money becomes less of a factor. You can already download limitless apps to access terabytes of information and a multitude of services for free.
5. Dematerialization
Physical products that you used to buy, such as calculators, alarm clocks, CDs, DVDs, maps, GPS devices, radios, cameras, camcorders, voice recorders, among many other things, are now on smartphones instead.
6. Democracy
Once something is digitized, more people gain access to it. Powerful technologies now belong to us all, not just governments, big business and the wealthy.
Sven Franssen