How to Spot the Next Big Investing Wave, According to Frank Holmes
The world is constantly being shaped by powerful waves that ripple throughout the global economy.
When analyzed effectively, these macro trends can serve as a key investment tool.
Today’s infographic comes from U.S. Global Investors, and it highlights how its team uses macro trends to identify investment opportunities.
Preparing for the Next Wave
Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors, is responsible for developing and overseeing investment strategies. One fund under his team’s management is the Holmes Macro Trends Fund (MEGAX), which follows a combination of two approaches.
- Analyze macro trends in an effort to find the fastest-growing sectors.
Macro trends are defined as long-lasting, pervasive shifts that affect a large population. They generally fall into one of the following categories:
A key benefit of macro trends is that they are unbiased, and cut through the endless headlines created by today’s 24/7 news cycle. They also help investors gauge market expectations, which in turn help drive long-term price trends.
Here are a couple examples of current macro trends, and the investment opportunities or threats they present:
- Aging populations
Africa has the world’s youngest population and is least likely to be affected, while China is particularly vulnerable given the one-child policy.
- Rising interest rates in North America
Financial companies may be able to improve their interest rate spread, while the real estate and automotive sectors may be negatively impacted by higher financing costs.
Once Holmes’ team has identified the regions and sectors with the best opportunities, it moves onto the next step.
- Analyze companies within those sectors in an effort to find the ones growing the fastest, at a reasonable price.
Traditionally, investors subscribe to either the growth strategy or the value strategy. Holmes’ team uses the Growth at a Reasonable Price (GARP) strategy, which combines elements of both.
- Growth – Buying stocks of companies that have been growing fast and may increase in price over time.
- Value – Buying stocks that appear to be undervalued by the marketplace.
- GARP – Buying stocks with a track record of consistent earnings growth and reasonable valuations.
Some other key metrics are also used to evaluate companies, including quarter over quarter sales, growth in earnings, and return on equity.
Macro trends are the waves that shape the future – but to ride them, investors need to pick the best companies in these sectors. The MEGAX fund, under the leadership of Holmes, follows this strategy.
Why invest in MEGAX?
- Experience: Fund managers have a total of 60+ years’ experience
- Strategy: Pragmatic investing that cuts through the 24-hour news cycle
- Composition: Diversified portfolio to decrease risk
Investors don’t need to discover the next big wave themselves. Instead, they can invest in MEGAX to take advantage of U.S. Global Investors’ experienced management.
Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.
Stock markets can be volatile and share prices can fluctuate in response to sector-related and other risks as described in the fund prospectus.
What is Lithium Worth?
How do you price lithium? Benchmark Minerals Intelligence has the method to price lithium for a new era in energy.
What is Lithium Worth?
Different generations find different uses for raw materials, changing the value of these inputs over time.
Lithium is not a new discovery, but its applications are. Scientists first discovered lithium as an element in 1817, but it was not until the 1970s that studies into lithium-ion batteries began.
It was a British chemist working for Exxon that first proposed the idea of lithium-ion battery. However, after some initial testing, Exxon abandoned the project.
Nonetheless, lithium-ion battery technology has evolved into regular use through cell phones and electric vehicles. It offers an alternative to fossil fuels that global industry can run on.
Just as the world currently watches the prices of oil to determine the trade winds, lithium could become just as important for the worldwide movement to clean energy.
Pricing the New Oil
Traditionally, buyers and sellers have priced lithium through long-term contracts. However, in recent times, there has been a push from major end-users, especially automotive OEMs, to have more price transparency and to use third-party independent contract references in negotiations.
Benchmark Mineral Intelligence has created a standard for pricing the special lithium chemistry for the battery supply chain that the industry can rely on.
Supply & Demand: Miners, Manufacturers and End Users
Lithium is a hot commodity in the mining, manufacturing, energy storage, and automobile industries today. The current size of the market is small, but the potential is huge.
In 2016, the world’s leading lithium battery companies produced 29GWh of batteries. This production is forecast to grow to 1049GWh by 2028, an increase of 3516%.
Data Collection and Price Reporting
There are three cornerstone factors Benchmark uses to set the lithium industry’s reference price.
- Quality and grade of lithium
- Shipping costs and volumes
- Quality and reliability of information
Let’s look in deeper at each one:
1. Quality and Grade of Lithium
Most of the world’s lithium comes from two sources: mined from hard rock deposits of pegmatites, or pumped from lithium brine salars.
Grade and impurity of extracted lithium have unique profiles which will affect its price. Lithium is converted into different compounds: spodumene concentrate, lithium carbonate, and lithium hydroxide.
These different varieties suit manufacturers’ exact specifications with different cost profiles.
2. Shipping Costs and Volumes
The origin and destination of lithium is an important choke point for pricing information. At these locations, “incoterms” are set rules that represent the destination and origin of the material, which in turn affects the cost of lithium.
3. Quality and Reliability of Information
In order to generate a lithium price, Benchmark embarks on the industry’s most rigorous price data collection process that relies on constant contact through email, phone calls, and in-person meetings.
Benchmark analysts evaluate the information received against volumes traded, the position of a company in the market, and reliability of the source of information.
Independent and accurate prices will be key as the lithium market grows, providing a solid foundation for contract negotiations and a level of transparency that will help attract capital to the market.
The varying nature of lithium chemicals makes it difficult to manage risk, but Benchmark Minerals Intelligence is building a standard for pricing lithium to help manage this, and set us off on a new era of energy.
The Consumer Potential of CBD, and Why It’s Here to Stay
Cannabidiol (CBD) is one of the major compounds in cannabis—and its therapeutic properties and varied applications are driving the $12 billion industry.
The Consumer Potential of CBD, And Why It’s Here to Stay
The billion-dollar cannabis industry is reaching new heights. While stigma and restrictions still exist, these haven’t slowed the industry’s global growth, and it’s projected at almost $32 billion by 2022.
At the core of it is a growing appreciation and understanding for cannabidiol, or CBD—a non-intoxicating compound found in cannabis and hemp plants. Today’s infographic from The Green Organic Dutchman wraps up our “Soil to Sale” series, by explaining CBD’s therapeutic benefits and why it’s taking the world by storm.
CBD: A Medical Marvel
CBD is one of two major cannabinoids that naturally occur in cannabis. It has a long history of being used medicinally, but it fell out of favor due to legal issues.
Today, it’s making a comeback. Medical cannabis relies on CBD for its therapeutic properties, and the personal anecdotes of patients are being increasingly backed by science. There are currently over 300 active and completed clinical trials concerning CBD, and it’s proven to help with a range of health issues, from simple to complex:
- Chronic pain
- Inflammation and arthritis
- Anxiety and depression
- Nausea or appetite loss
- Multiple sclerosis
- Crohn’s disease
- Epilepsy and seizures
The Food and Drug Administration (FDA) recently approved the first prescription CBD drug, Epidiolex, for its efficacy in reducing epilepsy seizures.
CBD is Going Global
It’s no wonder that over 20 countries have established medical cannabis markets, with more following suit. But there’s a catch—it can be legal to buy CBD-based products, but not cannabis. Ever-changing laws further complicate the legal status of CBD worldwide.
Canada is still one of only two countries to legalize cannabis on a federal level. It also has the resources to become a research leader, and expand product offerings based on changing consumer needs. Meanwhile, cannabis is still highly restricted in the United States, yet 33 states allow medical cannabis and/or the purchase of CBD products.
Many potential patients and consumers are wary to try cannabis, because they’re worried about getting “high”. With CBD-based products, that risk is significantly reduced, and it’s opening up all sorts of doors.
What Do Consumers Want?
Many consumers are drawn to CBD-based products for its therapeutic applications. In a survey of 4,000 Americans, here’s how many found CBD quite effective for different uses:
- 63%: Reducing stress or anxiety
- 52%: For better sleep
- 38%: Joint pain
- 24%: For fun or recreation
Consumers are also starting to explore CBD-based products for more than medication, such as sports recovery, and skincare and beauty. This new wellness segment is creating opportunities for alternative delivery formats—in the same survey, consumers reported using edibles, tinctures, vapes, and topicals to consume CBD the most.
It’s clear that CBD’s multiple applications will propel the market forward. Based on one estimate by Cowen & Co., CBD retail sales could shoot up from a baseline of $600 million to $16 billion by 2025. The most growth will be seen in the health and wellness category, like nutraceuticals (worth $6.4B) and topicals (worth $4B).
The Green Organic Dutchman Holdings Ltd. (TGOD) is a global leading organic cannabis brand, with an eye on CBD’s benefits and future market potential for years to come.
We want to remain on the cutting edge of innovation and establish the foundation for future … novel TGOD-branded cannabinoid products, from beverages and edibles, to topicals and beyond.
—Drew Campbell, Senior Director of Marketing at TGOD
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