How to Spot the Next Big Investing Wave, According to Frank Holmes - Visual Capitalist
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How to Spot the Next Big Investing Wave, According to Frank Holmes

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How to Spot the Next Big Investing Wave, According to Frank Holmes

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.

  1. 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:

    • Demographics
    • Economics
    • Environment
    • Government
    • Society
    • Technology

    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.

  2. 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.

Professional Management

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.

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The Genomic Revolution: Why Investors Are Paying Attention

Faster cancer detection. Tracking disease. Gene editing. All three are driven by the genomic revolution. Here’s why it’s important now.

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Genomic Revolution

The Genomic Revolution: Why Investors Are Paying Attention

At the center of the genomic revolution is big data and DNA.

The implications are vast. With recent advancements, faster cancer detection is within reach, potentially saving thousands of lives each year. An initial research study shows this technology could save 66,000 live annually in the U.S. alone.

What’s more, genomic innovation goes beyond just cancer detection. Today it spans a variety of innovations, from gene editing to anti-cancer drugs.

In this graphic from MSCI, we look at four reasons why the genomics sector is positioned for growth thanks to powerful applications in medicine.

What is the Genomic Revolution?

To start, the genomic revolution focuses on the study of the human genome, a human (or organism’s) complete set of DNA.

A human consists of 23 pairs of chromosomes and 24,000 genes. Taken together, the human genetic code equals three billion DNA letters. Since most ailments have a link to our genetic condition, genomics involves the editing, mapping, and function of a genome.

With genomic innovation, large-scale applications of diagnostics and decision-making tools are made possible for a wide range of diseases.

4 Ways the Genomic Revolution is Changing Medicine

Over the last century, the field of genomics has advanced faster than any other life sciences discipline.

The hallmark achievement is the Human Genome Project completed in 2001. Since then, scientists have analyzed thousands of people’s genes to identify the cause of heart disease, cancer, and other fatal afflictions.

Here are four areas where genomic innovation is making a big difference in the medical field.

1. Gene Editing

Gene editing enables scientists to alter someone’s DNA, such as eye color. Broadly speaking, gene editing involves cutting DNA at a certain point and adding to, removing, or replacing this DNA.

For instance, gene editing enables living drugs. As the name suggests, living drugs are made from living organisms that harness a body’s immune system or other bodily process, and uses them to fight disease.

Based on analysis from ARK Invest, living drugs have a potential $200 billion addressable market.

2. Cancer Detection

Multi-cancer screening, supported by genomic sequencing and liquid biopsies, is projected to prevent more deaths from cancer than any other medical innovation.

Through a single blood test, multiple types of cancer can be detected early through synthetic biology advancements. Scientists use genomic sequencing (also referred to as DNA sequencing) to identify the genetic makeup of an organism, or a change in a gene which may lead to cancer.

Critically, screening costs are dropping rapidly, from $30,000 in 2015 to $1,500 in 2021. The combination of these factors is spurring a potential $150 billion market. This could be revolutionary for healthcare by shifting from a treatment-based model to a more preventative one in the future.

3. DNA Sequencing

One modern form of DNA sequencing is long-read DNA sequencing. With long-read DNA sequencing, scientists can identify genetic sequences faster and more affordably.

For these reasons, long-read DNA sequencing is projected to grow to a $5 billion market, growing at a 82% annual rate.

4. Agricultural Biology

Finally, the genomic revolution is making strides in agricultural biology. Here, research is looking at how to reduce the cost of producing crops, improving plant breeding, and enhancing quality.

One study shows that genomic advances in agriculture have led to six-fold increases in income for some farmers.

Investing in the Genomic Revolution

A number of genomic-focused companies have shown promising returns.

This can be illustrated by the MSCI ACWI Genomic Innovation Index, which has outperformed the benchmark by nearly 50% since 2013. The index, which was developed with ARK Invest, comprises roughly 250 companies who are working in the field of genomic innovation. In 2020 alone, the index returned over 43%.

From diagnostics to prevention, the genomic revolution is breaking ground in scalable solutions for global health. Investment opportunities are expected to follow.

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Smashing Atoms: The History of Uranium and Nuclear Power

Nuclear power is among the world’s cleanest sources of energy, but how did uranium and nuclear power come to be?

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uranium and nuclear power

The History of Uranium and Nuclear Power

Uranium has been around for millennia, but we only recently began to understand its unique properties.

Today, the radioactive metal fuels hundreds of nuclear reactors, enabling carbon-free energy generation across the globe. But how did uranium and nuclear power come to be?

The above infographic from the Sprott Physical Uranium Trust outlines the history of nuclear energy and highlights the role of uranium in producing clean energy.

From Discovery to Fission: Uncovering Uranium

Just like all matter, the history of uranium and nuclear energy can be traced back to the atom.

Martin Klaproth, a German chemist, first discovered uranium in 1789 by extracting it from a mineral called “pitchblende”. He named uranium after the then newly discovered planet, Uranus. But the history of nuclear power really began in 1895 when German engineer Wilhelm Röntgen discovered X-rays and radiation, kicking off a series of experiments and discoveries—including that of radioactivity.

In 1905, Albert Einstein set the stage for nuclear power with his famous theory relating mass and energy, E = mc2. Roughly 35 years later, Otto Hahn and Fritz Strassman confirmed his theory by firing neutrons into uranium atoms, which yielded elements lighter than uranium. According to Einstein’s theory, the mass lost during the reaction changed into energy. This demonstrated that fission—the splitting of one atom into lighter elements—had occurred.

“Nuclear energy is incomparably greater than the molecular energy which we use today.”

—Winston Churchill, 1955.

Following the discovery of fission, scientists worked to develop a self-sustaining nuclear chain reaction. In 1939, a team of French scientists led by Frédéric Joliot-Curie demonstrated that fission can cause a chain reaction and filed the first patent on nuclear reactors.

Later in 1942, a group of scientists led by Enrico Fermi and Leo Szilard set off the first nuclear chain reaction through the Chicago Pile-1. Interestingly, they built this makeshift reactor using graphite bricks on an abandoned squash court in the University of Chicago.

These experiments proved that uranium could produce energy through fission. However, the first peaceful use of nuclear fission did not come until 1951, when Experimental Breeder Reactor I (EBR-1) in Idaho generated the first electricity sourced from nuclear power.

The Power of the Atom: Nuclear Power and Clean Energy

Nuclear reactors harness uranium’s properties to generate energy without any greenhouse gas emissions. While uranium’s radioactivity makes it unique, it has three other properties that stand out:

  • Material Density: Uranium has a density of 19.1g/cm3, making it one of the densest metals on Earth. For reference, it is nearly as heavy (and dense) as gold.
  • Abundance: At 2.8 parts per million, uranium is approximately 700 times more abundant than gold, and 37 times more abundant than silver.
  • Energy Density: Uranium is extremely energy-dense. A one-inch tall uranium pellet contains the same amount of energy as 120 gallons of oil.

Thanks to its high energy density, the use of uranium fuel makes nuclear power more efficient than other energy sources. This includes renewables like wind and solar, which typically require much more land (and more units) to generate the same amount of electricity as a single nuclear reactor.

But nuclear power offers more than just a smaller land footprint. It’s also one of the cleanest and most reliable energy sources available today, poised to play a major role in the energy transition.

The Future of Uranium and Nuclear Power

Although nuclear power is often left out of the clean energy conversation, the ongoing energy crisis has brought it back into focus.

Several countries are going nuclear in a bid to reduce reliance on fossil fuels while building reliable energy grids. For example, nuclear power is expected to play a prominent role in the UK’s plan to reach net-zero carbon emissions by 2050. Furthermore, Japan recently approved restarts at three of its nuclear reactors after initially phasing out nuclear power following the Fukushima accident.

The resurgence of nuclear power, in addition to reactors that are already under construction, will likely lead to higher demand for uranium—especially as the world embraces clean energy.

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