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.
The Rise of Cannabis Treatments for Pets
The Rise of Cannabis Treatments for Pets
For millennia, people have shared their lives with domestic animals – and pets have since become a fixture in urban life.
The global pet industry is growing fast, driven by pet owners who increasingly treat their furry companions like family, including applying the same lifestyle choices.
Today’s infographic from True Leaf looks at why over half of pet owners are exploring natural treatments like cannabis for their pets.
Breaking down the Pet-onomics
The pet care market is thriving worldwide, and expected to be worth over $202 billion in a few short years. Some of this can be credited to cultural shifts across Asia, where owning pets is a sign of affluence and a result of higher disposable income.
Closer to home, self-proclaimed pet “parents” are a main source of spending.
- 85 million households in the U.S. own a pet, or two out of three families.
- Millennials and baby boomers are increasingly “humanizing” their pets.
As the largest generations of pet owners, they only want the best for their companions, and are increasingly focused on their pets’ health and wellness.
|Pet Industry Expenditures||2017||2018|
|Supplies/ OTC Medicine||$15.1B||$16.0B|
*Live animal purchases and pet services. Values have been rounded up to one decimal place. (Source: American Pet Products Association)
To that end, millennials and baby boomers are also showing more interest in natural treatments such as cannabis for pets – which are also becoming more mainstream in their own lives.
Why Cannabis for Pets?
Natural therapies such as CBD- and hemp-based products are a rising trend in pet care.
To understand why pet owners are seeking cannabis-derived products, it’s important to understand its components: two sub-species of plants, hemp and marijuana.
Hemp is mainly used for industrial and nutritional purposes, and contains less than 0.3% THC. On the other hand, marijuana’s primary uses are medical and recreational, with between 5-20% THC.
Both plants contain CBD, which is popular for its therapeutic properties. But since hemp contains barely any THC, products made from it can heal without the “high”.
Hemp seeds are a popular superfood – packed with proteins, healthy fats, and vitamins with a myriad of health benefits for humans and pets alike:
- Manages arthritis
- Weight management
- Cancer prevention
- Manages inflammation
- Boosts skin and heart health
It’s no wonder that hemp-derived pet supplies are on the rise in legal markets.
Navigating A Shifting Landscape
Since the passing of the 2018 Farm Bill, CBD in hemp became legal in the United States. Meanwhile, CBD in marijuana is still under investigation by the FDA, for its potential applications in food and beverages – and the process is fast moving.
CBD-pet supplements are sold in the market, but as the segment is still unregulated, this lack of control can influence the consistency and quality of products that are available. To ensure safe cannabis treatments for pets, it’s important to pay attention to the current laws.
The global cannabis for pets industry is taking off. Few companies are able to comply with this complex legality – but those that can navigate it will emerge as the top dog.
Climate Smart Mining: Minerals for Climate Action
Renewable technologies are going to create a huge demand for minerals. The World Bank is working to mitigate mining’s impact.
Climate Smart Mining: Minerals for Climate Action
Countries are taking steps to decarbonize their economies by using wind, solar, and battery technologies, with an end goal of reducing carbon-emitting fossil fuels from the energy mix.
But this global energy transition also has a trade-off: to cut emissions, more minerals are needed.
Therefore, in order for the transition to renewables to be meaningful and to achieve significant reductions in the Earth’s carbon footprint, mining will have to better mitigate its own environmental and social impacts.
Advocates for renewable technology are not walking blindly into a new energy paradigm without understanding these impacts. A policy and regulatory framework can help governments meet their targets, mitigate, and manage the impacts of the next wave of mineral demand to help the communities most affected by mining.
Today’s infographic comes from the World Bank and it highlights this energy transition, how it will create demand for minerals, and also the Climate Smart Mining building blocks.
Renewable Power and Mineral Demand
In 2017, the World Bank published “The Growing Role of Minerals and Metals for a Low Carbon Future”, which concluded that to build a lower carbon future there will be a substantial increase in demand for several key minerals and metals to manufacture clean energy technologies.
Wind power technology has drastically improved its energy output. By 2025, a 300-meter tall wind turbine could produce about 13 to 15 MW, enough to power a small town. With increased size and energy output comes increased material demand.
A single 3 MW turbine requires:
- 4.7 tons of copper
- 335 tons of steel
- 1,200 tons of concrete
- 2 tons of rare earth elements
- 3 tons of aluminum
In 2017, global renewable capacity was 178 GW of which 54.5% was solar photovoltaic technology (PV). By 2023, it’s expected that this capacity will increase to one terawatt with PV accounting for 57.5% of the mix. PV cells require polymers, aluminum, silicon, glass, silver, and tin.
Everything from your home, your vehicle, and your everyday devices will require battery technology to keep them powered and your life on the move.
Lithium, cobalt, and nickel are at the center of battery technology that will see the greatest explosion in demand in the coming energy transition.
Top Five Minerals for Energy Technologies
Add it all up, and these new sources of demand will translate into a need for more minerals:
|2017 Production||2050 Demand from Energy Technology||Percentage Change (%)|
|Lithium||43 KT||415 KT||965%|
|Cobalt||110 KT||644 KT||585%|
|Graphite||1200 KT||4590 KT||383%|
|Indium||0.72 KT||1.73 KT||241%|
|Vanadium||80 KT||138 KT||173%|
Minimizing Mining’s Impact with Climate Smart Mining
The World Bank’s Climate Smart Mining (CSM) supports the sustainable extraction and processing of minerals and metals to secure supply for clean energy technologies, while also minimizing the environmental and climate footprints throughout the value chain.
The World Bank has established four building blocks to Climate Smart Mining:
- Climate Change Mitigation
- Climate Change Adaptation
- Reducing Material Impacts
- Creating Market Opportunities
Given the foresight into the pending energy revolution, a coordinated global effort early on could give nations a greater chance to mitigate the impacts of mining, avoid haphazard mineral development, and contribute to the improvement of living standards in mineral-rich countries.
The World Bank works closely with the United Nations to ensure that Climate Smart Mining policies will support the 2030 Sustainable Development Goals.
A Sustainable Future
The potential is there for a low carbon economy, but it’s going to require a concerted global effort and sound policies to help guide responsible mineral development.
The mining industry can deliver the minerals for climate action.
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