In a world where the sort of ‘normal’ growth we experienced in the 80s, 90’s and most of the 00’s has disappeared, investors are now venturing further out into more obscure areas to find the growth of yesteryear. Often this means looking in places where exciting new technology is being developed. That’s valid, but it also carries more risk. Some emerging technologies boom and many bust. It’s the nature of the beast.
If you’re a growth minded investor that wants to keep the reins relatively tight on the risk monster, where do you go? It’s not an easy question given the economy’s lack luster recovery and future prospects. In times like these we need to turn to things that have a greater amount of certainty of happening. The old saying is that only two things are certain in life – death and taxes. You can’t argue with that. Yet, a number of other aspects of life are pretty certain, as well.
Father time is a tough cookie. He gets the better of all of us eventually. With age certain things tend to occur across the population. One is the reliance on a greater amount of prescription drugs. This is a consequence of greater ailments as we age. Our bodies, through the aging process and/or past events we’ve experienced, don’t function as well as they use to or we’d like them to. Therefore, drugs are provided in order to maintain some level of activity that we once new.
The giant demographic blimp known as the Baby Boomers are either near or in their retirement years. As each day passes, the likelihood of them hitting the prescription bottle becomes more and more likely. More users equals a bigger market and a lot easier growth environment for your pharmaceutical company.
Another fact of life is that if you stave off the reaper long enough, you’re going to find yourself in a state where you cannot take care of yourself on your own. Whether it is being in some form of senior living facility or having in-home care, assistance will be needed. This is a huge area of growth. Consider this, my grandparents are both in their 90’s. They both have a certain degree of assistance from caretakers. They have seven kids. If all seven replicate their longevity of life, the demand for assisted living services will increase by over 300%. The reason why the Baby Boom generation is such a handful for society is because families in this era were typically very large by today’s standards. Seven kids was not uncommon.
With better health habits and better healthcare, many Baby Boomer will outlive their parents. This means that this demographic wave will ride high until these members are in their 80’s and 90’s. Once at this point greater and greater demands will be put in assisted living facilities and service providers. Growth, which is already occurring, will balloon.
How do you position yourself to take advantage of these opportunities? First off, this isn’t something that is going to occur overnight. If I told you that you needed to go in the next month and load up on X, Y and Z stock, I would be an idiot. What we are facing is a lengthy trend that will gain significant momentum in the years ahead. This provides you with time to identify companies meeting the needs outlined above. In identifying them, think of those that are paying a dividend and have a record of increasing the dividend. This is a trend for the long haul and you want to be in companies that are going to reward you. A consistent dividend is good, a consistent divided that is growing is better.
Lastly, sit back and wait. Sell offs are great buying opportunities. We know a huge segment in our population is moving toward the age where drugs and assisted living are major wants and needs. If the need isn’t going away, then the industry is not going away. Be patient and wait for a good buying opportunity. When the time comes, then load up and wade into the positions you’ve identified.