Michael Schmanske, Chief Investment Officer – AngelMD
Based off a lenghier analysis coming in the next issue of MD Next magazine.
In the next issue of MD Next magazine, I am going to lay out a historical review of macro economic trends from the 70s until now. Looking back will help us better understand where we are now and where we may be headed. However, I want to give you some of the cliff notes in advance because time is money and the issue won’t be out until just before Thanksgiving.
My full article will provide the cipher key, but here are the answers to What will Work in terms of macro bets for investing capital.
Anything that addresses the following secular trends will work:
Aging Population – we’re all getting older especially the population demographics of the wealthiest countries.
On-shoring, and improved supply chain robustness – Globalization is here to stay but the entire world now knows that we must improve the flexibility of our supply chain.
Workforce optimization and automation – 3.6% unemployment and inflation. While the workforce is slowly coming back to work and service employers are finding workers more easily than 6 months ago, we still have to deal with the aging workforce increased desires for flexibility and increased wages.
The Environment – agree or disagree on the premise, the green movement will continue. Maybe, hopefully, (please, please, please) We can move away from politicizing this issue and acting rationally. Europe would not be experiencing the second energy crisis if they had pursued clean nuclear energy instead of dogmatically supporting the solar lobby.
The Rise of “the Rest” – Countries from North America and Europe have dominated the world economy since the rise of the colonial empires. The rise of China defined the past 30 years of global development. The next 10 years will begin the true rise of southern Asia, Africa and South America. You will be hearing more about “The Global South” and as those populations become more wealthy they’ll want stuff too.
Tightening government spending – Maybe this should be #1. We’ve been living in a fantasy world of low interest rates. Trust me when I say No Government is prepared for what a real interest rate policy will mean to budgets around the world. Politicians have become very adept at spending money to which they have no accountability or real tie.
What DOES fit the model?
I’m actually not going to go into deep detail on the sectors I’m watching, mostly because I’m still feeling this out and the facts on the ground are always changing but here are some sectors which meet the above conditions:
Startup Healthcare – Seriously folks, I’ve said it before, so now I’ll just move on. I vote with my feet. This is why I moved to AngelMD.
Exotic materials fabrication – from rare earths to superconductors and graphite composites.
Biowhatever – This may be biotech therapeutics and MRNA for everything, but also watch for biomechanical crossover, bioenergy, biocomputing, and bioengineering. Alternate energy sources – yeah it’s “played out” – except it’s really not. From kinetic storage to improved energy networks and nuclear energy, there’s a lot of work to be done.
Alternate food sources – the stupid hype around veggiemeat is only stupid in that it is too early and there is so much more work to do – watch this space for real advances.
Robotics – implementation into daily life. I saw a cool company working on an automated fast food kitchen. Now expand to include driving, delivery, security, maintenance, healthcare.
AI – don’t focus on the cutting edge – think about what it means in real world application.
You’ll notice there are obviously deep opportunities in our network to invest in some of these key sectors. As I mentioned, this is largely why I joined AngelMD. I saw a substantial mega-trend forming in healthcare that looks much like what we saw with the PC revolution 25 years ago. Healthcare innovation is accelerating, and is arguably only in the 3rd inning. The next 10 years are going to see massive change and will witness substantial movements of capital. For an investor, this is as big of a bullseye as one can paint. We won’t likely see one this large again during our lifetimes…and I am counting the millennials.