2007 investment outlook
Asset Class
The valuations of equities is still attractive relative to the low interest rate. More money will be put into equities due to a lack of choices because other asset classes are unstable and no desirable.
Oil has been massively corrected due to the unseasonably warm weather around the world and the bubble that had formed last year. I am taking a wait-and-see approach, and I will probably dabble in the stocks of oil companies if/when oil hits the $40-45 mark.
As for gold, I would avoid it until the price drops to reflect the true industrial demand of it (or if we reach a hyper-inflationary period)
Bonds is one of the worst asset classes in this environment. Right now the long term interest rates are lower than the short term interest rates. You are much better off directing your fixed income allocations towards short term rather than long term.
Industry
Here are some industries that will benefit from future macroeconomical trends. They are good places to focus your equity and debt investments on.
IT - We are in the middle of the second wave of the IT revolution, or Web 2.0. The first wave was about entrepreneurship and experimentation. The second wave is about maturity and making loads of money.
Finance - Finance remains the highest margin business where the developed world still has a competitive advantage in. It will continue to benefit from globalization and increased capital efficiency. The banking sector will be strong as the interest rates stablize and eventually drop.
Healthcare - This area will benefit from the requirements of supporting a large number of aging babyboomers. This has been talked about to death but is very evident.
Alternative Energy - Modern economies have come to their senses about the risks of being over-dependent on fossil fuels, so there is definitely a renewed interest in this area.
Ideas? Thoughts? Concerns? Please share them with us.
The valuations of equities is still attractive relative to the low interest rate. More money will be put into equities due to a lack of choices because other asset classes are unstable and no desirable.
Oil has been massively corrected due to the unseasonably warm weather around the world and the bubble that had formed last year. I am taking a wait-and-see approach, and I will probably dabble in the stocks of oil companies if/when oil hits the $40-45 mark.
As for gold, I would avoid it until the price drops to reflect the true industrial demand of it (or if we reach a hyper-inflationary period)
Bonds is one of the worst asset classes in this environment. Right now the long term interest rates are lower than the short term interest rates. You are much better off directing your fixed income allocations towards short term rather than long term.
Industry
Here are some industries that will benefit from future macroeconomical trends. They are good places to focus your equity and debt investments on.
IT - We are in the middle of the second wave of the IT revolution, or Web 2.0. The first wave was about entrepreneurship and experimentation. The second wave is about maturity and making loads of money.
Finance - Finance remains the highest margin business where the developed world still has a competitive advantage in. It will continue to benefit from globalization and increased capital efficiency. The banking sector will be strong as the interest rates stablize and eventually drop.
Healthcare - This area will benefit from the requirements of supporting a large number of aging babyboomers. This has been talked about to death but is very evident.
Alternative Energy - Modern economies have come to their senses about the risks of being over-dependent on fossil fuels, so there is definitely a renewed interest in this area.
Ideas? Thoughts? Concerns? Please share them with us.
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