When you’re smack-dab in the hot part of earnings season, it’s easy to get bogged down with quarterly reports and stock fundamentals. But sometimes, it’s pays to take a step back from the flurry of numbers and estimates and just think — specifically, about the big picture.
For instance, ask yourself these questions: What’s the world going to be like in a couple decades? What things won’t change, and what things definitely will? What’s the forecast for the future? While they sound like nebulous questions, the answers have the potential to shape the markets for years to come.
Here are a few broader trends that look pretty certain — and how you can position your portfolio to profit:
#1: There Are a Lot of Old People
The elderly population is increasing at a crazy rate — according to the Census Bureau, the percentage of Americans older than 65 will jump from 13% in 2009 to more than 20% in 2050. You can thank an ever-innovating medical world that will keep baby boomers alive longer and longer.
The investing strategy is pretty simple: Most of those aging boomers eventually will need some sort of care — from health to housing. Although the Affordable Care Act has put a cloud of uncertainty over the near-term future of health care, it’s hard to imagine names like Eli Lilly (NYSE:LLY) and Pfizer (NYSE:PFE) won’t be relevant. Those stocks also pay nice dividends, increasing their power as long-term investments.
And, sure, aging folks say they prefer to get old and gray at home, but a lot of times that just isn’t possible. Which brings us to companies in the likes of Sabra Health Care REIT (NASDAQ:SBRA) and Omega Healthcare Investors (NYSE:OHI): Each draw in 90% of their profits from nursing homes and other properties aimed at elderly tenants. And like the pharma stocks, they offer fat dividends — both around a 7% yield at this writing.
#2: We’re Getting Fat
Depending on which study you’re reading, in the next 20 years, nearly half of the population will be obese — and health care costs for such a trend are expected to be around $550 billion.
Considering that obesity-related conditions such as heart disease, stroke, diabetes and several types of cancer are on the rise, you could go back to some of the health care stocks mentioned before.
But there could also be a growing demand for anti-obesity and diet pills. Arena Pharmaceuticals (NASDAQ:ARNA), for example, just got the first prescription weight-loss pill approved in more than 13 years. Vivus (NASDAQ:VVUS) followed up with its own green light, and Orexigen Therapeutics (NASDAQ:OREX) has a similar product in the works.
#3: Well, Not All of Us
A 2009 OECD study shows the number of people who are just a bit overweight is decreasing — overweight people are either “getting fit and dropping back down into the healthy weight category, or graduating to full fledged obesity or even morbid obesity,” as HealthHabits.com puts it.
And to stay healthy, more than half of U.S. consumers now regularly use some sort of dietary supplement. In fact, domestic spending on health supplements alone in the U.S. reached $28 billion last year, up from $23 billion a year earlier.