There is an old adage, “the trend is your friend”. It is applicable to many things in life and particularly investing. There are patterns of human behavior that affect the political economy in the form of trends. These trends can change the existing financial ecosystem diminishing some types of investments while opening up new opportunities.
Some trends seem to pop up quickly and take off unexpectedly within a few years. Cell phones, Facebook and Amazon would be examples. Some may be in part confrontational, such as Uber and legal marijuana. If you catch a trend early on or at an opportune time you can make a lot of money. The timing can be important with these short term trends as some turn out to be good while others not so much. Bitcoin, presently, would be an example of the latter. The conditions that create a trend may not be readily apparent so prescient recognition can be quite an advantage.
Often, history is the process of different people using the same old methods of deception and violence to gain power, occasionally interrupted by natural events. Unfortunately, a lot of people have not learned the benefits of goodwill and cooperation. It’s sad but you need to be aware that there are long term trends that originate in the history of conflict. They can last for very long periods of time. There are people who benefit and those who are adversely affected depending on the resulting social and political system.
To put this in perspective:
Consider the beginning of America. As the colonists pushed out the native Indians, economic development started to spread and then jumped after the Revolutionary War. The long practice of slavery helped the South build itself into an agricultural powerhouse.
The Spanish and Portuguese took huge wealth from South America that enabled them to dominate Europe and global shipping.
When the U.S. decided to establish more trade with Asia, it didn’t send diplomats. In 1853, it sent Com. Perry and several navy warships. Anchored in Tokyo Bay, they threatened the Japanese into an agreement. As with the British in China and India, this led to resentments. Trade then jumped again after WW ll.
In 1893, Hawaii’s monarchy was overthrown by a group of American businessmen and associated sugar planters. This became a great investment for the Dole family and others and eventually resort hotels.
At present, many nations are in the process of starting both peaceful and potentially confrontational long term trends. China is a good example. Their Belt and Road project is creating many businesses across the globe while at the same time they have built islands in the South China Sea and put military bases on them.
Thankfully, there have been long term trends that did not rely on serious confrontation. The establishment of fair laws of justice, general tax policies, national education systems and immigration are good examples of economic progress for all and investment opportunity for most.
Short term trends can bloom and then mature within a relatively short time frame. Historically, long term trends can present a continuous flow of investment opportunities.
Reflect on history and its effects,
Examples to help identify long term trends:
International power / military strength
Political system / fair jurisprudence
Political communication / media exposure
Public philosophy and sentiment
Cultural phenomenon
New technolgy
Industry developments
National debt / currency manipulation
Elections
For further insight on this subject, read:
INVESTMENT DILEMMA, by Joseph Testa Amazon, web booksellers
Territory: Trade & Tactics, www.ReasonAtRisk.com 10-12-2018