6 HOT Global Trends You Should Invest In Now: ENERGY EFFICIENCY OR RENEWABLE ENERGY? (3)

Energy efficiency and renewable energy are flip sides of the same coin. They are two means to the same end we humans desire: a substantial and sustainable reduction in our consumption of fossil fuels, which we blame for global warming.

Energy efficiency technologies (EETs) reduce our fossil fuel demand while renewable energy technologies (RETs) replace our fossil fuel supply.

Which of these two techs will gain more traction over the coming decades, and how can you as an investor best position yourself to profit from this drive to save the planet? This article helps you decide.

There's little doubt that we humans need to ditch fossil fuels. However, this is proving to be a massive challenge.

According to BP's Statistical Review of World Energy 2012, fossil fuels still dominate global energy consumption, with a market share of 87%, while renewable energy accounts for only 2%. By 2030, these numbers are projected to be around 81% and 6% respectively.

So we won't be totally ditching fossil fuels anytime soon. Sorry tree-huggers.

Instead, what we'll continue to do is reduce our consumption of these fuels using:

• A "supply-side" solution of replacing them with renewables; and/or 
• A "demand-side" solution of becoming more energy efficient.

Unfortunately, substituting renewables for fossil fuels on a massive scale is not going to happen because of the following factors:

• Lack of International Trade: One big reason we consume so much oil, natural gas, and coal is that these fuels are internationally traded. This makes it easier for governments and corporations to manage their supplies. Conversely, you can't transport the sunshine from the Californian desert to Siberia;

• Single Use: While the use of say, natural gas, cuts across many industries like manufacturing, transportation, and electricity generation, renewables are used primarily in electricity generation. And even in electricity generation, renewables have to compete with  fossil fuels;

• Subsidy Burden: Governments around the world continue to heavily-subsidize the consumption of renewables, despite rapid reductions in the production costs of some RETs like solar and wind. This subsidy dependency suggests there is low "natural demand" for renewables. When these subsidies go, and they will have to go at some point, the artificial demand for renewables may fall off the cliff.

So the supply-side solution is constrained.

Fortunately, energy efficiency is not burdened by the aforementioned factors.

Moreover, studies show that EETs are more cost-effective to deploy and pay back faster than RETs. Some studies even say that EETs cut more carbon emissions than RETs.

I'm not saying RETs are doomed. Far from it. However, as an investor you should know that in order to accelerate the reduction in global carbon emissions, policy makers around the world are likely to shift their focus from RETs to EETs in the coming decades.

Therefore, the best way to play this hot global trend of tackling global warming is to buy and hold an energy efficiency company, or a clean-tech exchange-traded fund (ETF) with considerable holdings in energy efficiency companies.

Now, during my research for such a stock, I avoided large-cap companies like ABB (ABB) and Johnson Controls Inc (JCI) because they were not "pure-plays" on energy efficiency, i.e., they were involved in other businesses i'm already exposed to through other stocks i hold.

Rather, I zoomed in on a small-cap U.S. company called Ameresco, Inc. (AMRC), which primarily designs, manufactures, and deploys EETs to a diversified customer base. As an icing on the cake they also have a smaller RETs business. So the stock gives me exposure also to renewables.

Fellow individual investors. Right now renewable energy is all the rage. But energy efficiency is about to come out of the left field. Hop on this money train now before the bandwagon arrives.


This is the third in a series of posts that examine six hot global trends you should invest in now. In the next blog, i examine the hot trend of Scarcity of Freshwater.

HOW MY CURIOSITY ABOUT 3 SMARTPHONE APPS GOT ME A TRIPLE-DIGIT GROWTH STOCK

This is a story about how my effervescent curiosity led me to a little-known small company that may become the IBM of mobile application software in as little as five years.

Before i pick the stock of a company as a long-term investment i always do some fundamental research.

Sometimes, however, i go with my gut instinct first. I do this when the company I'm investigating is in an industry i perceive to be "futuristic" and highly growth-oriented.

This gut feeling got me into the stock of Chinese mobile security firm NQ Mobile Inc. (NQ), already up 66% year-to-date (YTD) as of closing yesterday.

There's no doubt that the future is mobile.

Therefore, for the past year i was already on the prowl for a stock to ride this hot global trend of mobile consumption like a horse whisperer. I didn't think it would be Microsoft (MSFT), which i dumped two months ago.

One day in October 2012 i noticed an in-app cross-selling ad linked three of the apps i used the most on my android phone. This aroused my curiosity so i dug deeper.

Boom! Lo and behold, the three apps - NQ Mobile Security, NQ Mobile Vault, and NQ Android Booster - were made by the same developer.

Wow, i reasoned, since these three apps did what they were supposed to do excellently, their developer must have an ace up its sleeve.

I quickly googled NQ and read EVERYTHING i could find on the company. I was even tempted to call China or a Chinese friend to ask about the company.

Luckily at the time, NQ was just over a year old as a publicly-listed company and was trading well below its IPO price. I thought that was weird because all my research indicated this young company was going places in an industry that was exploding.

I jumped into the stock without delay and now this small-cap tech company is 6% of my portfolio and already my biggest percentage gainer YTD.

I suspect NQ Mobile will eventually become the IBM of mobile security or it will be snapped up in the not-so-distant future.

Fellow stockmarket investors, you don't need your commissioned stockbroker to pick stocks.

Just tune in to changes around you and around the world. Then pick companies you believe are best positioned to exploit these changes going forward.

With a little intuition you can find a gem in the rarest of places.

WHY SAVING IS FOR LOSERS

The banks will hate me for saying this but it's nothing personal.

No one knows tomorrow, so by all means put some money aside for EMERGENCIES.

However, if your goal is to grow this stash of cash at a decent clip over more than three months, then the worst thing you can do is stash your cash in a bank savings account.

Why?

Because of INFLATION.

Inflation is simply the general rise in the cost of goods and services from one period to another.

When you were thinking of saving you probably didn't even remotely think about inflation right?

Please do so from now on.

You see, when inflation is higher than the interest rate on your savings, what you're essentially doing is lending money to the bank at a cost to you. It costs you because inflation "devalues" your savings.

Think about that for a minute.

It's like you lend someone money (the equivalent of your savings) today at a very cheap rate (the interest rate on your savings). Then by the time they pay back all your money (the savings plus the interest you earned) the whole thing is now worth less than what you originally lent them.

That's how inflation turns savers into losers.

Rather than dump your money in a savings account, which just makes your bank richer at your expense, consider inflation-protected instruments like Treasury Inflation-Protected Securities (TIPS), inflation index-linked Bonds, Money Market accounts and Certificate of Deposits.

So here's the bottom line: ALWAYS CHECK THAT THE INTEREST RATE IS HIGHER THAN INFLATION BEFORE YOU PLUNGE YOUR MONEY INTO A SAVINGS ACCOUNT.

All that said, you should know that nothing beats the stockmarket for growing money, inflation-protected over the long-term. Not even real estate.

6 HOT Global Trends You Should Invest In Now: AGING POPULATION (2)

The world is aging, fast!

According to the United Nations, by 2050, the number of older people (60 years or older) in the world will exceed the number of young people (under 15) for the first time in history. By then, senior citizens will make up 21% of the projected world population of 9 billion people - that's like the whole of China and Europe today full of senior citizens!

Wait, there's more.

In industrialized countries, the UN says older people had already outnumbered young people by 1998! Furthermore, according to the Organization for Economic Cooperation and Development (OECD), by 2050, senior citizens will constitute more than 30% of the population of Japan, Spain, Italy, and Germany. For Japan, they will be over 40%, the highest in the world.

The world is graying fast because people are living longer just as they are having fewer babies - whether fewer babies are being born due to people's choices or to decreasing fertility is not so clear.

One thing's for sure. This rapidly aging global population will fuel a huge, unrelenting demand for long-term healthcare around the world, giving you the investor the golden opportunity to make a killing over the coming decades.

You should know that while demand for healthcare will boom worldwide, the United States spends a larger percentage of its Gross Domestic Product (G.D.P.) and more per capita on healthcare than any other country. This is unlikely to change over the coming years.

Therefore, you really should have some exposure to the U.S. if you're serious about making money from the growing global demand for healthcare.

To ride this healthcare money train all the way to the bank you should consider investing in these four areas: Drugmakers (Pharmaceutical and Biotech companies), Medical Device Manufacturers, Healthcare IT Software Developers, and Healthcare Real Estate Investment Trusts (REITs).

DRUGMAKERS

Investing in drugmakers is the most obvious play on the aging world population.

Pharmaceutical companies and biotechnology companies both make drugs. However, as an investor you should note these differences between them.

The drugmaking business is a notoriously hit-or-miss business.

If you're lucky to invest in a drugmaker that delights with a string of "blockbuster" drugs, then you can make a lot of money. Last week, Bloomberg reported that Swiss drugmaker Roche, which makes the world's best-selling cancer treatment, has minted at least 12 Swiss and German billionaires.

On the flip side, a "flop" drug can be very devastating for the drugmaker and your investment. Therefore, don't get into drugmakers unless you can stand the Russian Roulette nature of the business.

The 800-pound gorilla that may totally put you off this space though is "generic competition". Once a drug patent expires, even a dog can make a copycat of the drug and sell it over the internet.

Generic competition can crush the long-term return on your investment in drugmakers because the tenure of patents seems to be on a downward trend. This means drugmakers are increasing likely to have less time to just recoup investments in their drugs, let alone make any profit off them.

MEDICAL DEVICE MANUFACTURERS

Here's a great description of a medical device by Wikipedia.

If generic competition puts you off drugmakers, then consider medical devicemakers (note, however, that some pharmaceutical firms also manufacture medical devices).

A majority of medical devicemakers around the world don't make just medical devices. They have other businesses to fall back on as this space is as competitive as the drugmaking industry.

North American companies dominate this space, and you can find both small and large players as picks. The biggest global medical devicemaker by revenue is American company Johnson & Johnson (JNJ).

All the research I've seen forecast the growth of the global medical device market to outpace that of the pharmaceutical drugs market for years to come.

I've no positions in any medical devicemaker.

HEALTHCARE INFORMATION TECHNOLOGY (HCIT) VENDORS

Another way you can board the money train of aging global population is to invest in HCIT software developers.

Obviously, medical devices come with integrated software to optimize their uses. That's not the type of software I'm talking about.

What i mean by HCIT sofware are Electronic Healthcare Records (EHRs) software. These software allow medical professionals and facilities to jilt paper (phew!) and electronically capture, digitize, and share medical records of patients across multiple platforms (web, desktop, mobile) and multiple patient engagement points (hospitals, labs, doctor's office, etc.).

The HCIT software industry is highly fragmented across many lines in most countries so you may have a hard time picking a stock wherever you are. In the U.S., the biggest healthcare market in the world, there are over 350 EHRs software vendors of various sizes.

The industry's future seems to be tied to the growth of mobile devices. Therefore, your best approach to picking a stock may be to find a vendor with strides or ambitions in mobile. This is how i got into the voice recognition technology and document imaging company Nuance Communications (NUAN).

The American company is more known for its voice recognition and language translation products but its HCIT business accounts for 30 - 40% of its annual revenue.

HEALTHCARE REITS

As the world's number of senior citizens explodes, developed economy countries will need more of these healthcare properties: Senior Housing Facilities, Skilled Nursing Facilities, and Medical Office Buildings (MOBs).

Developing economy countries will most likely need more MOBs and hospitals because most people in these climes tend to look after their elderly at home. Therefore, senior housing facilities are not common.

Healthcare real estate investment trusts (REITs) own and/or manage these healthcare properties.

REITs are my favorite way to play this hot trend of aging global population because they give you exposure to the two most popular asset classes of stocks and real estate. Throw in the recession-proof nature of healthcare and you're good to go.

Furthermore, you get steady income as REITs typically have to pay out a majority of their profits as dividends to investors.

The healthcare REITs space in most countries tends to be highly concentrated in a few big players and fewer small players. Therefore, you may not have to sweat so much to find a good pick. I used to own Nationwide Health Properties (NHP) until it was acquired by another American REIT, Ventas (VTR), in 2011.

I'm still on the prowl for a small-cap U.S. healthcare REIT. Wish me luck.

Remember, always do your own research before you get into any stock.

Of the six hot global trends discussed in this series, the aging global population is the most sustainable. People will get old and seek healthcare. There's nothing anyone can do about it.

This is the second in a series of posts that examine six hot global trends you should invest in now. In the next blog, i examine the hot trend of Energy Efficiency/Renewable Energy.

6 HOT Global Trends You Should Invest In Now: MOBILE CONSUMPTION (1)

 Mobility is the new normal.

Although sustainable mobile consumption in the future may happen on other devices like wrist watches, smartphones are going to be with us probably till the Martians invade.

Whether in Africa or America, people increasingly want to run their lives on the go, and this is driving an explosive growth of the smartphone, first introduced by Finnish company Nokia (NOK) in 1996.

There are many ways to board this money train.

The most straightforward way is to invest in companies that make the actual handsets - companies like Apple (AAPL), Samsung, Blackberry (BBRY), HTC, Nokia (NOK), etc. However, when it comes to technology investing, i prefer "software" stocks.

If you're also biased towards software, then the smart way to play this trend is to zoom in on companies that make software components for the handset makers. These components typically tackle the three crucial aspects of mobile consumption: Privacy, Security, and Productivity.

Productivity probably determines the buying decisions of most smartphone users. Therefore, in this space you can consider Israeli company LivePerson (LPSN). They make engagements like chat, click-to-call, and email easy on smartphones, so they're big on productivity. So is Nuance Communications (NUAN), the company behind the speech recognition technologies in Apple (SIRI) and Samsung phones. I'm long Nuance.

Productivity and privacy are important but i think the sweet-spot of mobile consumption is security. You may not want to chat with Whatsapp or may feel uncomfortable with mobile banking, but would you want to take a chance with malware squatting on your phone?

That's why I'm also long Chinese firm NQ Mobile Inc. (NQ). NQ is primarily a mobile security firm, but as it turns out, also provides privacy and productivity services in over 100 countries worldwide. This company, which identifies and neutralizes over 75% of all global malware threats before any other company in the world, is adding 400,000 new customers a day. It's currently trading below its 200-day moving average, so this is a good time to long the stock. I expect NQ to ride this wave of exploding mobile consumption high.

This is the first in a series of posts that examine six hot global trends you should invest in now. In the next blog, i examine the hot trend of Aging  Population.

6 HOT GLOBAL TRENDS YOU SHOULD INVEST IN NOW!

40 years ago, Motorola had not invented the cellular (mobile) phone.

Today, wherever you are in the world, you've probably heard of the mobile phone - unless you're a member of a recently discovered ancient "tribe" in the Amazon rainforest. There are now almost as many mobile subscriptions in the world as there are people.

Imagine if you knew today what could be a business phenomenon like the mobile phone 20, 30, 40 years from now. Even better, imagine if set yourself and/or your dependents up now to make money from such a phenomenon.

Well, fellow self-directed (retail) investors, one way to discover future business gems is to research and study trends. A trend simply is the progressive tendency or inclination of something.

I have identified the following six global trends that are facilitating the emergence of companies and businesses likely to make their investors very rich years from now:

1. Mobile Consumption
2. Aging Population
3. Energy Efficiency/Renewable Energy
4. Scarcity of Freshwater 
5. The Age of Robotics
6. Frontiers Exploration.

WHAT’S WRONG WITH NIGERIAN STOCK MARKET REPORTS?

The short answer is that they are useless for stock market investors.

Whenever I read a local newspaper report on market activity on the Nigerian Stock Exchange (NSE) I’m just frustrated. All you get is that the market gyrated by some basis points and who the gainers and losers were. That’s it.

There’s hardly any mention of what moved - or could have moved - the market or a stock. Nothing inspires or motivates you to look deeper into the market or a stock for possible investment. Nothing makes you curious about stocks or the stock market. It’s like the journalists are too lazy to write something insightful.

For example, look at the stock market report for Monday, February 11, 2013, from Nigeria’s Business Day. Now compare that report to this report for Tuesday, February 12, 2013 from Reuters on U.K. market activity. See the difference? Nigerian commentators don’t try to connect the dots for uninitiated readers.

It’s no different when I hear a market report on radio.

Maybe this lack of easily-accessible and insightful stock market information is why most Nigerians don’t care about investing in stocks, which remains one of the easiest and fastest ways to make money wherever you are in the world.

I’m amazed at the increasing number of Foreign Exchange (forex) trading seminar ads I see in Nigerian newspapers. I doubt Nigerians trade forex in droves. Nonetheless, if Nigerians can take to forex trading then they can take to stocks trading because the forex market is a lot more complex than the stock market and Nigerians love simplicity.

Nigerian stock market commentators and writers need to do more than report statistics. The Financial Times and The Wall Street Journal are dailies yet they certainly try to get behind the numbers.

The regulators should take note. There’s no point in the Central Bank of Nigeria and/or the Securities and Exchange Commission compelling companies to list on the NSE when a majority of Nigerians don’t have the financial education to invest in the stock market.

I became a self-directed investor in 2006 - a year after I got out of B-School in the U.S. At the time I knew nada about investing in stocks, other than what I’d learned at B-School.

I learned the basics of stock market investing mostly from reading financial dailies and periodic magazines – Fortune Magazine is great for investigative journalism. I also frequented educational sites like the Motley Fool (www.fool.com) and Investopedia (www.investopedia.com).

I was so excited about what I was learning that I started this blog to share as I learned.