There’s a lot of talk about these so-called megatrends, but sometimes I wonder what’s so special about them. The world has always changed… simple (perhaps even boring) jobs are automated and so on.
Sometimes it feels like people’s greed drives them to buy “unfinished” companies that lag behind, in the manner of value investing. Yet, in the market, it’s the creative, big, and agile ones that “waste” money and play around with technology that succeed 
Megatrends are just a buzzword that all “on the pulse” analysts and investors are supposed to throw around. Many places trumpet that you should invest in megatrends. But if we assume markets are efficient, it should be all the same whether you invest in that megatrend or not, because the megatrend should already be priced into the stock. In reality, with that kind of hype, megatrend companies can easily become overvalued, like in the tech bubble.
I wouldn’t quite call it a buzzword yet, although the word megatrend is sometimes used as a buzzword (along with platform, everything is SaaS, blockchain.. ;D).
Long-term megatrends provide tailwinds for companies for years or decades. Of course, the market prices a lot in, but rarely perfectly: few investors seem to look at things from a perspective of more than a couple of years..
Usually, if an industry is driven by a megatrend, there are also many players in the industry competing for the same trend. So, in relation to the megatrend, there is unlikely to be significant benefit for the investor. However, one could think that all companies within a megatrend will certainly grow relatively more driven by the trend than some dying industry, so the appreciation gained through growth naturally supports the profitability of the investment.
A glaring and illuminating example of this pricing was Nokia’s recent pricing. As Mikael often stated, investors mainly looked at the upcoming quarter, not the underlying “megatrend” like IoT, 5G investments, etc. → Even for me, with only a few years of investment experience, it was a surprise how pricing errors sometimes occur even in large companies.
One could throw in the cliché “the importance of stock picking is emphasized” here. But of course, competition will intensify sooner or later, and eventually, the amount of investment might become excessive. First movers and companies capable of continuous change are in a strong position.
If investing according to megatrends were a good idea, then investing in the healthcare sector would be the best strategy. We all get sick and eventually die. Pharmaceutical companies & healthcare. But when you look at Pihlajalinna and Orion, they haven’t been very good investments looking back 4-5 years. What do you think are the best megatrends right now?
Digitalization (incl. machine learning, robotics, etc.), urbanization, automation (since ~10,000 B.C.!), population aging, and climate change should probably be tackled (huge problem = huge opportunity).
What industries aren’t included in megatrends? Don’t all industries adapt to a changing society? It’s up to the companies themselves which ones succeed and which don’t. It’s still about finding those successful companies. Investing purely in a megatrend is not an automatic path to riches. The risk, of course, for companies is that they don’t adapt to the environment, but that risk equally applies to those companies currently considered megatrend companies.
What you said is so true. I don’t think traditional media will be eliminated with digitalization; instead, they’ll adapt by introducing paywalls for their digital services. There’s no getting around the fact that digitalization has taken advertising revenue from traditional media, but even that could have been prevented if media outlets had reacted to digitalization more quickly.
That’s right, merely going against the current with a visionary approach can turn out to be a costly rush. It’s important to keep up with the times or possibly be a little ahead. Especially older generations are accustomed to consuming traditional non-digital content… and for some, digital doesn’t touch them enough to break their routines!
Right. What digital skills do you think young adults or young people, in particular, should learn and master right now? Besides starting a laptop, buying a phone plan, and using the internet, what specifically will one need to know in normal working life 10 years from now, coding?
I thought this news would fit well in this megatrend thread. Everyone has probably been aware of the upheaval in the automotive industry, but now, in one large market, the due date for change has been brought forward.
Now to think about who benefits from this and who will be harmed.
What does the forum predict as its winner or even just a contender for the next decade?
My personal prediction for at least a reasonably successful company is NextEra Energy. The company is the world’s largest producer of renewable energy from solar and wind, which has grown steadily for at least the past 5 years and is expected to grow by about 7% annually for the next 5 years.
This is the first time I’ve ever done any “analysis” of any company, by the way 
Megatrends have become increasingly important among investors in recent years. Are they needed? Well, megatrends are broad, global phenomena that affect society, the economy, and the markets.
Using megatrends in investing can be useful, as they can help identify future growth sectors and companies that benefit from these phenomena. For example, digitalization, climate change, population aging, and sustainable development are megatrends that affect many different industries and provide opportunities for investors. But hey, don’t take this too seriously! Following megatrends doesn’t mean you have to wear a dress shirt and stare at numbers all day long. You can follow megatrends casually and in your own style. Read the news, follow social media, talk to friends, and gather information about the world around you. And most importantly, always keep a level head in your investment decisions. Don’t just jump on the trend bandwagon; instead, carefully research the companies and sectors where you see potential. Also remember to diversify your investments across different industries and companies to avoid taking too much risk.
All in all, megatrends can be a good addition to your toolkit as an investor, but remember to keep things relaxed and make decisions logically. Good luck with your investments!