Investing in demographic changes

Investing in demographic changes

Investing in demographic changes

how do you identify those areas on which to build a long-term investment strategy?

Investing in demographic changes

Demographics and social change; climate change and resource scarcity; technological innovation; urbanization. These are the four Mega Trends at the basis of what one may call a thematic approach to investing. A method whose benefits are clearly stated and explained in the book One Million for my Daughter by Italian trader Pietro Di Lorenzo.

The volume has many tips and is worth reading. To give you a hint on how to modulate investments on these trends, let’s take a closer look at each of the them. You’ll get a taste of what their transformative potential is.

Demographic changes

Among the key demographic changes we have:

–         expanding population;

–         growing number of people with long-term chronic conditions;

–         expensive infrastructure and increased investment in Med-Tech;

–         rising labor costs and staffing shortages;

–         growing demand for broader ecosystem services;

–         aging population.

The topic of aging population is particularly hot in Italy, which leads Europe (together with Germany) among the countries where the average age is around 47. The demographic decline in the most industrialized countries is accompanied, however, by a boom in developing countries. It is expected that by 2100 50% of the world population will live in India, China or Africa.

Both ageing and the resulting decline in the labour force will require radical social and technological changes in the world of work.

What possible consequences?

In Japan, the combination of an ageing population and low levels of immigration has caused a mismatch between labour supply and demand. Japan is currently one of the biggest buyers (and producers) of robots: for every 10,000 people hired, there are 308 robots at work.

However, while automation can be an effective response to the needs of countries experiencing a strong labour force contraction, it is certainly a problem for younger economies, where it could swallow up jobs. The accelerator on this trend has certainly been Covid-19.

It follows that one seemingly profitable investment opportunity is in automation thus in Artificial Intelligence and Machine Learning.

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Pietro Di Lorenzo