Investors are told all the time to buy ASX shares with a long horizon. Think long term, ignore short term fluctuations in the market.
But so much of the published stock tipping advice is designed for shorter timeframes.
This could be because professional investors are forced to chop and change more frequently. Performance of their portfolios are scrutinised on a monthly, quarterly and yearly basis.
They have to avoid a potentially career-killing period of underperformance. They can't afford patience.
Just occasionally these professional fund managers reveal their honest thoughts about what the best long-term investments could be.
These are the stocks that one could just hold onto for years, even if they have a bad month, quarter or year.
The team at Firetrail, in a memo titled Three themes that will shape the coming decade, did exactly this earlier this month.
In the document they laid out what they thought were the best opportunities not over the next year, but the next decade.
The Firetrail analysts identified three themes that they thought would have "vast, long-term impacts on economies": deglobalisation, decarbonisation and "de-dollarisation".
Some other professional investors would call these structural growth drivers.
According to the Firetrail team, these forces would be the "major drivers of stock market performance over the coming decade".
Image source: Getty Images
Deglobalisation: energy security over cost
Globalisation was the pre-eminent force in the international economy over the past few decades. The movement of goods, capital and even services across national borders became more and more unimpeded, raising the standard of living for its participants.
But something odd started happening just before COVID-19 struck the planet.
"The deglobalisation trend started to emerge in 2019 with the US-China trade war," read the Firetrail memo.
"The trend has continued ever since. Australia has had its own trade war with China, and the Russia-Ukraine war has highlighted the risks inherent with concentrated supply chains."
Firetrail analysts believe over the next decade both governments and the private sector will "prioritise supply chain security over cost". Businesses operating in "friendly" countries with political and legal stability would dominate.
Australia, as a stable democratic state, would reap the benefits.
"Australia also has the resources that the world needs. Not just iron and coal — but also uranium, gas and decarbonisation metals."
The Firetrail team, as an example of a beneficiary of this theme, named Santos Ltd (ASX: STO).
"An Australian natural gas and LNG producer, [Santos] is well positioned to benefit from higher energy prices as a result of increased global demand for energy security and lack of investment in traditional energy projects."
Decarbonisation: battery materials
The majority of the world is now making efforts to reduce carbon emissions.
The Firetrail team reckons Australia will again be "a major player" in this transition to net-zero.
And again our mining and resources companies will be the winners.
"While it would be fantastic to switch from fossil fuels to renewables today, technology and infrastructure still has some way to go… In the future, uranium and hydrogen could provide the world with near-zero emissions baseload energy.
"Under all scenarios, Australia is a winner. Australia has significant stores of coal, gas, and uranium, and is developing clean hydrogen technology."
To store cleanly generated energy, the world will also rely on powerful batteries.
"To make batteries, we need lithium, rare earths, nickel, cobalt and copper," read the memo.
"We hold Lynas Rare Earths Ltd (ASX: LYC) in our Australian portfolios. Lynas is the world's only rare earths producer of scale outside China and a key beneficiary of increased demand for energy security and battery minerals."
'De-dollarisation': a golden comeback
The last theme, which the Firetrail team named "de-dollarisation", is the global movement away from using US dollars as the reserve currency.
"Since 2020, US money supply has increased by over 40%, budget deficits are running at over a trillion dollars, and national debt is at elevated levels," read the memo.
"The result is higher inflation in the US, putting pressure on the US dollar's reserve currency status."
So will the world see another currency emerge as the standard for international trade?
"Our view is no. However, we can see a world in which a group of three or four currencies share dominance. These would include the US dollar, the Euro, and the Chinese Yuan."
So how does this affect investors? If multiple currencies start changing hands, the world still needs a reserve base.
"We believe gold can play that role," the Firetrail memo read.
"Gold was the world's reserve currency for 5,000 years. It was only usurped by the US dollar 40 years ago following the breakdown of the gold standard."
The resurgence of importance in gold will mean a windfall for producers of the precious metal.
"A greater role in world finance will put upward pressure on the gold price to the benefit [of] low cost, long life gold miners such as Newcrest Mining Ltd (ASX: NCM)."
