Did you know that the average period an investor holds onto a particular stock was eight years in the 1960s — but has dropped to just six months now?
Morgan Stanley head of global thematic & public policy research Michael Zezas cited this remarkable statistic to demonstrate the value of long-term horizons.
"Most investors would probably do better to focus on 'secular' themes, which are major trends that play out over a number of years and affect multiple sectors, rather than try to outwit the market on quarterly earnings or economic releases," Zezas said in a Morgan Stanley research blog post.
He identified three such trends that investors should look for when screening for ASX shares to buy:
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Supply chains will be 'rewired'
Zezas claimed that his team recognised as early as five years ago that lowest cost was no longer the only criteria for businesses setting up supply chains.
Geopolitical risks were starting to be factored in.
"Morgan Stanley first flagged this secular trend in 2018 and believe it became the consensus following Russia's invasion of Ukraine and the west's policy response, which created fresh trade barriers and incentives to realign supply chains."
An example of this is the US taking measures to protect its intellectual property in the semiconductor industry from China.
"The market may not fully grasp the practical implications of this rewiring," said Zezas.
"It raises questions around how long it will take, whether it will lead to higher inflation, how such a transition will be financed and which companies and countries could benefit or suffer because of it."
Journey to net zero carbon emissions
It seems all of the developed world is making efforts to transition to a cleaner global economy.
Zezas reckons it's a tough ask.
"To reach net zero by 2050, carbon emissions would need to start falling by about 8% per year," he said.
"Even during 2020, when COVID-19 lockdowns limited mobility and global GDP shrank, emissions fell only 5%."
For each stock considered for addition to the portfolio, investors will need to carefully determine whether the underlying business will be a winner or loser out of this transition.
"One obvious beneficiary has been and will likely continue to be the clean tech industry," said Zezas.
"With the recent passing of the Inflation Reduction Act [in the US], which provides significant federal support for wind, solar, hydrogen, energy storage and carbon capture, there is potential for long-term growth in this sector."
Technology disruptions to be broader and deeper
Zezas admitted the spread of technology is nothing new.
But what's different now is that tech is starting to touch industries that were out of reach in the past.
"Fragmented industries or those with high regulatory barriers have typically not reaped as many benefits from tech-driven productivity, but suddenly look poised for a multi-year transition via tech diffusion."
Embedded finance revolutionising the consumer experience, tokenised assets providing financial inclusion, and health data ownership reform were named as examples of how tech was disrupting areas unimaginable decades ago.
