Editor's note: You've heard of "black swan" events... But this could be just as important to your investing future. Today, Rob Spivey, director of research at our corporate affiliate Altimetry, joins us to explain why... and to share the parts of the market you should be watching as these changes take hold.
A new variation on the "black swan" is emerging...
Black swans are unforeseen events that have a huge impact on the markets. The term was popularized by statistician and former options trader Nassim Nicholas Taleb.
The COVID-19 pandemic is a prime recent example of a black-swan event. Nobody could have predicted the pandemic in advance and been totally prepared.
But in late 2021, think tank the Atlantic Council released its own term to define similar types of events... It calls them "snow leopards."
According to the council, snow leopards are known – but overlooked or forgotten – events that could potentially change the world. Technological developments or new innovations could be good examples.
These developments are often known to the public... but they remain underappreciated while the work is still in progress. In the end, they result in life-changing innovations.
Many of these events go hand in hand with the most important investment themes taking shape now. So let's take a look at how they intersect – and what that means for your portfolio.
Snow leopards are distinct from black swans in one key way...
The Atlantic Council describes a black swan as "an extreme event with no historical precedent."
Unlike black swans, it says, a snow leopard "does not have to be a single discrete event at all." And there's plenty of information to foreshadow a snow-leopard event before it happens.
The Atlantic Council came up with six snow leopards to watch for in 2023...
- Tightening algorithm regulation
- Corporations distancing themselves from China
- The battery revolution democratizing electric vehicles
- A labor movement driven by online-platform workers
- The potential of geoengineering
- Improving relations between Japan and South Korea
Each of these snow leopards has a lot in common with our top investment themes at Altimetry.
For example, both corporate separation from China and Japanese-South Korean collaboration point to a larger outcome: We expect to see more countries diversifying their supply chains away from China.
We've been pounding the table on the "supply-chain supercycle" for months. This is our term for the wave of investment in U.S. infrastructure as we bring manufacturing back to our shores.
The pandemic brought to light the downside of outsourcing and offshoring. Factory shutdowns led to massive shipping delays, causing all kinds of product shortages worldwide.
It also brought the political differences between the U.S. and China front and center. Corporate America is concerned that these disagreements might make long-term business dealings difficult.
As corporations rebuild their supply chains away from China, expect stronger ties between the U.S. and its allies around trade.
In a similar vein, the tech sector is changing... and fast.
The Atlantic Council believes tightening algorithm regulations and the rise of the tech-enabled, platform-based labor force will mean big changes for the industry.
We agree. Tighter tech regulations may be just around the corner. It's a sector we're approaching with caution right now.
We've also been following the battery revolution. The world is moving toward greener energy... And that's going to require a big leap in energy-storage capabilities.
The U.S. leads the way in innovation, research and development, investments, and technological breakthroughs. It will be one of the biggest winners of this trend.
It's easy to ignore change when it's not right in front of our faces...
But snow leopards will likely have a big impact on your portfolio in 2023. It's important to keep them in mind as an investor.
These big changes often lead to the biggest moneymaking opportunities. Consider how snow leopards might alter the global economy... and how you can best prepare your portfolio.
Editor's note: Right now, a specific set of stocks is positioned to soar. These companies fit a strict set of criteria... designed to outperform no matter what the market is doing. It's a formula that our corporate affiliates Altimetry and Chaikin Analytics teamed up to create. And the results so far are impressive...
Of the 17 stocks currently on this recommended list, roughly half are up double digits in less than five months. Many of them have the potential to soar 100% or more from here. If you want to learn more, be sure to check out their latest presentation... Click here to get started.
"Don't blindly trust that management or the government is looking out for your interests as an investor," Joel Litman writes. A lot of folks miss crucial details that could tank their portfolios – especially when it comes to certain companies... Learn more here: Know the 'Key Players' of Your Investments.
"Your first task as an investor is to identify sources of fragility in businesses and make sure you have minimal (and preferably zero) exposure to them," Dan Ferris writes. Part of this is understanding a key concept for investors. It's called antifragility... Read more here: How to Find Stocks That Thrive in a Bear Market.