The world’s analysts are on edge as 2019 shifts into gear, and for a good reason: last year showed 90% of all asset classes on the market posting negative returns. This is in stark contrast to data on the same metric in 2017, which saw a mere 1% of asset classes ending in the red.
With some calling 2018’s market performance the worst it’s been in a century, the question on everyone’s mind is, Where should I place my money in the year to come?
As early as now, a handful of investments are poised to do well this 2019. We’ll run through the top three of them, exploring their history as investment opportunities as well as the factors that lend to their upward trajectory.
1. Pot Stocks Are On The Rise
With marijuana legalization sweeping North America, and Democrats holding the US House of Representatives, things are looking bright for the cannabis industry and stocks in related companies. As federal-level legalization of recreational marijuana begins to look like an eventuality for many in the United States, companies are vying to establish a foothold in the emerging market, with investors keeping a close watch on developments.
Unlike other fledgling industries, medical and recreational marijuana have a significant cultural head-start, with high levels of demand being a foregone conclusion. You needn’t look much further than California pot company MedMen (MMEN), which reported $6 million in sales for 2017 –and this is without an infrastructure for delivery and in-house pickup.
Today, all signs point to significant growth for the industry. As early as mid-2018, investors have been sifting through the set of new “pot stocks,” hoping to catch the next Amazon-esque success story. Notably, firms such as Canopy Growth Corp. (CGC), Cronos Group (CRON), and Aurora Cannabis (ACB) entered the year on a promising note.
While the industry is bound to face the same growing pains as any newcomer, few products have had as much pre-existing demand and access to sophisticated tools for marketing, logistics, and payment collection. Effectively, marijuana is today what beer was at the end of prohibition; with 2019 as its backdrop, expect pot stocks to take the market by storm.
2. Artificial Intelligence Will Be An Intelligent Investment
Artificial intelligence (AI) is the field of technology that deals with building computers that can perform the same set of complex tasks as the human brain. Instead of straightforward, programmer-assisted functionality, AI aspires towards more independent machines that can learn and adapt to large amounts of input.
AI isn’t a new concept, but recent years have seen a boom in its development and implementation. Advances in data science, neural network programming, and microtechnology make unassisted machine learning a promising new reality.
One of the more visible deployments of AI in recent memory would be Tesla’s self-driving cars. The company’s entire fleet of vehicles comes equipped with sensors that send data to the cloud, and this data is used in turn to refine their cars’ ability to navigate and respond to conditions on the road. In line with its tradition of putting data analytics at the heart of their business identity, Tesla’s approach to AI aspires to minimize the role of programmers in process.
While there are many pretenders using outdated tools and claiming involvement with AI, companies like Nvidia (NVDA), Apple (AAPL), and Alphabet (GOOGL) can be reliably counted among the pioneers in AI development. On the other hand, companies such as Netflix (NFLX) and PayPal (PYPL) lead the charge in terms of applying AI to their product lines.
As an interesting note before closing this item on the list, the data that powers AI shows just as much promise as its end product. Researchers at McKinsey and Co. speculate that the market for data generated by electric and self-driving cars could hit a $750bn yearly value by 2030 –a hefty sum for a pile of 1’s and 0’s.
3. American Millennials Will Propel The Housing Market
Despite mortgage rates that are expected to rise in the year ahead, analysts speculate heavy demand for homes among millennials in the US. The generation is noted for preferring mobile lifestyles and rental models over all-in property investment, but those old conclusions bear scrutiny now that the rate of young and first-time homeowners is experiencing an uptick.
The increase in millennial homeowners owes to a variety of factors. First and foremost is the simple matter of time: the millennial demographic is growing older, getting married, and nearing the point where settling down and investing in a single asset makes financial sense. With age also comes career advancement, and therefore an increase in purchasing power: more millennials can simply afford to play the housing game.
These are coupled with the number of mortgage lenders experimenting with friendlier lending policies and the big changes expected from the new UltraFICO score to make optimism in the US housing market a fair bet.
Make no mistake: millennials are still the same disruptive demographic as ever. The trend is significant, but it doesn’t upend years of market data and survey results. So while this won’t diminish the rental market by any means, real estate investors would be wise to keep an open mind to traditional housing.
For those who choose to invest in millennial housing, the same rules also apply. Your investment would go best with an agent or strategy that taps social media for reach and awareness, satisfies a market that knows how to do its homework, and gets creative with matching their doable price point.
2018 was quite the ride, and 2019 will likely be no different. Stability is hard to come by in today’s economic and political landscape, but as with any period in history, opportunities abound for those with the savvy to spot them.
While an upswing is highly likely after last year’s dismal performance, some trends are too promising to ignore. This is by no means a definitive list, but the three trends we’ve outlined above are worth following with interest.
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