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I keep a list of powerful social and demographic trends, and their likely beneficiaries, in my office.
I am well aware, for example, of things like the emerging field of artificial intelligence, the growing need for infrastructure, and the wild American spending on pets.
Not to mention the ever-increasing global middle class, the aging of the population, and other massive shifts that will be a source of phenomenal profits in the years and decades ahead.
At first glance, one would think that relying on my Sabermetric data to select stocks would mean that I miss many of these trends.
Nothing could be further from the truth. I spend most of my days either running data screens and tests or reading.
I read across a broad spectrum of topics, including the financial markets, the global economy, and international politics. And I delve into industry-specific publications and academic papers on a wide range of issues.
Doing this allows me to develop a broader picture of the world and spot trends that will change the world and the markets.
On this list of trends in my office, I record the Sabermetric value of all the companies on my radar and the price level where they will become bargains.
When I find a great company at a bargain price in an industry that is experiencing powerful social and demographic tailwinds, it becomes difficult NOT to make money.
One of those industries is housing, and millennials are driving it…
As Millennials Leave the Big City, Expect Builder Stocks to Rise
I had an interesting discussion the other day with my son-in-law (the father of the world's most beautiful and exceptional granddaughter) about investing in these powerful demographic and social trends.
My son-in-law is Garrett Baldwin, and you may know him already from his contributions to Money Morning. He's an economist with more degrees than a thermometer.
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Our casual conversations over an after-dinner bourbon usually run the gauntlet of economics, stocks, finance, politics, and, of course, sports.
During this most recent conversation, Garrett and I were discussing a powerful trend that we see developing – one that is actually impacting him and his family.
It is no big secret that the housing market has not had a good year.
The gap between new and existing home sales is as wide as it has ever been. Along with this shortage of homes, we are seeing rising costs, higher mortgage rates, and a labor shortage in construction trades. This quadruple whammy is making it difficult for most folks to afford a home right now.
That's horrible news for builders. Just ask Wall Street. The conventional wisdom has analysts downgrading the homebuilders, and the big funds and institutions are selling shares of builders hand over fist right now.
The SPDR S&P Homebuilders ETF is down 20% so far this year, and some of the individual builders have gotten hit a lot harder than that.
Obviously that's horrible, and conventional wisdom says that investors should avoid these stocks at all costs. In the short run, that may be true. But over the long run, one developing trend could create enormous profits for those who spot it and jump in when the price is right.
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of "Max Wealth" and Heatseekers.