As we enter the New Year and look back at the detritus of the old year it’s time to evaluate long term investment opportunities. Three categories come to mind for long term investing. These are United States infrastructure improvements, pharmaceutical research, and consumer goods. The new administration is going to pour money into infrastructure to create jobs. With an aging population any new regarding more effective medications will always be welcome and potentially profitable. People will always need soap, toilet paper, and other basic necessities.
Long Term Investments in the United States Infrastructure
The Obama administration has promised to pour money into roads, bridges, and other US infrastructure components in order to main competitiveness and especially to create jobs. Companies such as Caterpillar will benefit from increases in road construction. There have been calls for increased funding for road and bridges for years as the Interstate Highway System has aged. We don’t expect a new WPA but rather funding through the usual channels to revamp old infrastructure and put people to work. An endeavor of this magnitude will take years to complete and will reward patient long term investors.
Long Term Investments in Pharmaceutical Research
The overriding demographic in the USA is the aging population. With aging comes diseases of aging and the need for pharmaceuticals to treat these diseases. Whether it be the genetically engineered marvels of recent years or unique antibiotics discovered in nature, long term investing in pharmaceuticals that reliably treat diseases associated with aging will reward patient investors. Those interested in long term investing can expect rejuvenation of stem cell research when the Obama administration lifts restrictions on the use of cell lines. Research for cures to Parkinson’s disease, Alzheimer’s disease, and diabetes will proceed faster. The possibility of stem cell transplants providing a cure for long term heart failure increases the likelihood of longer healthier lives. Targeted investments in genetic pharmaceutical research will reward patient long term investors.
Long Term Investments in Basic Consumer Goods
Companies such as Proctor and Gamble do perfectly well in most economic times. People always need and buy basic consumer necessities. Those interested in long term investing in companies such as P & G and 3M will see dividends and a slow steady appreciation of the value of their portfolios. In general, banks and consumer goods do well during recessions. This time you can write off the banks, at least in the USA. Consumer goods companies will, however, probably provide patient long term investors with a steady return and appreciation.
Long Term Investments and Timing
For the time being put your capital where it will be safe and have a high probability of giving your long term investments a steady rate of return. When you think the recession is halfway over, and stocks start moving up, don’t move all of your assets at once. The old pros suggest that you leave a portion of your long term investments in something solid. This has always been sound advice, once again proven true in the last few months. Greed kills. Long term, patient investing can pay off if done with common sense.