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As we enter 2020, long term investors are thinking of investments for the next decade rather than just for the next year. In that regard, we noticed an interesting snippet in Market Watch. They believe that some of the best investments for 2020 and beyond are offshore and in India in particular. Their rationale includes the fact that two-thirds of their 1.2 billion person population is 35-years-old or younger. The point is that anyone who finds ways to sell to this growing pool of consumers will do well into the distant future. This will be happening as the US-China trade war enters a more-permanent phase.
Will Last Decade’s Winners Continue Be Good Investments?
The sort of reasoning needed for picking long-term winners is not the sort of thinking that investors use for predicting quarterly swings in stock prices. Besides thinking about the global struggle between the USA and China for hegemony and growth in countries like India, what are some other things to take into consideration for picking decade-long winners?
CNBC notes that last year the two tech titans, Apple and Microsoft, outpaced everyone else in contributing to the growth of the S&P 500.
Apple and Microsoft, which surged 85% and 55% this year respectively, together accounted for nearly 15% of the S&P 500′s advance in 2019, according to S&P Dow Jones Indices. Their influence on the cap-weighted index this year is greater than the next 8 biggest contributors combined. Through Monday, the S&P 500 was up 28%.
Apple sold for $30 a share in January of 2020 and starts 2021 at close to $300. It offers a 1% dividend which, if you had purchased your shares in 2010, would be a 10% dividend on those shares. Microsoft passed into 2010 at $28 a share and sells for nearly $160 a share as we begin 2020. Its dividend yield is 1.3% making that a 7.5% dividend on share value when purchased a decade ago.
Both of these companies are technology leaders and have broadened their products and services in efficient and profitable ways that are likely to remain profitable going forward. As such, they both have strong intrinsic stock value despite years of impressive gains. If you are looking for stocks to invest in for the next decade, or longer, these are both solid choices.
Where Is the Smart Investment Money Going?
We periodically look at the World Bank’s information on foreign direct investment. This information does not tell you which individual stocks to pick but rather which countries are attracting investment capital. What stands out in the most recent report is that direct foreign investment is down almost everywhere with the notable exceptions of South Asia and Vietnam as well as Indonesia in particular (as the anywhere but China movement takes hold). And, India is up as well as foreign investors appear to be looking at the demographics of India and potential profits.
Investing Offshore with ADRs
If you want to put part of your investment portfolio to work outside of the USA, the best approach (since you probably don’t speak a lot of foreign languages) is to use American Depositary Receipts. You can find a list of Indian ARDs on Top Foreign Stocks. Likewise, a list of Indonesian ARDs is available as well. When you pick the top-level ADRs, these companies abide by the same reporting requirements as stocks on the NYSE and NASDAQ which makes fundamental analysis possible.