I was thinking about things recently and as I am 35 years old and wanting to retire in my mid-50s, I was asking myself what can I invest in now that will potentially allow me to make extra-ordinary returns in the stock market over the next 10-20 years.  Put another way, what industries or technologies are going to play a large role in our lives over the upcoming decades?  My initial evaluation based on everything I have seen are as follows:

• Healthcare - Especially in the USA baby boomers are coming of age where their reliance on healthcare and healthcare services is only going to increase.

 

• Technology - This is a given obviously.  Think of the rate of advancement between 2000-2020.  Imagine where we will be in 2040 considering the rate of technological advancement is happening at an incredible rate.  Areas of growth include:
  1. AI
  2. VR
  3. Voice
  4. Cyber Security

 

• Retail eCommerce - If you look at the past 10-20 years, look at the impact that the likes of Amazon and Alibaba have done to the consumer buying patterns and how they learn about and receive their products.  What will the next 10-20 years look like?  Will we see a continual market erosion of brick and mortar shopping experiences.  Will some Commercial REITs be at risk?

 

• Renewable Energy
  1. Solar
  2. Wind
  3. Electric Vehicles

 

• Space Exploration - Strongly believe we will have commercialized space exploration over the next 10-20 years, if not sooner.  

 

• Storage - Population is growing.  Recent CNN article shows our population is in a growing pattern at least for the next 50 years.  In particular, I believe we need to focus on food storage.  More people means more mouths to feed. 

 

• Industries Impact by Changing Work Environment - I believe we were already on the path to a flexible work environment, however, COVID-19 pandemic has fueled this conversation.  Working from home is going to become more prevalent.  What industries will be impacted by this?  Less traffic and impact on infrastructure and transportation. Commercial properties will take a hit.  Restaurants and surrounding commerce to businesses will suffer.  

Obviously, knowone knows which particular industries and trajectory of growth of companies that exist or will exist in the future.  However, I want to focus on Healthcare for this blog post.  There are two things guaranteed in life.  Death and taxes!  The US population is aging, in particular Baby Boomers.  Let's look at some quick facts about Baby Boomers in the USA:

• Baby Boomers are the group individuals born between 1946 and 1964.  In 2020, that puts Baby Boomers in the age range of 56 to 74 years old.  

 

• Average life expectancy in the USA is 78 years old.  Therefore, Boomers on the older spectrum of this age range are accessing healthcare and healthcare facilities more regularly.   

 

• According to the U.S. Census Bureau, by 2050, there will be 83.7 million people aged 65 and older, almost double the 43.1 million seniors in 2012. Such a dramatic increase is expected to have a huge impact on the healthcare industry, not only due to the sheer numbers, but also because of the rapidly declining health of those over the age of 65.

 

• In 2018, more than $3.6 trillion — or almost 18% — of GDP was spent on healthcare in the U.S. Going by data from the  Centers for Medicare & Medicaid Services (CMS), healthcare spending will grow to $6 trillion, or 19% percent of the economy, by 2027.

 

• Projections from the U.S. Census Bureau indicates that in 2034, for the first time in U.S. history, older people will actually outnumber children under age 18.

 

• The American Hospital Association (AHA) figures that by 2030, a quarter of all boomers, about 14 million, will live with diabetes, and 33% (21 million) will be obese. About 50% of these boomers will find themselves suffering from arthritis, while 60% of them will seek out treatment options for their multiple chronic disorders.

 

• In 2018, there were an estimated 142 million visits to emergency rooms in the United States, up from 100 million in 2008. Hospital admissions are also set to double by 2030.

So what does this all mean?  In my view it is simple, over the next 10-20 years we are going to see an ENORMOUS amount of spending around healthcare and healthcare facilities.  The question is whether we will be able to keep pace with the demand of hospitalizations, prescription drugs, assisted living facilities, aged care etc.  Based on this, I believe Healthcare is going to have a large growth trajectory from a sector standpoint within financial markets. From an investment standpoint, when I read these bullet points the first thing that came to mind was Healthcare REITs.  The last bullet point alone should scare all of us.  If it holds true that means an estimated 284 million emergency room visits will be occurring annually by 2030.  According to American Hospital Association, there are a total of 6,146 hospitals in the USA.  Simple math, assuming no new hospitals (very unlikely), would say that would mean each hospital would take in an additional 23,104 ER visits annually or 63 visits per day.     

By 2030, the baby boomer age range will be between 66 and 84 years old.  This is a MASSIVE opportunity to get invested into Healthcare REITs.  The easiest way to do this without having to put forth many hours of research is to look for an ETF called “The Long-Term Care ETF (Symbol: OLD).  Parent company is Janus Henderson Investors, and based on the ETF overview on their website, “The Long-Term Care ETF seeks exposure to companies globally that are positioned to profit from providing long-term care to the aging population. These include companies owning or operating senior living facilities, nursing services, specialty hospitals or senior housing, as well as biotech companies for age-related illnesses and companies that sell products and services to such facilities.”


Relatively new ETF that up until this year was trending nicely from a return standpoint:

​​After careful consideration and research I have landed on my HTF Top 10 Fund Picks for 2020.  There were so many funds that meet my criteria to qualify to be on this list.  The criteria is to ensure a higher degree of confidence that these investments can sustain in a long term view.  I am NOT a believer that active investors or managers have a consistent track record of beating the market and/or the performance of passively managed mutual funds/ETFs.  Just to be clear, I am talking about returns AFTER fund fees and potential tax implications from short and long term gains.  With all that said, my criteria for the HTF Top 10 Funds are as follows:

• Minimum Investment - Between $0-$3,000
• Load - Preferably no load, but have one exception in my list.
• Expense Ratio - Less than 1%
• Turnover - Less than 50%
• Average Manager Tenure - Greater than 10 years.  I do have two exceptions that I will discuss further with each fund breakdown below.
• Fund Returns - Greater than 7% since fund inception.
• Fund Inception - Only includes funds that have been in existence for 15 years or more.  This is to ensure that these funds have a track record of going through at least ONE recession.  

Based on this criteria here is my HTF Top 10 Picks for 2020:

As you can see based on the fund categories there is a heavy focus on funds that invest in larger stable companies that not only provide growth opportunities but also regular income streams through quarterly and annual distributions.  Further, I am including 3 healthcare funds as I strongly believe these funds will continue to outperform over the next 10-15 years with baby boomers being in the 65-85 year old age.  In addition, with the current pandemic I believe there is going to be considerable investment in biotech research and disease prevention.  

To give more detail outlines for these funds based on the criteria see the following:

Non-Return Criteria

​Note: These figures above were pulled as of April 2020.  As such, adjustments may have occurred over the past two months.

Load for AMRMX - This is the only fund in the Top 10 that has a load %.  Even with the one-time 5.75% fee on initial investment, this fund is phenomenal.  Fund has been around for 70 years and has an annualized return since inception of over 11%!  In addition, ongoing annual expenses are very manageable at 0.61%.  

Tenure Requirement for HOVLX - Prabha S. Carpenter is the longest serving current manager at 6.1 years.  Prior to Carpenter’s arrival as Portfolio Manager the fund had three managers that served for 10+ years.  Carpenter has maintained the performance of this fund since assuming the role in 2014 with a top quartile ranking among large value funds for 0 to 5 year annualized returns.    

Returns

​My wife asked me a few weeks ago who is my target audience is.  I have a very clear mission in that I want to be able to serve people who may not be where they want to be financially and are looking to get on the right track and need guidance of where to start.  I want to be able to be a support system and sounding board of how we can work together to achieve a common goal of financial freedom.  In addition, I know I do not have all the solutions so I want this to be a collaborative forum where we can share ideas.  

To be clear, financial freedom in my mind is not to become insanely rich.  My definition is much simpler.  Financial freedom is the ability to achieve a standard of living that you desire to live a fulfilling life.  Whether that is to travel, to retire early, use your money to feed into your hobbies, or whatever your heart desires.  

Therefore, in order to achieve financial freedom you have to put your money to work.  There are many ways you can do this.  Whether it is putting your money in the stock market, contributing more to your retirement, buying investment properties, or starting a business, all avenues have the potential to provide a return on investment that can further you in your goal of financial freedom.  

Over the coming 6-12 months I am going to be putting out content that lays the framework to assist you in different ways you can put your money to work and the things I look for in certain investments.  Whether it be investing in individual stocks, mutual funds, ETF’s, investment properties, CDs etc.  Along the way I would love to get your feedback and ideas that you have and we can work together collaboratively towards a common goal of financial freedom.  

Hope you are having a great day as you read this post and let’s get after our financial goals.  It’s hammer time!

What is the Stock Market?  How does it Work?

I have done some research on the best way to portray what the stock market is and how it works.  Many sites provide a great explanation across the spectrum of simplicity to complex.  Also interchangeably referred to as a stock exchange, the stock market is a place where companies can offer an avenue to raise capital (i.e. Money) to use for the objective of putting into business operations and/or fund growth.  

Companies get on the stock exchange by doing an initial public offering (IPO).  This is a fancy acronym that effectively means the process of going from a private company to a public company.  A private company is a firm that is privately owned.  When a company does an IPO they are offering their shares to the public, allowing the general public the ability to have an ownership stake in the company.  The level of ownership in the company is based on how many “shares” you buy and own.  

Guess you are wondering what shares are?  A share is the mechanism or unit of a person’s ownership in a company.  If you buy 100 shares of a company’s stock that represents a certain percentage ownership stake in the company.  A company has a certain amount of shares outstanding or available that the public can purchase.  Therefore, if the company has 100,000 shares outstanding you would have a 0.1% ownership stake in the company (100 Shares/100,000 Shares).  

How do you Invest in the Stock Market?

If you have a retirement account or 401K you are very likely to already be invested in the stock market.  Within retirement/401K accounts you typically see your money in mutual funds or ETFs.  I will be discussing the different types of investments later in this blog series.

You can purchase individual stocks through a brokerage account or an individual retirement account like an IRA.  An easy way to get started is through online brokerages.  Brokerages act as the intermediary between you and the stock exchange.

So you are probably asking yourself if you should do your own investing or have someone else manage my money?  Stay tuned for future Blog Posts.  

Really hope you are having a great day and look forward to getting your feedback.  If you have any questions you can email me at [email protected] or go on my facebook page (https://www.facebook.com/HammerTimeFinance) and send me an IM or post on my page.