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In the pursuit of financial fortune, it’s important to explore unique investment opportunities. Here are nine compelling themes and ideas for your consideration that I think will lead to outsized gains and allow investors to prosper.
As a disclaimer, please assume that any company I discuss is one that I personally own shares of. This is not professional investment advice. These themes and ideas are my own personal opinions as of February 2024.
Table of Contents
Artificial Intelligence
You can’t have a list of investment ideas and themes without mentioning artificial intelligence (AI). AI has the possibility to replace many areas of the economy including certain content and product creation (pictures, songs, movies, coding, physical products in a factory setting, etc.) as well as act as a tool to make human workers more efficient. The pace of AI innovation and adoption is accelerating, leading to more use cases, and ultimately more earnings growth and profit margin expansion for companies that adapt to using this technology. The largest risk I see is the the high premiums paid for shares of these companies with high expectations already baked in.
Some companies I have on my radar include Nvidia, AMD, Microsoft, Tesla, ServiceNow, Super Micro Computer, Arm Holdings, Arista Networks, Symbotic, Upstart, Pagaya, UiPath, and SoFi.
Cybersecurity
Cybersecurity is a market that I think will keep expanding as long as digital transformation continues. With AI, cloud infrastructure, the metaverse, etc., there are many themes set to expand the digital universe and make it ever harder to identify and prevent cybersecurity risks. Similar to AI, these growth companies are not cheap, so if growth slows down significantly, shares could be repriced lower to account for changing expectations.
Some companies on my radar include Crowdstrike Holdings, Palo Alto Networks, Zscaler, Cloudflare, and SentinelOne.
Cloud Computing
Cloud computing is also a market set to expand with the ever growing digital universe. As more data is needed and produced with AI alone, cloud computing will be necessary. This means more companies will be required to embrace digital transformation and contract with one of the various cloud infrastructure and software providers. As you can probably see, I adore high-growth companies, but as before with AI and Cybersecurity, expectations are high and already included in the share price.
Some companies on my radar include Amazon, Microsoft, Alphabet, Oracle, IBM, Snowflake, ServiceNow, and DigitalOcean.
Slowing Inflation and Receding Interest Rates
It’s my opinion that inflation will meet the Federal Reserve’s key 2% level around summer 2024 when the housing portion of the CPI starts to reflect actual conditions (my understanding is that it’s a trailing indicator by about 6-12 months). When this happens, interest rate drops will follow shortly thereafter in the second half of 2024. I think this will affect industries heavily impacted by interest rates such as:
- Real Estate
- Banking and Financial Services
- Automotive
- Consumer Discretionary
- Utilities
- Construction and Infrastructure
- High-Growth and Tech Stocks (especially those heavily dependent of borrowing to fund operations)
- Emerging Markets
This will affect many different companies, but some of the companies on my radar include Walker & Dunlop, Home Depot, TREX Co., Enphase Energy, Boston Omaha Corp., SoFi, Upstart, Airbnb, Autodesk, Shopify, Adyen, Spotify, and many, many more.
Renewable Energy, Sustainability, and Decarbonization
This theme continues to have strong backing by governments and populations around the world due to it’s perceived effect on curbing climate change. Climate change and the industries surrounding it’s prevention and mitigation appear to be a major part of the zeitgeist of the 2020’s. Climate change remains a concern and solution development and execution will only get more urgent as time passes.
Some of the companies I’ve been watching in this space include Enphase Energy and Tesla. There are many more companies that stand to benefit from this theme.
E-commerce and Digital Payments
E-commerce and digital payments continue to be adopted by the masses with no signs of slowing down. By 2026, 24% of retail purchases are expected to take place online (Forbes). This is up from ~20% in 2023. The digital payments market is projected to grow by 10.73% by 2028 (Statista). These statistics suggest that neither trend will be slowing down anytime soon.
Some of the companies I’ve been watching in this space include MercadoLibre, Nu Holdings, Amazon, Shopify, Paypal, Affirm, Adyen, and Block.
Cryptocurrency Bouncing Back
I don’t fully understand all of the use cases for cryptocurrency like Bitcoin and Ethereum. I do understand that Bitcoin is perceived as a great store of value because it is liquid, decentralized, widely accepted, durable over time (hasn’t historically depreciated), divisible (able to be exchanged in portions), portable, and it is scarce. Also, I understand that Ethereum has other use cases outside of just being a store of value such as decentralized finance applications, smart contracts (contract executes automatically as soon as the terms and conditions are met), cross-border payments and remittances, supply chain management and traceability, etc. However, I still consider this industry more speculative than anything else. I currently don’t hold any cryptocurrency directly (some companies I own invest in them), but I may look to add in the future.
Emerging Markets – especially Latin America and Asia
This is a long term trend, but there is still a large opportunity for outsized growth in emerging markets, especially Latin America and Asia. For the short term it appears that Latin America will drag a little while emerging markets in Asia are poised for higher growth in the coming year.
When it comes to companies I watch in this space, I’m careful to try to pick companies that I believe will last and companies I’m ok with owning over the long run. Emerging markets have traditionally been higher risks, so I would suggest dollar cost averaging in over a long period of time and planning to hold for 5+ years. Some of the companies I’m looking at include MercadoLibre, Coupang, and Nu Holdings. I’m wary of the Chinese market right now given the government’s propensity to manipulate Chinese companies.
Advertising Technology Spending
In addition, with the 2024 Presidential Election ad spending projected to be >$10 billion (Statista) and the highest spending in history (of course inflation largely makes this so), some ad-tech companies should realize higher revenues and earnings than they had in 2023 (earnings typically drive stock price). I think this is largely baked in, but something to consider if you are investing in ad-tech in 2024.
I think of ad-tech as a longer term and somewhat cyclical market (political spending being a big cyclical driver) that will continue to grow as the advertising industry grows and the percentage of digital advertising takes a larger piece of the ad spending pie. Once inflation slows and interest rates start to recede, I see ad-tech as an industry that could benefit from increased economic activity. Some companies I’m looking at include Alphabet, Meta, The Trade Desk, Pubmatic, and Magnite.
Conclusion
Again, these are just my own ideas and themes for 2024 and beyond that I’m following closely to see if the thesis plays out. If you choose to invest in stocks, you should build your own thesis for how you see the world in 2024 and beyond, and look for pockets of opportunity that provide the correct balance of risk and reward for you. For me, this is only a small fraction of the money I have invested. I use this money to test out my thesis on various sectors and companies and to hopefully realize outsized returns for the higher risk.
If you’re highly risk averse, I would suggest using other financial products that are less risky such as index funds of ETFs, certificates of deposits (CD’s), high-yield savings accounts, treasury notes, etc. However, I wouldn’t suggest just leaving your money in cash as you’re guaranteed to lose spending power of time (as long as inflation continues in the US).
What are your thoughts on these ideas and themes? What investment ideas and themes are you interested in for 2024 and beyond?