A Financial Revolution 

March 16, 2006
Ten Trends in 2006
The McKinsey Quarterly recently included a web-only article on ten trends for the coming years. I thought it would be worth reviewing these trends and looking to see if it yields any areas for possible investment.

Trend 1: Economic activity will shift to new regions of the globe as Asia continues to grow.
Investment ideas: Consumer companies with a strong presence in Asia and global REITs.

Trend 2. Public-sector activities will balloon, making productivity gains essential. The unprecedented aging of populations across the developed world will call for new levels of efficiency and creativity from the public sector.
Investment ideas: Consultants that provide services to government agencies.

Trend 3. The consumer landscape will change and expand significantly. Almost a billion new consumers will enter the global marketplace in the next decade as economic growth in emerging markets pushes them beyond the threshold level of $5,000 in annual household incomeā€”a point when people generally begin to spend on discretionary goods.
Investment ideas: Consumer & luxury goods companies with a strong presence in Asia.

Trend 4. Technological connectivity will transform the way people live and interact.
Investment ideas: Internet companies.

Trend 5. Ongoing shifts in labor and talent will be far more profound than the widely observed migration of jobs to low-wage countries.
Investment ideas: Outsourcing companies in India, China, and other places with educated talent.

Trend 6. The role and behavior of big business will come under increasingly sharp scrutiny.
Investment ideas: Socially responsible companies.

Trend 7. Demand for natural resources will grow, as will the strain on the environment.
Investment ideas: Water filtration, pollution control, and energy companies.

Trend 8. New global industry structures are emerging. Even basic structural assumptions are being upended: for example, the emergence of robust private equity financing is changing corporate ownership, life cycles, and performance expectations.
Investment ideas: Small, nimble companies.

Trend 9. Management will go from art to science. Today's business leaders are using highly sophisticated software to run their organizations.
Investment ideas: Corporate software (e.g., SAP) and business consulting companies.

Trend 10. Ubiquitous access to information is changing the economics of knowledge.
Investment ideas: Internet companies.

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