Ask HN: If you had millions to invest, what sectors would you bet on? | Hacker News Reader

Ask HN: If you had millions to invest, what sectors would you bet on?

30 pointswesammikhail73 comments

Heyo,

I am genuinely curious to hear what sector(s) HN readers are currently interested in. Assuming you had a large amount of capital and you were allowed to only bet on 1 sector for the next say 5-10 years, what sector would you put your capital into? and what innovation(s) are you currently seeing within said sector that makes you excited about it?

Cheers

View on HN

Basic framework here is to look at megatrends that will shape the global economy.

1. Urbanization

More than 60% of the world population will live in cities and existing cities will become bigger ceteris paribus. I could write a thesis on this but you need to think very broadly about this. A lot of unicorns are playing in this space think Uber, instacart, Zillow etc

2. Global Southern shift Basically demographic and economic centre of activity is shifting to global South. This is different from southern hemisphere. Pretty much any business focusing on consumption sector in these areas is a good bet. Think FMCG FMEG

3. Ultratrend - climate change Climate change will play havoc with so many layers of our economic systems. While most people think agriculture, you can also add transportation, manufacturing, renewable energy, reinsurance, fishing, textiles, pharmaceuticals

Any solution that is climate defensible is gold

4.Technology breakthrough

Here an IP defensible stack with a focus a sector or niche in above 4 areas would be a force multiplier.

Here I guess basic framework could be data + operational expertise + combo{ML, AI, serverless computing.. }

Chemical companies could be an interesting bet. There is a lot of work happening in using AI for molecule discovery, process discovery. Any company which cracks this will be the Google of "atoms"

> 1. Urbanization

I'm more and more convinced we will see a reversal here. My guess is this: society as a whole will eventually reject the idea that they should be burdened with a massive expensive infrastructure just to have people sit in offices in centralized locations, staring at screens and doing the same job they could do from their homes. Or that shops need to be in centralized locations. Roads, railways, brick and mortar shops will all be gone and replaced with rural settlements in natural surroundings and virtual "travel" (VR) for the most part, air travel (drones, helicopters, flying cars) for the cases when absolutely necessary (transport of goods). It will probably be a gradual, but accelerating process as the bits fall into place.

So no, I don't believe urbanization is a good bet, not even in the medium term at least not in developed countries. Goods and services that support the above scenario on the other hand ...

I agree. The main reason people are urbanizing is because the types of jobs available are increasingly specialized and thus need to be based in urban areas to find talent. As remote working becomes more and more viable, people will start living where they want. Some will remain in urban areas because they like it. But many will opt for suburban and rural as housing prices are so starkly minimal in comparison.

Real estate. Mostly in Eastern Europe. I'd buy up areas around Krakow and Warsaw. This is a gamble on political stability in the EU, which I believe will pay off. I believe the EU will survive, and 20 years from now Poland will be much more integrated with the EU, so real estate in Poland can only go up. Same with Budapest. And parts of Romania are worth a look.

Even in the West, there are some areas that have not yet been gentrified. In Portugal, real estate in Lisbon has already gone up quite a bit, but less so in Porto.

In Italy, much of Sicily is interesting to speculate on. Again, one is speculating on the notion that politics will become more stable, and crime will come under better control, allowing property values to rise.

Interesting take. I am not as optimistic about the EU as you are. However, real-estate ownership is almost never a bad thing short of being exposed to massive economic downturns.

On a similar note, buy land in Ukraine - Ukraine has the most fertile soil in Europe, but agriculturally it's very under-developed due to corruption and bad government. It could be the bread basket of all of Europe.

https://en.wikipedia.org/wiki/Chernozem

The problem with massive corruption is that ownership becomes unreliable. I had an Indian friend once tell me that it happens sometimes that when you buy some land in India, and don't develop it, someone else may, and they will even have a second title. And that the courts are likely to grant it to the person that does the development vs the person that sits on their title. I was obviously surprised, but he said - what makes you think that the title you bought and sit on was ever valid in the first place?

This can also backfire on a more coordinated scale, for example see what the communists did in post WW2 Warsaw: https://en.m.wikipedia.org/wiki/Bierut_Decree

Those cases are still dragging on in (now fair) courts of Poland. And you can't honestly blame Bierut for doing this - the capital was so devastated that there were less than few thousand people living in it (down from like 1mil before WW2). In fact one of the problems with those pre-WW2 titles is that they often intersect multiple properties across streets, because due to the extent of city damage the street layout was re-architected (if you're starting from almost zero, why not rewire the fundamentals?).

Except for agricultural land is not for sale here right now and it’s often a subject of nation-wide debate. With bad governance habits and corruption not going anywhere for the time being it’s highly unlikely that foreigners will be allowed to buy any chunks of local fertile soil. But even if they were, not being accustomed to the way that business is sometimes done here, they could be quickly forced out by some local entrepreneur hiring some paramilitary group to set your farm on fire, for example. I’m not even making this up: https://www.kyivpost.com/article/content/business/french-win...

Diamonds! I got an email the other day from a lawyer who told me I'm actually a descendant of Nigerian royalty! As if that wasn't enough, my great uncle has passed away and left all of his diamond mines to me in his will! I just needed to transfer a downpayment - relatively small in the grand scheme of things - to formally transfer the ownership so the money will soon start rolling in! See ya later, chumps!

I’ve thought about collecting all those emails I get. There is some good creative writing going on :)

Gold. We are in a 6 year bear market and the fed just did a total 180 freezing interest rates. Interest rates will probably never normalize because of high debt loads and this could cause pressure on the dollar. Furthermore we are at year 10 of the bull market and the yield curve just inverted signaling a recession is likely in the next few years.

The probability is increasing that US Federal Reserve will become a much more politically motivated institution, biased toward accommodative monetary policy, low interest rates, a large and growing balance sheet, and more private debt.

At the same time, US government deficits are setting records highs for peacetime.

And it's not just the US, with other major economies like China and Japan also racking up public and private debt at astonishing rates not seen outside of war economies.

This is essentially a trade-off between juicing current GDP growth at the expense of long-term stability of price levels and ability to respond to inevitable crisis.

It's impossible to predict what will happen or when, but if the probability of economic catastrophe increases, the value of precious metals, real estate and the largest, most stable cryptocurrencies should increase.

> US government deficits are setting records highs for peacetime.

Sorta. It stabilized around 2013.

https://fred.stlouisfed.org/series/GFDEGDQ188S

Your chart shows the US national debt, not the budget deficit.

The deficit for the first four months of the current fiscal year increased 77% compared with the prior fiscal year.

Revenues fell by 2 percent to $1.1 trillion, while spending rose 9 percent to $1.4 trillion.

Source: https://www.bloomberg.com/news/articles/2019-03-05/u-s-budge...

All this during peacetime and economic expansion. What will this look like in non-ideal conditions of war or economic recession?

My point is that fiscal recklessness will increase as the Federal Reserve becomes more politicized. This will make the economic system more fragile and raise the probability of a catastrophe.

When the odds of financial catastrophe increase, the rational response is to allocate more capital to precious metals, real estate and two or three cryptocurrencies with the greatest hash power.

> Your chart shows the US national debt, not the budget deficit.

No, it shows debt as a percent of GDP. The idea is to normalize debt so the numbers are more meaningful. Context is everything.

> Revenues fell by 2 percent to $1.1 trillion, while spending rose 9 percent to $1.4 trillion.

I'm not especially concerned if also GDP went up, but the data's not out, yet.

> What will this look like in non-ideal conditions of war or economic recession?

See 2008-2015? That. That should worry you.

Also fun: https://www.google.com/publicdata/explore?ds=ds22a34krhq5p_&...

Let me clarify what I mean. I realize what I said is not clear.

* Gold is in its 6th year of a bear market. * The stock market is in its 10th year of its bull market.

Crypto. It's either going to $0 or to trillions. It's more than survived for 10 years now so might as well bet on the latter.

Or therapeutic psychedelics

All of them. Index funds. You can't beat the market.

^^^^ Right answer! ^^^^

If you’ll need the money in the next few years, put it in some interest bearing low risk account. Otherwise, index funds or a robo advisor.

That goes without saying tbh. I´m just curious as to where people think future growth come from.

Indexes for which countries or regions?

ah therein lies the rub :)

Why not all of them https://investor.vanguard.com/etf/profile/overview/VT

Buffet, Monger, Pabrai, Town, etc. This is an old theory that's been bashed quite a bit. There are many people who have and do beat the market continually.

It's so strange that people think you can't beat the market. I think it has to do with reading the opinions of people who failed to beat it rather than focusing on the people who can and are beating it.

Yeah totally.. You can also win the lottery, thats why i recommend people buy lottery tickets. If you don't believe me google it, lots of people do it.

Yeah lottery is a crap shoot. The market is a skill. If a person were to equate a lottery to the market, then they have a lot of reading to do. See poor people buy the lottery tickets because they have no hope and see it as a way out. The stock market is the rich person's backyard. The lottery is in a way, a tax on the poor.

Right, and buffet acknowledged this. It's the "monkey flipping coin" theory -- some amount of them will win. Here's the speech: https://docs.google.com/viewer?url=http://www.tilsonfunds.co...

9 "Superinvestors" all using the same method of evaluating crushed the market for over 30 years straight. That's mathematically improbably to the highest degree.

Actually Buffet won a million dollar bet against a hedge fund manager by placing his money into an S&P 500 index:

https://www.investopedia.com/articles/investing/030916/buffe...

Sure, against a hedge fund, because they take 2% fees, which has huge implications.

Yes, this. The s&p500 is a very good bet as those companies are very exposed with the global economy.

Clean Energy- Solar, Wind, and Battery Storage tech. Longevity funds that focus on providing retirement care in the US (as we're going to be entering a period where a large part of our population will be retiring), and life extension companies that provide solutions to extend someone's life.

Other than that, Biomedical and aerospace.

This is interesting -- I agree as an industry but would have no idea what companies will win out.

As with most investing questions, keep in mind that the instrument (i.e. the way you place your specific bet) matters just as much as the actual sector.

Crypto, marijuana, self-driving, take your pick: you could totally nail the sector choice and still lose a lot of money if you make a wrong bet. Trade carefully, and diversify...

Democratizing high quality education.

It used to be that the best teachers were available only to a few dozens of privileged students at a time. But now we have the technology to scale great pedagogy to reach millions of learners. I also think we ought to move from a push model of education to a pull model, i.e., learners get to pick and choose from a selection of good teachers and progress through various levels at their own pace (and get accredited for their learning). Classroom learning really ought to go or be reduced to very special cases. That we all have to be synchronized on when we are prepared to learn a topic is an outdated concept.

MOOCs are an excellent step in this direction, but we really should be doing more. In education, I think we're in a stage similar to where internet search was before google or smart phones were before iphone.

I agree with what you're saying, but MOOCs have showed time and time again that they don't work and people lose attention extremely easy. How is that perpetual problem going to stop?

Create a MOOC mixed together with that service where people watch you while you work, so that students are held accountable.

MOOC completion rates are not a good indicator of success.

It's ridiculously easy to sign up, so a a lot of low intent people sign up, but these people would never have enrolled in a college for the class and probably didn't plan to actually do the entire course.

I'd contest your claim that MOOCs "don't work".

It's true that only a fraction of those who participate in typical MOOCs complete them (8 - 10%), (https://imgur.com/a/HI4IXbt , from "HarvardX and MITx: Four Years of Open Online Courses", https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2889436), but a significant fraction (~15-20%) also explore these courses (i.e., they watch 50% or more of lectures). So this means that the MOOCs are reaching around 20-30% of the participants in some significant manner.

First of all, is the larger drop out rates really a problem? I'd argue that the option to drop out of a course if you feel that it doesn't serve your needs right now is itself valuable. This means that you're free to spend your time in ways that are more useful to you. Also, a large number of those taking the MOOCs are themselves teachers. This means that the high quality of pedagogy that MOOCs can deliver will have cascading effects through educators who use them to upgrade their own skills.

How to improve the effectiveness of MOOCs? There are plenty of things we can do, too many in fact to go into in one post. A few keys areas that I can see are (a) pedagogy (finding great teaching talent and professionally beefing up their performance), (b) affordability (an issue in developing countries primarily), (c) formal accreditation, and (d) a wider selection of courses that form a genuine alternative to the standard university programs. Models that I find incredibly exciting are that of India's IGNOU (https://en.wikipedia.org/wiki/Indira_Gandhi_National_Open_Un...), NPTEL (https://nptel.ac.in/), and Swayam (https://swayam.gov.in/), all of which issue officially recognized certificates. But unfortunately, as with many things that the Government of India does, the intentions are noble but the execution is mediocre. There's clearly room for players who will "full-ass" what IGNOU set out to do.

It's a fool's errand.

Buy a whole-market index. As Buffet says, don't try to find the needle-- own the haystack.

This is just a fun thought exercise...

Obviously yes. But that does not tell you much about where YOU think the future is heading. I am interested in what you think will happen in the future. The question phrased as an investment question in order to simulate some sense of "skin in the game"

Marijuana. It’s not going anywhere and it’ll eventually be larger than tobacco and as ubiquitous as alcohol.

This sector certainly is promising however the lack of investment vehicles and legal structure (especially here in Europe) do not allow bullish moves at all unfortunately :/ Otherwise I do share your optimism toward said sector

Agriculture. If the world keeps warming we’re gonna need some big changes in the way we make food. Anybody that’s looking to turn server farms into real farms would have my money. Bonus points for modular setups and micro environments to avoid the need for any plant treatment chemicals.

I was thinking the same thing, ag, agtech, aquaponics, hydroponics, renewable energy powered ag, etc...food and water...most important areas of research in my opinion

Ag tech or something along those lines, maybe, but producing a commodity is always a low-margin game, and it's getting harder with farm consolidations.

I second that.

Making healthcare more accessible (using technology). Includes remote care, AI-based diagnostic tools, home healthcare, compliance monitoring etc.

It's no doubt a very challenging space, given the regulations and liability issues, but the sheer size makes it all the more important

I think the market for plant based meat substitutes and cell cultured meat has the potential for massive growth. There are still some kinks to work out but tremendous progress is being made.

You can help out animals and the environment and make money at the same time.

There's a lot of research indicating that going back to basics with diet and eating lots of meat may actually be the healthiest option -- see "The Big Fat Surprise", and rise in Keto and Carnivore diets. Not saying which direction it will go, but definitely not a sure bet.

That research is extremely biased and suspect. I’m very confident that once people have been on these diets long enough they’re going to start seeing some very serious downsides. This is already happening with some prominent boosters of carnivore diets reporting some very alarming blood tests.

Health issues aside the planet can’t support 8 billion people eating like that so practical concerns alone will drive demand for alternatives.

What research? I didn't name any. I named a lot that shows research that indicates that plants are healthy is broken -- which I've seen bolstered in a lot of places.

I agree that Keto and Carnivore diet are underesearched, but blood reports have also shown very positive on quite a number of people, but most people test after a few weeks rather than 6 months.

The theory is that it takes the body a while to adapt to anything -- esp. when you've been stuffing your food with carbs for most of your life.

I'm 3 months in on Keto, planning on taking blood tests in another 3 months -- I'm not taking it likely, I've been vegan after a lot of research as well -- but there are many flaws in the vegan argument.

We haven't spent any time trying to solve the problem of 8 billion eating like that, we're pushing the other direction, and it quite well is causing HUGE amounts of health problems. So, I don't know that it's a real choice.

Other indicators that this segment is poised for growth is that big fast food chains are rolling out these products and meat industry executives are sounding the alarm that this is a threat to their business.

Some huge companies like Tyson are also making significant investments in this area.

https://www.washingtonpost.com/opinions/has-the-impossible-b...

Why focus on a sector and not take advantage of the market. Every day there is a new opportunity. You have to just adapt and take advantage of it and make profits. I would trade options for the different stocks available and leave the rest in AAPL.

Artificial Intelligence and Batteries.

Renewable energy. Excited about hydrogen fuels.

bearish on crypto, bullish on "AI"

in practice I've sold most of my index position for MCD, as the VIX (mean volatility) is trending high. Even if you're right about the sector, it's virtually impossible to predict which company will come out on top.

when you say bullish on "AI", which specifically do you find interesting in said sector?

automation of human cognitive tasks

I think this is 1999 for AI. There's some genuine, valid things it works for right now and there's some snake oil. In 10 years, I expect a Windows 98 to iPhone-scale advancement.

Laundromats and convenience stores.

People are getting poorer and moving towards renting and condos.

Water.

Water!

This feels like a crowded play. It's not fungible enough to really invest in, too many cities are close enough to the ocean to desalinate (expensive, but not that expensive), so you're left with ag use. That said, I'd be mindful of water supplies when looking at any real estate.

trash collection

Immigrant entrepreneurs

That´s... not a sector!

There is a venture fund that does this: https://onewayvc.com/

Flying Cars. If you want to invest contact me!

Reply on news.ycombinator.com