Investing in Megatrends

'Not going to take this anymore' investing

'Govts must make people less angry, more happy'

Disillusioned with the hubris, First World conceit and short-sighted compassion of liberals and the Left? Feel left behind, left out and betrayed by the status quo? Indelibly drawn to the our-people-first populist nationalism of the Alt-Right? Good news, sports fans. Regardless of which way you lean politically or socially, and how far, Credit Suisse has an answer for you. That is, you the investor.

Sure, the pros will say you've got to leave the emotion out of investment decisions, be agnostic and apolitical. Be rational, they'll say. But that's the beauty of big investment get-togethers like Credit Suisse's yearly Megatrends conference. It takes a "big tent" approach, with big investment themes. It's for all comers.

If you're one of those people who like to try and make sense of the world we live in, and parse trends, well, we've got some ideas for you.

Rather, Nannette Hechler does. She heads global investment strategy and research for CS, and what she sells are ideas.

Let's get started. After talking with Hechler, I've boiled her themes down to two key ideas.

First, how you can make money from the whole "I'm as mad as hell, and I'm not going to take this anymore" sentiment seen in many countries — thank you Paddy Chayefsky, writer of 1976's "Network."

Second, if you've got Millennial or Gen-Z kids, Hechler looks at how you can invest to not just make money, but hopefully help make their's a better, happier world.

Both are easy to understand. The first, is about a P-O'ed Western middle class. Forget about anger management. Go with it. The psychology makes sense.

"It is very evident that voters today are demanding change," Hechler said. "This is what recent electoral outcomes have been showing, so this got our mind going in terms of what's the policy change that we could be expecting".

For a lot of investors, that expectancy is getting to be an issue. They're still waiting. But Hechler said not to sweat, or wait for, the policy specifics. She said it's going to be about middle-class jobs. And not just in America.

"New governments have to make the middle class again prosperous — less angry, more happy. This means creation of jobs," she said. "The areas which are creators of jobs are exactly those where we find policy focus, but also investment opportunities."

So, she says to suss out companies that are national champions and brands. Security and defense, are pretty obvious. Also, job-creating infrastructure. Transportation stocks have had a good ride. But she said she sees a lot of potential in affordable housing. Hechler says it's "not so much yet on the land map of many investors, but it is going to be a huge need: 440 million households maybe over the next decades needing affordable housing units. That's a huge business."

Also look at clean energy, especially renewables like wind and solar, she said.

"Water and energy for Europe is an area that is absolutely critical. New voters want clean energy."

Clean energy segues nicely to the second theme of leaving your kids a better future. A lot of it is about technology. Get lost in the interweb? Not sure what emojis are trying to say? Relax. Hechler's talking about tech in the service of humans. Artifical intelligence, virtual reality, augmented reality, automation.

"We are thinking about co-bots — robots that work and help the labor force," she explained. "A lot of time one associates robots with a threatening force, but we think there is actually a lot of collaboration potential — making, say, workplaces safer, making them more productive."

Now, ready? Here's where it gets really interesting — for me, at least. Biopharma. Immunotherapy. Gene therapy. Everything that's finally starting to capitalize on successful sequencing of the human genome more than a decade ago. Your kids probably won't remember that, or weren't paying attention. Of course you were, right?

But this isn't just for your kids. It's for you. Because here's the kicker: Hechler drew attention to demographic trends suggesting much higher life expectancy, as well as exponentially higher healthcare costs.

"The correlation between aging and life expectancy, which is the nice part of the story, is extremely high, with the spending on healthcare," she said.

Well, I'm a boomer, so that definitely speaks to me. And worries me.

Here's a fun projection, courtesy of the United Nations: Because of increased longevity and decreased fertility, the number of folks 65 years and older is going to DOUBLE by 2050, and TRIPLE by 2100.

That's good news and bad news. Bad because it's going to cost more, a lot more, to stay healthy. Good news for investors because it's likely to mean biopharma outfits will have pricing power. Nobody who can afford it, is going to say "I'll pass. I'll just wait until a second heart attack."

"Population aging will mean a lot of the individuals will have to take care of the funding of their old age. So a lot of the funding solutions, as well, for the financial industry have a great outlook," Hechler said.

In other words, the bet could be on health, or on some sort of investment-linked, insurance.

It's an angry and disruptive world out there. It's not so easy, or practical, to detach these days. So instead, make some money off of it. And stay healthy. Sounds like a plan to me.