What is a Viewpoints investor?
Viewpoints investors want to test their knowledge of emerging trends that are shaping the future. Scoring highly for Viewpoints as a financial personality type means somebody is extremely curious about the world around them. They see investing as a way to satisfy and test their natural intellectual curiosity. They often have a desire to express their world views through their investments.
Viewpoints investors tend to be lifelong learners, early adopters, and are willing to learn about technologies and trends shaping the future. Linking their investments to views on the future is an exciting, intellectual activity. They act with conviction when they see an opportunity and derive great satisfaction and learning from the outcome of their actions.
In contrast, somebody who scores lower on Viewpoints believes investing is about getting to the right outcomes, not about taking chances.
Viewpoints investors may be interested in cutting-edge industries like artificial intelligence, virtual reality, robotics, medical breakthroughs, cannabis, and more. They may also have an eye for international investments like those in Emerging Markets such as China, India, or Brazil.
Topics in Viewpoints Investing
Investing in Emerging Markets
When you invest in emerging markets, you are buying stocks and bonds from countries whose economies are considered to be “developing.” They are distinct from “developed” markets like the United States and the countries of Western Europe, which have older, more mature economies. Still, the terms “emerging” and “developing,” which mean the same thing, may seem like misnomers. Many of the world’s largest economies are emerging markets – Brazil, Russia, China, and India are some examples.
These countries are considered to be emerging markets because their economies are at an earlier stage of their life cycle. The average standard of living tends to be lower. The infrastructure to support business and commerce across these countries is generally not as fully built out as what you will find in developed countries like Australia, Canada, France or Japan.
For investors, emerging markets can offer the potential for higher returns. Emerging markets do tend to be more volatile, so the potential for greater returns does come with extra risk. These younger economies may grow at higher rates than developed markets do. That can translate into greater growth potential for the stocks of companies in emerging markets. Bonds from these markets may also provide higher income because governments and companies may need to pay higher interest rates on their bonds to attract investors from around the world.
Investing in emerging markets can also offer diversification. The factors that influence emerging markets often differ from those that affect developed markets.
Thematic investing involves putting your money in a broad idea that may be transforming the economy or in an issue that matters to you. Investing in a specific type of technology can be a theme-based approach if you believe innovation in that area could bring growth. Similarly, investing in health care can be a theme if you think scientific breakthroughs, like the mapping of the human genome, can enable biotechnology companies to develop new treatments for a broad range of illnesses. A popular way to invest in stocks that may benefit from a particular viewpoint would be through Thematic Exchange Traded Funds (ETFs).
Today, more investors also want to bring their personal values to investing. There are many opportunities to invest in themes based on personal values. For example, you could invest in clean energy and not own any companies with fossil-fuel based businesses. Instead, you would invest in companies providing renewable energy like wind or solar. Investing in gender equality can also be a theme. With this goal in mind, you would own companies that have received high scores for providing pay equity and having diverse representation not only in their workforce, but also among senior executives and the members of company boards.
Many themes are reshaping the global economy. With today’s emphasis on environmental, social and governance (ESG) issues, there is also evidence that companies with strong ESG practices perform better. One risk is that thematic investing may be more narrowly focused and not diversified across a full range of business sectors. Consult with your investment professional to determine the best approach to expressing your Viewpoints through your investments.
Investing in Cannabis
The marijuana industry is growing as more states approve of either medicinal or adult recreational use of cannabis. The legal cannabis market is projected to hit $73.6 billion by 2027 (Research and Markets). Many legal North American cannabis companies have already reached billion dollar market capitalizations. Investors interested in this growth area will find that various cannabis-related ETFs have launched in the last few years.
Investing in Cutting-Edge Technology
Investing in cutting-edge technology enables people to put money in breakthroughs that can transform how we live and work. For decades, technological innovations have been coming nonstop. Here are some examples of technology where a Viewpoints investor may choose to invest:
Artificial intelligence (AI) and machine learning (ML): AI encompasses smart systems that do work humans once did. Examples of AI include robots in manufacturing plants and cars’ driver-assist features, like automatic parallel parking. Machine learning goes a step further. Algorithms gradually become better at interpreting data. Speech recognition systems become better at “understanding” voices, and GPS. systems get better at recognizing traffic patterns and finding fast routes.
Virtual reality (VR): Today, people can interact in a three-dimensional, computer-generated environment. With VR goggles, video game players become immersed in a simulated environment. People can experience new and foreign locations without having to leave their living rooms. VR has many educational applications and is used to train pilots and soldiers.
Blockchain and Cryptocurrency: This technology makes digital transactions between two parties possible without the need for a third-party intermediary like a bank. While fully transparent, the transaction is ideally free from fraud or other risks. Blockchain technology has given rise to cryptocurrencies, or digital/virtual currencies using cryptography, like Bitcoin, Etherium, or Dogecoin.
Cutting-edge technologies may provide investors with opportunities for growth, but investing in new technology can come with plenty of risk and volatility. Yesterday’s unicorns can be quickly disrupted by new innovation. Investors should approach each new exciting area with an appropriate risk management strategy in place.