Financial Advisor IQ:
How should advisors look at life expectancies, per capita income and how they relate—in different scenarios with different markets?
The first thing is that our lens through which we try to rank opportunity is all predicated at the first step—looking at the very long-term, structural phenomena that will manifest themselves over many years. So this is not a way of looking at opportunities to be exploited over the next several quarters or even the next two or three years. These things have a tremendous momentum and they’re going to go on for a very long time.
They estimate now that the population is going to peak out at 9 billion. And if the proportion living in absolute poverty reduces, we’re going to get a bigger middle class and more spending power.
The flip side of that, about which we also have a high level of certainty, is demographic shifts over the coming decade. The population is aging and is not just driven by an aging Europe, an aging Japan, but the demographics in the developing world are shifting. So there will be about three times the proportion of people over 65 in China in about 30 years.
So what will become precious with an increasing number of retirees? Aging people are generally bigger consumers of healthcare. This is going to present big challenges at a macro level for governments, but any company whose business is in terms of providing a better service at a better cost or controlling cost is going to have a burgeoning opportunity over the next 10, 15, 20 years.
Financial Advisor IQ:
Makes a lot of sense, George.
We’re also looking at companies that actually produce products that increase and improve the quality of life. For example, one of the things that inevitably happens with aging is your vision deteriorates. As your vision deteriorates, the complexity of your prescription goes up and the expense of the lens goes up. That’s usually a more profitable circumstance for well-positioned companies.
And the other thing is that 60% of the people in the world that actually need corrective lenses currently do not have them. They inhabit the developing world, so rising standards of living will make a corrective lens more affordable.
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