A trend that's just an idea today can reap big rewards if it becomes reality

Most investors, if they have been paying any attention at all, know you are supposed to invest for the long term. The thesis is that it takes time for companies to grow and the market is always volatile. Selling too early means an investor misses out on compounding growth and market valuation changes.

It can be hard to invest long term, but it is the best route to investment success. We have owned some stocks for 20 years. As we age, we will need to think about cashing some of these in, but for now the rule is “don’t fix what is not broken.”

But what if you want to invest for the really long term? Not 10 or 15 years, but 30, 40 or even 50 years?

This is how many pension funds invest. They don’t worry about daily market gyrations. They worry about long-term themes, globalization, demographics and other factors, and try to figure out how to make money off long-term trends.

A trend might only be an idea today, so this type of investing can be risky. But it can certainly be rewarding as well if you are both right and have the time to see that trend become a reality.

Here are five possible very long-term trends that might be investable ideas.

Artificial intelligence

We know you are saying, “That’s a current trend,” and, yes, it is, but we think it is absolutely here to stay. It has probably barely started.

Like the internet in 1997, we do not really know where AI is going to take the world. It may be very helpful or it could be very disruptive. Entire industries could be replaced. Companies that properly utilize it might see profit margins soar and stock prices surge, too. Companies that miss the boat might go out of business.

At some point, companies will need to decide if the money spent on AI was worth it. We think, in most cases, it will be. Better productivity and higher profit margins will be powerful drivers for companies.

For stock pickers, there will be losers and winners in the AI game. The hardware sector has run already. Software and data analytic stocks might be next. After that, who really knows? Certainly, cybersecurity stocks could be winners. AI likely makes it far easier for scammers, so security is going to be a very big concern down the road.

Longevity

This theme is not exactly new, but we think it will get much more traction. Consumers want to live longer and better. Already, there are drug companies extending the life of dogs, and we wonder how long it will take to get to human trials. We know of more than 20 companies already working on life-extending products in such areas as cellular reprogramming, body part replacement, young blood injection, cloning and genetic editing.

There are hundreds of snake-oil companies looking to make a quick buck from boomers seeking to extend life. But there are also real companies, backed by billionaires, doing real research and starting to see breakthroughs. This will become a much bigger industry — and investment theme — over the next 50 years.

Legacies

This investment theme could be tricky, but it could be a big one. The legacy theme is a derivative of what is already occurring. You know when some rich guy donates $20 million to a hospital and gets a surgery wing named after him? This ensures his name lives on long after he’s gone.

Aging, rich baby boomers are going to want the same feeling. They don’t have the $20 million, but they are very well off and might start looking for ways to ensure their long-term legacy. Let’s face it, no one is going to remember you in 200 years. But some sort of legacy, monument, recurring advertisement or something along those lines would ensure your name and memory last longer.

Years ago, there were companies selling the naming rights to stars in our galaxy. Name a star after yourself and you will always be present in the universe. This made those companies lots of money, but we are looking for something closer to Earth and more legal (the only body that can name stars is the International Astronomical Union).

Demographics

An aging population is becoming an issue in many countries. Investing in this theme can cover a wide area: age care, hospitals, drug companies, housing, estate planning and so on. Companies that can successfully target aging consumers are likely to see faster growth.

There is also a big debate on whether rich baby boomers are going to transfer their wealth or spend it. There is another debate on how governments can possibly fund pensions if there are fewer young workers on the contribution side. When investing, we suggest asking yourself how your prospective company’s business is going to be impacted by an aging population.

Urbanization and digital infrastructure

People continue to leave their rural lives behind and flock to cities in nearly every country on the planet. This means better jobs, more excitement and more service for them. Thus, this trend is likely going to continue for decades.

Investment opportunities abound from this shift. Companies can establish the necessary infrastructure to cater to both people’s move to cities and their rapidly growing and changing digital needs. As the citizens of developing countries become wealthier, they are going to want to buy cars, smartphones, digital TVs and everything else that can make their lives better and easier.

New technologies are bound to emerge and the companies that can capture market share of this new trend could do very well.

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