I sometimes like to play the game with friends of ‘what is one must have item if deserted on an island’? The answer gives me insight into their values and beliefs from taking a Bible to a cheeseburger. But I find myself asking the same question about investing: if I could only pick one investment to put my money into – what would it be?
My gut reaction is to pick gold or silver. After all, these act as a global currency and may be the only recognized form of standardized exchange if an unprecedented disaster rocked our earth. But after contemplating this, I don’t really feel that we are headed for a Mad Max type environment anytime soon. Even if the unthinkable did happen and I lived from an underground bunker, I am sure non-perishable food items would be a more realistic bet than a metal that sits there and does nothing of practical value (under such circumstances). As well, with the prices as high as they are, I am unsure whether this would be a suitable investment if I could only pick one.
Apple (AAPL) is a vying for the top market cap company with Exxon Mobil. Apple went from a market cap of under 8 billion in 2001 to more than 44 times that size in a mere 10 years in addition to strong forward growth expectations. But might another small innovative company, perhaps a social networking site, take out this Goliath just as Apple rose up from being the underdog? Can Apple keep up with its ingenuity and market edge with the passing of Steve Jobs? Hmmm, I’m not convinced and would have to put Apple in my top 20 list, not my number one slot.
What about a limited resource that is in high demand? My brain immediately turns to oil. Consumption around the globe has risen from 49.4 million barrels of crude per day to around 90 million barrels per day. Oil should rise with inflation and shoot even higher when new oil cannot be found and supply tightens. There is a long-term downside to oil in that new technologies have promise to replace oil. The E-CAT device may or may not be a hoax, but scientists have become savvier at discovering new cheap energy alternatives. Solar energy can be absorbed through chemical reactions in paint that could be applied to highways or modified roof shingles. If oil prices get too high, this will make alternative energy sources ever more attractive. It may not happen tomorrow, but if I only have one investment…
What about food such as PowerShares DB Agriculture Fund (DBA)? Would I bet on the rising cost of food? Much in the way of fossil fuel is necessary to produce food – which should keep prices high. Population increase puts pressure to produce more food in our limited fields, and with estimates reaching over 14 billion by 2100 – this could be a highly yielding investment choice. But something in my conscience feels bad about capitalizing on world hunger. I truly hope that new techniques will be developed (or existing methods enforced) or that waste will be reduced for a sustainable earth. Solutions from hydroponics to gleaning or shipping leftover products to developing nations by major food producers could or should be implemented. I would not want to encourage social irresponsibility.
This leads me to believing and investing with the underdog. If I am to make one investment it will be with people and not a product. I believe that inequality of opportunity creates a hunger in entrepreneurs that drives them to be better than being handed a good life in developed nations. As globalization opens up new opportunities, I firmly believe that brilliant and clever people from all walks of life will innovatively come up with new solutions to existing problems, and their country of origin (or businesses therein) may not restrict or thrown a wet blanket on the genius development of technology will inevitably succeed commodities such as oil that are controlled by an elite few. If I had only one investment it would be with an exchange-traded fund such as the S&P Emerging Markets Small Cap (EWX) that includes smaller businesses situated in countries such as Taiwan, China, India, South Africa, Turkey, and the Philippines.
When it comes right down to it, no matter if we have another major war or unparalleled times of peace, regardless of whether the companies Apple (AAPL), Google (GOOG), or Facebook (FB) continue to be a major players over the next 20 years, I believe that people in general will rise to whatever challenge is thrown at them – and that those desperate to make a better living in emerging countries will become the inspirational frontrunners of this movement.