Globally, value investors led by billionaire Warren Buffett have had a hard time these past few years, given their commitment not to buy overpriced shares.
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Buffett’s Berkshire Hathaway ended 2024 sitting atop a $334-billion pile of cash and its equivalents. So large is this sum that his annual letter to shareholders tries to reassure them that it does not prefer cash over “good businesses.” But are investment opportunities really so scarce? Critics wonder if it’s missing out.
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McKinsey Global Institute (MGI) recently identified 18 hot arenas of rivalry expected to thrive over the next 15 years: e-commerce, cloud services, artificial intelligence, semiconductors, cybersecurity, electric vehicles, shared autonomous vehicles, batteries, streaming video, digital ads, video games, non-medical biotech, obesity drugs, robotics, modular construction, nuclear fission, future air mobility and space. These 18 fields, MGI estimates, could account for up to $48 trillion in revenues by 2040.
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Granted, identifying companies likely to emerge as winners is no easy task. But so long as innovation doesn’t flag, even value investors should be able to make picks. Surely, every business isn’t overhyped and overvalued.
