The stock market often makes it tough to find -- and pursue -- good investment theses. Great foresight into a market or economic trend can pay off richly, but you never have much time to rest on your laurels.
For investors prescient enough to foresee the current financial crisis, shorting stocks such as Citigroup and Wells Fargo
But basking in past success is a luxury that the market doesn't grant most investors.
Mind those laurels
For years, the massive upswing in the oil and commodity markets padded the accounts of numerous commodity bulls, but those who stuck with that theme a bit too long saw a good deal of their gains evaporate. Oil lost nearly 75% of its value from peak to trough, and many other commodities followed suit.
Right now, we're embroiled in economic and financial distress. But betting against the financial industry may be getting a little long in the tooth. If recent market action is any indication, it may be high time to move on.
So what's next? Here are four areas I think could provide some winning stocks over the next decade.
Remember China? Before the economic downturn set in, the country seemed poised to take over the world. Stocks like China Mobile appeared unstoppable, and even U.S. companies such as Yum! Brands and Las Vegas Sands got a boost from their exposure to China.
With the Shanghai Index down around 60% from its 2007 peak, and China's economic growth slowing from "torrid" to merely "quick," China seems to have lost some of its luster of late.
But don't be fooled -- the country's still in the early stages of becoming a worldwide economic power. China's desire to replace the U.S. dollar as the world's reserve currency probably won't come to pass. Still, the suggestion reveals an increasingly important global player flexing some newfound muscle. Investors can benefit from this development by tracking down the best Chinese businesses, or by targeting major U.S. companies setting up shop in China.
The U.S. Treasury and the Federal Reserve are collectively splashing trillions of dollars in our economy's face, hoping to wake it from its recent fainting spell. In the short term, that's OK -- the velocity of money has come to a screeching halt, and deflation is more of a threat than inflation at present. But that won't always be the case.
In the long term, U.S. monetary authorities face the tough task of avoiding significant price inflation. Personally, I doubt they'll be quick enough on the trigger. That's why I think investing in companies that can easily hike prices in an inflationary environment is a solid strategy, from commodity kings like Freeport-McMoRan
3. Baby Boomers
The aging of the U.S. population was a big deal a few years ago, but that story seems to have been buried by the hoopla surrounding high energy prices and the subsequent banking crisis. Nonetheless, the U.S. still has a massive Baby Boomer generation headed toward old age and retirement, creating investing opportunities.
Medical stocks may be the most direct way to play this trend, whether that means drugmaker Merck
Oil was on the tip of everyone's tongue when it clawed its way to $147 per barrel, and our currently mellow prices may rise to those heights again in the future. However, the picture for global energy is much broader than oil alone.
A growing global population -- and increasing wealth worldwide -- will mean increased demand for energy of all sorts. Fears about the availability and environmental impact of fossil fuels suggest that alternative energy sources will play a significant role in energy's future. The tough task with alternative energy, though, is figuring out which contender among a young and growing field will come out on top. Will First Solar
You might be smarter to step back and look at a company such as MEMC Electronic Materials, which feeds silicon wafers to the solar industry. Or zoom even farther out to consider General Electric
Bagging these returns
Making rash investment decisions is never a good idea, but sitting on your thumbs too long can increase the chances that these stories will have ended before you make your first move. If you're looking for fresh ideas, now is the time to start digging.
Our Motley Fool Global Gains team tunes into the trends making waves around the world -- and finds investments to capitalize on those swells. Over the last few months alone, these globetrotting investors have tapped multiple great investment ideas that stand to capitalize on the themes I've outlined above in a big way. Best of all, you can see all of these stock ideas with a free 30-day trial of Global Gains. Just click here.
Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. Coca-Cola and Stryker are Motley Fool Inside Value recommendations. Suntech Power Holdings is a Rule Breakers pick. The Fool owns shares of Stryker. The Fool's disclosure policy has found that resting on its laurels is far less comfortable than resting on its couch.