Long-term investors prefer to ignore the short-term noise and focus on the value that a certain company will yield in the next years and decades. A type of investing that is closely associated with position trading due to the long-term focus, long-term investors are looking for stocks that have significant cash flow, operate in continuous profit, have solid balance sheets and have long-term leadership.
In this post, we’re looking for industry trends and companies that are best-positioned to capitalize on these trends.
Tech continues to dominate other sectors
This August, Apple Inc. became the first publicly listed US company to reach the market cap of $2 trillion. The tech giant needed around 40 years to reach a $1 trillion valuation and just two more to double that figure.
It is absolutely clear that tech companies are leading the way. This revolution has created space for lots of smaller companies to show outstanding performance and gain a larger share of the market.
This gap between value and growth-focused companies continues to widen. If you look at the graph below, you can notice the difference in returns investments in the Russell 1000 Growth and Russell 1000 Value indexes would have produced in the last decade, a substantial difference of 275.3%.
10 years ago, stocks in finance and energy sectors together constituted 26.7% of the index, and right now they account for only 12.2%, marking a notable sector shift.
Obviously, the best performer by far in the last ten years has been the tech sector. Its growing weight in the index indicates that US market gains are depending on tech stocks now more than ever.
The surge in their share prices reflects their strong