Japan is one of the most-visited countries this year, and I couldn’t pass up the opportunity presented by favorable exchange rates to visit one of most interesting countries in the world.
Among the many intriguing things I learned about Japan, perhaps not a surprising fact, is that 10% of their population exceeded 80 years old for the first time in 2023, making it the oldest country in the world, according to the United Nations.
As you see in the chart below, where the 2020 working population is the baseline, the whole world is aging, although at different speeds. By 2030, one in six people globally will be over the age of 60, up from one in 11 in 2019.
Twentieth-century victories against infectious diseases — in the form of sanitation, antibiotics, and vaccines — dramatically extended lifespans, and today most children in high-income countries born since 2000 can expect to live 100 years or more. In the past six decades, medicine has added about seven years to the average lifespan — less by saving young lives than by extending old ones, and often in states of ill health. In many cases, we’re prolonging the time it takes to die. So, how do we make this long life a worthwhile one?
Age Structure of Estimated World Population
The opportunities and implications of the 100-year life for individuals, businesses, communities, and governments will be profound. Importantly, longer lives will lead to longer working lives — or longer retirements.
Working longer than the traditional retirement age has many potential benefits.
Benefits for individuals. There is growing evidence that it is good for our health and longevity if we stay mentally, socially, and physically active for longer.
Benefits for businesses. Research indicates that a multigenerational workforce creates a more productive environment.
Benefits for the economy. There are significant increases in GDP when people remain part of the workforce for longer, although longer work lives will require retraining and reskilling.
In contrast, longer retirements create a major financial strain. Wealthy nations established government retirement systems at a time when the age structure looked like a pyramid: there were more people contributing to it than drawing from it (see diagram above). This model would not be sustainable now or in the future, when the population across generations is more even. Therefore, people will have to rely on their personal savings and/or employer-sponsored retirement programs.
Lifelong learning, healthy living, prudent finances and meaningful relationships may be the ingredients to a happy long life. But good investing will also be an integral part of healthy longevity.
Opportunities
Healthcare Tailwind
Those 80 and older spend more than 4 times on healthcare per capita than the national average. As the population of those 80 years and older increases, the best healthcare companies are well positioned to take advantage of these industry tailwinds.
In the housing industry, the coronavirus pandemic was a major challenge for senior housing, as the senior population was one of the worst hit by the virus. Over the past three years, this industry has steadily recovered, but supply will likely remain below the historical average in the coming years. Looking ahead, the older demographic boon will create a massive spike in demand for senior housing.
One of the opportunities in this space is Ventas (VTR), which will benefit from these industry tailwinds due to its portfolio of high-quality assets connected to top operators in the senior housing, medical office buildings, life science, and hospital segments.
AI Investments Trends
As per S&P Global Market Intelligence data, there is a growing realization in the AI industry that foundation models will not make sustainable stand-alone business models.
Foundational, or general-purpose, models are AI models that can be instructed to generate content, such as text, code, images, and synthetic data. Given the plethora of open-source foundation models from companies such as Meta Platforms Inc. and Mistral AI, the focus is on generative AI application companies, which leverage third-party foundation models to build software for specific consumer or business purposes.
Adobe and Autodesk are two businesses that significantly benefit from the current capabilities of GenAI. Both companies were sold off recently, making them particularly attractive investments.
To get an idea of the general trends of AI opportunities, look at Microsoft's recent AI investments in the graphic below.
Kommentare