The Future – Starting To Warm Up Today’s Stock Market

Wednesday, March 3, 2010

Avatar and Up nominated for Best Picture Academy Award? A science fiction movie and a cartoon? Just shows you that Hollywood is… well, what?

Answering that “what?” actually gives us a window into the future stock market winners – and that future, delayed a bit by the economy’s recent turmoil, now is closing in on us.

Perhaps “what?” is best answered by first thinking about Olympics figure skaters. To be labeled “best” they need to excel in a number of categories: skating skills, transitions, performance/execution, choreography and interpretation.

The same goes for best picture. Depending on the movie, many elements must be judged, including direction, casting/actors, story/script, cinematography/film editing, sound, special effects or music/song. It all has to come together.

Avatar and Up share another element – advancement of the art. Like Titanic and Snow White, the advances represent the future of filmmaking, thus making them “best” in Hollywood’s eyes.

The same holds true for the best companies. Ones that qualify for “best” first need high ratings in the necessary business components: management/staffing, products/services, marketing/distribution and production/delivery. Then they have that future element, producing advancements in one or more of the areas.

When we think about future-focused companies, we first think of the technology industry. However, virtually every industry has leaders focused on the future and incorporating advancements into their plans. 3M (MMM) and Procter & Gamble (PG) are good examples of companies that have successfully done so for many years.

That brings me to a “best company” described in a The Wall Street Journal article: “Miner Digs for Ore in the Outback with Remote-Controlled Robots” (March 2, page B-1). The article discusses Rio Tinto’s (RTP) use of technology in a desolate, inhospitable, dangerous environment. No, not for the unobtainium on Pandora, but for seaborne iron ore in Pilbara, Australia.

As described by Rio Tinto’s head of innovation, the company mines by remote control. From 800 miles away, operators guide all manner of equipment – even robots with explosives. In development: driverless trucks and trains.

Rio Tinto is a great example of the type of advances that can make stock ownership so rewarding. Focusing on the future now will help ensure your portfolio enjoys those benefits.

Note: Earlier I wrote three articles about having the right frame of mind for stock investing. The third write-up was about the future: An Investment Frame of Mind – For Five Years Out

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March 2010