Catching Up on Thematic Musings
While there are a number of things that we at Tematica Research do well, rather well in some cases, one area that we tend to fall down on is sharing the content we write that is published elsewhere. As we move forward in 2022 and utilize Substack to power a new and hopefully improved Thematic Signals, we’ll aim to do a better job of sharing those. With that in mind, here are several pieces that speak to various aspects of our Aging of the Population, Cleaner Living, Digital Lifestyle, Digital Infrastructure & Connectivity, Digital Payments & FinTech, and Cybersecurity & Data Privacy investment themes and indices.
Enjoy!
Investing in an Aging Population Amid a Structural Shift in Demographics
As we look around us, moving though our lives, we are recognizing the demographic reality unfolding around us that people are living longer and the population is skewing grey. In many respects, this is a good thing, but those extra years can have a significant impact on society. As we age, our needs and abilities change, and with that, so do the services and products that we consume. That shift isn’t going unnoticed by companies that are looking to tap into that increasing pool of spending dollars.
According to a National Center for Health Statistics report released in 2016, the average life expectancy in the U.S. stands at 78.8 years on average, with women outlasting men by a few years 81.2 years of age vs. 76.6 years. By 2030, the Administration on Aging (AOA) estimates there will be about 72.1 million people aged 65 or older, more than twice their number in 2000.
The Hidden Environmental Costs of Clothes, and How Companies are Addressing It
Over the holidays, unsuspecting people all over the world became the hapless victim of well-intended clothing gifts, many of which unfortunately belong in the "wouldn’t be caught dead in it" pile, unaccompanied by a gift receipt. Is it any wonder UPS sees one in four Americans making a return following the 2021 holiday shopping season, with 41% of those making a return planning to return three or more items? Others may also be invoking Marie Kondo, resolving to clear out the clutter in their closets. Most of us have items whose disappearance would be a net positive.
Here, we look at the hidden environmental cost of what’s in our closets, what is being done to address it, and suggest some candidates for investors to add to their stock portfolio.
Every year, roughly 20 pieces of clothing are manufactured for every person on earth. Worldwide clothing production doubled from 2000-2014, and the number of per capita garments purchased grew by around 60%. According to data from Kantar, a consumer in the U.S. purchases around 65 items of clothing a year, and a consumer in the U.K. buys around 50 items a year. However, consumers are holding onto their clothing today for about half as long as they did 15 years ago, with some estimates suggesting that the lowest-priced garments are treated as essentially disposable, usually tossed after less than ten wears.
What CES Tells Us About the Growth of Our Digital Lives
Toward the end of 2021, while some were recovering from the Christmas holiday and others were making some last-minute omicron-inspired adjustments to the New Year’s Eve plans, another cohort of approximately 350 million account holders let out a collective cry: The cause was a six-hour outage on Fortnite, the popular player vs. player video game that is at its heart a free-to-play battle royal game developed by Epic Games. When the game came back online, Epic said it will “have more details” as it investigates a solution to “stability issues” following its servers going down.
According to data published by Statista, global online gaming revenue totaled $18 billion in 2020, easily eclipsing the global movie box office that was battered by covid-19, and by streaming services and their content efforts. Even so, both are still expected to grow in terms of their respective user bases, with Statista forecasting the size of online video game audience to reach $1.3 billion by 2025, a 30% increase from its 1 billion size in mid-2021. By comparison, the number of global video streaming users is expected to hit 1.49 billion by 2026, roughly 18.9% of the global population up from roughly 15% in 2021.
Here's the thing – more people streaming games and videos will add incremental pressure to existing digital networks even as they are challenged by a new crop of applications including IoT, semi-autonomous and autonomous vehicles, and the metaverse (or omniverse if you prefer).
Digital Wallets Are Revolutionizing How and Where We Pay
This time of year, many of us are pulling out our wallets more frequently, but increasingly that wallet is digital. Here, we are going to look at the rapid pace of innovation in payments as new technologies are making payments faster, cheaper, less intrusive, and safer.
While both Web 1.0 and Web 2.0 changed civilization in mind-boggling ways, allowing people from all over the world to connect and collaborate, regardless of geography, they were materially flawed. They were both content-first and were missing two layers: an identity layer and a financial layer. The absence of both creates enormous cybersecurity challenges.
As we move towards a more decentralized, interactive Web 3.0, new technologies are allowing for a digital-first identity and financial service layer that will offer speed, agility, and a level of convenience that will frequently allow them to operate in the background. Unlike prior technological leaps, developing nations are innovating and adopting at a much faster pace than we are seeing in developed nations, where existing solutions work well enough most of the time. But in developing nations, millions of the unbanked are getting access to the global economy for the first time through digital wallets and mobile device-based eCommerce, and they are unencumbered by legacy solutions.
The Future of Data Privacy
When we see forecasts for the global Internet of Things (IoT) to reach $1.4 trillion by 2026, up from $761 billion in 2020 according to Mordor Research, we, like many others, are excited by that opportunity. More connected devices sharing data gives us more information, and hopefully drive greater productivity and better decisions.
The flip side is that more connected devices mean greater threats to personal data privacy and more opportunities for information to be compromised. As we can see by the passage of privacy laws, such as GDPR in Europe, the California Consumer Privacy Act (CCPA), the Brazilian General Data Protection Law (LGPD), and others winding their way through various legislatures, privacy is a growing concern for the individual as it has been for governments and corporations for some time.
1,000 Words on Cleaner Living’s Cleaner Beauty
We’ve joked before about the saying a picture is worth 1,000 words if only to share something that showcases a particular aspect of our thematic strategies. In this case it’s the accelerating shift in the market place for Cleaner Beauty products, one of the aspects of our Cleaner Living investment theme, courtesy of Coty Inc. (COTY) and its 2Q2022 Earnings Presentation that it shared on Feb. 8, 2022.
