6A- Identifying Opportunities in Economic and Regulatory Trends

Regulatory Changes:

1)    A hot topic of conversation recently has been minimum wage.  Many people are pushing to up the minimum wage; this issue is especially prevalent in Florida.  The state has had talks of raising it as high as $15 an hour.  I learned about this issue on the podcast Market Foolery.  If the minimum wage really is raised, many companies will have trouble holding on to all of their current employees.  Since it would cost much more to pay them, it may be hard to hold on to enough of their work force to stay viable.  I believe that this problem will be solved by companies moving their production centers to other countries.  Outsourcing allows companies to produce more cheaply because in many countries the labor force is a lot cheaper.  Factories in countries like Taiwan, Mexico, India, ect will be flooded with production requests from US based companies.  If someone was to buy or build factories in these countries and hire a cheap work force, it could be a very lucrative opportunity.  This opportunity is relatively hard to exploit because there are relatively high barriers to entry.  It would cost a lot of money to acquire a factory and a work-force. Also, if the minimum wage isn’t raised as high as $15, it could be less lucrative than it originally seemed.

To see this opportunity, you must be realistic.  If you think that US companies will stay in the US purely out a patriotism or love of Donald Trump, then you’re dreaming.  US companies are out to make money just like any other company. They’ll do anything to stay afloat, even if it means hurting the US economy.  I think my realism allowed me to see this opportunity.

2)    Over the course of 2018, interest rates on housing mortgages were increased three times.  Another government increase is expected in the next couple months.  While the housing market is relatively dormant right now, the heightened interest rates are making US consumers less likely to buy into the market.  I found out about this opportunity on the US News and World Report website.  With less people actually buying property, I believe more people (especially young people) will turn to renting or leasing.  I believe that means more people will be living in either apartments or rental properties.  I think that this will effect more young people because in general they have less money on hand, and have less stable jobs.  This makes them less likely to take a risk on taking out a mortgage, because they are not absolutely sure they’ll be able to pay for it- especially with the higher rates.  The way to take advantage of this opportunity would be to buy or build properties to rent to people in areas where many young people live.  This opportunity is relatively hard to take advantage of because of it’s barriers to entry.  It costs a lot of money to build or buy real estate.  It also costs money to do up-keep on the properties that you would be land-lording for.  I think that once jumping though the initial hoops though, it would be relatively easy to exploit.

I believe that the reason I was able to see this opportunity is my position as a young person who rents an apartment.  Many of my friends are not in college, and have real jobs.  There is no real difference in our housing situation though, as they pretty much all rent as well.  Real estate is just too expensive right now to buy into until you are very financially secure.  I also have seen how lucrative this business is though my dealings with my rental office. They only have a couple buildings, but a huge number of tenants.  The opportunity for a profit seems enormous.

Economic Trends:

1)    The rate of technological advancement has slowed in recent years.  This comes as a result of the challenge for technology companies to find ways to improve upon current technology.  This however, will not be the case for long.  All signs point to the next technological advancements to come from AI.  This is an up-and-coming techonology, it’s estimated that technology will be worth $1.2 trillion by 2020.  As the world becomes faster, people are willing to spend more money for technology that anticipate their needs and wants.  This information comes from the Forbes website.  Despite the research being done now, the market for AI is still relatively primitive.  As the technology gets more advanced, the market and price points will become more lucrative.  I believe this opportunity exists because there is no established provider of AI technologies yet.  I believe that when this technology comes to market, the prototypical consumer will be younger people in the upper-to-middle class.  Obviously, these technologies take a lot of research and development, so a lot of money must be spent before bringing anything to market.  This barrier to entry causes this trend to be difficult to exploit.

The reason I was able to see this opportunity is that I really am bothered when I waste time. Any time I am doing something, I try to do it as efficiently as possible.  I think this allows me to see past what something is, to what it could be.  AI technology would make tech much more use friendly and faster to use.  This is why I think it could be so lucrative, because of how useful it would be in my daily life.

2)    Right now we are living in the midst of the longest government shutdown in US history.  This effects the economy because since government workers are not getting paid, consumer spending drops.  These people need to buy certain things, but since they aren’t getting paid, they don’t feel like they can.  This is especially apparent in the drop in sales of “luxury” products like computers and refrigerators.  I found this information on the PBS News Hour site.  I believe an opportunity exists in giving these people the products that they need or want now.  I could be done by giving them the products, in expectation they would pay you back once they get their back pay when the government re-opens.  It would be something like an extended lay-away on the products.  Everybody has certain needs to maintain their living, and if they can’t pay for them now, this could be a good alternative.  The consumers of this product would be government workers whose pay has been effected by the shutdown.  I believe this opportunity would be relatively easy to exploit because of the sheer number of people whose incomes have been effected.  

I think that a lot of people are scared of the idea of selling something on credit. Especially if they don’t know when they could get their money back.  I’m in college and we share a lot of stuff, so I tend to trust people when it comes to credit.  We know that these people will have the money for the time they worked once the government re-opens.  As long as they have decent credit, I would trust them to pay back what they bought.